Staying Ahead of the Curve - Renewable Energy Future?

Many of the finance / investing magnates got their big break by being ahead of the curve or simply being in the right place at the right time. If you were a trader at a bank in the mid 70s, you likely made a boatload of money in the 80s when that business took off. Similar situation to when Institutional Private Equity took off in the mid to late 1980s, Tech in the early 2000s, you get it. The guys that were involved in those fields before the explosive growth typically made tons of money.

So my question is, why aren't more finance students today dying to get into renewable energy investing? If you're in your 20s now, surely there will be an explosive growth period at some point in your career. And you'll already have the requisite experience to capitalize on this growth. I'm not talking about growth in return levels - I mean the number of renewable projects should increase and capital that wants exposure to these projects should increase implying AUM growth / Fee Growth for the PE Funds and Banks. Here is a Forbes article discussing renewable energy growth by 2040

I ask this because I work in real estate, and at times I feel like I missed the boat. There were record levels of institutional capital raised for REPE funds in 2018 meaning right now is a great time to be involved in the space, but it's the senior guys who are raking in all the fees. If you want to truly capitalize on these highs you need to have been in the business 10 or 20 years ago - before it was mainstream.

So am I crazy? Is getting into the renewable energy world a good idea now? Did that explosive growth that I'm talking about already happen? Would love to people who work in the renewable energy world or are knowledgeable on the subject

Comments (11)

  • Associate 2 in PE - Other
Dec 28, 2019 - 1:36am
JSmithRE2010:

Bump, no renewable energy guys?

Renewables do not really have the proper risk/return profiles in the US right now.

In Europe/Asia/Australia there is a ton more activity. Get the experience abroad and come back if you are American.

  • Prospect in AM - Other
Dec 28, 2019 - 11:14am

Interested in this as well, most of the renewables finance work seems to be project financing for renewable energy projects. Can anyone provide any commentary on this type of renewable energy project financing and how it is viewed? Exit opportunities?

Most Helpful
Dec 29, 2019 - 12:51am

I always like to preface my responses by saying that I do not have complete information, but this is just my perspective.

The biggest problem with energy is not in the capture, but in the storage. Since wind and solar are intermittent (not consistent), and there is no effective means for storage and use at a later time, this sometimes results in negative energy prices since too much energy will cause energy grids to fail. Since the energy density density of renewables is fixed and the energy efficiency is not likely to make marked improvement, the issue really only lays with the scale of solar/power farms. Scaling isn't the issue, storage is. Many of the VC's and CVC's we syndicated with at my old firm are investing heavily in power storage.

I mention CVC's since many of their executive leadership teams are heavily worried about the ongoing shareholder v. stakeholder PR discussion. They cannot be seen as gas-guzzling fat-pigs in three-piece suits, but rather need to be seen as eco-conscious. Since fracking and new oil surveying techniques are finding large areas of untapped oil; logical people, including C-suite executives, understand FF's are not going away. This is why many CVC's and F500 companies are investing into carbon-capture technology, biomass fuels, lithium mining, automation (cars & trucking, buildings, and industrial processes), mpg efficiency, nuclear technology, and etc. Processes complementary to current energy sources and available technologies, rather than revolutionary. As people who are conscious about the environment understand that first, second, and third world countries will continue to use FF's into the foreseeable future. They understand that we need a long-term transition plan to get off fossil fuels without decimating the global economy. Not only for environmental reasons, but they also understand that the reserve to production ratio for FF's will ultimately reach zero. They are biding their time by mitigating the effects of current energy usage until the storage issue, and maybe the efficiency issue, are able to be largely improved for renewables. The goal is and should be focused on clean technology, not just renewables.

Basically, people are investing in a renewable energy future, just not in the way you think. It's not about massive solar/wind fields or flashy new panels. It is all about the complementary technologies to our current energy sources and production processes. This also means there is going to be an increase in nuclear power. China, India, Russia, and the UAE are all investing heavily in nuclear power. Whenever someone says to me that they believe in a renewable energy future, starkly reducing carbon emissions, but also want to get rid of nuclear power, that always tells me one thing: He/she has no idea what they are talking about. While companies invest in a green future, they understand radical change is not technologically or economically feasible. We are in a transition period, and investment in energy-focused technology is relevant to this transition, to 2040, to 2060, and eventually a majority clean-energy based world.

TLDR: Renewable energy investment is everywhere; main focus is decarbonization rather than renewables

Jul 10, 2021 - 1:37pm

I own a renewable energy company, spend my days consulting on next gen technology in the space and work with the largest battery testing facility in the US.  Your thesis is correct.  Just like mining degrees and oil and gas degrees, some university will make their mark in getting a renewables degree (finance, etc).   The market is strong and has another 20 years or so on this cycle.

Namaste.

D.O.U.G.

  • Intern in IB-M&A
Jul 10, 2021 - 3:27pm

Renewables are a fucking meme. Nuclear energy is perfectly efficient and clean.

  • Prospect in HF - Other
Jul 11, 2021 - 10:34pm

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