Why Traders Should Consider Investing in Renewable Energy

In recent years, the global shift towards more renewable sources of energy has gathered pace. Climate change is a very real problem, and steps must be taken in order to ensure that the damage already done to our planet is not irreversible.

Arguably the most significant change is the move away from the use of carbon-based fossil fuels. Their environmental impact is enormous, with the emissions prompting more extreme weather conditions, which in turn has a knock-on effect on the health of our natural habitats.

Some of these fossil fuels are becoming increasingly expensive, too. The Russian invasion of Ukraine has prompted a spike in oil prices, which is being felt by the average consumer in the form of rising energy bills.

All of which means those with an interest in the markets and in CFD trading may see the renewable energy sector as one of great opportunity – both now and in the future. So, just how significant is the market size? How is it predicted to develop over the next few years? And which types of energy might traders be looking towards? Read on to find out more.

What is the market size of the renewable energy sector?

It’s estimated that in 2020 the worldwide renewable energy market was worth $613 billion. However, it’s forecast that between 2021 and 2027 there will be a compound annual growth rate (CAGR) of 91%, which will see that figure almost double, to $1.1 trillion.

As for the UK, between now and 2027 the CAGR is expected to exceed 10%, thanks in part to rising demand for renewable energy as well as support at governmental level. The coronavirus pandemic meant progress stalled in the first half of 2020, but signs are encouraging that the sector has rebounded and looks set to continue to grow.

Which types of energy are attractive for traders?

Historically, the likes of coal, oil and natural gas have been popular options for traders all over the world. The planet’s sustained demand for power means they have long been seen as reliable commodities to invest in. Then there are the businesses associated with those materials, such as processing plants, refineries and transportation companies.

But it seems we are entering a new era – one where green energy sources are being considered as viable long-term alternatives. That means those that are involved in harnessing and distributing wind, solar, hydroelectric and geothermal energy are becoming increasingly attractive

propositions.

What are some examples of renewable energy stocks?

The likes of NextEra Energy, for example, is the world’s largest generator of wind and solar energy. It’s an organisation which has delivered growing dividends for its shareholders over an extended period and is set to continue to invest in renewable sources.

Then there’s Brookfield Renewable, which has hundreds of hydroelectric plants, wind farms and solar facilities. The company has steadily expanded down the years and that growth is expected to continue, by as much as 20% between now and 2025.

These massive corporations are among those leading the way in the renewable energy sector, helping to create more sustainable solutions for our planet and piquing the interest of traders who might be on the lookout for potential new opportunities.