Big leap into mainstream lures funds
Significant seed money is being invested in renewable energy projects globally, writes Robin Bromby
SUDDENLY, renewable energy has come in from the fringe and is now attracting some serious money. Renewables, and clean energy generally, have taken what might be called a quantum leap. This sector is now suddenly of interest at the big end of town.
According to the US- based industry magazine Renewable Energy World , the global clean energy market grew by 40 per cent last year to be worth $ US77.3 billion ( about $ 70 billion). The publication estimated the sector would generate business worth $ US255 billion by 2017.
Australia is doing its bit, largely with wind power, but coal still dominates. But abroad, the clean energy sector is racing ahead.
There is precious little altruism here. Investors will be calculating that the fast rising costs of fossil fuels — thermal coal as well as oil — are going to make more attractive the economics of other, cleaner forms of energy.
Clean energy is becoming a necessity rather than a luxury, and this applies in both developed and developing countries.
Against this background we have the parallel issue of bringing more people within reach of electric power in developing countries. India and China are the two most obvious examples, but take Kenya: just 15 per cent of its population is connected to the national grid.
It gets much of that power from hydro stations, while the coastal towns are dependent on costly and polluting oil- burning generators. Kenya already has to import electricity from Uganda, and is now negotiating with Ethiopia.
Impoverished countries simply cannot afford to buy coal or oil in the quantities that would be needed. This is why the country’s main utility, Kenya Power and Lighting Co, is looking to develop hydro schemes but also to invest heavily in geothermal exploration. It estimates that the Rift Valley could support as much as 2000MW of generating capacity.
Two recent developments show the degree to which clean energy has become not only a mainstream issue, but one that is now also seen as a viable business strategy.
First, there is the sudden embrace of tidal power, a technology regarded until surprisingly recently as one that was little more than a pipe dream. South Korea is spending about $ 1 billion on a tidal scheme that entails anchoring 300 turbines to the sea floor. These turbines will, promoters say, produce sufficient electricity by 2015 to power 200,000 homes.
But Britain has struck first with what is claimed to be the world’s first commercialscale tidal plant. Late last month a 1000- tonne power unit was lowered into the water in Northern Ireland’s Strangford Lough. This generator will come into operation within months and provide power equivalent to the needs of about 1000 homes.
The 1.2 megawatt SeaGen plant was built in the Belfast shipyard of Harland & Wolff, the shipyard that built the Titanic.
The company behind the project, Marine Current Turbines, plans to roll out a series of similar tidal farms around the coast of Britain.
Second, there came a large investment from a Canadian pension fund in a US wind power project — another sign that the rich North American pension funds are showing increasing interest in alternative energy investments.
The Canada Pension Plan Investment Board, which has about $ US119 billion under management, will place $ US200 million for what it calls a significant minority interest in an environmental power company controlled by JP Morgan Chase. Noble Environmental Power is developing wind farms in several states including New York, Vermont, Maine and Texas.
While wind energy — of all the renewables — attracts the most opposition, usually from people who don’t want to look out their windows and see a great field of tall turbine towers, this is the form of clean energy which now seems to be leading the pack.
The European Union’s energy commissioner Andris Piebalgs is calling for a big push into developing wind stations, along with the building of a maritime grid infrastructure to connect a series of offshore operations around the coast of Europe.
The 27- nation EU now gets 4 per cent of its power from wind farms, compared to 1 per cent in 2000. Its post- 2000 power growth capacity has consisted of the additional 47,000MW of wind, 1200MW of nuclear and 9600MW of new coal- fired stations.
The EU last year committed to having 20 per cent of its electricity generated from renewable sources by 2020. Given that the EU now has 57,000MW of installed wind capacity, that implies that by 2020 the union will have to install a further 228,000MW of renewables — solar, tidal, geothermal as well as wind. An ambitious task for the next 12 years.
This is going to require a massive investment, and some of that may come Australia’s way. Locally listed Babcock & Brown Wind Partners has recently added to its European portfolio with the acquisition of three wind farms in Germany at a total cost of 50 million euros. These farms, either in operation or being built, have a total capacity of 33MW.
Everywhere you look, clean energy is on what might be called its own power walk. Japanese trading house Mitsubishi Corp has established a 20 billion yen investment fund to provide finance to companies and governments seeking to develop wind power schemes.
Beijing’s China Daily says the central government has designated part of the Old Silk Road in Gansu province as a ‘‘ wind power corridor’’ with immediate plans to install around 10,000MW of wind turbines in the area.
The Americans are also rushing to clean energy. Southern California Edison is spending $ US875 million on that country’s largest solar power array to date. Solar cells on rooftops of buildings in a 5.1sq km area will have total generating capacity of 250MW.
In Maine, state law requires 30 per cent of electric energy used there to be from renewable fuel and there are plans to lift that to 40 per cent.
And the mighty Mississippi may no longer be just a transportation corridor. A Massachusetts company has announced a plan to lower turbines in the river all the way from St Louis to the river mouth to generate electricity.
Not just desert: Solar panels in California’s Mojave Desert. America’s largest solar power array will be on rooftops of buildings