Renewables

Solar photovoltaic (PV) and wind power are currently the fastest-growing renewable energy sources globally. Solar capacity has been growing at over 20% annually, driven by dramatic cost reductions. Offshore wind is also experiencing rapid growth, particularly in Europe and Asia. Battery storage technology is emerging as a critical complement to these variable renewable sources, enabling grid stability and energy independence.

Solar energy works by converting sunlight into electricity using photovoltaic (PV) cells made of semiconductor materials, typically silicon. When sunlight hits these cells, it excites electrons and creates an electric current. This direct current (DC) is then converted to alternating current (AC) by an inverter for use in homes and businesses. Concentrated solar power (CSP) is another method that uses mirrors to focus sunlight to heat a fluid and generate steam for electricity.

The energy transition refers to the global shift from fossil fuel-based energy systems to renewable and low-carbon energy sources. This transformation includes transitioning electricity generation to solar, wind, and other renewables; electrifying transportation and heating; improving energy efficiency; and developing new technologies like hydrogen and carbon capture. The transition is driven by climate concerns, policy incentives, and the declining costs of renewable technologies.

China leads in total renewable energy capacity, particularly in solar and wind power. European countries like Germany, Denmark, and Spain have high percentages of renewable electricity. The United States, India, and Brazil are also major renewable energy markets. Nordic countries like Norway and Iceland generate nearly all their electricity from renewable sources, primarily hydropower and geothermal energy.

ESG (Environmental, Social, and Governance) investing in the energy sector involves evaluating companies based on their environmental impact, social responsibility, and corporate governance practices. This includes assessing carbon emissions, renewable energy commitments, worker safety, community relations, and board diversity. ESG criteria increasingly influence capital allocation, with many investors favoring companies with strong sustainability practices and clean energy portfolios.