As governments turn their eyes to a green recovery, 80% of institutional investors are planning to increase their investment into renewable energy.
In a new report entitled Renewables and the recovery: accelerating investment in a post-pandemic world, Octopus Renewables argued that the COVID-19 pandemic could act as a catalyst for green growth provided governments seize the opportunity to support technologies like renewables going forwards.
“There is now a huge opportunity for governments everywhere to implement measures that not only help economies recover post the pandemic, but create an environment that encourages further, and greater, investment into renewables at the same time,” Matt Setchell, co-head of Octopus Renewables said. “It is crucial they do.”
The report points to the UK’s Build Back Greener plan committing the country to 40GW of wind by 2030, as well as the EU’s Next Generation EU plan, which commits to invest 30% of its funds in sustainable technologies, as key for encouraging institutional investment.
The report suggests that previously institutional investors have been put off making, or increasing, allocations to renewable energy assets when there is not enough government coordination, a lack of liquidity and energy price uncertainty.
Compared to last year’s report from Octopus Renewables – which focused on divestment from oil and gas – the concern over the lack of liquidity of assets has doubled among the investors surveyed as their money is locked up for a set amount of time with assets like wind and solar. With doubt caused by the pandemic, this is even more challenging for investors.
Additionally, more joined-up international policies to fight climate change will be needed to spur on investment in the future. Without this, there is concern that the pace of the energy transition could be held back.
“COVID-19 can be the catalyst to a greener, more sustainable future,” explains Alex Brierley, co-head of Octopus Renewables. “But it needs to be a collaborative and organised effort from governments, institutional investors, specialist energy fund managers, banks and energy companies.”
By removing these barriers, $12 trillion of investment in the renewable energy sector could be unlocked over the next decade, enabling the world to meet the Paris Agreement’s goals.