Renewable Energy Growth Reliant on a Business Case

For renewable energy to develop further, a sound business case must be in place.
Published: Tue 08 Apr 2014

Concerns over climate change alone with not see renewable energy develop further. However, renewable energy will sell if there is a business case for it. Investment opportunities must be in place to attract investors, and economic benefits such as employment opportunities must be there if countries are to adopt it. This is according to IRENA (International Renewable Energy Agency) director general Adnan Amin, who says that although renewables have seen tremendous growth, a lot must still be done to make clean energy a significant share of the global energy mix.

Impressive progress has been made in the past three years promoting renewable energy as a policy choice, especially in parts of the developing world where demand is expected to grow rapidly. Renewable technologies are also becoming more cost-effective. It is these aspects that are making clean energy like solar, wind and geothermal power more practical.

IRENA’s growth a good indication of renewables development

The growth of IRENA, an organization established by international treaty and based in Abu Dhabi, is an indication of how interest in renewables has grown. Its membership has expanded from 70 countries to over 130 over a three year period.

The organization helps governments shape policy and gives public and private sectors tools with which to make better decisions around renewables investment. One of IRENA’s big initiatives is the freely accessible atlas that gives users information on the location of viable renewable energy projects. That kind of information is immensely valuable for technology manufacturers and vendors who are looking to install wind turbines and solar panels.

Mr Amin points out that the secret to developing renewables is going to be how fast renewables can be brought to scale, how quickly technology costs can be brought down, the creation of different business models to suit different environments, and the utilization of fast-moving innovation processes for renewables. He says that all of this is already coming together and remarkable progress is currently being made in the sector. The rate of change is also accelerating.

The future for renewables will be affected by many factors, including elevated prices for conventional energy, reductions in the price for many renewable technologies and the improvement of those technologies to make them more efficient. Emerging markets in Asia and Africa are some of the most promising places for renewables growth as they find themselves in a relatively early stage of infrastructure development and in some cases need to urgently address pollution and power problems.

Opportunities and challenges

“The scale of investment in China is mind-boggling,” Mr Amin said. “They revise their targets every year upwards in dramatic fashion.” China’s position is a result of a relatively unique combination of extensive, high-quality renewable resources — and the potential for their development — as well as government support that provides attractive pricing for renewable energy.

Africa is another place that presents both opportunities and challenges. IRENA launched the Africa Clean Energy Corridor last year, an initiative that promotes renewables as electricity production expands on the continent. Most electricity is currently generated from coal-fired plants in Africa, where demand is expected to more than double in the coming years. The continent has an abundant supply of sunshine so it would make sense to take advantage of this instead of relying on fossil fuels which releases a high level of carbon emissions.

Some parts of Africa rely heavily on expensive gas imports and others are overly dependent on hydro-power which is not always reliable in the dry season. Solar panels also eliminate the need for grid connection. This will eradicate the need for expensive infrastructure and those who haven’t had access to power before, will suddenly have electricity. Challenges do exist in this continent however. Government subsidization is lacking in most parts of Africa, and there are a shortage of skills when it comes to the upkeep of the solar equipment.

IRENA and other similar organizations are aiming for a UN target of doubling renewable energy production by 2035. Mr Amin points out that much of the case for renewables will come down to economics in the end.