IEA Recognizes Potential of Renewable Energy Sector

For many investors, renewable energy remains a somewhat forbidding topic.

What seems to be the best sure-fire bet? Solar? Wind? Geothermal? Tidal? Biomass?

Now the redoubtable International Energy Agency is to publish in July an invaluable guidebook for the perplexed, “Deploying Renewables -- Best and Future Policy Practice,” 182 pages, ISBN 978-92-64-12490-5, paper €100, PDF €80 (2011)

According to the IEA’s bookshop, “Growth is focused on a few of the available technologies, and rapid deployment is confined to a relatively small number of countries. In more advanced markets, managing support costs and system integration of large shares of renewable energy in a time of economic weakness and budget austerity has sparked vigorous political debate.

The IEA’s new report, Deploying Renewables 2011: Best and Future Policy Practice:

• Provides a comprehensive review and analysis of renewable energy policy and market trends;
• Analyses in detail the dynamics of deployment and provides best-practice policy principles for different stages of market maturity;
• Assesses the impact and cost-effectiveness of support policies using new methodological tools and indicators;
• Investigates the strategic reasons underpinning the pursuit of RE deployment by different countries and the prospects for globalization of RE.”

Directly addressing the potential investor IEA Executive Director Maria van der Hoeven said, “A portfolio of renewable energy technologies is becoming competitive in an increasing range of circumstances and countries,” but stressed that, “significant policy effort, combined with continued economic incentives, is still needed to push a large portfolio of these technologies toward full competitiveness.”

For those investors looking for places to put their capital that could pay off big time, it is worth considering that renewables are now the fastest growing sector of the energy mix, currently accounting for almost a fifth of all electricity produced worldwide.

For those wondering about the IEA’s credentials, the Paris-based autonomous intergovernmental organization was established in the framework of the Organization for Economic Cooperation and Development in 1974 in the wake of the 1973 oil crisis to advise OECD member states how best to buffer the severe economic dislocation caused by the oil embargo, which saw prices briefly soar more than 300 percent. The IEA was initially focused on developing responses to physical disruptions in the supply of oil along with serving as an information source on statistics about the international oil market and other energy sectors. While the IEA acts as a policy adviser to its 28 member states, it also works with non-member countries, especially China, India and Russia.

The report includes five-year projections for global renewable energy electricity capacity and generation and accordingly will provide an important benchmark to policymakers and the wider market for measuring renewable energy developments.

Accordingly, the report is about as close to sitting in on government deliberations as the average investor is likely to get. Furthermore, as the report will be used to formulate government policies, it gives the investor an inside track on some of the most significant data to be considered.

Still not sold? The report contains market analysis at the country level, an outlook for renewable energy technologies and their associated manufacturing along with an examination of global renewable energy finance. In drafting the report, in-depth country analysis was provided for key markets along with technology-specific drivers and barriers such as economic issues, costs compared with traditional fossil fuels, and government policies, among others.

The report’s illustrations include “Regional trends in non-hydro power generation, 2000-09,” “Factors influencing RE competitiveness and the role of policies” and “Remuneration adequacy and policy impact indicators for onshore wind support policies, 2008/09”

As well as employing its own data, the report also compiles material sent from government departments. The real bonus for investors seeking an inside edge is the fact that the IEA also contacted over 100 companies and organizations which supplied detailed market, cost and performance insights on renewable energy technologies.

And who is the current IEA poster boy for renewable energy?

Denmark, last year outlined a series of energy policies meant to make the country independent of fossil fuels by 2050.

Van der Hoeven said, "The IEA commends Denmark and its people for the scope of their vision and their many successes in adopting sustainable energy policies."

Considering that this report will be used by the governments of 28 of the world’s most advanced nations for formulating policy, the investor interested in the renewable energy market cannot make a better purchase this year.

By. Dr. John C.K. Daly of Oilprice.com