RECAI: Chief Editor’s note

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Diversify and conquer

Speculation over the likely impact of the oil price drop on renewables has dominated the headlines. However, we must avoid oversimplified conclusions that assume the two are mutually exclusive, or confuse short-term fluctuations with long-term objectives.

The economic, societal and environmental fundamentals underpinning the case for a diversified generation mix in achieving secure and affordable energy are increasingly coming to the fore, removing the black and white choice between renewables and conventional fuels.

These diversification and energy security themes run through our feature articles on the energy revolution underway in India and Sub-Saharan Africa.

In an exclusive interview, Piyush Goyal, India’s Minister for Power, Coal and New & Renewable Energy, emphasizes how important it is for renewables to work alongside other forms of generation, and the need for a healthy balance between competition and support for domestic enterprises in identifying the most cost-effective long-term technologies and solutions.

He also talks about how critical private sector engagement and broader reforms are to making the Indian market attractive to foreign investors and developers.

In our Africa focus, Andrew Herscowitz, Coordinator of the Power Africa initiative, also reinforces the need for public-private sector collaboration in breaking down investment barriers and creating tailored solutions that meet the energy needs of individual markets.

Surely we are beyond the fossil fuel vs renewables debate?

Suppressed oil prices perhaps highlight the need to continue driving down cost, and think more keenly about the broader benefits of renewables.But the reality is that, even with oil at US$50 per barrel and the natural gas renaissance in full flow, wind, and increasingly solar, are equally affordable without subsidy. These technologies are also expected to get cheaper over the next few decades. Can the same be said for fossil fuels?

Let’s continue to focus on achieving the right balance of energy sources in any particular market, with collaboration and transparency key to this.

Let’s continue to innovate through demand side management and market reform, with competition a critical enabler. And let’s continue to drive down costs to ensure renewables can sit comfortably with conventional generation.

Finally, let’s not get distracted by temporary oil price shifts.

Ben Warren
Global Power & Utilities Corporate Finance Leader