Big leap into main­stream lures funds

Sig­nif­i­cant seed money is be­ing in­vested in re­new­able en­ergy projects glob­ally, writes Robin Bromby

The Weekend Australian - Review - - Clean Energy -

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

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