Financial & investing
Financing a survivable future
In my belief, the way money is allocated is at the heart of the problem. Our current version of capitalism allows investors routinely to place little or no value on a sustainable future. In investor-speak, it is as though the ecosystems on which we depend, and indeed the healthy economies we will need in the future, are being wilfully omitted from the assets on the global balance sheet. Hence multiple billions are being pumped short-term into technologies and industries that we know threaten that future. This is one of the main system failures we have to correct, and an orderly retreat from fossil-fuel investing into renewables and efficiency is a core change needed. The good news is that current trends offer encouragement in this regard.
More investment is now going into renewables than into coal and gas
UN figures show more investment went into renewables in 2008 than coal and gas generation:$140bn (£85bn) versus $110bn. The UN says $750bn will need to be invested in renewables between 2009 and 2011. Including energy efficiency, $155bn was invested in clean energy in 2008, despite a 51% year-on-year fall in capital raised on public markets. Wind attracted $51.8bn with solar next on $33.5bn. Analysts predict that the solar market will triple in the next four years. Solar currently represents less than 0.5% of generation in the $1 trillion global electricity market, but shipments are expected to rise at a compound annual growth rate of 50% for the next four years.
My own experience of solar investing
I have very little personal capital to deploy, so most of my investing has involved “sweat equity.” Apart from the sweat involved in the day job at Solarcentury, I proposed the idea of a solar-focussed private equity fund to Bank Sarasin in Basle in 1998, and in 2000 they decided to set it up. I have been a director of New Energies Invest AG, the world’s first private equity fund for renewable energy, ever since. The dot.com crash happened in the year we set up, and we had to struggle our way through the aftermath of that for a few years. But during the subsequent upturn, we grew the value of the fund quite well, so that by end December 2008 its value was up 65% on the launch value, a performance significantly better than the worldwide investment in shares in the same period. In September 2008 the markets crashed again as a result of the credit crunch, and we are now toughing our through a second downturn, just like everyone else.
The credit crunch and personal action as a result of it
I chronicle highlights in the sorry story of this latest financial crash in the triple crunch log. My intense disappointment, watching this fiasco unfold, has made me very interested in alternative investment strategies to the financial norms that prevailed until the summer of 2007. I have switched my banking from RBS to the ethical banks, Co-operative and Triodos. I have cashed in my pension funds, and am investing in solar installations. I am very interested in collaboration with people who think, as I do, that the 2007 pre-crash version of capitalism needs root-to-branch re-engineering. As events in London, Washington and other capitals have shown since, and the Triple Crunch log shows, it is barely being tinkered with, let alone re-engineered. One of the key levers for people-driven change will be mass access to wholly new ways of saving and investing.
“Electrofinance”
I have long believed that financial products will emerge that pool energy bills with financial services in ways that reward efficient energy use by the customer. The single household bill of the future, in this view, would consist for example of an energy component (lower, zero, or even a payment to the customer because solar is being used), repayment on a loan for household solar systems (low interest), household insurance (lower because solar homes are safer than homes powered conventionally), and a pension top-up payment to the customer because of carbon-trading, and feed-in tariffs. I wrote a paper on electrofinance, as we call it at Solarcentury, back in 1999, with my friend Joel Gordes. So far, in the UK, we haven’t even seen a simple solar mortgage product emerge! But watch this space…..
