In a recent panel, experts shared their thoughts on how to increase investment in renewables amid falling prices, policy uncertainty and emerging tech
In a recent online chat, an expert panel tackled the huge topic of how to grow investment in renewables as part of a transition to a low carbon economy. Here are 10 key lessons from the discussion:
1. Solar and wind are cheaper than you think!
Despite an investor assumption that renewables are expensive, “this stuff is really cheap”, said Bloomberg New Energy Finance‘s Jenny Chase. There are plenty of places where solar and wind already make economic sense, provided investment conditions are right.
People will start buying solar panels for their houses – without the need for subsidies – because it makes financial sense, Chase said. Panels now sell for less than a quarter of their 2008 price. And they won’t be restricted to rooftops: Solar and wind plants are increasingly feeding into the grid and fulfilling the energy needs of large local power users, such as factories, in India and Chile.
Bloomberg estimates that the world will have 600GW of photovoltaic solar worldwide by 2020 (an increase from about 150GW today) and 1,900GW by 2030; making up 5-7% of the global electricity mix. These positive predictions are based on the falling prices of renewables.
2. Policy uncertainty is the biggest obstacle to investment in renewables
Governments are failing to take up the challenge and lead the way on renewables. The energy debate has become too politicised, argued EY’s Ben Warren, and a lack of cohesive and stable policy has undermined a “long-term view on investment in renewable energy“. Among the problems are skewed tax relief, fossil fuel subsidies and retroactive changes to renewable incentives, which make them risky to investors, panelists said.
Politicians are also listening to the wrong people, said Bruce Davis of Abundance Generation. The increasingly vocal lobbying of those with vested interests in slowing the growth of renewables is being heard more than the majority of voters who are in favour.
3. Regulators are getting better, although they still have ‘sharp teeth’
That said, panelists were positive about the role of regulators, at least in the UK. Davis, who runs crowdfunding organisation Abundance Generation, said he is constantly updating the Financial Conduct Authority about innovations and the benefits crowdfunding can bring to investors without compromising investor protections.
“There is a world of difference between the old [Financial Services Authority] and the new FCA approach,” he said. “That is not to say they don’t have sharp teeth, but they do make efforts to listen to evidence and form policy based on real experiences of platforms.”
4. Germany, Denmark and South Africa are good role models on renewables
Germany and Denmark have made great strides on renewables – partly because they have a diverse and large ownership base, said Co-operative Energy’s Paul Monaghan. Germany has over 800 renewable energy co-operatives and the government has made – and stuck to – strong incentives for renewables, while in Denmark, communities have the right to invest and profit from wind turbine programs, which creates a broad political base for policy support.
The South African government has also done well on getting the best prices. It held a competitive tender, asking a simple question: “who wants to sell us wind and solar power for the lowest prices?” It was a simple but effective strategy that was clearly aligned with the long-term goals of government and also creates sustainable jobs locally, Davis said.
5. Business is leading the way
Corporates and individuals are taking the lead and hoping that policy will eventually follow. Business interruption risk and price volatility mean that an increasing number of businesses are taking a strategic approach to energy procurement. “Direct procurement of renewable energy might just prove to be one way for the sector to reduce its dependence on government policy,” Warren said.
Software company SAP’s Will Ritzrau said of his company’s policy: “we look at renewables as a long term approach to control our energy cost and thus margin impact.” >>>