The few weeks since our last issue have been something of a rollercoaster ride for all of us. The banking ‘bagatelle’ had immediate consequences, and the renewables business was not immune. Quickly, contractors were finding that the usual ‘working credit’ from the banks, which routinely eases them through the cashflow troughs of project development, was no longer there. Some businesses were finding that customers were holding off, waiting to see what the price would look like ‘next month’. And thus the wheels started to turn more slowly on existing plans. Spending on new projects seems set to be slower in 2009 in Europe and the USA, though development in China may maintain momentum. And the new involvement by the UAE’s Masdar and Qatar in UK renewables could signal a future trend for more renewable energy investment by these and other ‘oil-wealthy’ nations.
Yet of course the renewables sector is not an island – its fortunes are connected with those of the energy sector as a whole. In a blog last month (for the online coverage of the Solar Power International event by RenewableEnergyWorld.com) I suggested that the speed of construction, and the modular nature of many renewables projects might put them at an advantage when investment decisions are being made. For when utilities are investing in new generating plant – whether they require outside finance or build from their balance sheets – projects that can be flexible in size and start to generate power rapidly surely have an advantage over megaprojects that can take up to a decade to come online.
And there’s no doubt about the longer-term potential for renewables. Just as we were going to press, the often-conservative IEA announced in its latest World Energy Outlook that renewable energy will overtake natural gas to become the second largest source of power generation worldwide ‘after 2010’ (with coal in number one place). Meanwhile the brand new Energy [R]evolution: A Sustainable World Energy Outlook from Greenpeace International and EREC demonstrates that aggressive investment in renewable power generation and energy efficiency could provide half of the world’s electricity, create an annual US$360 billion industry, and eliminate over $18 trillion in future costs of coal and other fossil fuels.
It’s ‘simply’ a matter of choosing how to direct investments, with an eye on a long-term goal.
October’s US bank rescue plan rather remarkably included an extension of the US wind PTC and an eight-year investment tax credit programme for solar and other renewables. This gave a real shot in the arm to the US market even before the Presidential election. Once he takes office, US President-elect Barack Obama will have many priorities – and energy must be one. His campaign energy plan included a $150 billion commitment over 10 years to energy efficiency and renewable energy, a plan to re-industrialize America and create clean jobs. There is a real opportunity for the United States to steer an exemplary course in creating a clean energy plan and a world-leading renewables industry.
So – while financial and political leaders are busy rethinking the economy, this might just be time for them to set a course for a greener, renewable energy economy.