Massive investments in renewable energy will be needed for decades – all-time growth yet to come

In 2023, investments in renewable energy capacity increased by 50% compared to the previous year. We will see all-time growth over the next five years [1].  

Where will all the new electrical energy be consumed? Not all energy goes to electric cars that come to mind first, but large energy consumers, such as heat energy production and industrial production, are being electrified. According to Statistics Finland, industrial production and heating of buildings represent 70–75% of final energy consumption in Finland, and transportation is then a good third.

There are already great practical examples of the electrification of heat energy production, such as Vantaa Energy’s investment in the world’s largest seasonal heat storage facility published on 4.4.2024 [2]. The seasonal heat storage facility, named Reserve, will be implemented by excavating a huge water tank deep into the bedrock, where two 60 MW electric boilers will be built. The stored water is then heated in electric boilers up to 140 degrees, allowing it to store 90 GWh of thermal energy. The amount of energy corresponds to the heating needs of a medium-sized Finnish city for the whole year or the battery of 1.3 million electric cars. Hot water can be discharged into the district heating network without fossil fuels, for example, in sub-zero temperatures.

Investments in the megatrend of renewable energy can be made for a long time to come

The energy system in Finland is on the right path and our country is likely to become a net exporter of electricity permanently as renewable energy, both wind and solar power, increases. Many people are not aware of how much solar power is increasing in Finland. If all planning for solar energy plants in Finland is realised, the number of power plants will increase to as many as 120 pcs and the production capacity to over 9.5 gigawatts by 2030 [3]. The future scale of solar power production is easier to understand when you note that daily electricity consumption in Finland is fulfilled with the power of 9-10 gigawatts at the time of writing. Solar power is a reality, even in Finland.

About 95% of Finnish electricity is already clean and about 70% of heat, but there is still a lot to be done around the world. To reach our net-zero emissions targets in 2030, non-bioenergy-based renewable energy sources, such as solar, hydro, wind and geothermal power, must increase their share from the current 5% share of energy production to 17%. According to the International Energy Agency (IEA), the use of renewable energy should grow by an average of 13% per year between 2023 and 2030, almost twice as much as in the past five years [4].

Diversification – the only free lunch in investing

The only free lunch in investing is diversification, said Nobel Prize-winning economist Harry Markowitz in 1952. We see this 70-year-old wisdom in such a way that it is worth investing in many countries and in a large number of projects, also in renewable energy. Our investors already have investments in nine countries and our deal flow consists of more than 120 projects under development.

We always work with local partners. In renewable energy project development, it is very important to know local networks and operating models and to speak the local language. Our job is to find the best local teams and support them in their success in many ways, so that our investors get the best possible risk-adjusted return.

Massive investments in renewable energy will be needed for decades to replace our energy production which has been based on fossil energy for hundreds of years. 

Through Korkia, institutional investors and advanced, high-net-worth clients can invest in an internationally diversified deal flow of renewable energy and energy storage, totalling already 18 gigawatts. The next closing for Korkia Renewables & Energy Infrastructure Ky fund is on the 22^nd of May.

Purchasing investment products always involves risks. You may lose part or all of your invested capital.

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[1] IEA. Massive expansion of renewable power opens door to achieving global tripling goal set at COP28.

[2] Vantaan Energia aloittaa maailman suurimman lämmön kausivaraston ”Varannon” rakentamistyöt Vantaalla.

[3] Reilua Energiaa. Suurten aurinkovoimaloiden esiinmarssi.

[4] IEA. Energy system: Renewables.