Policy-makers in countries across the globe see little option but to foster renewable sources in an effort to become energy independent. The Renewable Energy Policy Network for the 21st Century (Ren21) reports that change in renewable energy markets, investments, industries and policies have been so rapid in recent years that perceptions of the status of renewable energy can lag years behind the reality.
Take, for instance, the surprise announcement in late October 2012 by prince Turki Al Faisal Al Saud of Saudi Arabia that he said that he would like to see his country using 100% renewable energy within his lifetime.
According to Ren21, by early 2011 at least 119 countries had some type of target or renewable support policy at the national level, up from 55 countries in early 2005. Ren21 says that total investment in renewable energy reached $257bn in 2011, up from $211bn in 2010, with China, Germany, the US, Italy, and Brazil ranking as the top countries for investment in 2011.
Against the wind
The UK has the best wind resources in Europe. However, it pays 20% more for wind energy than Germany, the world’s largest user of wind power, despite the fact that both countries use a quota system for large-scale wind energy. The UK is trying to reach a goal set by the EU, to produce 20% of its energy from renewables by 2020.
“The UK has to make up for lost ground,” says Mark Livingstone, an energy expert at PA Consulting Group, who says that the country's late entrance in the market is hindering its efforts to achieve the EU goal.
To meet the UK’s low-carbon objectives, its Department of Energy says that £110bn ($175bn) of new capital investment in generation and transmission is needed. “Much of that investment will have to come from foreign sources in Europe, China, North America and, potentially, the Middle East,” says Mr Livingstone.
According to Scott Flavell, also an energy expert at PA Consulting, there is no shortage of investors allocating capital to green energy projects. He says that fund managers, including Australia-based Industry Funds Management and private equity firm Macquarie, have shown interest in investing in the UK's renewable energy sector.
“Traditionally, there has been a lot of foreign interest in the UK energy sector because it is one of the oldest, more established and liberalised energy markets,” says Mr Flavell. “French, German and Spanish investment has [been made] on the expectation that all European energy markets will be liberalised in the same way, although this is developing very slowly.”
The UK government is not targeting one particular technology, with both wind and nuclear power generation offering viable options. “Many people are very opposed to nuclear but are supporting it because they see it as one of the only options for sustainable [energy] generation in the UK,” says Mr Flavell.
Currently, three nuclear power plants are in development in the UK. Paris-based electric utility company Électricité de France, which has extensive experience of nuclear power generation in its domestic market, is the lead developer of the new 3.3-gigawatt (GW) nuclear power station at Hinkley Point C, in the south-west of the country. On completion, Hinkley Point C will be one of the most advanced nuclear power stations in the country.
In late October 2012, Japanese technology firm Hitachi announced its acquisition of Horizon Nuclear Power, a joint venture set up in 2009 by RWE npower and E.ON to build new nuclear power stations in the UK. Hitachi executives have confirmed the company's intentions to progress with Horizon’s plans to build new nuclear plants in Wylfa, north Wales, and Oldbury in the West Midlands region of England.
“The Horizon consortium was set up by two German utilities [RWE npower and E.ON],” says Mr Livingstone. “But with the German government decision [against] nuclear power, they chose to exit this development and sell their rights.”
A third nuclear consortium, NuGen, includes France’s GdF Suez and Spain’s Iberdrola. It has plans to build a nuclear plant Sellafield, in north-west England, and expects to make a final investment decision by 2015.
Whether the UK meets its diversification goals by developing its wind or nuclear power capabilities will be a decision made on a national level. In other countries, however, energy decisions are made at a provincial level. In Canada, for example, federal policies toward green energy are peripheral. This has led to the development of a wide range of energy generation facilities. In Alberta, oil and gas is the main source of energy. In Manitoba and Quebec, it is hydropower.
“Each province takes its own approach in terms of energy needs and developing green energy,” says Brad Duguid, minister of economic development and innovation in Ontario. “In Ontario, we have to find ways to make our own energy,” he adds.
While half of Ontario’s power comes from nuclear energy, the province is becoming a leader in cleaner sources of power, including wind, solar and bio-energy. “We will be one of the first jurisdictions to get off of dirty coal,” says Mr Duguid.
Renewable energy projects in the pipeline include the Ontario Power Generation Niagara Tunnel, which will divert water from Niagara Falls and generate some 1.6 billion kilowatt hours of electricity annually, and the Lower Mattagami River project, which is northern Ontario’s largest energy project in the past 40 years and will allow a significant amount of new energy to be produced without creating new dams. Another project is a joint venture between Samsung Renewable Energy and US-based wind and transmission company Pattern Energy Group to build a 250-megawatt (MW) wind and photovoltaic plant in Haldimand County, Ontario. The plant is expected to be operational by the second half of 2014.
From the top
At the heart of Ontario’s effort to go green is the province's feed-in electricity tariff programme, launched in 2009 to create new clean energy industries and jobs, boost economic activity and the development of renewable energy technology, and to improve air quality by phasing out coal-fired generation by 2014. The programme calls for 10,700MW of energy to come from renewable sources, mainly wind and solar.
“We are 95% of the way there,” says Mr Duguid. “It is the single largest climate change initiative in North America. The opportunity for FDI is huge. We already have more than C$20bn [$20.06bn] in investment in renewable energy commitments."
Sail Venture Partners is the latest company to invest in Ontario's renewable energy sector. The US-based venture capital firm recently launched a $100m joint fund in Ontario that targets clean technology companies.
Ontario has leveraged about $27bn in private sector investments since the feed-in tariff programme was launched in 2009, according to the Ontario Ministry of Energy. Investment is coming from a range of companies, and from countries around the world, including Germany, South Korea, the US and China.
Ontario’s commitment to renewable energy has also jettisoned the province to take a leadership role in cleantech. For instance, a number of Ontario universities are becoming involved in private sector partnerships such as Smart Grid, a power delivery system that uses advanced information technology to improve the effectiveness and sustainability of energy production and distribution.
“We are considered to be a global leader [in cleantech],” says Mr Duguid. “Every energy customer, including consumers, is on Smart [Grid's] meters. It hasn’t been an easy path. It has taken a fair amount of political courage and a lot of vision on the part of Ontario’s premier, Dalton McGuinty."
As more and more countries are finding out, the transition from fossil fuels to renewable has to begin with leadership from the top. But with the global market for clean energy projected to be worth more than $3000bn by 2020, an increasing number of governments are deciding that their countries can benefit from being part of it.