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Peter Taberner

Peter Taberner

Peter is a reporter for  FX Empire, and the International Finance Magazine, where he writes on energy markets, specializing in nuclear power and the renewable…

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These Nations Lead The Renewables Revolution

Renewables

Renewable energy is a hot topic amongst developed and developing countries across the world, but the accessibility and affordability for the poorest nations remains a significant challenge for ‘green’ power.

Recently, at the Climate Vulnerability Forum, representatives from 47 of the least affluent nations targeted powering their economies and homes purely from renewable sources.

This lofty target has been achieved by Iceland, as 100 percent of their electricity is powered by hydro and geothermal energy.

Costa Rica ran entirely on renewable energy this summer, and Uruguay has also seen rapid progress, with 94.5 percent of its energy now from green sources, thanks in large part to effective policy and technical support.

As figures from the International Energy Agency would testify, in their World Energy Investment Report this year, renewable energy accounted in 2015 for a fifth of all energy spending, reflecting the reduction in costs of solar PV panels and wind turbines.

The question is whether these headline figures represent an increase in renewable energy power for the poorest nations.

Alex Perera, global director of charge for the Washington based World Resource Initiative’s Electricity Initiative, stated that “Technology that's available today, like solar PV and wind power offers affordable solutions for these countries. We are seeing new innovation every day. As the price of renewable energy continues to fall, these technologies will become even more attractive and are today the most affordable option in many markets.”

“We're also seeing countries with large populations without access, like Tanzania and Kenya, look to decentralized solutions like solar home systems to deliver basic electricity services.”

He added: “Energy efficiency technology also has an important role to play in making sure that electricity generated is as productive as possible and saves consumers money in the long run. “

“Better policy and government support is an essential component for scaling up renewable energy in these countries. The IEA raised its five-year renewable energy forecast this fall thanks in part to better policy support in key markets.”

“Governments that are transparent and have open decision-making processes will be well-positioned to deliver on their climate and energy plans. A few key areas for governments to focus on are: open up access to data and information, let citizens and independent experts participate in decision-making, put in place legal mechanisms and create space for advocacy.”

The Paris Agreement has now been ratified by 117 parties, and can only help push renewable energy forward, with one of the key points of the agreement is to ensure that greenhouse gasses peak as soon as possible.

Alexis Crow, who leads Price Waterhouse Cooper’s global investment opportunity practice, opined that the efficacy of the Paris Agreement is that the leading countries in the world are approving it. And points to developments such as the cap and trade plan, which has been put forward by Canada’s Prime Minister Justin Trudeau. Related: The Oil Mystery Behind Saudi Arabia’s Production Cut

Geographically, she would look to Europe as the continent that still leads the renewable energy front, with supranational funding as has been brought in from the European Bank of Restructure and Development (EBRD).

She continued: “Looking at energy returns from investment from a poorer country‘s point of view, there are differentiations in the cost of producing a unit of energy, it takes a lot more ethanol to produce a unit of energy than natural gas for example, then there is storage and transport.”

“Renewable energy is used for power or for transport, India have motorbikes as the main conduit for transport as opposed to a car, there is not just one model of energy for transport use.”

“Power generation is like a laptop computer, there has been an immense amount of progress in cost reduction, especially for solar energy. In the very poorest countries that have an abundance of sunshine.”

“Two other key points are the slowdown of global trade, we are seeing a weakening of demand of oil partly down to greater efficiency, there is less movement of physical commodities... Another key point is the changing of the investment environment, as in renewable energy products acting as fast consumer goods, needing a rate of return. This leaves incentivization for renewable energy as an important facet” Crow reflected.

“In Jordan, a combination of the EBRD providing loans for plants that the government has tendered, has proven to be successful. Jordan is targeting that by 2020, 10 percent of its energy base arrives from renewable sources, enforcing a rate of return.”

The least affluent nations are likely to favour solar and wind power according to Crow, she would place bio fuels further down the list of renewable preferences due to the expense. Related: Combatting Cyber-Attacks In The Oil And Gas Industry

Also, investment in energy efficiency is something that is often overlooked, as we have seen with the improvements in solar power.

In terms of how government structures will help or hinder advancements in renewable energy, Crow explained: “I would again highlight the Trudeau tax law, the more that you can parade examples like that the better it will be, the World Bank is also doing some strong work on this facet, it’s all about incentivization.”

“The participation of the United States and China and their leadership on renewable energy investment is important, and it’s a great risk if that support is withdrawn.”

“If the richer countries do not progress in renewable sources, then the poorer countries will believe why should we do anything. They will come into their own on renewable technology if they are led by others.”

Only time will tell if renewable energy is as prevalent in salubrious parts of Manhattan, as it could be in Mumbai.

By Peter Taberner for Oilprice.com

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