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German Investors Look to Renewables for Returns

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"Royal Bank of Scotland sees demand revival in demand for structures and indexes linked to solar and renewable energy."

Royal Bank of Scotland has seen a surge in demand from German investors for structured products linked to solar and renewable energy

The disaster at Japan's Fukushima nuclear power plant has sparked Europe-wide debate about the safety of nuclear power. And now Royal Bank of Scotland (RBS) in Germany has seen a revival in demand from investors for structures and indexes linked to solar and renewable energy.

The contribution of renewable energy in Germany will double over the next decade, according to a report published on March 14 by the Fraunhofer Institute for Solar Energy Systems (ISE), the largest solar research institute in Europe. Supporting 340,000 jobs and replacing €5 billion worth of energy imports per annum, Germany has been a pioneer in building a competitive low-carbon economy and there is currently very strong commitment in Germany to reinforce the use of renewable energy, says Begsi.

In addition to the global 30 Photovotaik index, limited to 30 solar companies, globally diversified and weighted by market capitalisation, RBS has seen a surge in demand from investors for its German environment index, limited to the universe of German stocks.

In response to the European Union’s request for stress tests on all nuclear power stations, Germany has taken its oldest plants out of service. "The government can hardly agree on how fast to shut down nuclear plants. Seven out of 17 are already going to be closed. All that loss must be compensated in one way or another," says Begsi.

The short-term solution will probably be coal and gas, he says. "But those are not very environmentally friendly. Our emission limits are most likely going to be reached. So our long-run solution has got to be renewable energy," he says.

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