Al­ter­na­tive’ now in the main­stream

The Weekend Australian - Review - - Investments - Keith Orchi­son

THE hot news for al­ter­na­tive en­ergy in 2008 is that, in an en­vi­ron­ment of record crude oil prices and ac­cel­er­at­ing pol­icy mea­sures to deal with global warm­ing, it may not be al­ter­na­tive’’ any longer. Many of the al­ter­na­tive en­ergy op­tions that emerged from the 1970s oil cri­sis soon lost their ap­peal when crude prices fell back to record low lev­els in the 1980s, keep­ing gas and coal prices in the cel­lar too.

Non- con­ven­tional en­ergy — es­pe­cially for power gen­er­a­tion — is ex­pen­sive and can’t com­pete with fos­sil fu­els in a low- price en­vi­ron­ment. What makes 2008 dif­fer­ent — in Aus­tralia and most of the de­vel­oped world as well as in fast- grow­ing economies such as China and In­dia — is the com­bi­na­tion of cost penal­ties and reg­u­la­tion bear­ing down on fos­sil fu­els on the one hand, and the flow- through of ex­tra- high oil prices to gas and coal costs on the other.

While main­stream re­new­able en­ergy op­tions such as hy­dro- elec­tric­ity, wind and so­lar will vie for the largest share of the new mar­kets for green power, al­ter­na­tive en­ergy pro­po­nents can see sig­nif­i­cant niche op­por­tu­ni­ties emerg­ing for their prod­ucts.

Some, such as us­ing ba­nana and sug­ar­cane wastes as fuel for elec­tric­ity in north­ern Aus­tralia or cap­tur­ing gas from big city land­fill sites to burn in tur­bines, are not new at all — they have just lan­guished in mar­kets where cost made them non- vi­able.

Oth­ers, such as wave power, where sev­eral Aus­tralian de­signs are vy­ing with over­seas con­cepts to achieve a break­through, are start­ing to at­tract se­ri­ous in­vestor in­ter­est be­cause sub­si­dies can pull them through to prof­itabil­ity as their con­ven­tional com­peti­tors feel the heat of car­bon re­stric­tions.

The en­larged manda­tory re­new­able en­ergy tar­get pro­posed by the Rudd Gov­ern­ment is es­ti­mated to make a to­tal of more than $ 11 bil­lion avail­able in sub­si­dies be­tween 2010 and 2020 as it is phased in and $ 1.8 bil­lion a year there­after. Even though a large part of this rev­enue is ex­pected to fall to the wind sec­tor, with geo­ther­mal power fore­cast to start­ing gain­ing mar­ket share from the mid­dle of the next decade, there will be multi- mil­lion dol­lar crumbs’’ avail­able for en­ergy al­ter­na­tives.

The chances of wave power are ex­pected to rise be­cause de­vel­op­ments can of­ten also pro­vide a de­sali­na­tion ser­vice along with power sup­ply. Con­cen­trated so­lar power ( CSP) — us­ing heat to drive tur­bines rather than sim­ply con­vert­ing light to elec­tric­ity through pho­to­voltaics — is seen as en­hanc­ing its prospects when a CSP farm can be linked to a gas or biomass plant to pro­vide round- the- clock elec­tric­ity sup­ply.

While the flame of in­vestor in­ter­est burned brightly only briefly in the 1970s dur­ing the oil price shocks, this time in­vestors around the world are tip­ping bil­lions of dol­lars in to green en­ergy’’.

More than $ US70 bil­lion was in­vested glob­ally in 2006 in clean tech’’ com­pa­nies, 43 per cent more than in 2005 and more than tre­ble the 2003 con­tri­bu­tion, and the in­vest­ment lev­els re­port­edly held steady in 2007 de­spite the ini­tial im­pact of the world­wide lend­ing cri­sis.

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