Oil and gas firms, big industrial players and pension funds will increase investment in renewable energy thanks to falling costs and a shorter payback time than for nuclear, Swiss private bank Sarasin said on Monday.
“The sector will become the target of progressive oil and gas companies and utilities and of blue chip firms in conventional industries,” the bank’s sustainability research analyst, Matthias Fawer, said at a press briefing in Frankfurt.
“Insurers such as Allianz and Munich Re are also looking to new investment possibilities like wind parks and solar plants in order to boost their profits,” he added.
Renewable energies over the last 10 years were the fastest growing energy industry segments, the bank’s research showed.
Investment worldwide in the sector rose 25 percent year-on-year in 2010 alone to $200 billion, it said.
Sarasin administers renewable funds worth 1 billion euros for private and institutional investors out of 100 billion euros ($138.7 billion) in total assets it manages in funds.
Investors are tapping into production cost savings as unit costs of wind and solar installations fall rapidly, while nuclear power plants become more costly due to safety requirements, Fawer said.
Overcapacity in solar module and wind turbine production facilities is likely to result in a shake-out, however. This would bring a better supply-demand balance, enabling the fittest firms to become leaders in innovation and niche development.
Fawer said that pension funds were looking increasingly favorably on putting their money into energy technology that is free of carbon dioxide emissions to help protect the climate and in decentralized energy to quickly empower emerging market countries.
Banks, which tend to have a more cautious lending philosophy after the financial crisis, are more willing to lend to wind power projects with a 12 to 18 month realization timespan, for example, compared with nuclear plants, which need 10 to 15 years, he said.
Fawer cited recent examples of traditional energy companies and big industry moving into renewables such as Norwegian oil and gas firm Statoil, which has defined developing offshore wind as core expertise.
SWM, the Munich city utility, has declared it will cover all its power needs by 2025 from its own wind and solar generation plants.
