By Ed King
Investment opportunities in energy efficiency remain strong despite the current financial crisis, and could offer attractive returns over the coming decade, according to fund managers Ingenious.
With the current Eurozone crisis showing no signs of abating, and many experts predicting a global slide into recession, the short-term outlook appears to be bleak.
But certain sectors within the cleantech market have the potential to ride out the storm, according to Ingenious Investment Director James Axtell.
“It’s clear to us that clean energy has the characteristics that media had 10 years ago. Finance are getting the picture and so are the government with regulations and incentives – the carrot and stick,” he told RTCC.
“We’re using our experience in crafting innovative investment opportunities – the key is not to take technical or developmental risks.”
Ingenious have recently launched two UK funds, one focussing on mature solar PV installations benefitting from feed-in-tariffs, the other aimed at the growing energy efficiency market.
Estimated to be worth £4.3 billion in 2010 – the UK energy efficiency market has been targeted by the current government through policies such as the Green Deal, which aims to help reduce emissions from the home by 29% by 2022 (on 2008 levels).
While the UK government have recently slashed solar incentives, with Minister Greg Barker effectively admitting they were too successful, there has been increased support for energy efficiency measures, which Axtell believes came out of a recent review ‘smelling of roses’.
And Camco Director Dave Worthington, whose company oversees global cleantech development initiatives, says he is encouraged by the way government regulation and private enterprise appear to be working together across the world.
“We are seeing private sector and multi-national blue-chip companies starting to drive the sector as much as government legislation,” he told RTCC.
“It’s important for [companies] in terms of energy efficiency, cost management and delivering value for money both for customers and shareholders. Government actions are still important – but these are mixed on a regional basis.”
Examples of top-down leadership include India’s recent introduction of an Emissions Trading scheme and Malaysia’s decision to cut emissions by 40% by 2020, which Worthington describes as ‘exciting’ developments.
Still more potential exists in Russia – according to the 2011 IEA World Energy Outlook – published this week.
It reports efficiency measures could have saved Russia 30% of its energy consumption in 2008 and praises both President Medvedev’s decision to target energy efficiency as a ‘strategic priority’.
Away from the contested future of the Kyoto Protocol, negotiations at COP17 in Durban are expected to focus on the development of two key instruments that could see finance for energy efficiency measures easier to access – the Technology Mechanism and Green Climate Fund.
Yet for once it appears not all hopes rest on securing a global deal. Camco’s Worthington says business across the world is already buying into a low-carbon economy.
“We don’t have massive expectations for the COP, we’re more excited about what is happening in blue chip companies and regional markets: it’s becoming an almost irreversible trend”.