Can capitalism respond effectively to climate change? We believe so. The transformation of the world’s power systems is an ongoing process, and financial providers such as reconcept are part of the change.
According to Bloomberg New Energy Finance, zero-emission energy sources will make up 60% of the installed capacity by 2040. Wind and solar will make up 64% of the 8.6TW of new power generating capacity added worldwide over the next 25 years, and account for almost 60% of the $11.4 trillion invested.
At the same time wind and solar keep getting cheaper. While already competitive in a number of countries even without national subsidy systems, the cost of onshore wind is expected to drop 41% by 2040, driven primarily by improving capacity factors – which will reach 33% on average in 2030 and 41% in 2040. The solar experience curve also marches on, but declining technology costs are increasingly accompanied by a reduction in the cost of development, finance and operation, pushing new utility-scale solar down 60% from a $74-$220/MWh range today, to a central estimate of around $40/MWh worldwide in 2040.
In summary, investments in renewable energies open up a promising market for smart investors. Most notably because they are a genuinely assets-based investment opportunity.