Renewable energy is a key investment theme for CareSaver, as we expect the global shift to renewables to continue to gain momentum. It’s driven by a range of factors including massive improvements in technology, regulatory settings for carbon and consumer preferences.
The cost of solar power in the US has fallen 70% over the last decade, wind power is also dramatically cheaper. Solar and wind cannot generate power all day – for example at night (solar) and calm days (wind) are downtime. The key will be generating breakthroughs in battery technology. In 2018 the amount of power stored in batteries globally was miniscule – estimated to be less than half the amount of energy used by the Falklands Islands in a year! But with huge amounts of research and development spending, battery costs will come down and battery efficiency will increase exponentially. The outlook is positive – VW for example expects that within 10 years 40% of vehicles they sell with be electric. The largest individual company holding across CareSaver’s funds is Meridian Energy which is the largest 100% renewable power generator in New Zealand.
Japan’s demographics: Japan is an affluent first world economy and like most countries it faces major changes – and challenges. Japan’s particular challenge is its demographics. More than half of the babies born will live to at least 100 years. Although living longer, they also have a falling birth rate – meaning its population is shrinking by nearly 400,000 a year. Many countries make up the ‘shortfall’ through immigration – yet Japan only has 70,000 immigrants a year. Their 67 million workforce is expected to shrink nearly 15% by 2030. So Japan is challenged by its population living longer, its workforce shrinking and while its economic debt balloons.
This will result in change – more immigration, more women in the workforce, a heavier reliance on robotic technology and a higher retirement age. For CareSaver we are mindful of how these shifts present opportunities (and risks) for investment.
Sources include the Economist Magazine and Fortune Magazine