Talking Point  

Attraction to renewables grow as energy prices climb

Attraction to renewables grow as energy prices climb
(Credit: PA Wire/PA Images via Fotoware)

High energy costs is causing more investors to express a strong interest in renewable energy, according to the latest FTAdviser poll.

The poll which asked advisers: how much more interested are your clients in investing in renewables since the cost of energy started rising, found that more than half (56 per cent) of advisers said their clients were very interested.

About a third said clients were quite interested, leaving about 12 per cent who said their clients were not interested.

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Nigel Green, founder and the chief executive of deVere Group says as rising energy costs, which are fuelling the cost of living crisis, intensify, impacting the budgets of households and businesses, minds have been focused on seeking alternatives. 

"As such, interest in investment into renewables is becoming front and centre in clients’ minds," Green added.

"The global energy crisis is only set to deepen. It’s not going away any time soon. It was started by the world economy rebounding from the pandemic faster than was anticipated, bringing to the fore supply and infrastructure issues."

Green energy push

The invasion of Ukraine by Russia has also been a factor in the rush to transition to green energy.

A recent survey by HANetf, a white-label ETF and ETC platform, found that 92 per cent of European wealth managers expected to increase their exposure to clean energy over the next 12 months.

Given the ongoing war in Ukraine, and the subsequent need to reduce reliance on Russian fossil fuels, investors are looking to invest in alternative sources of energy, the report said.

This is further supported by 88 per cent of the respondents who said that they had recently invested in nuclear energy or uranium-focused funds.

While nuclear energy is not renewable, it is increasingly viewed as clean given its relatively low carbon emissions.

More generally, 80 per cent of the wealth managers said that they planned to increase their exposure to thematic funds over the next 12 months, with 74 per cent reporting increased interest in thematic investing from their clients.

According to Green, there is another factor exacerbating the energy crisis. Demand is surging due to a 1 per cent rise per year in global population growth, plus the increase in wealth and consumption of the growing global middle class.

Green added: "The energy crisis, which is driving up prices, should serve as a catalyst for the energy transition. 

"Clients, keen to get ahead of the curve as well as receive decent returns, are increasingly seeking out the opportunities.

"They’re now moving at pace to have an early advantage, foreseeing the undeniable value, necessity and rewards of investing in greener energy."

Commenting at the time of the former chancellor Kwasi Kwarteng's mini-Budget, Alex O’Cinneide, chief executive of Gore Street Capital, investment manager of Gore Street Energy Storage Fund, said with an energy mix comprising a more significant proportion of renewable energy, there was more to be more consistent pricing and greater energy security.