Global upsurge in renewables projects poses dilemma for energy investors

Martin Wilcox
19 October 2018

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Green energy

Mott MacDonald’s global practice leader for integrated energy systems Dr Martin Wilcox explores how renewables are disrupting the energy market. What should investors listen to - head or heart?  

With exciting developments in the renewables market across the world, it’s an exciting time for energy investors. Should you invest in markets with aggressive renewables targets where you know money can be made, such as the Middle East, China or India? Or should you be encouraged to invest in developing countries in Africa and Asia where you can make a real difference to people’s lives by providing access to affordable and clean energy, often for the first time? 

All of these contribute to the UN’s Sustainable Development Goals (SDGs) but the balance of weighing up where reasonable profits can be made and making a real difference to peoples’ lives is complex. Head versus heart. I will be hosting a roundtable discussion at the Global Engineering Congress next week to explore the risks and rewards available to investors today.

Joining us at the roundtable will be representatives from Actis which has developed energy projects across Africa, Asia and Latin America since 2004. Actis’ work focuses both on access to power and how infrastructure can be upgraded to help countries build more resilience in their critical infrastructure. Is it possible for focused investments to shift the most coal-reliant economies towards renewables? Also joining us are representatives from Wood Group which has been providing dedicated support to the UK Department for International Trade as it articulates the opportunity for British businesses in the growing market for renewables in the Middle East.

Fresh incentives are driving an upsurge in renewables

There are many interesting stories emerging from the Middle East. Jordan, for example, relies heavily on energy imports. This includes meeting over 97% of its fuel needs for oil- or gas-powered thermal plants. Being dependent on a pipeline in a politically-fractious region brings its risks, so renewables can boost energy security and reduce energy costs. 

Saudi Arabia, on the other hand, is moving away from electricity subsidisation as the cost is no longer economically sustainable. When you charge people the true price of their electricity, it becomes cheaper to install new solar panels, particularly in such a sunny part of the world. While Europe has shifted towards renewables largely due to climate change concerns, other markets have multiple incentives based around political, economic or social benefits.  

In many countries, a new wave of renewables is acting as a catalyst for resilience, independence, political stability and increasingly economic benefits. Are renewables now passing the tipping point where they are deemed attractive as a financial consideration rather than just a conscientious choice, reliant on subsidy? Some investors are beginning to think so. 

Innovation in energy storage will boost the potential of renewables 

These are pertinent questions for the research and development community too. In recent years, we’ve seen how exciting developments in renewables projects have disrupted traditional energy industries around the world. This is partly due to improvements in energy storage, such as high capacity batteries. Countries are now starting to include storage within their strategic renewables plans from the outset, so there is a golden opportunity for innovators and entrepreneurs who can quickly bring affordable and effective storage technology to the market. Orders with the major energy storage vendors are growing exponentially. 

Whereas once we talked about progress in terms of decades, we now speak in terms of years and months, with exciting new projects showing that we have just scratched the surface of what’s possible with renewables. Could ‘runaway renewables’ be the phenomenon that staves off ‘runaway climate change’? 

Martin Wilcox will be exploring these ideas further in a roundtable discussion during the Global Engineering Congress in London on Friday 26 October. If you are interested in hearing more contact Kellee.Hosking@mottmac.com