Renewable energy will be the fastest growing power source through 2040, according to the U.S. Energy Information Administration. Renewable energy investments have been on the rise in the past 10 years, with $9 billion invested in first quarter 2004 to $50 billion invested in first quarter 2015.
According to a report from CBRE, investors are beginning to include wind and solar assets as part of core infrastructure assets. With the cost of producing electricity from renewables becoming increasingly lower, they are becoming nearly equal in cost to traditional fossil fuels. Additionally, these investments have some of the key attributes of core infrastructure investments: they are long-lived real assets, they generate predictable cash flows and they possess high barriers to entry.
Globally, solar photovoltaic capacity has grown at a rapid rate, increasing from 3.7 gigawatts in 2004 to 139 gigawatts in 2013. Wind power capacity also has increased globally from 48 gigawatts in 2004 to 318 gigawatts in 2013. By early 2014, at least 144 countries had renewable energy targets, according to CBRE, and in 2013 almost one-third of electricity in Denmark was produced from wind.
The renewable revolution is happening here in the United States as well. For example, the city of Burlington in Vermont — home to more than 40,000 people and the state’s largest city — is 100 percent powered from renewable energy. The city runs off a mix of biomass, wind, solar, hydropower and natural gas, the majority of which is produced locally, statewide or within the New England states. Despite the claim that renewables can be quite expensive, Burlington has found rather the opposite to be true.
“We haven’t raised rates since 2009 in this city, and we don’t anticipate raising them anytime soon,” Neale Lunderville, general manager for Burlington Electric Department, told TriplePundit.
CBRE predicts that global renewable power — excluding hydro — will increase from 11 percent of generation in 2013 to 25 percent in 2030. This is largely in part to governments around the world pushing “green” policies, coupled with the lowering cost of producing electricity through renewable sources. All trends point to renewable energy being the primary way we will power the world in the future.