One of the Largest Investors Backs Renewables

It’s a sign of the times that more and more people who invest are starting to focus on renewables. Of course, the stock market is all about making money and there’s no room for sentiment if you want to make a profit.

The news that one of the world’s largest investors, Morgan Stanley, backs renewables will provide everyone around the world rooting for the green agenda with a boost. The research they carried out showed that renewables such as solar and wind are becoming cheap enough to outperform fossil fuels, especially coal.

According to the bank in July:

“Numerous key markets recently reached an inflection point where renewables have become the cheapest form of new power generation. A dynamic we see spreading to nearly every country we cover by 2020. The price of solar panels has fallen 50% in less than two years (2016-17).”

There are a number of things that have been responsible for driving the cost of renewables down in recent years. Improvement in technology is one – wind turbines are operating with longer blades nowadays which allows them to produce more power. An oversupply of solar panels in the US has led to better details for home and commercial installations. In the UK, the price of installing solar panels has also come down in recent years and with markets such as China producing cheap products this may be set to continue.

The lower cost is making utility companies think again about what sectors they invest in. If solar and wind are going to be cheaper, the costs can be passed onto the consumer. Those large companies that are investing in infrastructure may also get a better return if they choose renewables rather than coal, oil or gas based projects. The development of new technologies such as tidal lagoons could take us even further if they are successful.

The key that is perhaps driving things more than most is the development of storage technology that helps us circumvent some of the major problems with renewables – how to get energy when the sun doesn’t shine or the wind doesn’t blow.

According to Morgan Stanley:

“The demand for storage is expected to grow from a less than $300 million a year market to as much as $4 billion in the next two to three years, says the Morgan Stanley report. Ultimately there’s about a $30 billion market for storage units, with capacity for around 85 gigawatt-hours of power storage. That’s enough electricity to light up most of the New York City metro area for a year.”

This comes on the back of the UK government recently announcing a major commitment to developing storage technology. Many see it as the future and the one ingredient that will push renewables way past the tipping point and finally consign fossil fuels to the past. The question is how quickly it’s going to happen.

As with anything to do with renewables, however, things are not entirely straightforward. A thinktank in the UK at the beginning of the year, said there was a threat that renewables will suffer from underinvestment over the next three years because of the removal of subsidies. They put the decline in investment in areas such as solar and wind at as much as 95%.

That hasn’t stopped those who do invest and are moving from high carbon to low carbon solutions, which is better news for green advocates. That may well be the governing factor when it comes to renewables, rather than the presence or absence of any subsidies. As with most things, money talks. According to Emma Pinchbeck from the Green Alliance:

“The energy sector is changing. The infrastructure pipeline shows that the private sector understands the smart money is on the renewables industry – that is why they are moving from high carbon assets to low carbon ones.”

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