An important part of the move to a low carbon system is that there will be an increasing role for renewables. Some critics of renewable energy rely on the argument that the costs are too high, but as with any kind of technology, it is likely that a “learning curve” will take effect, production will come more efficient and unit costs will fall. A much more pressing problem is that the nature of electricity production differs greatly from more traditional forms, wind and solar energy is greatly weather dependent, and as the amount of energy produced wildly fluctuates, we will need a system in place to ensure that we always have enough energy, and that we don't over produce at certain times.
Part of the solution to this will be interconnection, which means the transfer of electricity between countries, for example the import and export of wind power to and from Norway. Energy solutions need to include traditional fossil fuels which allow for planning such as gas, coal with Carbon Capture and Storage (CCS), as well as nuclear power. The Electricity Market Reform White Paper published earlier this year sets out government plans to promote low carbon energy generation, it outlines measures such as a tax on carbon and an emissions standard for power generation, with the goal being to meet our energy targets such as an 80% carbon reduction by 2050.
These long term energy pressures will eventually have a marked effect on investment opportunities. To date Clean Energy funds have had poor performance, and the global industry has experienced setbacks, but in the much longer term prospects look promising. Mark Hoskin, Managing Partner at Independent Financial Advisers, Holden & Partners, said in his talk at the Worldwise Launch event: "Investors need to look beyond past performance statistics and look to the future, clean energy investment will at some point turn round”.
[Picture from National Grid]
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