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Top 3 trends impacting global renewable energy investment market – Technavio

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Desert Renewable Energy Conservation Plan Los Angeles Times photo.

In developing countries, long-term, low-cost debt have the capacity to reduce cost of low-carbon power by 30%

LONDON – Technavio’s latest report on the global renewable energy investment market provides an analysis on the most important trends expected to impact the market outlook from 2016-2020, according to a press release.

Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.

“The global renewable energy investment market is expected to exceed USD 353 billion by 2020, growing at a CAGR of almost 6 per cent. Investments in renewable energy generation have risen significantly due to the growing power crisis and the growing requirement for cleaner power resources. Renewable resources, such as wind and sunlight, enable electricity generation with minimal greenhouses gases emissions,” said Amit Sharma, a lead analyst at Technavio for research on power sector.

The top three emerging trends driving the global renewable energy investment market according to Technavio energy research analysts are:

  • Spending on utility-scale renewable energy projects
  • Provision of equity capital for renewable energy companies
  • Transition to a low carbon economy

Spending on utility-scale renewable energy projects

The renewable energy projects that are more than 10 MW are said to be utility-scale renewable energy projects that benefit from state and local policies and programs. The state and local policies and programs address the potential barriers by implementing correct measures.

“The utility-scale renewable energy projects are considered to be highly individualized energy projects wherein the most effective states have coupled renewable portfolio standards with financial mechanisms such as tax benefits and clean energy fund grants. This helps in encouraging and supporting the development of large-scale projects within their borders,” said Amit.

Provision of equity capital for renewable energy companies

Companies like Riverstone manages the private renewable energy investment on a global scale. The company has devoted nearly USD 4.1 billion of equity capital that involves new start-up companies.

The company focuses on developing incremental production of renewable energy resources on a global scale.

The provision of equity capital for renewable energy helps companies in overcoming capital constraints, develop technologies, increase skills, and forge international connections.

For example, the ARENA’s Renewable Energy Venture Capital Fund Programme was created to provide venture capital funding to the clients. The program was also created to encourage the development of Australian companies that are commercializing renewable energy technologies, helping companies in active investment management.

Transition to a low carbon economy

In the developing countries, the long-term and low-cost debt have the capacity to reduce the cost of low-carbon power by 30 per cent.

The transition to a low-carbon electricity system would bring in financial savings of USD 2 trillion by 2030. This is due to reduced operational costs associated with extracting and transporting coal and gas outweighing increased financing costs for renewable energy and losses in the value of existing fossil fuel assets.

Few regions that import more oil than they produce include the US, China, Europe, and India. Therefore, they can benefit by reducing the oil consumption, opting for low-carbon alternatives.

Competitive vendor landscape

In the present market scenario, there have been multiple changes in policies enforced by governments worldwide, focusing more on clean energy and taking correct measures and actions on the greenhouse gas emission.

Therefore, it is important for vendors to focus more on the reduction of CO₂ emission through energy efficiency, improving the energy security.

Top-vendor offerings in the global renewable energy investment market:

Company Offerings
Center Bridge Partners Investment firm that focuses on credit investments and private equity.
GE Energy Financial Services Investments through equity in infrastructure
Goldman Sachs Equity, loans, bonds, project finance, derivatives, leases, private or public capital
Macquarie Infrastructure asset management services

Source: Technavio

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