Ranking of Energy Investments for 2020 – 2030

It is currently very difficult to discriminate between good and bad investments in the energy field, and much research is required in order to determine the best investment opportunities. Unfortunately, this is a lengthy process, for starters just entering the energy industry it boils down to making investments through funds and / or stock market options for most people.

The solar and the wind energy industry have matured. By now they have become global players in their own right. They do not have the same market concentration (few players in the market) but the markets consolidate and larger players are being swallowed up by smaller one’s. 

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1. We have ranked energy investments (please note that this is not investment advice):

i. INVESTMENT OPTION: DIRECT FUNDING OF RENEWABLE ENERGY PROJECTS

ii. INVESTMENT IN CONVENTIONAL ENERGY SOURCES AND UTILITY INFRASTRUCTURE COMPANIES VIA STOCK MARKET OPTIONS

iii. INVEST IN UP-AND-COMING ARTIFICIAL INTELLIGENCE SOLUTIONS THAT WILL BECOME AN INTEGRAL PART OF THE ENERGY INDUSTRY

iv. CYBERSECURITY (THIS ONE REQUIRES FAMILIARITY WITH THE SUBJECT MATTER)

Ranking of Energy Investments for 2020 – 2030:Please refer to the Disclaimer*

2. DIRECT FUNDING OF RENEWABLE ENERGY PROJECTS CAN BE ATTRACTIVE FOR DIFFERENT TYPES OF INVESTORS


One option is to invest in renewable energy sources such as biomass (wood) and waste-to-energy and secondly, to invest in wind energy, biogas and photovoltaics. I believe that investment opportunities in wind energy, biogas and photovoltaics have been sufficiently exploited, but that depends on the geographic location and locality. Although direct funding of energy projects is certainly suitable for investors familar with different investments in the energy field, it is not so easy to do that for someone just entering the field.

One might recommend investing in funding schemes that offer an attractive return of investment and preselect investments. Selecting an investment fund has the added advantage that you will hedge against risk by spreading your investment. In that case, it makes a lot of sense to compare different energy sources and find a product that suits your needs in terms of inherent risk it involves and the ROI.

A prudent investor must account for generous subsidies that are offered by local governments but if these incentives run out in the near term, this drastically reduces the attractiveness of making an investment in a particular area. In addition to that, regulatory frameworks can work against you if you are not familiar with the legislation in that specific jurisdiction. In my estimation you can avoid some of these risks by paying special attention when generous subsidies are running out in one part of the world and what sort of political backing your chosen investments has in that jurisdiction.


3. ALWAYS KEEP IN MIND THAT THERE ARE DIFFERENT LOCATIONS / JURISDICTIONS WHERE YOU CAN INVEST AND YOU DO NOT HAVE TO ‘ACT LIKE A PLANT’ WHEN MAKING INVESTMENT DECISIONS, YOU DO NOT HAVE TO STAY IN ONE PLACE ONLY


The most attractive investment opportunities are not even anywhere near your home country, and it pays handsomely to have your foot in the door, in places such as East Asia and Southeast Asia where we can expect strong growth of renewable energy production in the medium-term. When you are making a decision of where to invest you should look at the underlying structure of the energy industry in your chosen investment destination, and in particular the availability of private versus public funding in these places, as well as the willingness of local governments to increase private investments long-term there. This has the added advantage that it gives you some assurance that the investments you have made will be protected.


4. INVEST IN CONVENTIONAL ENERGY SOURCES AND UTILITY INFRASTRUCTURE COMPANIES VIA STOCK MARKET OPTIONS


Although conventional energy sources are seen as dying dinosaurs by the general public, the proof is in the pudding because they will remain an important part of our energy infrastructure for a long time to come. I think it is not unreasonable to assume that they will continue to play a major role ensuring stable energy supplies, particularily for primary energy demand, at least for another 30 to 35 years or even longer.

This means there is an interesting investment horizon to speculate, for younger investors who are below 35 years of age. In fact, I would not recommend the second best option for younger investors, although they remain a good option just in terms of their risk exposure and reward ratio. Utilities are usually not seen by investors as bold investment options, at least not in the European Union as the ROI has usually been lower and stock market prices of large utilities have plunged due to restrictive government policies.

But in Western countries there will be a strong demand to improve the legacy infrastructure that was build in the sixties, seventies and eighties, or even before that and many governments and  local authorities will not be able to shoulder these enormous costs. This should give private investors a leg up, all the while guarenteeing that your investments are relatively secure in the meantime compared to other investment locations.


5. ARE CONVENTIONAL ENERGY SOURCES AND UTILITIES GOOD PLACES TO INVEST BECAUSE FOSSIL FUELS ARE IN TERMINAL DECLINE IN THE LONG-TERM?


There is good money to be made on investments, fossil fuels or conventional energy production capacity but it requires diligent research. It really is like looking for a needle in the haystack of bad stock market options. Though they remain the most likely investment vehicle for someone just entering the market.

Again, it is worth pointing out that energy infrastructure investments have been severly lacking in the last thirty years in the West, which means one should expect investments to be made in the future, and baked into the cake, there should be a greater need for private funding of these projects. One should keep in mind that PPP projects have gained a bad reputation which is what many stock market companies invested in, seemingly oblivious that this will eventually come to an end. You should assess your company’s involvement in any of these projects.


6. INVEST IN UP-AND-COMING ARTIFICIAL INTELLIGENCE SOLUTIONS THAT WILL BECOME AN INTEGRAL PART OF THE ENERGY INDUSTRY


This is certainly a very exiting option for a lot of investors but it seems to be just starting to become more interesting for investors. It is worth to do some research on start-up’s in that industry just starting out and requiring capital for their expansion and investment plans. So that would be more in the line with venture capital investments. The reason why I am not a big fan of artificial intelligence solutions in the energy industry as investment options right now is that they are high risk in the form of funding them directly as investors, and require enormous expertise to invest successfully.


7. CYBERSECURITY IN THE ENERGY INDUSTRY (AS I HAVE MENTIONED BEFOREHAND, THIS ONE REQUIRES FAMILIARITY WITH THE SUBJECT MATTER)


Cybersecurity will become absolutely critical for the IT-led smart metering infrastructure and smart grid that is put in place in industrialized nations and without it, noone can guarentee the safety and security of the energy grid as a whole and potentially disrupt social life on a grand scale as the energy grid underpins almost anything else you can imagine, from credit card payment systems to cooling systems in supermarkets, electric cars, and hospitals.  



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