The future is green for renewables

The rising oil price and spread in carbon trading have led to a growing interest in green investment, according to a report in Energy Risk magazine.

Global investment in green energy was estimated to reach US$94.5-billion in 2007, up from US$75.4-billion in 2006 or a 25.3% increase, with most activities taking place in the renewables sector.

The solar market is growing at an average annual growth rate of 40%, while wind at 30%. The Chicago Mercantile Exchange (CME) reported an increase in the use of derivatives and insurance instruments by the renewables sector over the past years with about US$20-billion in contracts being traded.

In August 2007, the United States Futures Exchange (USFE) offered the first renewables futures contracts, initially, in the form of wind futures. This is a welcome development in the industry. It is said that renewable futures will play a vital role in decreasing the cost of financing renewable energy projects by smoothing out revenues, reducing volatility and expanding credit.