A Close Look at Investing in Renewable Energy

The total global investment in clean energy (renewable energy plus low-carbon technologies) in 2005 will be around $42.2 billion, according to estimates from New Energy Finance. Plus, total financial transaction value in the sector will exceed $56 billion when the impact of merger and acquisition (M&A) activity is included. But it can’t stop there if renewable energy is to compete in the energy industry.

“At over $42 billion in annual investment volume, the clean energy industry worldwide has achieved a meaningful scale,” said Michael Liebreich, Founder and CEO of New Energy Finance. “However, it is clear that for there to be a truly meaningful switch in the current energy mix away from fossil sources — without the need for a massive build-out in nuclear capacity around the world — levels of investment in clean energy will have to go up by a factor of at least five over the next decade,” said Liebreich, “which translates into a sustained growth rate of nearly 20 percent per annum.” The estimated total current volume of investment in the industry of $42.2 billion is gleaned from data collected by the New Energy Finance Desktop on 11,000 organizations active in the clean energy industry, 6000 individuals and more than 4000 investment transactions. Although $42.2 billion is not a small figure, the company claims, it must be put in context. It is equivalent to just 6.7 percent of the $630 billion estimated by the International Energy Agency (IEA) last year as the total worldwide annual demand for investment in the energy industry through to 2030 ($568 billion in 2000 dollars expressed in 2005 dollars). New Energy Finance is a specialist provider of news, data and analysis to investors in the renewable energy and energy technology industry and its investors worldwide. The company’s information services cover investment activity, including venture capital, public markets, M&A and project finance in renewable and low-carbon energy technologies.

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