Most renewables now are cost competitive with combustion sources, says IEA

PARIS, France, 2003-07-30 (Refocus Weekly) The prices for renewable energies have fallen over the past five years to a point where “most are now cost competitive with fossil technologies when all values are considered,” says the International Energy Agency.

“Renewable energy is proving to be commercially viable for a growing list of consumers and uses,” says ‘Renewable Energy... into the Mainstream,’ produced last year but released in June. “More and more, renewable energies are contributing to the three pillars of sustainable development - the economy, the environment and social well-being - not only in IEA countries, but globally.”

There is a convergence of important factors affecting the overall value of renewables, it explains, with several technologies delivering cost-effective services now while others could become commercially viable soon. “The market for renewable energy technologies is robust, albeit growing from a relatively small base,” which means growing investment in new manufacturing capacity and a “fairly convincing need” around the world for the greater use of renewables and a greater understanding of the benefits to be derived from renewable energy technologies.

Despite progress, “renewables have generally not achieved market ‘take-off’ whereby those technologies can compete in the marketplace on their own merits without government support,” it notes. Some technologies are still immature and need significant cost reductions to make them competitive, while market barriers or “entrenched beliefs” result in continued use of conventional fuels.

“A long-term commitment and strategy are needed to ensure renewables are not sidelined, bypassing their full potential,” adding that “a policy framework must be created that will provide a more level playing field because rules, laws and systems have built up over the last century, based primarily on fossil-fuel based systems.” For renewables to flourish, governments must redress the imbalance of those traditional approaches and the policy framework must keep pace with the dynamic changes underway within the overall energy sector, as well as reflecting social, economic and environmental priorities.

It applauds the European Union for requiring a specific percentage of generation to come from renewables, even as it liberalizes the power market on the continent, and notes that many states in the U.S. are introducing Renewables Portfolio Standards.

Support from international financial institutions has traditionally been for large hydro projects, but there is a shift in support towards geothermal, solar and other new renewables, it notes. “Financing is crucial” and the flexible mechanisms of Joint Implementation and the Clean Development Mechanism will be “important vehicles for western countries and industry investing in renewable energy projects in non-OECD countries.”

“Our understanding of the ‘value’ of renewables has evolved significantly in recent years, following the increased understanding that security diversity and the environment are goals that matter, and that can be measured,” says IEA. “Because of this new understanding of ‘value,’ we need to reassess how renewable energy should increase its share of total energy consumption.”

“The benefits of renewables are clear and significant,” it concludes. “Getting the energy framework to reflect the full and total costs of the environment and energy security is a challenge. However, doing so creates a framework where renewables can compete fairly with other technologies that are also needed in the energy mix, thus leading to a sustainable and vibrant energy sector.”


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