How to invest in renewables

Read our guide to learn about investing in renewable energy sources.

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Fact checked
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.
The UK government is aiming to provide 15% of energy from renewable sources by 2020. With clean energy moving out of the fringes and into the mainstream, the renewable energy industry is seeing rapid growth.

Read on to find out more about renewable energy as an investment opportunity.

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How to invest in renewable energy

Aside from rooftop solar panels, there are many other options when it comes to investing in the renewable energy sector. Here are the main ones:

1. Purchase shares in renewable energy companies

Another way to invest in clean energy is through the purchase of individual shares. 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 who do more than just renewables, such as General Electric (GE), who have large exposure to wind power though their branch GE wind, and Siemens (SI), who have large investments in solar panels and wind turbines.

Stocks in companies focused entirely on renewables have a higher risk, with high potential returns. Various renewable energy companies you might want to consider include European wind turbine manufacturers Vestas Wind Systems, First Solar, Greencoat Renewables, and Gamesa Corporacion Tecnologica.

Pros
  • You can tailor your own portfolio.
  • A simple and accessible way of investing.
Cons
  • Shares can be volatile, especially in niche companies.
  • Putting all your eggs in one basket makes the risk of losing your investment higher.

Compare these providers for buying shares, ETFs and more

Table: sorted by promoted deals first
Data indicated here is updated regularly
Name Product Price per trade Frequent trader rate Platform fees Brand description
Fineco
£2.95
£2.95
Zero platform fee
Your first 50 trades are free with Fineco, until 31/12/2020. T&Cs apply.
Fineco Bank is good for share traders and investors looking for a complete platform and wide offer. Capital at risk.
IG
0% commission on US shares, and £3 on UK shares
From £5
£0 - £24 per quarter
IG is good for experienced traders, and offers learning resources for beginners, all with wide access to shares, ETFs and funds. Capital at risk.
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0% commission, no markup, no ticket fee, no management fee
N/A
Withdrawal fee & GDP to USD deposit conversion
Capital at risk. 0% commission but other fees may apply.
Hargreaves Lansdown Fund and Share Account
£11.95
£5.95
No fees
Hargreaves Lansdown is the UK's number one platform for private investors, with the depth of features you'd expect from an established platform. Capital at risk.
Interactive Investor
From £7.99 on the Investor Service Plan
From £7.99 on the Investor Service Plan
No transfer fees or exit fees. £9.99 a month on the Investor Service Plan
Open an ISA, Trading Account or SIPP you will get £100 of free trades to buy or sell any investment (new customers only).
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. Capital at risk.
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Data indicated here is updated regularly
Name Product Minimum deposit Maximum annual fee Price per trade Brand description
Moneyfarm stocks and shares ISA
£1500
0.75%
£0
Hargreaves Lansdown stocks and shares ISA
£100
0.45%
£11.95
Hargreaves Lansdown is the UK's biggest wealth manager. It's got everything you'll need, from beginners to experienced investors. Capital at risk.
Interactive Investor stocks and shares ISA
Any lump sum or £25 a month
£119.88
£7.99
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. Capital at risk.
Saxo Markets stocks and shares ISA
No minimum deposit requirement
0.12%
£8.00
Saxo Markets offers a wide access to a range of stocks, ETFs and funds. Capital at risk.
AJ Bell stocks and shares ISA
£500
0.25%
£9.95
AJ Bell is a good all-rounder for people who to choose between shares, funds, ISAs and pensions. Capital at risk.
Fidelity stocks and shares ISA
£1000 or a regular savings plan from £50
0.35%
£10.00
Fidelity is another good all-rounder, offering a good package at a decent price. Not suited for trading shares. Capital at risk.
Nutmeg stocks and shares ISA
£100
0.75%
£0
Nutmeg offers three types of portfolios. Choose the one that goes with your investment style. Capital at risk.
Legal & General stocks and shares ISA
Legal & General stocks and shares ISA
£100 or £20 a month
0.61%
N/A
Legal & General is a big financial services company which offers insurance, lifetime mortgage, pensions and stocks and shares ISAs. Capital at risk.
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Name Product Minimum investment Choose from Annual fee Brand description
Moneyfarm Pension
£1,500 (initial investment)
7 funds
0.35%-0.75%
Moneyfarm has pensions that are matched against your risk appetite, goals and planned retirement date. Capital at risk.
AJ Bell Pension
£1,000
Over 2,000 funds
0.05-0.25%
AJ Bell has two different pension options, a self managed pension and one that is managed for you. Capital at risk.
PensionBee Pension
No minimum
7 funds
0.5% - 0.95%
Pension Bee is a newbie in the pension market. It helps consolidate your pension plans into one place. Capital at risk.
Hargreaves Lansdown Pension
£100 or £25 a month
2,500 funds
0-0.45%
Hargreaves Lansdown is the UK's biggest wealth manager. It's got three different retirement options. Capital at risk.
Interactive Investor Pension
Any lump sum or £25 a month
Over 3,000 funds
£10/month
interactive investor is a flat-fee platform, which makes it cost effective for larger portfolios. Capital at risk.
Saxo Markets Pension
Saxo Markets Pension
£10
Over 11,000 funds
No annual fee
Saxo Markets gives flexibility and control over your investment strategy. Capital at risk.
Moneybox Pension
£1
3 funds
0.15% - 0.45% charged monthly
Manage your money with an easy-to-use Moneybox app. Capital at risk.
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.

2. Directly invest in renewable energy projects

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 of 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.

Pros
  • Unlike with rooftop solar, if you move home you retain your share.
  • Risk is low
  • Community solar projects benefit the local economy, providing jobs through planning, construction, operation and maintenance.
Cons
  • Defining factors, such as the weather, can impact a solar farm’s efficiency heavily.
  • Solar installations can take useful land out of commission or cause harm to the environment.

3. Purchase renewable energy ETFs

A popular investment strategy is to purchase Exchange Traded Funds (ETFs). While the risk levels are slightly higher, ETFs have higher potential returns. You can check out our ETF guide here.

ETFs give access to a whole load of assets, without having to put all of your money into one or two firms. ETFs work by replicating the performance of major markets or collections of stocks at a lower cost than holding an active fund. If you need to brush up on ETFs, check out our guide.

One of the most well known ETFs in the industry is the iShares Global Clean Energy ETF. While it is still fairly small, the iShares Global Clean Energy ETF offers exposure to 30 of the world’s largest companies involved in clean energy. Another option would be the PowerShares WilderHill Clean Energy Fund (PBW), which tracks the WilderHill Clean Energy index.

Pros
  • ETFs provide instant diversification across the renewables industry as a whole.
  • Investments come at a low price, with relatively low risk.
  • You don’t have to gamble on the success of an individual organisation.
Cons
  • The split of assets is out of your control.
  • You may be limited to larger companies, reducing your exposure to mid/small cap companies.

4. Invest in your own renewable energy project

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 space to host your renewable energy farm. You will also need to obtain interconnection authorisation 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, fluctuating costs of developments and power make these projects high-risk investments.

Pros
  • Returns can be substantial.
  • You have a great deal of control.
  • If you own a commercial building and have the space, a solar farm can reduce energy bills, generate income and improve your organisation’s green credentials.
Cons
  • A large initial investment is required, meaning the risk is higher.
  • Experience and expertise are necessary.
  • A project takes a great deal of dedication, time and effort.

Reasons to invest

  • As worldwide energy consumption rises, and resources such as fossil fuels decline, the demand for sustainable, renewable energy sources is growing rapidly.
  • The world is becoming more environmentally conscious, renewables can be an ethical investment.
  • As the technology behind renewable energy production advances, renewable resources are becoming more efficient, reliable and lower in cost.

Risks to consider

  • Renewable energy is still a specialist area, meaning the risks are higher.
  • When newer or smaller companies run into trouble their value can plummet dramatically. This makes renewables a volatile investment.
  • While many governments are encouraging renewable energy, an unpredictable change in public policy has potential to negatively impact investors.

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