The recent news that appeared in NYTimes article sends some encouraging signal to the renewable energy sector. The renewable energy sector and more specifically wind power sector is becoming more of a mainstream industry than something that was looked upon as surviving under the aegis of government subsidies. Cases are generally referred to the WTO, when the government remains concerned about any sector that has the potential to generate employment but will be unable to do so due to cheap export of products or services. It is not only the government that remains quite confident about the potential of wind energy sector but also the companies that are into manufacturing of wind turbines.
But another article of Knowledge@Wharton refers about how investment in renewable sector has been affected after the economic crisis in Spain, a country that has been in the forefront of power production from non conventional sources. Excessive subsidies over the past decade has led to over capacity in solar power production, which now is becoming difficult for the government to purchase at a price above the market rate. In Spain the government is yet to declare the new policies that will affect the sector; causing uncertainty among investors. The Spanish experience can be a good learning for any government agencies while framing policies for the renewable energy sector.
More than market volatility, uncertainty in government policy acts as a deterrent for long term investors in the sector. In both the above mentioned articles this becomes visibly clear. This has led to outflow in some of the clean energy funds which have investment in the developed countries.
Same may not be said about the developing countries. Among the developing countries, governments of both India and China have taken more initiative in reducing green house gas emission. The Ministry of Power of Government of India has already introduced trading of Renewable Energy Certificate in two of the power exchanges. To measure the performance of a state, the Indian Central Government will also take into account environmental factors before providing any kind of financial assistance to the state.
To reduce the dependence on imported oil, China has set itself a target to become the largest producer of electric vehicle by 2012. The Chinese car market has been growing almost 50% a year. Similarly, Israel also has set a similar goal to make its transport sector “completely free of petroleum” by 2020. Thanks to the technology and infrastructure developed by the Israeli start-up company Better Place.
Shai Agassi, founder and CEO of Better Place, while delivering the 2009 Alfred Deakin Eco-Innovation Lecture said “Things that brought us to the crisis, will not take us out of it.”
