At some point in the future, the renewables industry will decide that it needs a single representative body. With more and more companies being engaged in more than one renewable technology this seems inevitable, and I am often called upon to speak on more than just wind in various political fora. While the distinction (and competition) between technologies roars on in the marketplace, officials are increasingly asking when we’re going to have a single representative voice. One place where the industry has been able to come together is in the context of the International Renewable Energy Agency (IRENA) — where wind, solar, hydro, geothermal and biomass associations speak with one voice.
The IRENA Coalition for Action was formed a few years ago to create a means for the private sector, NGOs and civil society in general to cooperate with and assist with the implementation of the work of IRENA. While it has gone through a number of iterations, I was pleased to be able to present the outcome of the work of the Business and Investor’s sub-group of the Coalition to IRENA’s 8th General Assembly in Abu Dhabi on the 13th of January. Our ‘white paper’ is available on the IRENA website here.
Recognizing that investment levels in renewable energy are still far from what is needed to decarbonize the energy sector, the Business and Investor’s Group (co-Chaired by the Global Wind Energy Council and the Global Solar Council) within the Coalition has focused its efforts during the last year to the topic of scaling up of renewable energy investment in emerging markets.
While it is true that the majority of investment in wind since 2010 has been outside the OECD, and the same has been true for solar for the last couple of years, this investment has focused on the major markets — primarily China of course, but also India, Brazil, South Africa and Mexico. There are many opportunities outside these large markets which have not yet been seized, and that is where we need to focus our efforts.
We borrowed our methodology from the UK Working Group on Offshore Wind, defining key barriers, ranking them in terms of criticality and likelihood, and then placing them in a heat map. The barriers were divided into three main categories: Finance and Bankability; Administrative and Capacity; and Policy and Regulatory. For the details, please see the paper, but after the presentation at the General Assembly’s public-private dialogue, a lively discussion ensued:
There was a broad consensus among the various stakeholders in the room that there is no lack of capital in the marketplace for good projects; there is, however, a lack of bankable projects (compounded by political and market barriers) to attract investment and scale up renewables to meet the Paris target and the Sustainable Development Goals.
- Political will, clear targets and a long-term policy framework that ensures a broad and just participation in the energy transformation, are crucial to successfully scale up investment.
- Public finance institutions need to focus on risk mitigation including off-taker guarantees and currency risk hedging mechanisms, which in turn is critical to reduce financial costs.
- Standardized contract templates are an important tool to reduce transaction costs, and to facilitate the aggregation of smaller projects to create larger financial deals.
- Non-discriminatory market access is needed, allowing for both private and community based investors to engage effectively in the energy transition.
- The importance of maximizing socio-economic benefits at all levels, especially the local community level including local job creation.
- Last but not least, there is strong support for long-term and effective carbon pricing and the removal of subsidies to fossil fuels.
We find ourselves in a time where investing in renewable energy has never made more sense — indeed, when it makes no sense to invest in anything else. With the last decade’s remarkable cost reductions and maturing policy landscape, renewable energy is now the most cost-competitive source of energy in many parts of the world. As we move forward with the energy transformation, the need to cooperate in identifying and sharing experience and good practices will only continue to grow.
The Public-Private Dialogue was indeed successful and we see it as a starting point for further collaboration and another similar dialogue at the time of the next year’s Assembly.
From the Coalition for Action’s side, we stand ready to work with governments to accelerate the efforts needed in transitioning to a sustainable energy future. Together, we can make it happen.
How many governments will engage with us remains to be seen, although the reception at IRENA was generally very positive. Very few of the Coalition members have much spare staff time or energy to devote to this at present — although that will have to change in the near future as we will no doubt have plenty of work to do!