Banking on the sun
When considering new asset classes for investment, investors typically seek low-risk, competitive returns, and returns that are uncorrelated with the stock market. A well-balanced investment portfolio is diversified among different asset classes that represent the appropriate risk/return profile for different investors. Solar investments can potentially lower overall portfolio risk by providing long-term fixed income with lower volatility.
In addition to being an emerging asset class, solar is also an impact investment that achieves social and environmental good while earning a competitive return. In fact, a report by J.P. Morgan and the Rockefeller Foundation highlights the momentum of impact investing and the potential for “multiple bottom-line returns and social good...with financial returns, ranging from concessionary to market-beating.”
Solar is also an investment in infrastructure. Infrastructure appeals to investors due to its predictable and steady cash flows, low volatility, long-term assets that provide essential services, and minimal correlation with other asset classes (if the stock market tanks, infrastructure is less likely to go down with it).
Solar is positioned to become an exciting new asset class for all of the reasons above. Goldman Sachs called renewable energy “one of the biggest profit opportunities since its economists got excited about emerging markets in 2001.” Renewable energy investments are also gaining the attention of...Warren Buffett and powerful national economies like Germany, China and India.
When you sit down and consider your different options for personal investment, you are rarely presented with such an inspiring balance of people, planet and profit. Solar as an asset class embodies all three of these pillars and ensures that anyone who supports solar can own solar.
This article was first published on Mosaic's blog.
Will Quinn is an environmental consultant with ICF International. He holds a B.S. in Environmental Policy Analysis and Planning from UC Davis and is an Editor for the solar financing marketplace Mosaic. He is passionate about practical solutions to environmental problems and believes people take action when personal benefits outweigh the
barriers. The opinions expressed in this blog are his own and not necessarily those of ICF International or Mosaic.
Mosaic is an online marketplace that connects investors to high-quality solar projects. Learn more at https://joinmosaic.com.