Renewable Energy - Just How Sexy is It?

Filed in archive Alternative Energy , Market , Opinion , Renewable Energy on April 25, 2006

This article is co-authored by Hans De Keulenaer and Michael Olivo. Hans De Keulenaer is the Manager for Electricity & Energy at the European Copper Institute. He maintains the Sustainable Energy Blog.

Hans establishes the quick stage for this article by providing information on the most attractive countries for renewable technology/energy investment; he also provides some detail about their decision-making considerations for investment in those countries. After Hans' introductory material, Michael provides a brief op-ed commentary.

Top 5 countries to invest in renewable energy

According to the Ernst & Young Renewable Energy Country Attractiveness Index, the 5 most attractive countries for investment are Spain, USA, Germany, UK and India, in that order.

The index provides an overall score for renewable technologies that are currently entering the market on a large scale, i.e. wind, solar and biomass. Wind as the most important renewable from a business perspective today, is weighted 85%, solar and biomass respectively 5% and 10%. For each technology, an index is constructed based on a mixture of infrastructure and technology factors:

- Infrastructure (35%): Market risk, Planning & grid connection issues, Access to finance

- Technology (65%): Power offtake attractiveness, Tax climate, Grant/soft loan availability, Market growth potential, Current installed base, Resource quality, Project size

Financial aspects, i.e. access to finance, power offtake attractiveness, tax climate and grants/soft loans, often regarded as the critical factor of success for renewable energy sources, are weighted together 35.5%. They're a very necessary, but far from sufficient condition for development.

Addendum May 3

Meanwhile, E&Y updated the index with a Spring 2006 edition the top 5 remains the same, but India took the 4th position from UK. Also Portugal, China and Ireland are becoming (slightly) more attractive, according to the index.

Setting aside this informative post:

So how sexy is renewable energy? I imagine a meeting where a bored of directors is considering getting into the new renewable energy arena...

Exec... Director to the bored, "We might consider investing in new wind generation capacity of 500 MW but first we must consider the Tax Climate and what about the Market Risk, and for that matter the Grid Connection Issues? With all this Planning and the Lack of Soft Loan Availability, I'm not sure if the Weighted Factors considering the Offtake Attractiveness would be supported by our Infrastructure ...

Sounds sexy to me...