Investors to record double-digit returns by accelerating the energy transition

An increase in the deployment of distributed energy resources, digital transformation technologies and electric vehicles will drive the market for electricity products to reach $6 trillion by 2030, according to a new whitepaper published by Navigant Research.

The whitepaper states investors are likely to record double-digits return on investment figures from investing in emerging technologies.

Other key findings included in the whitepaper, include:

  • The Paris Agreement, climate risk mitigation and technology innovation call for a shift in portfolio strategy from asset managers and private investors.
  • Due to a growing need for capital to fund transformative energy companies and projects, investors face an unprecedented opportunity to reduce exposure to outdated systems.
  • The rapid decline of renewable energy and energy storage costs has shifted customer preferences, and energy markets are becoming more sophisticated and digital in nature.
  • Growing awareness of the need for climate change and consumer demand for sustainable alternatives are providing opportunities for massive returns on investment for green energy investors.
  • To avoid losses on outdated assets, investors need to shift their outlook away from conventional energy sources such combined cycle gas turbines.
  • Potential legislative initiatives on green energy could accelerate opportunities and reduce the cost of capital, however, the opportunities are reliable even without increased government subsidies or green-friendly regulation.

Three major trends that will influence valuation and the market growth of investees active in energy transformation include:

  • Growth and diversification of the renewable industry
  • Expansion, modernisation, and digitisation of energy grids
  • Network orchestration and platforms

Jan Vrins, leader of the global energy practise at Navigant Research, said: “This is a call to action for every investment player — from pension fund managers and venture capital principals to insurance underwriters and asset managers.

“Investors remain focused on the downside of risk, and not enough on the upside of opportunity.”

Jan-Willem Bode, a director with Navigant Research, added: “A key challenge for investors is the sheer number of opportunities within the Energy Cloud given the diverse array of business models and monetization strategies.

“Investors need to understand the changing energy landscape and which assets will remain profitable. Banks, venture capitalists, public pensions, and private equity all have a role to play based on their risk profiles – and all could deliver superior returns to their shareholders under the right strategy.”

The whitepaper is available for download here…