THE power sector was set for a renewable energy revolution with the cost of “green” power generation technologies dropping and investment in the renewable energy sector having surpassed investment in fossil fuel.
Eric Usher, of the UN Environment Programme (Unep) made the remarks at a sideline event of the UN COP17 climate change talks in Durban last week, hosted by Nedbank and National Business Initiative (NBI).
“Transformation is under way in the power sector with about $230 billion (R1.8 trillion) being invested in new renewable energy projects globally… Investment in the renewable energy sector surpassed investment in fossil fuel more than two years ago. This includes wind, solar, hydro and other clean technologies,” he said.
“(What is) exciting for Africa is that investment in renewable energy projects on the continent has quadrupled in the past few years. Most of this investment has been in East Africa, in countries like Kenya and Uganda,” said Usher.
“This comes as investment in renewable energy by developing countries in the world has also surpassed the developed nations. Much of this is because of massive development of the renewable energy industry in China and India. China is now the world’s largest manufacturer of solar panels.
“Renewable energy has now reached a tipping point where it is becoming an important part in the global energy mix.
“The price of these technologies is dropping. For example, the cost of solar panels has dropped by about 65 percent, largely because of production in China. However, it is going to take industrial mobilisation and financial innovation for large-scale investment in renewable energy projects,” he said.
Usher, as well as other members of the panel discussing the topic of “lending in a low carbon economy”, agreed that South African banks had an important role to play in funding the growth of the renewable energy sector in Africa.
National Planning Minister Trevor Manuel said the government would use development finance institutions such as the Industrial Development Corporation to drive the new “green economy”.
However, private sector financing institutions needed to capitalise this investment to boost the renewable energy industry, he said.
“Governments cannot devolve themselves of the need for change because some fiscal measures are needed, including support for research and development and fiscal incentives that would support a shift to cleaner technologies.
“In respect of the banks, we want to welcome their significant contribution, but I think that people in banks are shy to talk… We need a different discussion about how we bring banks into play,” Manuel said.
Paul Clements-Hunt, head of the Unep Finance Initiative said smart, forward-thinking bankers needed to be at the epicentre of the transformation to renewable energy.
“Banks are the transmission mechanism that can take the power from the engine of investment to the wheels of the real economy. Mainstream banking is still wedded to fossil fuel economy because bankers naturally seek out easiest route to returns. So conversations are needed and the Unep Finance Initiative has tried to facilitate that conversation,” Clements-Hunt said.
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