ESG Investment Opportunities in the Solar Energy Generation Industry

Posted by Manisha S on February 12th, 2024

The average ESG score for the solar energy generation industry is between 55% and 65%. Our proprietary ESG scoring framework analyzed 65 parameters across the environment, social, and corporate governance.

The need for proactive and relentless efforts from forward-looking companies to navigate the risks posed by climate change will foster the solar energy generation market size. Climate change has brought a paradigm shift in the ways that businesses assess risk and plan and deploy resources. Sustainability, security compliance, safety, business growth and innovation have become instrumental to progress toward implementing best practices in environmental, social and governance portfolios. The trend for green, sustainable and safe pathways is likely to pay off and help make better economic sense in the long run. Prominently, solar has garnered popularity as one of the cheapest forms of electricity and will be a solid proposition to tap potential in energy generation. 

In common parlance, solar energy plays an invaluable role in boosting sustainable development energy solutions. Solar energy generation applications are likely to play a vital role in fostering an environmentally friendly energy agenda. In essence, solar panels have gained ground to generate clean power and contain the cost of electricity. To illustrate, in June 2022, the U.S. Solar Buyer Consortium announced an infusion of USD 6 billion to bolster the domestic solar panel ecosystem with the supply of around 7 GW of solar modules per year from 2024. It is worth mentioning that the Solar Energy Industries Association asserts the U.S. installed 23.6 gigawatts of solar capacity in 2021. The federal investment tax credit, along with renewable energy credits, advanced technologies, reduced installation costs and financing arrangements, offers promising opportunities for stakeholders to emphasize solar power as an indispensable part of the ESG goals across the U.S.

Is your business one of participants to the Global Solar Energy Generation Industry? Contact us for focused consultation around ESG Investing, and help you build sustainable business practices

Exelon Corporation Harnesses the Potential of ESG

With environmental issues spurring governance and social practices, investors are curious to know how businesses minimize their carbon footprint. Stakeholders are responding to these trends through ESG strategies. Several companies have come to the fore to inject funds into renewable energy to propel ESG sustainability goals. For instance, the Exelon Corporation reportedly avoided 78 million metric tons of GHG emissions with its zero-carbon nuclear generation. The company witnessed 161 million MWh zero-carbon generation, around two-fold more compared to the next largest producer. In July 2022, Exelon released the 2021 Corporate Sustainability Report and noted that it poured USD 6.6 billion in energy infrastructure in 2021 and is contemplating raking in USD 29 billion from 2022 through 2025. On the environmental front, the company claims to be working to minimize impacts on biodiversity and watersheds. It has also spurred sustainability through corporate governance—assessing accountability and risk.

E.ON SE at Pole Position in ESG Disclosure; Emphasizes Green Electricity

Sustainability strategies and disclosures have come on the horizon amidst ESG being tasked with the goal of decarbonizing the global economy. When it comes to ESG disclosure, E.ON SE is at the helm, followed by Exelon Corporation and Equinor ASA. E.ON is gearing to be climate-neutral by 2040 and its corporate governance is increasingly linked to its ESG management aspects. CDP, an international association of investors that independently assesses the transparency and detail of companies’ climate reporting, lauded E.ON as a Supplier Engagement Leader in 2021. In a bid to bolster the green-power community across Europe, E.ON forayed its .ON Home, an energy management app, into the U.K. Similarly, it claims over 10 million customers received certified green electricity products in 2021. 

Incumbent players have reinforced their efforts to underpin the decarbonization of Europe. E.ON contemplates investing €1 billion (around USD 1 billion) annually through 2026 to significantly boost the infusion of funds into energy networks. It is geared to foster sustainable homes, work and lifestyles with innovative solutions, including self-generated green electricity. E.ON aims to install approximately 5,000 new charging points through 2026. The Germany-based company plans to pour €27 billion into energy transition through 2026. Furthermore, the company has also upped investments to provide green energy to take carbon neutrality and sustainability to the next level. For instance, in April 2022, E.ON inked a deal with Solar Markt to create Green Cloud to offer green energy to corporate customers across Hungary. 

The competitive landscape alludes to an increased focus on ESG framework and sustainable policies from forward-looking companies, such as E.ON SE, Adani Green Energy Limited, Equinor ASA, Nextera Energy, Inc., Exelon Corporation, Duke Energy Corporation,  Solaria Energía y Medio Ambiente and ReNew Wind Energy (Jath) Limited. Besides, organic and inorganic growth strategies have become pronounced, underscoring solar energy generation market share. To illustrate, in November 2022, Equinor announced the acquisition of BeGreen, a Danish solar developer, to propel the solar PV portfolio. Meanwhile, in April 2022, the Norway energy giant forayed into the Australian market through investments in RayGen to provide impetus to solar energy. In November 2022, Equinor expressed contemplation to augment investment in renewables by two-fold and that renewable energy will account for approximately 20% of the company’s investments in 2022. Amidst the trilemma of the Russia-Ukraine war, energy security and affordability, emphasis on renewable energy sources could be a game-changer with considerable environmental upsides in solar energy generation. 

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Manisha S

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Manisha S
Joined: August 2nd, 2017
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