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Investors Guide to Clean Energy | Sources of Clean Energy

Learn more about our Clean Energy ETF

Part 1: Introduction to the Clean Energy ETF | ZERO

Part 2: Investors Guide to Clean Energy | Sources of Clean Energy

Part 3: Investment Case for Clean Energy

Part 4: Introducing the HANetf S&P Global Clean Energy Select HANzero™ UCITS ETF

 

The clean energy sector encompasses energy derived from zero-emission sources that are “renewable”, or naturally replenishing. Humans have been harnessing nature’s power for millennia, but as we develop increasingly innovative and efficient ways to do so, renewable clean energy is becoming increasingly viable and displacing the dirtier sources of energy (e.g. fossil fuels) that have dominated economies since the industrial revolution. Growing renewables’ share of generation capacity is a key pillar in the fight against climate change, and in particular with respect to meeting increasingly ambitious targets to drive national economies toward net zero carbon emissions.

The main sources of clean energy, and the energy sources our Clean Energy ETF tracks, are as follows:

  • Solar
  • Wind
  • Hydroelectric
  • Geothermal
  • Biomass

 

Each of these technologies is described in brief detail below.

 

Solar

Solar photovoltaic cells transform sunlight directly into electricity. Such systems do not produce air pollutants or carbon dioxide, and typically have no environmental impact beyond the manufacturing process.

Effectiveness can be limited by the intermittent nature of the amount of solar energy that reaches the earth’s surface, depending on location, weather conditions, time of day, and seasonality. In addition, large surface area is required to absorb or collect a useful amount of energy. [1]

 

Wind

Wind energy is collected through the use of turbines, which use blades to collect kinetic energy. The blades act as wings, creating lift as wind passes over them which causes the blades to turn. This rotation then drives an electric generator, producing electricity.

As with other sources of renewable energy, location is critical. Favourable sites include the tops of smooth rounded hills, open plains and offshore. Large numbers of turbines tend to be aggregated in these areas to form wind farms. In addition, higher altitudes are generally more conducive to wind generation. As a result, large wind turbines are placed on towers that are as much as 900 feet high.

Wind energy also does not result in emissions beyond the manufacturing process. Limitations of wind energy relate predominantly to the intermittency of wind availability, which vary both hourly and seasonally. In addition, environmental groups have noted that wind farms can have negative impacts on local bird and bat populations. [2] 

 

Hydroelectric

Hydroelectricity was the first renewable source of electricity established at scale. It is generated by channeling moving water through large pipes, where it pushes against and turns blades in a turbine, which spin a generator to product electricity. These include run-of-the-river systems, which as the name suggests harness the force of an existing river’s current, and storage systems which rely on dams to create reservoirs, from which water can be released through pipes fitted with turbines.

In geographies where it is feasible, hydroelectricity has long made up a meaningful portion of generation capacity. It is a prolific source of clean energy, although not entirely without its challenges, which generally relate to environmental and social impact of diverting rivers and creating reservoirs.

 

Geothermal

Temperatures emanating from the earth’s core are approximately equivalent to the surface of the sun due to radioactive particle decay. Geothermal energy harnesses this heat where it rises closer to the earth’s surface and heats water reservoirs from which excess heat is extracted either as a source of heating or electricity via a turbine and generator.

Viable sources of geothermal energy tend to be found along major tectonic plate boundaries where volcanos and geysers are most likely to be found. [3]

 

Biomass

Biofuels are transportation fuels derived from biomass materials such as corn or sugar. These include ethanol and biomass-based diesel fuel. Such fuels are typically blended with petroleum products but can also be used on their own. Even blended fuels burn more cleanly than pure petroleum products, and the use of biofuels displaces fossil fuels, thereby reducing consumption all else equal. [4] 

 

Visit our Clean Energy ETF page here

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