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Why Are Investors Turning Significantly Towards Solar Energy?

By Author: Zena Winn
Total Articles: 7

It is frequently heard about the anxiety of going green and developing an alternative source of energy not only to conserve it but also to fight against Global Warming. Galloping world prices have also been responsible for increasing the attention on finding renewable sources of energy.
Petrol prices have increased remarkably in the past few years and are expected to rise further and non-economical renewable resources are expected to become economical. Yet many of which are still underdeveloped due to its exorbitant prices.
Solar energy is one of the most extrusive alternative sources of energy. Numerous countries across the globe are toying with the idea of its development. Unfortunately, the share of solar energy in an overall sector is merely 0.1%. According to a survey, solar power has recorded a growth of up to 22% in the tenure of last 10 years, while 35% of its growth has been recorded in last 5 years alone.
With spectacular growth of this, there have been rising expectations that are replicating tremendous high valuations in the investment market. Investing in solar energy is one of the hottest trends these days as it is prospering and one of the best performing industries today. According to a solar research group:
• Installation of solar photovoltaic rose approximately around 62% in previous years.
• The demand for solar has grown up to 30% annually for the last 15 years.
• Prices for solar has fallen annually 4% over the last 15 years.
Outspread and awareness about solar energy led many people in adapting solar resources. More buyers means more demand which in return increases the profit of solar energy corporations. Form an investor’s point of view, investing in such energy guarantees higher returns and following other factors:
Production Prices: Initially, the solar energy production has never been a popular choice due to its exorbitant cost as compared to of oil. According to a certain research report on green business investment, this era is the dawn of solar power. The report states the breakeven point with oil production is around 50 dollars a barrel level, which means in today's marketplace solar is now becoming a really viable option. Government in many countries have been slow in subsidizations of solar energy but now a number of market are starting to grow dramatically.
Feed-In Law: Before solar started becoming more ambitious in the market, number of developed nations took the lead and provided subsidies to the solar industry. 3 global market leaders US, Japan and precisely Germany introduces a law which stated that excess renewable energy that is produced must be brought back by the utilities at a set rate per Kilowatt. This interested and attracted investors around the globe greatly. Solar energy gets a better rate of 47-57c/Kilowatt as compared to any other renewable sources. As a result, the holder of the solar energy generating system can generate income stream whilst also helping the environment. Influenced by such benefits, similar laws were passed in several developed and underdeveloped countries.
High Yielding: High yield returns in this industry is one of the main reasons why investors have started looking into green business investment. It is difficult to predict from each installation how much income investors can generate. Banks who lend money to buyers are usually looking for a minimum 8-10% yield before approval. Depending on the amount of sunlight, conventionally projected gross yields in the region of 10-15% are easily achievable.
Immediate Income: One of the biggest advantage in investing solar energy is that investors are able to generate income pretty much straight away. Return on investment in green business originates very quickly which helps in reassuring investors about their decision.
High Level of Financing: As investments in solar businesses are quite secure, banks are prepared in providing a high level of finances which has boosted lot of investors across the globe.
Security: In this era of investment, investors are after the security of their funds as much as growth rates. Green business investments are an extremely secure way to invest your money. In a country like Germany, solar investments come with a 20-year government contract to buy back the excess produced. Schemes along similar lines are now being introduced in many countries.
With a lack of equity in the marketplace and subsequent rise in commodity prices, the financial markets have become an even more volatile place to invest money. There is no doubt that huge profits can be made in commodity or any other sector, but the risks are far higher. Established investors will be hearing a lot more about solar energy as an investment vehicle in the coming years. Investing in solar businesses is becoming quite economical and has an attractive income stream. The backup of banking institution and support from government is making it a secured investment. Most importantly this also gives investors peace of mind for contributing towards the global need for energy independence from oil and a long-term security.
For more refer: http://ziglerfinancial.com/

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