How to start investing in renewable energy

More people are looking to invest in a way that reduces harm and supports the environment.

Investing in renewable energy is a great option for ethical investors.

So how do you get started, and where are the best places to invest in renewable energy? 

What is renewable energy? 

Renewable energy is generated from sources that can regenerate indefinitely.

Unlike fossil fuels, which will one day run out, renewable energy sources like the sun, wind, rivers and oceans have almost infinite power potential.

Renewable energy sources also produce far fewer emissions than burning fossil fuels, making them more sustainable power solutions. 

Some types of renewable energy are better for a low-carbon future than others.

Solar power has the potential to meet the world’s energy demands and produces virtually no carbon emissions.

Biomass fuel, on the other hand, can lead to deforestation and generates carbon emissions — albeit fewer than fossil fuels.  

Types of renewable energy

People have been harnessing renewable energy for hundreds of years, but energy suppliers first began to offer renewable energy solutions at the start of the 21st century.

Even though the technologies were extremely expensive at first, the costs of wind and solar energy have dropped massively — making them a similar price to fossil fuels. 

There are a few different types of established renewable energy, such as: 

• Solar – Using solar (photovoltaic) panels to convert the sun’s rays into electricity and other forms of energy
• Wind – Onshore and offshore turbines that harness wind to generate electricity
• Geothermal – Using the Earth’s natural heat from reservoirs
• Hydropower – Harnessing energy from running water 

Scientists are also exploring other renewable power options.

Using the energy of the ocean, for example, is just one of the most exciting new areas of renewable energy research.  

Why invest in renewable energy?

Here are some of the top reasons to consider investing in renewable energy:

• Ethical impact - invest in line with your values and contribute to a greener future
• Tech revolution - ride the wave of innovation as renewable energy leads in cutting-edge advancements
• Global support - governments worldwide back renewable energy, driving its expansion and success
• Economic boost - the creation of new job opportunities, especially in rural areas, while reducing reliance on fuel imports

Is renewable energy a good investment?

The ongoing climate crisis won’t go away on its own and it’s clear the world needs to do more to limit climate change.

Currently, the UK gets around 40 per cent of its energy from renewable sources and has committed to getting 95 per cent of its electricity from low-carbon sources by 2030, and decarbonising electricity fully by 2035.  

Governments across the world have made similar pledges.

But without continued investment into renewable energy and new technologies that help us extract more energy from carbon-neutral sources, these targets will be difficult to hit.

It’s estimated the UK alone needs an extra £500 million in renewable energy investment to meet its goals — most of which will come from non-government investors.

Perhaps that’s why UK Pensions minister, Guy Opperman, urged savers to invest their pension funds into renewable energy. 

It's clear that renewable energy isn’t a flash in the pan, but it is still considered a niche sector for investors.

While no investment is risk free, the future of energy has to be more sustainable, making renewable energy a savvy and ethical investment.  

How to invest in renewable energy

If you’d like to keep it simple, buying stocks in an energy company that offers renewable energy is the easiest route.

Large, proven businesses have a lower chance of failure than a renewable startup — but as the mass energy company shutdown of 2021 showed, the chance is never zero. 

Hargreaves Lansdown explains that many up-and-coming renewable energy companies can’t be found on the stock market.

To invest in these ‘unquoted’ companies, you typically need a large sum of money.  

Renewable energy funds are a great way for everyday investors to access cost-prohibitive investments and support the future of green energy.

They’re also typically managed by investment managers who understand the complexity of this niche sector and can maximise your chance of returns.  

Best renewable energy funds

If you’d prefer to diversify your investment a bit more to protect yourself against potential risk, a renewable energy fund is a great option.

No investment is ever risk free, but a fund lets you add to a pool of money that is spread across a range of stocks, assets and commodities.

In 2024, some of the most interesting renewable energy funds/companies to invest in according to InvestorPlace include: 

• NextEra Energy (NEE): a Fortune 200 company committed to shaping the future of energy through innovation and investments in clean energy throughout North America.
• Ormat Technologies (ORA): a geothermal industry leader. They have gained global expertise in exploring, developing, designing, manufacturing, building, owning and operating geothermal power plants around the world.
• Clearway Energy (CWEN): falling under the renewable utilities ecosystem, Clearway features a mix of conventional and renewable energy generation projects. Mostly, their mix consists of wind, solar and natural gas.

Disclaimer: the above should not be considered investment advice and it's recommended you get professional advice before making any investment decisions.

The future of renewable energy

Exciting times lie ahead in the realm of renewable energy.

As technology continues to evolve and governments unite for a greener planet, this sector's potential continues to grow.

From ethical investments to technological innovations, from global sustainability to local economic growth, the future of renewable energy looks bright.

By joining the renewable revolution, you're not just investing – you're shaping a cleaner, more prosperous world for generations to come.

How can a financial adviser help?

Before you look to invest in renewable energy, it’s sensible to research the most recent performance of funds you’re interested in.  

And if you’re really not sure where to put your money, reach out to a professional. 

An independent financial adviser will look at the entire market, rather than solutions from one provider, and give you an unbiased view of the best options for you.

They’ll assess your appetite for risk and direct you towards investment options that are aligned with your outlook and goals.