Renewable energy in the 21st century: a two-step plan

Renewable energy is infinite and does not emit greenhouse gases. It also increases a country’s independence and security. This happens in two important ways. First, by replacing fossil-fuel imports and thus strengthening a country’s balance of payments, and secondly, by making power generation less dependent on the market value of fossil fuels – something importing countries have little control over – thus stabilizing prices. Energy security and price stability will become increasingly important for policy-makers in a world still riven by tensions over resources.

We know that renewable energies generate economic wealth and regional development. A European study by Ernst &Young showed that in countries with no fossil resources, investing in a wind farm had an impact on GDP 3.5 times greater than investing in a Combined Cycle Gas Turbine plant, while the wind farm created more jobs in the EU.

Furthermore, the development of renewables brings new opportunities, such as cutting-edge technologies, skilled jobs and significant export opportunities.

In addition, renewables are proving both economical and increasingly competitive compared with traditional resources. The cost of alternative energies has plummeted in recent years: wind turbine prices by 30% and the cost of installing solar panels by half. According to McKinsey (Global Solar Initiative), onshore wind will be up there with gas and coal by 2015.

So, who will renewable energies benefit the most? Firstly, fast-growing, energy-hungry economies, who want power systems that are predictable, quick to assemble, easy to integrate and don’t damage the environment. Secondly, countries planning to widen access to energy, improve energy security and increase their energy independence. This is because new renewable-energy generators can become operational in less than two years. Compare this with an average of almost five years for the development of conventional power plants.

Renewable energy plants have the added advantage of being scalable: they can be configured in different sizes without necessarily requiring a minimum size to make a project profitable. Almost a fifth of the world’s population does not have access to electricity, which makes the introduction of wind and solar power all the more attractive.

Finally, renewable energy plants are reversible. If existing technologies were to become outdated in a few decades, it would be relatively easy to remove the plants, change their location or even transform them for alternative uses. Unfortunately, we can’t say the same for most other types of energy and their associated technologies.

However, structural change in a country’s energy system is not easy to bring about. Energy policy requires long-term political commitment and the strength to rise above political power play.  The introduction of any new technology can threaten the status quo and ruffle energy-industry feathers.

This is one reason why any society wanting to build its energy architecture for the 21st century needs to follow two very basic rules before starting on the road to a cleaner and more sustainable future.

The first rule is the simplest and the most difficult: reform must be a common goal that enjoys multi-party support and the approval of most of the population. (For this, it’s necessary to be transparent about the costs, benefits and implementation of the new policy.)

The second rule is almost as challenging: governments must develop a long-term strategy accompanied by a clear set of policies. These policies have to be flexible enough to adapt to fluctuations in the world economy, without sacrificing its long-term objectives.

There are, of course, more rules and ideas on how to proceed. Very recently, the International Energy Agency detailed the most logical and tried-and-tested of them in its report Tracking Clean Energy Progress 2013.

It is to be expected that entrenched interests will do their utmost to maintain the status quo and prioritize short-term private gain over longer-term social and economic benefits. That is why, as with the introduction of any other game-changing technology, the key is to win political and social support.

Read the Global Energy Architecture Performance Index Report 2014.

Author: José Manuel Entrecanales is Chairman and CEO of Acciona

Image: A woman is silhouetted next to a solar panel display in Tokyo March 2, 2011. REUTERS/Yuriko Nakao