There are many reasons why the renewable energy sector is proliferating. One of them is government policies from all over the world, which have favored the industry. There is also the disturbing issue of climate change which needed to be solved like yesterday, and renewable energy helps deal with the menace. As much as there is a long way to go to reach zero emissions, the progress is also worth appreciation. As for the investors, it also means that there is a lot of new opportunities.
Going by what the people who have already ventured into this industry have achieved so far, it is a significant sector to invest in, no doubt. The fact that not even the coronavirus pandemic shook it despite bringing other businesses to their knees also speaks volumes. However, that doesn’t mean it is a walk in the park. From business models to regulations, there is a lot at play. Four factors have even more impact than the affair, and here is a discussion of the same.
One of them is the power purchase agreements that have become the order of the day. Government incentives are no longer readily available to renewable energy asset investors. That’s where private companies come in to offer the much-needed finances, which are, in most cases, power purchase agreements. The grants are to be paid within a long time, which encourages investors to consider them. The loan is based on the predicted value of the energy the borrower will generate in the future. It is mainly between renewable energy firms and utility companies.
Another factor is that one has a rough idea of future power pricing and its trends. After all, experts are doing their best to come up with the most realistic forecasts. They are good, no doubt. There have been fluctuating energy fuels in the past most of the time due to the changing economy. Some have gone down due to too much supply, whereas, in other instances, it has been a result of low demand. The forecasts will ensure that manufacturers only produce the energy that the customers will use.
When the forecast fails, which might be rare, energy storage will save the day. It will also be crucial since weather, including wind and solar, used in energy production are beyond people’s control. Otherwise, there would be many cases of people ending up wasting the produced energy by the end of the day. Energy efficiency will also be harnessed to ensure that energy is not lost during generation and transmission. It will also not be lost when it comes to distributing and using it.