Investment in Energy

Energy is important in many aspects. First, energy is the necessity for our model civilisation. We need energy for work, home and leisure; most of us cannot survive without energy that we need fridges to store our food and need computers to complete our work and need Internet and smartphones for booking hotels for holiday. Secondly, energy helps to further develop our technologies. We can say that all modern technologies are based on energy that without the supply of electricity, modern technologies become useless and it is impossible for any further development or innovation. Thirdly, energy is key for our development, not only technological development but also economic development. Since energy is so important, how much should we invest in energy?

Although state and government investment can be influential, private investment is more important and powerful, as private investment shows the extent of interests within the economy as well as the community. When there is more private investment, it does not only show more private money is put into investment in energy, but also shows more human resources including intelligence are put into energy development. Private investment is depending on the risk and the expected returns. Investment in energy has enormous potential returns, as many businesses and countries accumulate their wealth solely from oil. However, the risk is enormous as well. The amount of money is required to develop a new energy source. Moreover, businesses and countries also need to consider the opportunity costs that the amount of funds required for energy development can be used for other less risky uses.

Currently there are many businesses and countries which show their interests in new energy (mainly solar energy) and new energy vehicles. This is because these countries and businesses have believed the solar energy is now much mature and close to perfection, the risk in investing in solar energy and new energy vehicles is much less now. Investment in energy and other key technologies which requires enormous funding needs some bravery investors who are willing to take the risk, and in general their initial investment may not be paid off fully.