There are so many nonsensical comments about renewables and, surprisingly, even very intelligent people also make unfounded and unintelligent comments.
What this demonstrates is how deep passions run when it comes to criticising against renewables. The evidence is usually not very well assembled and is often poorly substantiated. Here is an example: someone said that the wind sector was in trouble. The evidence? The share price of a reputable company had gone down. This was read as a sign that renewables and the cleantech sector were about to collapse. But, if one took a five-year view of the company in question, as well as its underlying assets, it became evident that the company was doing quite well.
Just because Chesapeake, a shale gas company, is somewhat in trouble at the moment does not suggest that it or that the shale gas industry, for that matter, is about to collapse. The shale gas industry may well be in a price bubble, but that is a different matter altogether. The overzealousness displayed in the US shale gas industry will be corrected when the price bubble bursts.
Despite the slowdown in the global economy and the trouble in Europe, the cleantech sector is still doing well. The recent Grant Thornton study for 2012 confirms this view. The report notes that cleantech sector investments, a large share of which comprises renewables investments, are expected to double from the current $180-billion to $360-billion.
A McKinsey study, titled ‘Solar Power: Darkest Before Dawn’, reinforces this view, pointing out that installed solar capacity is likely to amount to between 400 GW and 600 GW by 2020. The only other energy source posing stiff competition for renewables is natural gas.
The recent BP ‘Energy Outlook for 2012’ report conveys the same message. Seven years ago, nobody would have predicted that photovoltaic (PV) energy prices would come down so fast – they have declined by 70% or so and more price reductions are predicted.
There is need for common sense to prevail and for a measured approach to new energy technologies, rather than to allow ourselves to be influenced by prejudices and ruling new technologies out because of ignorance. A study of the history of technology will be a sobering reminder that one must take a realist and pragmatic view of things. Technologies have their own patterns of boom and bust cycles.
Infant technologies are only starting to gain market share because they are coming from a low base. Their growth rates will be high initially – until their growth stabilises and plateaus. Hundreds of companies and players will want to be part of the action.
It is interesting to note that there are close similarities between the shale gas and renewables industries: both offer spare capacity for returns. There is a ‘gold rush’ at present but not everybody will survive. There will be charlatans, renters and serious people. Perhaps the ‘puntocrats’ against renewables did not read Schumpeter’s thesis on creative destruction.
Some governments will throw money at good and bad ideas. Some ideas that are good will prove too difficult to complete. The appropriate thing to do is to ensure the right collaboration and not to be dictated to by nationalistic triumphalism because technology development and pathways can have an element of national ego in the mix. Done for these reasons, folly will most certainly punish you.
The Joule is a classic example, not of folly, but of a lack of sufficient resources to see things to fruition. Nonetheless, what we have lost as a market for electric vehicles, we have gained in capability. The developers of the Joule are now shifting their focus onto electric buses. Perhaps this is where they should have started. In general, we have been quite good adopters rather than developers of technologies. I am sure I will be challenged for this assertion but the evidence is compelling in a range of technologies.
Will the development of electric cars around the world be stopped? No. Will some car companies that try to develop them fail? Yes, of course, but others will succeed. This is the natural way technologies evolve. The variety of companies and players testing different permutations and optimising and refining renewables and other clean technologies begin to tell you a story that nobody buys the idea that we must succumb to idleness and wait till the final drop of fossil fuel has been consumed.
New energy technologies should have been aggressively pursued during the 1970s oil crisis. It is a pity we did not because we should not be having this debate about whether we are doing the right thing or not. All bets must be taken but there must be a dose of realism. The US has a big bet on the longevity of shale gas and, in so doing, it is undermining potential energy-related technological innovations in its own country.
However, China is thinking differently. It is a good example of a gigantic guzzler of fossil fuels that is also rolling out one of the largest renewables programmes in the world, comprising electric cars, solar water heaters, and wind and PV technologies.
China is also making great strides in lowering its energy intensity through vast energy efficiency interventions.
Simultaneously, an enormous amount of work is under way with respect to battery and storage technology innovation. This is certainly a space to watch. But forgive me for being optimistic: nobody will ever make the mistake of the 1970s again of starting ventures in new energy technologies and stopping midway. Astute governments with resources are taking a different view on the future because they are not going to make the folly of betting on just one thing anymore and they certainly will not repeat the mistakes of the 1970s of stopping midway.