It might not all be bad
news for the renewable energy industry. While plummeting oil and coal prices
make fossil-fuel power projects more attractive, aggressive government support
is making sure the renewable sector is still in the picture.
"Half of new power
plants were renewables last year. Looking at the next five years, about
two-thirds of total power plants will be filled by renewables, in particular
hydropower, solar and geothermal," said Fatih Birol, chairman of the
International Energy Agency (IEA), on Monday.
Speaking at an energy
conference in Singapore, Birol explained that while alternative energy sources
are competing with cheap coal prices, new government policies are giving
renewables extra leverage.
"Renewables are
becoming a mainstream fuel. They are thought to be mainly driven by OECD
(Organization for Economic Cooperation and Development) countries, but we
expect that in the next five years, two-thirds of global renewables will come
from emerging countries, led by China and India," he said.
Ahead of the United
Nations's climate change summit in Paris this December, the world's governments
have pledged to reduce their carbon emissions footprint -- and renewable power
will play a key role in attaining this. India for example, has pledged to
source 40 percent of its electricity from renewable and other low-carbon
sources by 2030.
But, Birol warned, it is
vital that government are consistent and follow through with their plans.
"My main suggestion to
governments is if they have a renewable support program, be consistent with it
and don't change it every year or so since it give unpredictable signals to
investors."
He singled out China as a
particularly aggressive player, noting that Chinese renewable technology, along
with nuclear power, will soon become one of the country's major energy exports.
Indeed, the State Grid Corp
of China, the country's state-owned utility firm, believes by 2050, China's use
of clean energy will be more than 80% of the country's overall energy mix.
Moreover, the dramatic
decline of renewable prices is a further boost.
In the U.S. solar energy
pricing is at a record low, research from the Lawrence Berkeley National
Laboratory shows, and further falls are expected. Power from large utility-sale
solar plants will be selling at below the price of electricity from natural gas
by 2021, the research said.
The IEA's overall bullish
stance on renewables comes amid a dismal outlook for oil.
As the price of the
international benchmark Brent continues to trade below $50, Birol expects ample
supply to last until mid-2016. And despite lower prices benefiting consumers,
he warns of wider consequences. Investment into upstream oil production has
declined by more than 20 percent this year, with North America and Brazil
making most of the cuts, he said. According to IEA estimates, the losses are
set to continue next year, which will mark the first time in two decades that
investments have decreased for two consecutive years.
Further proof of growing
optimism in renewables can be seen in employment trends.
Direct and indirect
employment in renewable energy rose 18 percent last year while the oil and gas
sector shed more than 200,000 jobs since mid-June last year, Reuters reported,
citing data from the International Renewable Energy Agency and Swift Worldwide
Resources.
(www.cnbc.com)