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[ CLEANTECH ]
Recent advances mean renewable energy is beginning to challenge
fossil fuels in terms of price as well as environmental impact.
Pádraig Floyd examines the funds riding the cleantech wave
Not hot air
T
he Paris Climate Accord,
agreed at the end of
2015, demonstrated an
unprecedented level of
intent on the part of (most) G20 nations
to grapple with environmental issues.
Climate change and social projects
such as sex and gender equality
have raised the profile of sustainable
investing and demand has grown
considerably.
In fact, for renewables, it has never
been higher, though the UK figures
disguise this. Data from Bloomberg
New Energy Finance (BNEF) shows that
UK investment in wind, solar and other
renewables has fallen by 56 per cent
over the past two years to £7.5bn, while
worldwide spending increased by 3 per
cent to £242bn, just short of its peak.
A growing global and increasingly
urbanised population is driving
demand, but cleantech and
FE TRUSTNET
Renewable energy
accounted for a quarter of
the electricity produced
by the UK last year, enough
to meet its entire
requirement from 1958
renewable energy is attracting a
great deal of attention as it becomes
an important component in the UK’s
energy production. It accounted for
a quarter of the electricity produced
by the nation last year, enough to
meet its entire requirement from
1958, largely from offshore wind
turbines.
Earth, wind and fire
Yet there is more to cleantech and
renewable energy than wind and
solar farms and this is reflected in the
holdings of all but the most specialist
renewable funds.
Jon Forster, senior portfolio
manager at Impax Environmental
Markets, has less than 10 per cent of
his portfolio in renewables with half
of that in utilities which build and
run the infrastructure. He is cautious
on wind, at less than 1 per cent of
“We are getting to the point where
renewables will beat production
from traditional sources, not through
subsidy, but by fundamentally better
technology,” says Charlie Thomas,
manager of the Jupiter Ecology fund.
Making the most of it
Nevertheless, all investment
managers agree that finding good
projects is hard in the renewable
energy sector if the focus is simply on
electricity production.
assets, due to concerns about pricing
“Energy efficiency is the biggest
and margins as Europe introduces
part of the strategy,” says Forster,
auctions for generation capacity.
“which includes smart metering,
While there are also concerns about
individual energy efficiency, factory
the falling cost of tools such as solar
automation – in fact anything that
panels and wind turbines, other
requires efficiency, from buildings
industry commentators remain
needing insulation and lighting to
upbeat, pointing out the withdrawal of components for electric vehicles.”
subsides shows the sector is beginning
to stand on its own two feet.
trustnet.com