Should I invest in renewable energy storage?

Renewable energy concept collage

Image source: Getty Images

According to the Select Committee on Climate Change, renewable energy sources are derived from natural processes and are replenished faster than they are expended. Solar, wind and hydropower are renewable energy sources. Renewable energy stocks invest in and operate projects that generate electricity using the power of the sun, wind and running water.

I will look at the investment case for renewable energy storage, but first, a brief aside. Biofuels are sometimes included under the umbrella of renewables. Biofuels release carbon dioxide when burned, just like fossil fuels. But the carbon in biofuels is taken from the atmosphere as CO2 when plants grow. Carbon in fossils has been locked up for thousands of years. Burning them adds carbon dioxide (CO2) into the atmosphere that will soon become unavailable. I think of biofuel as a low carbon energy source like nuclear power.

Renewables are taking a bigger slice of the pie.

In the UK, wind, solar and hydro power account for 0.26%, 0.01% and 1.07% of total electricity production respectively. In the year By 2021, solar power will be 4.31%, wind 21.49% and hydropower 1.67%, this is a big change especially for wind power. If such growth continues, it should bode well for renewable energy stocks.

Source of electricity production, % of UK energy mix 2001 2011 2021
Wind 0.3% 4.4% 21.5%
of the sun 0.0% 0.1% 4.1%
Water power 1.1% 1.6% 1.7%
Other low carbon, including biofuels 1.2% 3.7% 13.3%
Nuclear 23.8% 19.0% 15.3%
Source: Our World in Data

While nuclear has declined as a share of the energy mix in the 20 years since 2001, other low-carbon sources such as biofuels have grown from 1.2% to 13.3% over those two decades. Given this performance, converting renewable energy reserves to biofuels would not destroy it.

High power

I don’t want a growing piece of a shrinking pie. This surprised me, but UK electricity, measured in gigawatt hours (GWh), peaked in 2005, according to figures from the Department for Business, Energy and Industrial Strategy.

I can’t find a definitive answer as to why this is happening. Maybe there were energy-saving appliances and light bulbs. Maybe it’s industrialization. I want to know why because this allows me to predict whether the forces driving the trend will reverse.

However, I can think of a few things that should mean that electricity generation is not in terminal failure. The proposed addition of five more Hinkley Point nuclear power stations or 90,000 new wind turbines to the UK’s all-electric vehicle fleet has been cited. This is a major development in electricity generation capacity. And with the government aiming for a net zero economy by 2050, the share of renewable energy in the mix needs to increase.

RActivating energy reserves

I am confident that the UK renewable energy industry is booming. I like investing in growing industries. Therefore, I should consider investing in UK renewable energy stocks in my portfolio. However, the industry is still relatively new and needs to be supported to continue. So, to manage risk, I look at investment trusts that fund different projects rather than stocks of a single company. Here are some examples:

  • Greencoat UK wind
  • Greencoat renewable
  • Vision solar fund
  • Renewed infrastructure team
  • JLEN Environmental Properties Group

Like investing in big energy companies SSE And Central It is also possible. These are growing their renewable energy businesses. But they are transitioning from burning fossil fuels, and the switch may be flipped.

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