Posted by: Dr Pano Kroko Churchill | June 13, 2012

Solar Economy

Solar radiation produced, renewable energy, is nearing grid parity globally.

And that is great news…

Mostly because of that approach to grid parity and the resultant prospect of profit as well as a defense to Climate Change all solar, energies received savvy investors’ top priority amongst energy investment choices.

Still overall renewable energy received record investment in 2011 and as a result it also expanded massively.

Yet it also struggled with dwindling political support, plummeting prices and steady attacks from the Fossil Fuel lobby.

As a result, the industry faces several more years of growing pains before it can properly compete with fossil fuels.

By the end of 2011, the global power capacity from renewables was more than 1360 gigawatts, and renewables supplied 20.3 per cent of global electricity, according to Environmental Parliament and the REN21 Renewables 2012 Global Status Report.

Meanwhile, investment in renewables increased by 17 per cent last year to a record $257 billion – six times what it was in 2004, according to a report by the UN Environment Programme.

The UNEP report, Global Trends in Renewable Energy Investment 2012, concludes there were particularly big gains for solar power, which received $147 billion – 52 per cent more than in 2010.

Yet at the same time, solar power companies suffered massive drops in share prices. Six major companies, including Solyndra and Solar Millennium, have sought bankruptcy protection.

The main reason is the steep drop in the cost of solar panels over the last three years, largely due to a switch to large-scale manufacturing. Solar power is now cheaper than diesel in countries such as India.

Many governments,including the UK one, also cut their financial support for solar, as tumbling prices meant consumers did not need such large subsidies to buy a panel. All FIT rates [Feed In Tariff] are reduced across Europe as well and this puts further strain on many solar companies who rely on the long term economic support per Kw/h of solar electricity in order to sustain themselves long term…

So many of the economically weaker houses fold…

And it is normal for weaker firms to fall by the wayside as the ramp up, and consolidation ensues within this nascent industry. Yet the challenge for both institutional investors and for strategic ones and for policy-makers is to regulate the support mechanisms at just the right pace and at the right time.

The trade wars and customs protectionist tariffs do not help very much either.

Best to not monkey too much with the industry as a whole.

Otherwise we might kill the golden sun goose…

Yours,

Pano

PS:

Yet we still need support and action both for the Renewables industry directly and in order to defeat Climate Change through the reduction of Emissions the renewable energy industry achieves.

Still we need to be economical in our thinking.

Because cutting subsidies too fast will stop renewables in their tracks, now the industry is in the dolldrums.

 


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