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| | == Rationale for <span data-scaytid="6" data-scayt_word="Renewables">Renewables</span> == | | == Rationale for <span data-scaytid="6" data-scayt_word="Renewables">Renewables</span> == |
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| | [[File:Economics of RE 1.PNG|thumb|right|300px|Investments in Renewables in 2012. Source: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance]] | | [[File:Economics of RE 1.PNG|thumb|right|300px|Investments in Renewables in 2012. Source: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance]] |
| | <div></div> | | <div></div> |
| − | According to <span data-scaytid="11" data-scayt_word="REN-21’s">REN-21’s</span> <span data-scaytid="9" data-scayt_word="Renewables">Renewables</span> Global Futures Report 2013, the future of renewable energy is uncertain as finance remains a key challenge. The future of the <span data-scaytid="5" data-scayt_word="renewables">renewables</span> industry depends on finance, risk-return profiles, business models, investment lifetimes and a host of other economic, policy and social factors. Many new sources of finance are possible such as insurance funds, pension funds and sovereign wealth funds along with new mechanisms for financial risk mitigation. Many new business models are also possible for local energy services, utility services, transport, community and cooperative ownership, and rural energy services <ref name="Appleyard, D., March 2013. The Future of Renewables: Economic, Policy and Social Impications - Renewable Energy World International. Available at: http://www.renewableenergyworld.com/rea/news/article/2013/03/from-the-editor20">Appleyard, D., March 2013. The Future of Renewables: Economic, Policy and Social Impications - Renewable Energy World International. Available at: http://www.renewableenergyworld.com/rea/news/article/2013/03/from-the-editor20</ref>. | + | According to <span data-scaytid="11" data-scayt_word="REN-21’s"></span>[http://www.ren21.net/REN21Activities/GlobalFuturesReport.aspx REN-21’s Renewables Global Futures Report 2013], the future of renewable energy is uncertain as finance remains a key challenge. The future of the <span data-scaytid="5" data-scayt_word="renewables">renewables</span> industry depends on finance, risk-return profiles, business models, investment lifetimes and a host of other economic, policy and social factors. Many new [[Portal:Financing and Funding|sources of finance]] are possible such as insurance funds, pension funds and sovereign wealth funds along with new mechanisms for financial risk mitigation. Many new business models are also possible for local energy services, utility services, transport, community and cooperative ownership, and rural energy services <ref name="Appleyard, D., March 2013. The Future of Renewables: Economic, Policy and Social Impications - Renewable Energy World International. Available at: http://www.renewableenergyworld.com/rea/news/article/2013/03/from-the-editor20">Appleyard, D., March 2013. The Future of Renewables: Economic, Policy and Social Impications - Renewable Energy World International. Available at: http://www.renewableenergyworld.com/rea/news/article/2013/03/from-the-editor20</ref>. |
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| | In 2011, the global investment in renewable power and fuels increased by 17% to a new record of $257 billion dollars. Significantly, developing economies made up 35% of this total investment <ref name="Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance, 2012. Global Trends in Renewable Energy Investment 2012, Frankfurt am Main, Germany: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance.">Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance, 2012. Global Trends in Renewable Energy Investment 2012, Frankfurt am Main, Germany: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance.</ref>. | | In 2011, the global investment in renewable power and fuels increased by 17% to a new record of $257 billion dollars. Significantly, developing economies made up 35% of this total investment <ref name="Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance, 2012. Global Trends in Renewable Energy Investment 2012, Frankfurt am Main, Germany: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance.">Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance, 2012. Global Trends in Renewable Energy Investment 2012, Frankfurt am Main, Germany: Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance.</ref>. |
| | <div> | | <div> |
| − | Despite these trends, <span data-scaytid="16" data-scayt_word="RETs">RETs</span> continue to face a number of barriers <ref>These barriers can be financial and economically such as, higher upfront costs, political and regulatory (generally policies do not favour renewable technologies), environmental and social (e.g. planning objections), technical (e.g. intermittent nature of renewable technologies), or related to the scale of the projects, mainly higher transaction costs. To create a level playing field for renewable technologies, all the barriers mentioned above need to be addressed, but the crucial starting point is a supportive and stable policy and regulatory framework. This will encourage greater investment on the part of financial institutions. (United Nations Environment Programme Finance Initiative (UNEP FI), 2004)</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> | + | Despite these trends, renewable energy technologies (<span data-scaytid="16" data-scayt_word="RETs">RETs)</span> continue to face a number of barriers <ref>These barriers can be financial and economically such as, higher upfront costs, political and regulatory (generally policies do not favour renewable technologies), environmental and social (e.g. planning objections), technical (e.g. intermittent nature of renewable technologies), or related to the scale of the projects, mainly higher transaction costs. To create a level playing field for renewable technologies, all the barriers mentioned above need to be addressed, but the crucial starting point is a supportive and stable policy and regulatory framework. This will encourage greater investment on the part of financial institutions. (United Nations Environment Programme Finance Initiative (UNEP FI), 2004)</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> |
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| | When assessing decisions to support RET’s, policy-makers need answers to the following questions:<br/> | | When assessing decisions to support RET’s, policy-makers need answers to the following questions:<br/> |
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| | = <span style="font-size: 19px; line-height: 23px;">Costs of Renewable Energy</span> = | | = <span style="font-size: 19px; line-height: 23px;">Costs of Renewable Energy</span> = |
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| | '''2. It is more expensive to deliver non-renewable energy in some places than others.'''<br/> | | '''2. It is more expensive to deliver non-renewable energy in some places than others.'''<br/> |
| − | *For example, rural communities in developing countries are often not connected to the grid, resulting in "off-grid" energy production - particularly solar power - being more competitive<ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref>. | + | *For example, rural communities in developing countries are often not connected to the [[Portal:Grid|grid]], resulting in "off-grid" energy production - particularly solar power - being more competitive<ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref>. |
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| | = <span style="font-size: 22px; line-height: 30px;">Increasing the Use of Renewable Energy</span> = | | = <span style="font-size: 22px; line-height: 30px;">Increasing the Use of Renewable Energy</span> = |
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| − | There is significant scope to increase the use of <span data-scaytid="51" data-scayt_word="renewables">renewables</span> especially in developing countries. However, this potential is not limitless. Although it can be expected that the costs of <span data-scaytid="52" data-scayt_word="renewables">renewables</span> will continue to fall relative to fossil fuels, (especially in countries with high renewable energy potential), fossil fuels are likely to retain a cost advantage<ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> | + | There is significant scope to increase the use of <span data-scaytid="51" data-scayt_word="renewables">renewables</span> especially in developing countries. However, this potential is not limitless. Although it can be expected that the costs of <span data-scaytid="52" data-scayt_word="renewables">renewables</span> will continue to fall relative to fossil fuels, (especially in countries with high renewable energy potential), fossil fuels will probably retain a cost advantage<ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span> |
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| − | Therefore:
| + | '''Development:''' |
| | #The basic economics of renewable energy need to be artificially altered, either by increasing the cost of fossil fuel-based energy (e.g. through taxes or equivalent mechanisms), or by reducing the costs of renewable energy (e.g. subsidies), or by boosting the returns to renewable energies (e.g. through paying a premium for this form of energy) <ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref>. | | #The basic economics of renewable energy need to be artificially altered, either by increasing the cost of fossil fuel-based energy (e.g. through taxes or equivalent mechanisms), or by reducing the costs of renewable energy (e.g. subsidies), or by boosting the returns to renewable energies (e.g. through paying a premium for this form of energy) <ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref>. |
| | #Developing countries should not necessarily be required to meet these costs. This is particularly so where the development of renewable energy capacity may place countries at a competitive disadvantage and/or these countries bear no responsibility for climate change. The costs should be met by countries that do bear these responsibilities. This case is even stronger while developed countries are [[Subsidies|subsidizing fossil-fuel energy]]<ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span><br/> | | #Developing countries should not necessarily be required to meet these costs. This is particularly so where the development of renewable energy capacity may place countries at a competitive disadvantage and/or these countries bear no responsibility for climate change. The costs should be met by countries that do bear these responsibilities. This case is even stronger while developed countries are [[Subsidies|subsidizing fossil-fuel energy]]<ref name="Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf">Griffith-Jones, S., Ocampo, J. A. & Spratt, S., 2011. Financing Renewable Energy in Developing Countries: Mechanisms and Responsibilities. Available at: http://erd-report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_griffith-jones-ocampo-spratt.pdf</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span><br/> |
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| | *[[Economic Viability of a Biogas Plant|Economic Viability of a Biogas Plant]]<br/> | | *[[Economic Viability of a Biogas Plant|Economic Viability of a Biogas Plant]]<br/> |
| | *[[Economic Analyses of Wind Energy Projects|Economic Analyses of Wind Energy Projects]]<br/> | | *[[Economic Analyses of Wind Energy Projects|Economic Analyses of Wind Energy Projects]]<br/> |
| − | *[[Energy_Subsidies:_Why,_When_and_How?|Energy Subsidies: Why, When and How?]]<br/> | + | *[[Energy Subsidies: Why, When and How?|Energy Subsidies: Why, When and How?]]<br/> |
| | *[[Macro-economic evaluation of Biogas Plants|Macro-economic evaluation of Biogas Plants]]<br/> | | *[[Macro-economic evaluation of Biogas Plants|Macro-economic evaluation of Biogas Plants]]<br/> |
| | *[[Overview Costs and Benefits of Energy Development Projects|Overview Costs and Benefits of Energy Development Projects]] | | *[[Overview Costs and Benefits of Energy Development Projects|Overview Costs and Benefits of Energy Development Projects]] |
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| | = References = | | = References = |
| | | | |
| − | <references /><br/><br/> | + | <references /> |
| | | | |
| | [[Category:Financing_and_Funding]] | | [[Category:Financing_and_Funding]] |
| | + | [[Category:Wind_Energy]] |
| | + | [[Category:Solar]] |
| | + | [[Category:Hydro]] |
| | + | [[Category:Geothermal]] |
| | + | [[Category:Bioenergy]] |
| | + | [[Category:Biomass]] |
Worldwide more energy is required to enable economic development. Fossil fuels are a finite resource that contribute to climate change and cause other problems like smog, extended supply lines and vulnerable power grids. Utilizing renewables would help to avoid these problems, create new job opportunities and reduce the drain on hard currency for poorer countries. Because conventional fuels have received long-term subsidies in the past, it is vital that governments support the development of renewables in the form of financial incentives that can create a level playing field [1].
In 2011, the global investment in renewable power and fuels increased by 17% to a new record of $257 billion dollars. Significantly, developing economies made up 35% of this total investment [3].
Generally the economics of renewable energy are not competitive, as production costs per unit of energy are usually higher than those for fossil fuels as depicted in the figure below, which shows the relative costs for renewable energy technologies compared with each other, and with non-renewable energy[5].
As shown in the figure, while non-renewable costs are found in the range of US$0.3–US$0.10/KwH (kilowatt hour), most renewables are more expensive and have a far greater cost range. This indicates the relative maturity of technologies and also the key significant cost difference of renewable energy production (which is dependent on factors such as wind speed and degrees of solar intensity.)
These factors suggest that there is scope to reduce the varying production costs of renewables.
It is significant that much of the global solar power is concentrated in developing countries, although other areas also have a high potential.
