Friday, July 25, 2014

10 things you should know about investment in renewable energy /The Guardian

10 things you should know about investment in renewable energy

In a recent panel, experts shared their thoughts on how to increase investment in renewables amid falling prices, policy uncertainty and emerging tech
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1. Solar and wind are cheaper than you think!

Despite an investor assumption that renewables are expensive, "this stuff is really cheap", said Bloomberg New Energy Finance's Jenny Chase. There are plenty of places where solar and wind already make economic sense, provided investment conditions are right.

People will start buying solar panels for their houses - without the need for subsidies - because it makes financial sense, Chase said. Panels now sell for less than a quarter of their 2008 price. And they won't be restricted to rooftops: Solar and wind plants are increasingly feeding into the grid and fulfilling the energy needs of large local power users, such as factories, in India and Chile.

Bloomberg estimates that the world will have 600GW of photovoltaic solar worldwide by 2020 (an increase from about 150GW today) and 1,900GW by 2030; making up 5-7% of the global electricity mix. These positive predictions are based on the falling prices of renewables.

2. Policy uncertainty is the biggest obstacle to investment in renewables

Governments are failing to take up the challenge and lead the way on renewables. The energy debate has become too politicised, argued EY's Ben Warren, and a lack of cohesive and stable policy has undermined a "long-term view on investment in renewable energy". Among the problems are skewed tax relief, fossil fuel subsidies and retroactive changes to renewable incentives, which make them risky to investors, panelists said.

Politicians are also listening to the wrong people, said Bruce Davis of Abundance Generation. The increasingly vocal lobbying of those with vested interests in slowing the growth of renewables is being heard more than the majority of voters who are in favour.

3. Regulators are getting better, although they still have 'sharp teeth'

That said, panelists were positive about the role of regulators, at least in the UK. Davis, who runs crowdfunding organisation Abundance Generation, said he is constantly updating the Financial Conduct Authority about innovations and the benefits crowdfunding can bring to investors without compromising investor protections.

"There is a world of difference between the old [Financial Services Authority] and the new FCA approach," he said. "That is not to say they don't have sharp teeth, but they do make efforts to listen to evidence and form policy based on real experiences of platforms."

4. Germany, Denmark and South Africa are good role models on renewables

Germany and Denmark have made great strides on renewables - partly because they have a diverse and large ownership base, said Co-operative Energy's Paul Monaghan. Germany has over 800 renewable energy co-operatives and the government has made - and stuck to - strong incentives for renewables, while in Denmark, communities have the right to invest and profit from wind turbine programs, which creates a broad political base for policy support.

The South African government has also done well on getting the best prices. It held a competitive tender, asking a simple question: "who wants to sell us wind and solar power for the lowest prices?" It was a simple but effective strategy that was clearly aligned with the long-term goals of government and also creates sustainable jobs locally, Davis said.

5. Business is leading the way

Corporates and individuals are taking the lead and hoping that policy will eventually follow. Business interruption risk and price volatility mean that an increasing number of businesses are taking a strategic approach to energy procurement. "Direct procurement of renewable energy might just prove to be one way for the sector to reduce its dependence on government policy," Warren said.

Software company SAP's Will Ritzrau said of his company's policy: "we look at renewables as a long term approach to control our energy cost and thus margin impact."

6. We need a diversity of projects

Having as many models as possible, from small-scale initiatives to large-scale projects, will be the key to financing the necessary energy transition, Emma Howard Boyd said.

According to Davis, co-operatives are good models where there is a motivated community with the requisite time and expertise. But it's also important to have schemes that appeal to commercial developers and make them more open to community involvement.

7. The public are up for renewables

Poll after poll shows that people have bought into the idea of renewables, Monghan said; now we have to unlock the big institutional investors. Crowdfunding can provide an easy way for people to get involved in projects that have already been vetted and will offer reasonable returns. Plus, organisations such as Share Action and Divestment are helping people have control over where their money is invested.

8. Developing countries could spearhead innovation

We may well see the flow of innovation reverse, with developed markets being disrupted by companies from developing markets. Energy innovation using mobile technology is one clear example of where this could happen: "more people in India own mobile phones than they do toothbrushes", Ashden's Chhavi Sharma said.

Sharma pointed to innovations such as M-PESA, which have allowed the renewable energy sector to leapfrog in Africa. Enterprises such as Off.Grid:Electric are using a service-based model and selling pay-as-you-go solar that can be paid for daily using mobile money, akin to setting up a micro-utility.

9. Power of the internet

It's hard to imagine how crowdfunding would work in an internet-free world, Chase said. The "internet of things" and broadband availability will enable automated and smart energy consumption. Large amounts of information will be needed to make the energy markets work. Soon smart technology will control various appliances so your fridge will stop cooling if the power price spikes, and other devices can be switched on or off automatically according to need.

Social media - and the internet more generally - have the potential to accelerate the awareness and acceptance of new technology. New and viable ideas, especially if they benefit individuals, will survive and grow. However, growing into a conservative market too early is also risky and some big companies may be a little more cautious about adopting potentially too-radical innovation.

10. There's some way to go

There have been leaps and bounds in terms of innovation and affordability, which have helped renewables to become an attractive investment opportunity. But if we are to reach the kind of levels required for a genuine energy transition, there's much more to be done. Investors should continue to view opportunities realistically, but also remain open-minded enough to recognise - and tap - the great renewable opportunities that exist.

The finance hub is funded by EY. All content is editorially independent except for pieces labelled advertisement feature. Find out more here.

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Tuesday, July 8, 2014

Government Audit Finds Hydropower Aid Doesn't Benefit the Poor

Government Audit Finds Hydropower Aid Doesn't Benefit the Poor
By Peter Bosshard
Huffington Post, July 8, 2014

No other industrialized country relies on hydropower for its own power
generation as much as Norway. Norwegian companies build hydropower dams
around the world, including controversial projects like the Theun
Hinboun Dam in Laos. Norwegian development aid actively supports the
interests of the hydropower sector. Norway is also promoting hydropower
in international organizations and diplomatic initiatives.

Since the turn of the century, Norway has spent more than NOK 12 billion
(approximately $1.5 billion) on development assistance for the energy
sector. This aid consists of the following elements:

. Almost half of the assistance supported investments in mid-sized
hydropower projects in Chile, the Philippines and other countries
through SN Power, a state-owned investment company. The projects in
which SN Power has invested include Allain Duhangan in Northern India, a
dam that was bitterly opposed by the local population.

. Norwegian aid supports the planning and construction of transmission
lines, including a project that would export power from the
controversial dams in the rainforest of Sarawak to Indonesia.

. Norway is strengthening the capacity of Southern governments to build
hydropower projects, and funds feasibility studies for specific
projects. Norway has for example entered a hydropower partnership with
Ethiopia, and has funded studies for two large dams on the Blue Nile.
Only last month, the Norwegian government canceled this cooperation due
to the Ethiopian government's insistence on uneconomic mega-dams.

. A small portion of Norway's clean energy aid supports the development
of decentralized renewable wind and solar projects.

While the Norwegian Ministry of Foreign Affairs has failed to evaluate
its energy assistance, the government's Auditor General Office carried
out an in-depth assessment of the assistance and submitted the findings
to parliament on June 25.

The findings of the audit are highly critical. The Auditor General
states: "Norwegian assistance to clean energy has not led to a
noticeable increase in power generation and has contributed little to
improving living conditions for the poor in those countries that have
been prioritized for such support."

More specifically, the audit finds that Norwegian energy assistance is
"still primarily directed towards hydropower, although countries have
ample opportunities to utilize solar and wind energy resources." This
bias makes recipient countries "more vulnerable to failure in energy
supply" than a more balanced approach would have done. The support for
transmission lines has created energy access for over 100,000
households, although "primarily the wealthiest households" have
benefited from this. The various measures have not spurred private
investment in the recipient countries, and their economic viability is weak.

"A stunning 12.26 billion Norwegian kroners has had little effect on
electricity production, poverty alleviation and business creation in the
prioritized target countries," FIVAS, a Norwegian environmental
organization and long-time partner of International Rivers, commented on
the audit findings. "This confirms our view that too much Norwegian
support has been tied up in hydropower."

In his response to the audit, Norway's Foreign Minister agreed that the
rapid advancement of solar, wind and biomass power "will make it
possible to expand the breadth of investment in clean energy," and
accepted the recommendation "to strengthen efforts to improve energy
access in rural areas with small-scale renewable solutions." At the same
time, the Foreign Minister argued that among all technologies, Norway
was still best placed to extend aid for hydropower.

The strong and unambiguous findings of the independent audit offer the
government an opportunity to change course. A failure to do so in the
interest of the country's hydropower industry would dent the high
credibility of Norway's development assistance.

Norway is a leading voice in the global dams debate and is often
considered a model in development and energy finance. The new audit adds
to the growing evidence that large hydropower projects are not effective
at reducing poverty, and that better tools for achieving this goal
exist. The World Bank, the Green Climate Fund (which receives strong
support from Norway and will soon decide on its own energy priorities)
and other institutions should take note.

[An English translation of the audit report's main sections is available

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