Are you looking to get more direct investment exposure into clean energy? Hydrogen, solar, battery storage? Buying an index fund might not give you what you’re looking for. You don’t have to be a stock picking guru or a professional money manager to invest strategically in clean energy.
Investment in clean energy is poised to grow more than ever as the utility, transportation and energy industries continue their transformation. Global investments totaled close to $300 billion last year. That number will grow even further with the pace of decarbonization and electrification accelerating.
I’ve mentioned several companies in previous posts that I feel will benefit tremendously from this growth. However, you might not feel comfortable with buying single stocks. Or perhaps you would like to invest in early stage companies but aren’t an accredited investor.
Exchange Traded Funds (ETFs) have really expanded into all types of sectors, industries, themes and even investment strategies. If you’re gun shy about trying to value and pick stocks, then there’s probably a ETF that can cater to a certain focus of yours. You can diversify across a portfolio of stocks. In addition, these ETFs can also provide you with exposure to foreign companies. Investing in foreign companies can sometimes be difficult to gain access to depending on where you live.
Maybe you’re only interested in solar companies. There’s the Invesco Solar ETF (NYSE ARCA: TAN) with companies that are a part of the solar supply chain, from modules to inverters. Holdings include companies like Enphase Energy, First Solar and Sunrun.
There’s also the iShares Global Clean Energy ETF (NASDAQ: ICLN) that has more diversified holdings, across the spectrum of clean energy, including hydrogen, solar and wind. Holdings include companies like Plug Power (NASDAQ: PLUG) and Danish wind giants, Vestas and Orsted.
Early stage investments have long been hard for the average investor to participate in, especially if you’re not an accredited investor. Innovation in the fintech space and new SEC rules have allowed platforms like Microventures and SeedInvest to provide crowdfunding opportunities for early stage companies. In my post “Five Future Energy Technologies to Watch” I highlighted a company, Oscilla Power, a wave energy company that just announced a new funding round on Microventures.
There’s been about $10 billion in venture funding for energy storage since 2008. Energy storage has been a hot area to invest in recently. Over the last few years, the number of funding rounds has decreased. However, the total amount funded continues to grow.
These platforms will sometimes have opportunities in the clean energy sector. Typically minimum investments range between $1,000 to $10,000. Sometimes they can be as low as $100.
This post isn’t meant to provide any financial advice on any particular investment or strategy. The clean energy sector can be volatile and can experience significant drawdowns, but the long-term rewards can be outsized. This is meant to show some alternative ways of how to invest in clean energy.