CEO Of Mainstream Renewable Power Questions Funding Decarbonization
Eddie O’Connor, the CEO of Mainstream Renewable Power, has called into question the need to financially support the decarbonization of economies like India.
On Thursday, Eddie O’Connor called for a rethink of climate finance at COP21, the United Nations climate negotiations currently entering their final hours in Paris. “We must learn to stop whistling yesterday’s tunes,” O’Connor said, suggesting that established renewables such as onshore wind and solar are already cost competitive with fossil fuel generators in emerging markets like India, and do not necessarily require the muddled and complicated subsidy schemes many believe they do.
“I know there are governments including India and others, looking for financial support from the USA and Europe to facilitate the support schemes that they think will be needed to incentivise new investment in renewable energy,” continued O’Connor, who believes that such support is not needed. “In South Africa, new onshore wind can be built for less than half the cost of a new coal plant. What COP21 can do is to incentivise sustainable behaviour by countries, companies, and families. By far the best way to do this is to put a price on carbon. A €30 price per tonne of CO2 would rapidly accelerate the transition to sustainability.”
The cost of solar and wind has been a continuing discussion throughout 2015, with numerous arguments for either side of the debate. Mainstream Renewable Power claims that over the last decade, the cost of onshore wind has fallen by over 60%, and solar PV has seen its costs drop by over 80%, “to a point where they are both cost competitive with, and quicker to install, than coal or gas in many markets.”
“Onshore wind energy is one of the cheapest sources of new generation available today,” said O’Connor, who speaks from experience — Mainstream Renewable Power is developing wind and solar plants across a number of markets, including South Africa, Egypt, Ghana, Chile, and Mexico.
A report by Bloomberg New Energy Finance published in October reached similar conclusions, finding that the levelized cost of electricity for onshore wind was now fully competitive with gas and coal in certain parts of the world.
“Our report shows wind and solar power continuing to get cheaper in 2015, helped by cheaper technology but also by lower finance costs,” said Seb Henbest, head of Europe, Middle East and Africa at Bloomberg New Energy Finance. “Meanwhile, coal and gas have got more expensive on the back of lower utilisation rates, and in Europe, higher carbon price assumptions following passage of the Market Stability Reserve reform.”
“The deployment of large amounts of new wind and new solar PV plant is no longer reliant on support schemes like the feed-in tariff, or green certificates,” continued O’Connor. “These programmes were very effective at bringing forward new technology when it was more expensive than new fossil plant. But, today, new wind, and in some markets, new solar PV, are now cheaper – in fact, a whole lot cheaper – than new fossil generation.”
Image Credit: via Mainstream Renewable Power, Flickr
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A price on carbon means that long term market distortions that could slow down the growth of effective, democratic, renewable energy adoption are avoided. Without carbon pricing, renewable energy must somehow compete against subsidized carbon emitting energy sources.
Completely agree, but I would want to put a price on the mercury, particulates, SO2, and NOx, too just for completeness.
The one subsidy that is useful is FiT for domestic (and perhaps commercial), because whilst Utility scale decisions might be rational, individual consumers are less likely to, i.e. the oh, that solar PV panel looks really ugly on my house idea – even if it saves substantial amounts of money.
Residential and Commercial are a hugely important key to reducing GHG emissions rapidly – we cannot do it all through the old-school centralised method (even if that centralised power is RE).
India’s bid for subsidised finance is questionable. Given the huge scale of India’s renewable plans, it would suck funding away from the poorest countries, mainly in Africa. Unlike them, India can access international capital markets on decent terms now. Its claim that coal is still cheaper than renewables is questionable, even without a real or virtual carbon tax. (A virtual tax is just used, as in the USA, for evaluating regulations.) Coal burning in India imposes very large health costs, which can be estimated using standard methods. It also requires more transmission than solar.
We have to create incentives in the U.S. to entice the private sector to do something beneficial for the country.