Renewable energy is moving towards commercial viability but governments have a large part to play before it gets there, say international experts at this week’s Clean Energy Expo Asia in Singapore.
The prohibitive cost of adopting renewable energy was a significant topic of discussion at panel discussions on Wednesday, which focused on the development of the renewable energy industry worldwide and particularly in Asia. Speakers stressed the necessity of overcoming cost barriers in Asia-Pacific countries.
“The Asia-Pacific region is the frontline in the fight against climate change,” said Asian Development Bank’s Samuel Tumiwa. The Asia-Pacific currently leads the world in both economic growth and the use of fossil fuels.
Mr Tumiwa, ADB’s planning specialist in its regional and sustainable development department, said ADB estimates show that energy demand in the region will grow by about 2.6 percent annually, with most of the increase coming from more highly developed countries including Australia, Japan, Korea and Singapore. By 2030, Asia will account for almost half of the world’s greenhouse gas emissions.
The projected energy consumption of Asia will affect not only climate change but the energy security of the region. For this reason, governments around the region need to take a leading role in developing the renewable energy industry.
Political will is key, noted Richard Finlayson, head of the Asia Asset Finance and Leasing Group at Deutsche Bank AG Singapore. He noted that renewable energy is still not price competitive with fossil fuels. As a result, it is currently driven by political agendas – governments use it to create jobs and to maintain their image.
In contrast, the private sector may be wary of financing technology which is relatively new and unfamiliar. “A lot of the economics around clean energy rely on government support;” he pointed out, “There isn’t a lot of activity on the financing side.”
One example of how government support drives the industry can be seen in China, which leads Asia in the race towards renewable energy.
Equity for the renewable energy industry in China is derived almost entirely with the backing of state banks. This makes China one of the few countries in the world where financing for the industry has not been constrained by the economic downturn of the last few years.
Figures from Bloomberg New Energy Finance show that the Asia-Oceania region leads the world for capital raised in the renewable energy industry, with China predictably at the forefront.
Many European countries, seeking alternative ways of raising capital, have introduced incentives to encourage individual consumers to adopt renewable energy.
Magarida Monteiro from DTS Group explained Portugal’s policy to encourage citizens to produce their own wind energy. The national grid buys back excess power at a price equal to four times the cost of its production. In 2009, almost 10,000 homes in Portugal were producing their own power.
The government has set an ambitious goal that 40 percent of Portugal’s energy will come from renewable sources by 2020. “We think renewable energy will be the future for Portugal and other countries,” said Ms Monteiro.
Encouragingly, the cost of renewable energy is dropping as suppliers begin to feel the pressure to reduce the cost of technology, said Mr Tumiwa.
“Manufacturers are squeezing the margins of their technology suppliers to bring their prices down, and it is going to get more and more competitive,” he said, citing the falling cost of wind power as an example. The support of governments will speed this process up greatly, he added.
Roy Adair, chief executive officer of Hydro Tasmania, suggested that beyond financial support, governments and regulatory bodies can also smooth the way for the industry’s development by creating a consistent global carbon market.
“I’m hoping to see a more formal carbon price introduced around the world so that the market mechanisms for renewable energy can start working,” he said.
Eco-Business.com’s coverage of the Clean Energy Expo Asia 2010 is brought to you by Conchubar Capital Management.
Click here to read all stories from the Clean Energy Expo Asia 2010.
