It’s one thing to have renewable energy as a stated policy goal, as in: “Our government supports an increase in using more energy from renewable sources.”
It’s one thing to have solar panels on individual houses, or wind turbines on small corporate properties.
Large scale investment in renewable energy? That’s another thing entirely.
According to the World Bank, investors are still leery of putting their money in large projects devoted to renewable energy – plants to harness solar, wind and wave power – even though these projects have proven technical viability and long-term benefits. To investors, they still seem too risky, too troublesome and too expensive.
Clearly, this is one place where the free market model falls short. Objectively, we can see that investment in renewable energy is a wise long term solution to a very real problem; yet, there is insufficient motivation for a private company – and the majority of power companies are privately held – to make the investment in the short term. So how do we change it? Require government take-over of utilities? Create a financial structure (tax cuts, credits, or rebates, perhaps) that would motivate an energy company to invest in renewable energy? Every government action must (or at least should) be funded; so where does the money come from? What programs would be cut or given less funding to pay for this? And of course, how would the question of investment in renewable energy even become part of the debate in a place like the United States where only 29% of the public believe that dealing with climate change should be a top governmental priority?
The World Bank’s private sector division, IFC (International Finance Corporation), has been investing in renewable energy projects around the world in order to overcome such difficulties. Chile is touted as a prime example of how this partnership between IFC and local companies can have an enormous impact on a country’s energy picture.
As of 2012, the vast majority of Chile’s energy came from fossil fuel sources with only 37% coming from alternative, renewable sources. With IFC’s assistance (over $450 million invested in hydro, solar and wind energy projects), and with legislative requirements put in place by the Chilean government, Chile is projected to get over half (55%) of its energy from renewable resources by the year 2024. Not only will the people of Chile benefit from the clean energy thus produced, but money that is not spent on importing fossil fuels will be available for any number of pressing local uses. IFC hopes that Chile will be a vivid example to investors around the world. Check out the short video that details much of this information here: http://blogs.worldbank.org/voices/making-renewable-energy-happen
In addition to financial investment, the World Bank is engaged in programs to map the renewable energy resources of cooperating nations in detail (REMP). Wind patterns and strength and solar radiation are among the kinds of information being gathered. Knowledge of resources gives governments, commercial developers, private investors and donors the information they need to act confidently and with assurance in building and investing in new technology that is necessary to address future needs. The goal of this data collection program is to increase the proportion of renewable energy used in sub-Saharan Africa and Southern Asia, a mere 1.6% and 1.8% of all fuels used in 2010, respectively.
What do you think? How can private energy companies be encouraged to invest in renewable energy? Is a shift in public opinion enough or must there be governmental incentives and/or outside investment such as IFC? Will having more information about renewable energy resources, such as that gathered under the REMP programs, encourage dialogue about energy options and investment? Share your thoughts with us in the comments below.