How to Invest In Green Energy: ETF’s, Stocks, Funds, & JCM


Renewable energy comes from renewable sources that are directly or indirectly based on the sun’s radiation and are therefore renewed at the same rate as they are used.

Examples of renewable energy are; hydropower, wind power, solar energy and bioenergy (comes from biomass such as plant parts).

In many ways, the idea of the environment has begun to show, plastic tax, electric cars and conversion to renewable energy are some ways.

So, how do you invest in green/renewable energy?

You can invest in renewable energy through e.g. funds, equities, ETFs and alternative investment projects. Today there are a lot of funds with the words “sustainable” or “sustainable” and you might think that all of these are a good sustainable alternative. Unfortunately, it is not that simple.

There are also different ways of thinking. Do you want to invest in companies that opt out of fossil fuels, or do you want to invest in companies that are directly related to e.g. production or the transition to renewable energy?

Below I present a few different options.

Top 4 ways on how to invest in green/renewable energy

1. Renewable energy funds

If you are looking for companies that are actively working to limit holdings that are exposed to fossil fuels, you can start looking at their CO2 labeling.

The CoO2 label is developed by Morningstar through sustainalytics analyzes at company level. Low CO2 risk means that the fund’s holdings have had a CO2 risk value of less than 10% in the last 12 months.

And that the holdings’ average exposure to fossil fuels should be below 7%. This is measured quarterly.

Sustainable and index-linked funds

If you are interested in index-linked funds that opt out of companies that receive more than 5% of their income from thermal coal extraction, coal power production, or services, you can, for example, take a look at the SPP funds in this list.

The fund also actively selects companies with a low CO2 footprint and companies with a high sustainability rating.

Up to 10% of the fund’s assets are invested in solution companies, ie companies that are involved and contribute to meeting the UN’s global sustainability goals.

SPP Europa Plus: Is a fossil-free, index-linked European equity fund that invests in companies listed on the European stock exchanges.

The fund focuses on companies with high sustainability and can invest up to 10% of the fund’s funds in companies with a concentration on sustainable solutions, such as companies in renewable energy.

SPP Global Plus: Is a fossil-free, index-linked global equity fund that invests widely in various industries in the developed markets.

The fund focuses on companies with high sustainability and can invest up to 10% of the fund’s funds in companies with a concentration on sustainable solutions, such as companies in renewable energy.

SPP Emerging Markets Plus: Is a fossil-free, index-linked equity fund that invests widely in various industries in emerging markets.

The fund focuses on companies with high sustainability and can invest up to 10% of the fund’s funds in companies with a concentration on sustainable solutions, such as companies in renewable energy.

Industry funds – New energy

DNB Fund Renewable Energy retail A: Investes in companies in solar, hydropower and wind power and also in companies active in energy saving and streamlining of energy production. The fund is also looking for companies that can make better use of the energy already produced.

BGF Sustainable Energy A2: Investes in companies operating in the market for alternative energy or energy technology. The fund primarily focuses on companies in the industries of renewable energy, fuel for vehicles, energy storage and technologies that make energy use more efficient.

Pictet-Clean Energy R USD: The investment fund’s strategy for capital growth is to invest at least two thirds of its assets in shares issued by companies that help reduce carbon dioxide emissions.

2. Stocks in renewable energy

Below I have picked out some stocks that are involved in various ways in the production and / or development of renewable energy solutions.

There are of course more companies than these, but it is a selection within different energy alternatives.

First Solar: First Solar designs and manufactures solar modules. The company uses a semiconductor-semiconductor technology to manufacture electricity-producing solar modules.

The company has built and delivered facilities with over 20 GW of capacity and invested $ 17 billion in project financing. They offer completely ready-made solutions to those who want to build solar energy plants.

Vestas Wind: Manufacturer of wind turbines. The company is active in the entire value chain, from design, production, assembly, logistics installation to aftermarket service.

The company has over 100 GW of wind power capacity distributed over 80 countries. The largest countries in terms of their capacity are the USA, Germany, Denmark, India and China.

Ørsted: The business is focused on the production of renewable energy via wind turbines, where the largest market is found in the Nordic countries and Europe. In addition, the company also produces natural and biogas.

Verbund: Is one of Austria’s largest electricity suppliers and the majority of electricity is generated by hydropower. The company is also one of the largest hydropower suppliers in Europe. Verbund plans to upgrade its energy network and become compatible with solar and wind projects.

Aliboma: They produce biomass from sugar cane residues called bagass. This will supply sugar mills with electricity and reduce their costs. The company also has 150 solar energy plants and heating plants in French territories outside Europe.

Climeon B: Specialized in the development of thermal power solutions that produce renewable electricity. The technology is based on utilizing waste heat and low-temperature geothermal heat, where customers are mainly found among industrial and maritime players.

3. ETFs in renewable energy

A good way to find ETFs is to search through iShares. They are part of BlackRock and have very many different types of ETFs, for example the iShares Global Clean Energy UCITS ETF.

This ETF aims to track the performance of an index of 30 of the largest global companies in the clean energy sector.

Comparative index S&P Global Clean Energy. The dividend frequency is semi-annual and the direct return is 0.54%.

Luxury ETF New Energy: The fund is an index-managed UCITS fund. The primary part of the revenue comes from the alternative energy sector at the global level, which includes segments for renewable energy, efficiency and energy distribution.

Some of the holdings are: Schneider Electric SA, Nextera Energy Inc, Vestas Wind Systems A / S and Nibe Industrier.

It has become more difficult for us in Europe to invest in ETFs. It is because of the new European regulations that came in 2017.

Unfortunately, we can no longer invest in US ETFs. Therefore, the supply right now is not huge.

4. JCM Power – Alternative investment projects

JCM Power invests in renewable energy, primarily from solar and wind turbines in developing countries.

They work towards establishing long-term partnerships with local communities, countries and financial institutions to build and run projects in renewable energy in emerging markets with good conditions for renewable energy.

JCM Power has a few different projects underway. An ongoing project is a solar cell project in the Salima district of Malawi.

Their government continues to show strong support for the development of renewable energy in the country and the project continues to make progress.

The project is currently under construction.

Is renewable energy a good investment?

Yes, in recent years, interest in renewable energy has increased significantly. And there are several hot trends that speak in favor of good and long-term structural growth prospects for renewable energy.

There is no car manufacturer that does not talk about the transition from fossil fuel to electric propulsion. Bus and truck manufacturers also talk about the importance of being able to offer electric power.

This has created a significant demand for hot new raw materials to create good and long-lasting batteries for electric motors.

And companies are being created that want to deliver different types of input goods, everything from more efficient software to special semiconductors optimized for electric operation. The list goes on.

It is time to invest in solar and wind as energy sources as many believe it is the solution to prevent global warming. Several large countries have clearly declared that they will shift energy production in favor of renewable energy.

Conclusion

As you can see, there are many different ways to invest in renewable energy and it is important to read to know exactly where to invest your money.

There is a difference between investing in companies that opt ​​out of fossil fuels and companies that work with the development of renewable energy.

Energy sector prices and returns are greatly affected by political fluctuations.

Therefore, it is good to follow the global climate decisions and the plans of the great powers, in my post renewable energy can be the stock market winner in 2021, I go through Biden’s energy and climate plan.

If you are a new investor, I recommend that you first and foremost focus on mutual funds. Then you do not have to analyze individual companies and projects yourself.

Of course, it is still a risk to invest in mutual funds and you could lose all your capital. But your money is spread over several different companies through the fund.

You can definitely have more than one fund, take a look at their holdings and not just go by the return history.

Kevin

Hi, my name is Kevin and I am a weightlifter, now part time blogger. Keep in mind that I dont have any fancy degrees or operate some high-end business company. I am just a dude from Sweden who loves to learn new things, especially new things on how I can inqrease my wealth. And now I have the opportunity to share that knowledge back to you.

Recent Posts