Financial barriers to implementing renewable energy technologies

Problem Title

Financial barriers to implementing renewable energy technologies

Scientific Title

Optimizing institutional investment in renewable energy through corporations

Student: 
Kevin Cavanaugh
Major(s): 
Mathematics
iCons Concentration: 
Renewable Energy
iCons Class Year: 
Class of 2014
Executive Summary 

In order for the United States to achieve its potential to be a global leader in approaching a renewable energy future, investment in renewable energy needs to increase dramatically. Prior research indicates that institutional investors, including pension funds, sovereign wealth funds, insurance companies, and other long-term investors, with a combined $71 trillion in assets, make up one of the largest pools of private capital in the world. Policymakers are considering whether institutional investors have the capability of meeting the renewable energy funding challenge through corporate investment via corporate bonds or equity shares.

Cost benefit analysis were used to determine the most attractive investment options for corporations, indicating that adding renewable energy to a portfolio is a viable long-term strategy for corporations, but not the best available option. In an effort to discern the investment decisions of corporations, General Electric, Google, and Nike were chosen to serve as examples of corporations that have effectively used institutional investment to build their renewable energy portfolios.

Research shows that Google is leading non-energy industries, with over $1 billion invested in renewable energy and General Electric is a leader in the energy sector, with roughly $9 billion invested. By interviewing executives at these companies, information will be gathered about the reasons these companies make effective investments in renewable energy. Major problems include regulatory constraints that prevent the effective use of these funds, policies that discourage investment in renewable energy technology, and ways to encourage more institutional investors.

Publicizing these critical issues can help break down the financial barriers preventing the United States from running on renewable energy. If investment can occur on a larger scale, then more investors would be encouraged to invest in renewable energy technology, making it the standard in the United States economy.

Problem Keywords: 
renewable energy costs
Scientific Keywords: 
cost-benefit analysis
institutional investment