Investor Sentiment and Renewable Energy Investments

The transition towards renewable energy is crucial in addressing climate change and ensuring sustainable economic development. However, investment decisions in the renewable energy sector are influenced by various factors beyond traditional financial metrics. This study explores the role of investor sentiment in driving investment flows into renewable energy assets. Drawing upon the principles of behavioural finance, the research examines how psychological factors, market moods, and sentiment indices impact investment decisions, asset pricing, and the valuation of renewable energy companies and projects. Using both qualitative and quantitative methods, including sentiment analysis of market data and investor surveys, the thesis investigates the correlation between investor sentiment and investment patterns in renewable energy markets. The findings reveal that positive investor sentiment significantly enhances capital allocation towards renewable energy initiatives, while periods of negative sentiment increase volatility and risk perception. The study provides valuable insights for policymakers, investors, and stakeholders seeking to promote sustainable investments by understanding and leveraging behavioural factors. Ultimately, this research contributes to the growing literature on sustainable finance and behavioural influences in green investments.