For decades, investment in renewable energy resources invited progress, but facilitated little change. Thankfully, that trend is beginning to reverse. More and more, green investors are realizing positive ROIs due to commercialization opportunities.
In the past, green technology investments were a marketing asset and held a lot of potential, but that wasn’t enough to sway investors concerned about risk. As a result, government agencies around the world have been some of the bigger players in the space until the last few years.
There were several obstacles to private investment in green technology:
- Entrenched solutions bolstered by a strong infrastructure were cost effective and low risk, making green technology a tough sell, in practice.
- The perceived and real risks of bring emerging technology to market further delayed introductions.
- The front-end capital costs in some smaller markets and developing countries were higher and riskier for private investors.
In many areas of the world, government subsidies, grants, and public policy has largely shaped the market for green technology. According to the earlier findings of several case studies on financing green technology from the San Giorgio Group in 2012, more public resources and policies designed to alter the risk landscape for private investors were needed to help deliver green technology to the world at large in the near future.
The solar market is maturing and has always been the poster-child of the green technology movement. Private investments in large solar technology endeavorsare still lagging behind public resources in 2015, but their support of smaller projects, up 29% from 2014, may indicate a change. Commercialization is driving the ROI of many smaller, innovative projects. The investments tend to be less risky than larger projects, and companies can show a faster turnaround for ROI.
While public policy continues to evolve, in 2015, it appears that smaller eco-investments driven by consumer demand are taking the lead with private investors. Companies are also finding smaller ways to incorporate green technology at a lower-risk level. This slow adoption process is easier to finance and can be implemented across a variety of industries, and the payoff is often lucrative.
As investors and entrepreneurs start to see the payoff in existing technologies, adoption of new solutions becomes easier. Along with government subsidies, the shift to green technology is an easy one. Technologies that perform equally as well as traditional solutions will slowly replace entrenched solutions along with the slow culture shift towards adopting green technology.
Contact Funding Well Capital to learn more about financing solutions for green technology.