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Renewable energy accounts for about 16% of Canada’s total primary energy supply. As of 2018, Canada is the third largest producer of hydroelectricity in the world.
Renewable energy is so-named because it comes from sustainable resources like the wind, the sun, water, naturally-occurring heat from the earth’s crust and fuel made from biodegradable materials (biomass).
With clean energy gaining mainstream interest, the renewable energy industry is growing rapidly. There are many options when it comes to investing in renewable energy—let’s walk through some of the main ones.
A popular investment strategy is to purchase exchange-traded funds (ETFs). ETFs give access to a variety of assets without having to put all your money into 1 or 2 firms. ETFs work by replicating the performance of major markets or collections of stocks at a lower cost than holding an active fund.
A common way to invest in clean energy is through the purchase of shares of individual companies. The nature of these shares is that their prices can be incredibly volatile, especially in newer, niche industries such as renewables.
You could reduce some of this risk by investing in companies that do more than just renewables, such as:
Stocks in companies focused entirely on renewables have higher risk, with high potential returns. Various renewable energy companies you might want to consider include the following, though some of these are over-the-counter stocks — not listed on a major stock exchange — and may not be available in every brokerage account.
The most direct way to invest in renewable energy, without installing solar panels on your roof, is to invest directly in renewable energy projects. This method is low risk, especially in terms of solar PV projects, as once the facility is up and running, not much can go wrong.
Community-owned solar farms are increasing in popularity. These projects make it possible for communities to invest in solar together by inviting local people to purchase a share, the funds for which are then used to cover the costs of setting up a solar farm. Once set up, members of the group are able to take advantage of the energy produced and benefit from any profits made.
Experienced investors willing to take the risk may consider investing in their own renewable energy projects. This requires large initial investments for equipment and the land to host your renewable energy farm. You will also need to obtain interconnection authorization and a power purchase agreement.
Once you have achieved all this, the energy your farm generates can often be sold for a substantial profit. However, return on investment can vary wildly, as fluctuating costs of developments and power make these projects high-risk investments.
Renewables and other green investments are one way to invest your money in a cause you care about, but no commodity or stock is completely risk-free. To limit your risk, diversify your portfolio and consult a financial advisor. For more information about your investing options, read our guide to investing.
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