- Renewable
sources currently provide 13% of the world’s energy needs. The main
sources of renewable energy at present are geothermal and hydro-electric
power and biomass.- Scope
for increasing the contribution of geothermal and hydro-electric is
limited by geology. Scope for private-sector involvement is limited
because building dams means turfing people out of their homes, so large
scale hydro-electric projects are undertaken only by governments. - Biomass
provides 10% of the world’s primary energy needs, mostly in developing
countries, where villagers burn cow dung on basic stoves. There are few
niches in developed markets: in Britain
councils increasingly require new developments to get a 10-20% of their
energy needs from renewable sources. Putting a biomass water-heater in
the basement tends to be easier than sticking a windmill on the roof. - The
technology for producing electricity from biomass has not changed much in
recent years, and shipping manure and woodchips over long distances is
expensive.
- Scope
- That
leaves wind and solar power as the main sources of growth. According to
the US Department of Energy, America
entire energy needs by covering a mere 1.6% of its land area with solar
cells. - Wind
and solar energy already play an important part in a few countries. Around
20% of Denmark
electricity comes from wind and about 80% of China
energy. But worldwide those two energy sourced barely register. Currently,
however, the two are enjoying their bigger boom ever. Solar photovoltaic
power has grown by an average 41% a year over the past three years; wind
has grown by 18% a year. - During
the wind boom of the 1970s turbine blades were around 5-10 meters long,
and turbines produced no more than 200-300 kW of energy each. The energy
they produced cost around $3 per kWh. Now the blades are up to 40 meters
long and turbines produce up to 2.5 MW each at a cost of 5-8 cents per kWh
(Note: Coal-fired electricity, depending on the plant, costs 2-4 cents per
kWh). There are even 5MW prototypes in existence with 62 meters blades. - The
efficiency with which solar photovoltaic cells convert sunlight to
electricity has increased from 6% when they were first developed to 15%
now. The costs have dropped from around $20 per watt of production
capacity in the 1970s to $2.70 in 2004 (Note: A silicon shortage has pushed
the price up since then). - There
are three different ways in which governments have set up subsidies
systems for the proportion of their country’s energy that should come from
renewable sources:- Germany
and France’s feed-in tariffs give generators a fixed payment for the
electricity they provide. This system is expensive but effective. Wind
and solar energy has both grown fast in Germany. The guaranteed price of
solar energy at 54-57 cents per kWh is especially generous against 8.4
cents for wind. Germany’s feed-in tariff means that, as a generator of
solar power you sell power to utility at 50 cents and buy at 20 cents, a
net profit of 30 cents. The payback period for a solar panel in Germany
is eight or nine years but the price for the electricity it generates is
guaranteed for 20 years. Approx. 90% of output from Suntech, a leading
company in generation of solar energy, goes to Germany thus making
Germany the principal source of Mr. Shi’s wealth. The adverse consequence
of this system is (i) silicon shortage which push up price of solar
panels for use in countries that are sunnier than Germany and (ii) a big
bill for taxpayers and electricity consumers (The feed-in system may cost
consumers an extra 2 billion – 2.9 billion euros a year in high energy
prices. - Under
Britain’s Renewables obligations, a set proportion of the electricity
that power distributors buy must come from renewable sources; if they
fail to do so they need to put money into a pot to be shared among the
renewable providers. The system is complex and the resulting price is
uncertain. This explains the discrepancy between planned and built
capacity. Two adverse consequence of this system are: (i) The pot of
money is divided between few developments, which are therefore highly profitable;
(ii) Britain will not meet its target of producing 10% of its electricity
from renewable by 2010. - America’s
production tax credit gives renewable-energy producers 1.9 cents per kWh,
enough to encourage plenty of investments in wind. The system is
unpredictable. The government has failed to renew the system in some
years thus resulting in a slump in the business.
- Germany
Source: The Economist, June 2nd 2007. (“Sunlit Uplands”
pp. 16-20)