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Problem 7

Existing energy generation through renewables is not competitive with current carbon intensive energy sources.

Problem Dimensions

Many renewable energy sources are rarely competitive with conventional energy sources.

• Economic, financial, political, geographical and technological factors are the main obstacles to a fast, large-scale, global development and deployment of Wind, Water, Solar, Geothermal (WWSGs).

Economic Obstacles

A. The low costs of conventional energy (coal and natural gas) make it hard for clean-technology start-ups to compete.[1]

B. Current market-structures often constitute effective barriers of entry for WWSGs.[2]

  1. Eg. While the costs of geothermal power in some countries can be comparable to coal, obstacles include:
    o High financial costs and risks of exploratory drilling.
    o Requirement of specific geographical properties. [3]
    o Gaining consent to explore.
  2. Technologies that depend on subsidies are not sustainable. [4]
    o When Spain withdrew its subsidies for the solar industry, many start-up ventures collapsed.[5]

C. Significant investment and subsidies are required to:

  1. Scale up technological innovations to meet the demands of markets. Furthermore, most investors are unwilling to finance new technologies. [6]
  2. Fund the development of Smart Grids to allow the amalgamation of renewable of renewables.[7]

Technological obstacles

Clean-tech start-ups looking for venture capital face funding, market and political barriers. [8]

 

Solutions

Conventional Solutions

Bridge the technical gap between conventional and renewable sources of energy:

Channel revenue from carbon taxes into building the necessary infrastructure for renewables.

  • E.g. Charging stations for electric cars or hydrogen fuel cells.

A fund built from offsets can be used to finance clean-tech start-ups that venture capitalists deem too risky.

  • A combination of renewable sources of energy will usually be required to replace conventional fuels.
  • As one technology becomes more competitive with fossil fuels, subsidies can be redirected to other renewable
  • E.g. Chrysalix is working on scaling up a solar power system that can be competitively priced with natural gas.[9]Once this is accomplished, focus can be shifted to wind energy

 

Political determination and coordination amongst countries is required to: [10]

  • Steer public awareness. [11]
  • Promote the uptake of smart grids and new clean-technologies.
  • Provide proper legislative and incentive structures to market players. [12]
  • Public policies will determine the growth rate of renewable energy development in the short and mid-term. [13]

 

Progressive Solutions

Price conventional sources of energy above that of renewable sources of energy

In the short to medium term, only regulations that internalize the cost of environmental damage to producers can accomplish this.[14]

Building on Solution 3 -  EnerBucks:

  • The energy efficiency of homes is reflected in property taxes, but EnerBucks can be used to pay a portion of property taxes.
  • The fuel consumption and emissions of cars are reflected in annual insurance rates but EnerBucks can be used towards these payments.
  1. [1] Richard MacKellar, Managing Director of Chrysalix and speaker for the Venture Capital: Where is the Money and Who’s in the Game? session at ISES 2011.
  2. [2] Explained in Problem 3.
  3. [3] ISES 2011 session – Geothermal Power: What it is, Where it is, and it’s potential as a global green energy supply source.
  4. [4] Richard MacKellar, Managing Director of Chrysalix and speaker for the Venture Capital: Where is the Money and Who’s in the Game? session at ISES 2011.
  5. [5] Richard MacKellar, Managing Director of Chrysalix and speaker for the Venture Capital: Where is the Money and Who’s in the Game? session at ISES 2011.
  6. [6]  Richard MacKellar, Managing Director of Chrysalix and speaker for the Venture Capital: Where is the Money and Who’s in the Game? session at ISES 2011. 
  7. [7] Dr. Hassan Farhangi, SM-IEEE, Director of Group for Advanced Technology, British Columbia Institute of Technology and speaker for the Smarter Grids for Smarter Communities session at ISES 2011.
  8. [8] Richard MacKellar, Managing Director of Chrysalix and speaker for the Venture Capital: Where is the Money and Who’s in the Game? session at ISES 2011.
  9. [9]    Richard MacKellar, Managing Director of Chrysalix and speaker for the Venture Capital: Where is the Money and Who’s in the Game? session at ISES 2011.
  10. [10] Explained in Problems 3, 4 and 5.
  11. [11] Expanded in Problem 9.
  12. [12] Expanded in Problem 7 and 8.
  13. [13]    Message from SSREN presented by Dr. Ralph Sims, Professor of Sustainable Energy and Director of the Centre for Energy Research at Massey University, New Zealand and speaker for the Economic Outlook of Global Energy Markets session at ISES 2011.
  14. [14]   Explained in Problems 2, 3, 5, 8, 9 and 10.

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