RECAI: Chief Editor’s note
If you build it, they will come, right?
Wrong.The fact that renewable energy will make up an increasing proportion of the global energy mix is not in doubt — falling capital costs and minimal operating expense will make the numbers stack up for consumers, stable, long-term returns will keep investors happy, and our planet’s finite resources will maintain a sustainability imperative.
However, this does not give the sector a divine right to attract capital, or absolve policy-makers of their responsibility to establish well-considered, stable, transparent energy policy. To reap renewable energy’s full benefits, cost competition will continue to be critical, with capital and soft costs still needing huge improvement.
Rising from the ashes of the global recession, deep pools of capital — from public markets to institutional investors, major corporations to individual consumers — are now searching for attractive investments. The renewables sector should make it easier for them. Aggregation of assets, effective allocation of risk and reward, and structuring of investor opportunities and capital instruments are just some of the ways developers and energy providers can attract and benefit from highly liquid capital.
The use of risk mitigation tools, such as political risk insurance, will also help the sector tap into the most attractive opportunities, increasingly found in emerging markets. The need for tailored solutions and greater collaboration between energy providers and offtakers, exemplified by the mining sector, are becoming critical to opening up new markets.
Our feature on domestic content requirements also flags the perils of ill-considered or blunt policy instruments to deal with the complex challenge of creating sustainable industry. Policy-makers must carefully deploy a range of measures to achieve long-term investment rather than short-term goals motivated by political objectives.
Is long-term policy-making too much to hope for? Perhaps not, at a time when renewable energy continues to ask questions of the affordability of alternatives. Game on!
Global Cleantech Transactions Leader
UK&I Environmental Finance Leader