Renewable energy: how to cash in as the US goes green

A rapidly growing emphasis on renewable power in America will boost investors’ portfolios. Max King outlines the best ways to invest.

Solar panels in the desert
Solar penetration in America is 40% lower than in Europe and the UK
(Image credit: © VLADIMIR RODAS/AFP via Getty Images)

Renewable energy accounted for just 25% of US installed electricity-generating capacity in 2018, well behind the UK and Europe, and 43% of that was from long-established hydroelectricity schemes. About 22% of US capacity still came from coal-fired generation, which has all but disappeared in most of Europe. Yet renewable energy is expected to account for 53% of US capacity by 2040, of which just 14% will be hydroelectric.

This offers a major opportunity for the two specialist funds recently listed in London. The US Solar Fund (LSE: USF) raised $200m in April 2019 and the Ecofin US Renewable Infrastructure Trust (LSE: RNEW) raised $125m last December. The former is fully invested and, at $1.04, trades at an 8% premium to net asset value (NAV). The latter has only invested $61m in the seed portfolio and, at $1.02, trades at a 4% premium. Both promise a 5.5-cent dividend when fully invested, which means this year for USF.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.