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Top 3 trends impacting global renewable energy investment

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Hydrocarbon Engineering,

Technavio has released a new report on the top three emerging trends impacting the global renewable energy investment market from 2016 - 2020.

Technavio’s latest report on the global renewable energy investment market provides an analysis on the most important trends expected to impact the market outlook from 2016 - 2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.

According to Amit Sharma, a Lead Analyst at Technavio for research on the sector, “The global renewable energy investment market is expected to exceed US$353 billion by 2020, growing at a CAGR of almost 6%. Investments in renewable energy generation have risen significantly due to the growing power crisis and the growing requirement for cleaner power resources. Renewable resources enable electricity generation with minimal greenhouses gases emissions.”

The top three emerging trends driving the global renewable energy investment market, according to Technavio energy research analysts, are:

  • Spending on utility-scale renewable energy projects.
  • Provision of equity capital for renewable energy companies.
  • Transition to a low carbon economy.


Spending on utility-scale renewable energy projects

The renewable energy projects that are more than 10 megawatts (MW) are said to be utility-scale renewable energy projects that benefit from state and local policies and programmes. The state and local policies and programmes address the potential barriers by implementing correct measures.

“The utility-scale renewable energy projects are considered to be highly individualised energy projects wherein the most effective states have coupled renewable portfolio standards with financial mechanisms such as tax benefits and clean energy fund grants. This helps in encouraging and supporting the development of large scale projects within their borders,” notes Sharma.

Provision of equity capital for renewable energy companies

Companies similar to Riverstone manages the private renewable energy investment on a global scale. The company has devoted nearly US$4.1 billion of equity capital that involves new start-up companies. The company focuses on developing incremental production of renewable energy resources on a global scale.

The provision of equity capital for renewable energy helps companies in overcoming capital constraints, develop technologies, increase skills, and forge international connections. For example, the ARENA’s Renewable Energy Venture Capital Fund Programme was created to provide venture capital funding to the clients. The programme was also created to encourage the development of Australian companies that are commercialising renewable energy technologies, helping companies in active investment management.

Transition to a low carbon economy

In developing countries, the long term and low cost debt have the capacity to reduce the cost of low carbon power by 30%. The transition to a low carbon electricity system would bring in financial savings of US$2 trillion by 2030. This is due to reduced operational costs associated with extracting and transporting coal and gas outweighing increased financing costs for renewable energy and losses in the value of existing fossil fuel assets. Few regions that import more oil than they produce include the US, China, Europe, and India. Therefore, they can benefit by reducing the oil consumption, opting for low carbon alternatives.

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