Valuation bubbles

(Why) Do valuation bubbles arise in renewable energy? ... and what we can do about it? 

Nearly every institution we talk to that’s invested in renewables is happy with the experience and would repeat it. The (typically operating) assets they bought years ago have generally delivered as promised. They’ve dependably thrown off cash as expected and, in many cases, have also risen nicely in market value. Exhibiting recognisable behavioural traits, many such investors’ only regret is that they didn’t commit more to the strategy at the lower prices available back then.

Some of those investors baulk at the higher prices being paid today for similar assets and are hesitant to get back into the game at these levels. Some are wary of a possible asset price bubble in renewable energy investing, at least in some sectors. So, is there one? And if so, how did this bubble arise? In short, how do we not only understand these risks, but also mitigate them to maintain or improve forward returns and continue to support the net-zero economic transition.

Read More > Download Full Though Piece > (Why) Do valuation bubbles arise in renewable energy? … and what we can do about it? 

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