Investment in alternative energy was already on the rise, but with Japan’s recent nuclear crisis, more bets are expected to be placed on alternative energy schemes. Pictet Clean Energy’s co-manager Luciano Diana and Guinness Alternative Energy Fund’s co-manager Edward Guinness spoke to Hemscott on the next big thing in the energy sector.
Although Pictet’s portfolio allocates 17% of its assets to natural gas, Diana expects wind energy to be the next recipient of investments. He said that onshore wind producers will greatly benefit. It is understandable that onshore wind producers would be the biggest group within the wind energy sector considering that offshore wind is still relatively new and limited to certain areas. Diana pointed to China’s 2020 wind energy target as a catalyst for the industry.
Diana sees solar energy coming behind wind energy, but Guinness feels that solar energy stands to gain the most citing that it is “much less objectionable” visually. He did explain that cost is the main deterrent, but that the industry is seeing a dramatic reduction in production costs with places like the US implementing some “decent solar incentives.”
Both financiers agree that emerging markets will play a major role in the alternative energy sector, including BRICS countries (Brazil, Russia, India, China, and South Africa). Guinness currently invests about 70% of its portfolio in green energy manufacturing rather than utility providers. However, he notes that this is all subject to change in 10 years time – if not sooner – as the overall alternative energy sector could experience a major uptick in demand. He said that this could create an attractive investment opportunity in utility providers.
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