Unlocking the Power of Institutional Capital for a Sustainable Future
Written by
Plural Energy
Despite a broad acceptance of the need for a clean electric grid, global annual investments fall significantly short of what is required to achieve climate goals. According to the United Nations, a staggering $4 trillion needs to be invested in renewable energy until 2030 to attain net-zero emissions by 2050.
Clearly, dedicating more capital to climate change mitigation is crucial, and institutional capital holds untapped potential to bridge this gap.
Although the renewable energy industry is currently reliant on institutional investors for financing, it remains difficult for the majority of institutional investors to make investments in this domain. Building easier paths for all types of institutional capital to invest in clean energy is critical as institutional investors aim to meet ESG mandates and close the $4T funding gap.
Direct investments in renewable energy projects remain a largely untapped avenue for institutions. As reported by the International Renewable Energy Agency in 2020, a mere 20% of institutional investors ventured into renewable energy investments, primarily through indirect means. Only a minuscule 1-2% succeeded in directly deploying capital in this sector.
Historically, direct investments offer stability and high yields - attributes that are highly attractive to institutional investors. However, the principal challenges they encounter involve the accessibility of reliable data for investment opportunity analysis and the procurement of premium investment opportunities in a field riddled with entry barriers. By addressing these challenges, the potential for increased direct investment in renewable energy projects can be unlocked.
Plural facilitates a streamlined process for institutional investors to analyze, price, and invest in operating assets. In the realm of direct investing, data accessibility poses a significant challenge for these investors. Plural addresses this hurdle by integrating all assets directly with the blockchain, offering trustworthy and validated proof of energy production. Consequently, investors can effortlessly access and scrutinize on-chain data concerning asset performance.
The platform's protocol and exchange provides investors with simple channels to deploy capital straight into renewable projects. By offering the liquidity and data accessibility akin to public equity markets combined with the return profiles of alternative asset markets, Plural empowers institutional investors to directly invest in renewable assets. With Plural, investing in sustainable assets is as efficient as it is rewarding.
To meet global climate goals, a significant increase in capital investments is required, and institutional investors hold the key to unlocking this transformative potential. By adopting a forward-thinking approach, overcoming risk aversion, and actively engaging with renewable energy projects through platforms like Plural's, institutional capital can become a driving force in the global transition towards clean energy.
