Investing in renewables, a green opportunity for savers

Just this October, the European Council definitively approved a directive on renewable energy sources that establishes that by 2030, the share of renewables in total energy consumption in the European Union should be 42.5%. This could be increased to 45% in some countries, i.e., almost half of energy consumption.

Beyond the legal issues and policies to be implemented by EU countries, this regulation underpins a key trend of recent years: the emergence and consolidation of the renewable energy sector, which is reflected in the growing interest of savers in investing in renewables to:

• Obtain passive income by betting on a sector that is on the rise and is set to become capital in the coming years.
• Contribute to forging a more sustainable production model.
• Thus, investing in renewables can be a double opportunity for savers and have a significant social and economic impact because:
• Market-sector companies need access to financing channels to invest and bet on innovation in an industry in constant transformation.
• Industries, businesses, and neighborhood communities must reform to improve energy efficiency and consume more renewable energy.
• Not only public administrations and large companies can contribute to the sustainability of our energy consumption. Citizens also have a role to play in this process, not only in terms of consumption but also in terms of investment.

We will now look closer at why investing in renewables over the next few years can be a wise decision that will bring economic and social benefits.

Horizon 2030: The European directive that marks the medium-term future

The directive approved within the European Union, which must now be transposed into the legal system of each state, amends a previous directive on the promotion of energy from renewable sources to extend the consumption of renewables to all sectors.

The new text not only sets the generic target of 42.5% renewable energy consumption as a percentage of total consumption but also focuses on several key areas:

• Transport
• Industry
• Buildings, district heating and cooling

We should also remember that this directive aligns with the REPowerEU plan launched in 2022 to reduce fossil energy consumption and not depend on Russian fuels in the face of the Ukrainian War. The objectives of this plan are:

Save energy
Diversify supply
Produce clean energy

To comply with the directive and the plan, it is essential to invest in renewables to help the sector consolidate, improve the energy efficiency of companies and households and reduce the consumption of fossil fuels.

For this reason, the directive includes measures to speed up the granting of permits for renewable energy installations and their updating, facilitating the work of companies in the sector and the access of businesses and families to these energies.

What does this mean from an investment point of view? Investing in renewables becomes more attractive for investors, and companies need mechanisms to finance their growth.

Companies in the sector need liquidity to grow

All companies need access to finance at some point, and most need it regularly. Why? Obtaining liquidity is essential not only to meet expenses or unforeseen events but also to invest in machinery and technology, to enter new markets, and, in short, to grow and consolidate in a complex market.

All this is even more valid regarding the renewable energy sector. Why? Technology plays a significant role in this sector, and the acquisition of devices and materials is constant and substantial.

Take, for example, a company that installs solar panels in homes and businesses. If its demand increases, which is foreseeable given the current regulatory framework and socio-economic trends, it will need liquidity to hire personnel and purchase materials to cope successfully. Hence, you must finance yourself to have more customers and continue to grow.

In this way, investing in renewables can not only be an opportunity for savers, but it is also of capital importance for companies in the sector, as it provides them with more sources of financing.

Until a few years ago, companies only had the financing products of traditional banking institutions at their disposal. They can also turn to alternative financing mechanisms such as crowdfactoring or crowdequity.

Investing in renewables and earning interest

Green bonds, investment funds specialized in financing sustainable companies, issuance of green notes on the Alternative Fixed Income Market (MARF)… There are currently various channels for companies to finance themselves and for individuals to invest in renewables. With what purpose? To get interest for their money.

What happens with these investment channels? They are used to finance large companies and not SMEs like the one we are using in our example. In addition, the minimum capital to invest is usually high, which is a barrier for small savers.

On the other hand, it is possible to invest in renewables by supporting small and medium-sized companies through alternative investment mechanisms. They also facilitate access to investment for all kinds of people, as the minimum capital requirement is much lower.

What mechanisms are we referring to? Crowdlending, crowdequity or crowdfactoring, as in the case of Inversa Invoice Market, is a platform where you can invest in invoices of companies in the real economy from as little as 20 euros.

Investing in renewables without leaving home

One of the differentiating factors of crowdfactoring compared to other investment products is that investors know at all times in which business projects they are investing.

Companies in the real economy, including companies in the renewable energy sector, upload their issued and uncollected invoices and promissory notes to the Inversa platform.

Investors can find all the information about the assigned businesses, the drawn companies, i.e., those that must pay the invoices, and the transaction details: interest, the credit rating of the debtor company, and term…

In addition, thanks to Big Data, Inversa performs a repayment analysis, studying the behavior of the assignor and drawee companies to study how they behave and help investors decide which businesses to invest in.

In this way, and without leaving home, a person can invest in renewables by financing thousands of miles away company. Who said you can't invest in a wind farm in Denmark?

If the spread of renewable energy is a common cause across the EU, investing in renewables in different parts of Europe must also be possible. Inversa transforms that possibility into reality, making it easier for small investors to design their investment strategies, invest in renewables and make all the decisions about their money.

Profitability + Responsibility. Why do millions of people want to invest in renewables?

In this article, we have explained why investing in renewables is critical and a massive opportunity for savers who want to earn passive income from their savings. But we should pay attention to one factor that incentivizes the decision to invest in renewables: social commitment.

The extension of ESG criteria for socially responsible investments and the consolidation of products such as green bonds show that responsibility and commitment have become factors when designing investment strategies.

Many people want to make their savings profitable and use their money to support business projects they believe in, contribute to transforming the productive fabric by making it more sustainable or help companies that create jobs, wealth and innovation to consolidate.

Investing in renewables is, therefore, a decision in line with this trend since the aim is not only to earn interest but also because many investors wish to contribute to the success of innovative projects in this field.

The passing of legislation firmly committed to renewable energies, technological and scientific advances, for example, linked to green hydrogen or offshore wind energy, and social mobilization to combat the climate emergency will encourage thousands of people to invest in renewables in the coming years.

A crowdfactoring platform such as Inversa can become an exciting investment channel for savers and financing companies in the sector.

People are investing in people… and in a more sustainable world.