When thinking about investments, it is always my job to think about what’s going to be worth investing in tomorrow, almost irrespective of what happened yesterday.
That’s not only in terms of investment markets, but I’m also looking at economic trends, shopping trends or general buying trends in the way the world is heading.
One thing that I have got my eye on, and that the future is almost certainly going to be surrounded by, is green energy production. It’s one of the most talked-about topics within governments now as they all move to meet their green energy quotas and reduce climate change.
Whenever we start seeing big investments from governments, it often leads to big government spending, which may lead to profits in terms of an investment.
So, where are the potential opportunities within green energy for investors? And are they worth considering as part of a portfolio?
This blog will help answer these questions and explain why green energy may become an important part of a diverse portfolio in the future.
The rise of solar power
Looking at where the world is going, we can identify certain technologies that are going to play a major role in the energy production of the future.
The most impactful of these is no doubt solar technology. Solar technology has been around for some time now. We all remember having those solar calculators as kids, don’t we?
It’s been a part of our lives for years, but it may well become instrumental to the world’s energy production in the near future. Some believe that it may become the new oil.
And with every new advancement in solar technology, the energy it produces becomes cheaper. The first solar panel ever produced decades ago would have cost millions of pounds to make, whereas now you can manufacture thousands of solar panels in big enough bulk, at a very low cost.
A new opportunity for investors?
If the low cost of solar panels means cheaper solar energy, that may present a big opportunity for investors who want a piece of the action; and if solar energy does go on to power the world, it’s going to make investors who buy in early a lot of money.
Today we are using more power than ever before and, eventually, we will have to find some way to keep up with demand once our oil runs out.
The rise of solar energy may present a very interesting situation in the future because, currently, a lot of the world’s energy production comes from fossil fuels in Russia, America and the Middle East.
The winners and losers of solar power
Once those deposits run out in 10, 20 or 50 years’ time, we may see a shift in power from these countries, many of which have built their entire economies on oil.
As the energy requirements of the world change, the locations in which that energy is produced may well change too. For example, Russia doesn’t really have the best climate for solar panels and may find it doesn’t hold the same sort of wealth once the oil runs out.
So, where might the transfer of wealth fall to? If solar energy becomes the main producer of energy in the future, you have to look at where the biggest benefactors might be.
Countries in northern and central Africa and South America, which have a lot of wide, open space and a huge amount of sunshine, will probably be the best places to locate the solar fields needed to power the world.
It’s certainly not going to be in England, with our five days of sun a year!
Preparing for the future
The reliance that we may come to have on solar may change the very landscape of the world economies, so investors may want to be well placed to make money from it should these changes happen.
The main thing we’re interested in at Applewood Independent Ltd is making a profit for our clients. From that perspective, I can see a lot of that profit potentially coming from solar energy as time goes on.
Large energy companies like Shell and BP have already made considerable investments toward solar/green energy, and they have their finger on the pulse of oil. As soon as it stops being profitable, whenever that might be, they should have everything in place to move over to cheaper, more profitable energy sources.
The thing about renewable energy is that, once it’s set up, the cost of collecting that energy is very low. Apart from maintenance, you don’t have to spend anything on pulling it out of the ground as you do with oil. That means that the more panels, wind farms or hydro dams there are, the cheaper energy becomes and the more potential money there is to be made.
So, I think investing in green energy may turn out to be a fantastic way to diversify your portfolio. It potentially allows you to make money that can’t be made anywhere else.
I hope this has been useful!
If you have anything else to add, I’d love to hear from you. To find out more, feel free to get in touch by emailing firstname.lastname@example.org.
The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article or, alternatively, contact the Applewood Independent Ltd office on 01270 626555.
The value of your investment can go down as well as up and you may not get back the full amount invested. Past performance is not a guide to future performance.