Big names including Google and BT are starting to generate their own renewable energy, and it’s set to become big business, says Emily Farnworth

When wind turbines have been used for generating electricity for more than 150 years and for pumping water for millennia, it seems odd that it has taken so long for renewables – in the modern sense – to be appreciated as a desirable, affordable and necessary part of the world’s low-carbon energy mix.

In the face of rising demand for – and price of – fossil fuels, a series of positive announcements last year suggest that 2008 might spell a new coming of age for renewables as a viable and popular mass energy source for the 21st century.

In November, Google announced a new initiative to develop electricity from renewable energy sources that will be cheaper than electricity produced from coal. The newly created initiative, branded RE

Although one gigawatt can power a city the size of San Francisco, it is the financial implication of Google’s ambition that makes the announcement so important – that clean green energy can be cheaper than coal will remove a long-standing market barrier. For an industry with growing energy demands, mainly due to increased data centre capacity, it is not surprising that the organisation wants to secure a sustainable source of power.

BT has announced major plans to develop 250 megawatts of wind energy in the UK by 2016 as part of a £250 million wind power project in Scotland and Cornwall – enough to power a city the size of Coventry, or a quarter of BT’s requirements.

Google and BT are not the only companies making a business case for renewable energy. A coalition of European companies – the Green Power Market Development Group – has already completed more than 100MW of green power projects and purchases since 2005, providing more than 50 corporate facilities in 16 European countries with green power. The coalition’s more established US counterpart has developed more than 700MW of renewable energy since 2000 and is on its way to meet the goal of 1,000MW of cost-competitive green power.

Signs of competition

Stock market flotations and mergers are other important indicators that renewable energy is beginning to compete. In December, Iberdrola Renovables completed the world’s fourth largest flotation of 2007, raising $6.6 billion. According to some, it single-handedly boosted the global clean energy’s share of total funds raised by the energy industry on the public markets in 2007 to about 17 per cent.

Germany and the UK are taking big strides to bolster renewable energy demand. Germany’s new climate change package includes plans to provide 25-30 per cent of the country’s energy needs from renewables (up from the current 12 per cent), while the UK has backed a major expansion of offshore wind power that aims to bring 33GW of offshore capacity online by 2020 – potentially meeting about a fifth of the UK’s electricity needs. China has committed to doubling its renewable energy targets to 20 per week by 2020, while in the US, renewable targets are increasingly being set at state level.

While the sector is repeatedly beating all forecasts, the scale of the challenge is certainly not for the faint-hearted. Barriers to faster deployment include a poor understanding of the business case (companies often dismiss renewables as being too costly despite evidence to the contrary), lack of resources and technical understanding of renewable energy technologies, and a tendency to conduct “business as usual”.

Moreover, setbacks caused by public opposition to renewable energy projects, a not-in-my-back-yard attitude, and a fragmented regulatory framework are making it difficult to get more renewable energy development in the pipeline. Although global investment in clean energy rose by 35 per cent last year to $117 billion, this is countered by IEA World Energy Outlook’s estimate that a massive $22 trillion of investment is needed in energy infrastructure by 2030 if rises in energy demand are to be met.

This low-carbon challenge will require a new level of international leadership and collaboration between governments and companies. What we can celebrate now is that clean green energy is attracting new champions to evidence and lead the economic case.

Emily Farnworth is director of the corporate leadership programme at The Climate Group.
efarnworth@theclimategroup.com
www.theclimategroup.com