Monday, September 13, 2004

High Oil Prices = Less Alternative Energy Investment?



This Newsweek article on alternative energy investment seems to suggest that the high oil prices which mean record profits for oil companies when combined with an uncertain regulatory environment for alternative energy may actually discourage investment in renewable energy.

There are some big multinationals like BP, Shell, Sharp, Kyocera, Sanyo
and Mitsubishi with divisions investing in alternative energy, these are companies that can afford to take risks and take a long-term view. The sums involved however are a drop in the ocean when compared to the amount of money spent on finding and extracting our declining fossil fuel reserves.

In my opinion the solar power industry in particular is attracting attention and investment from VCs as this is the area where it seems most likely at the moment that a technological breakthrough may come, which would allow low cost mass production of solar cells allowing them to become ubiquitous.

However while solar energy may hold the promise of the great technological breakthroughs and therefore the biggest profits, it seems to be grabbing most of the attention and therefore the investment away from other types of alternative energy.

Wind power is competitive now. However it requires major capital investment, has tight margins and doesn't currently hold the tantalising prospect of any technological breakthroughs.

First government has to stop subsidising fossil fuels and spend the money instead on encouraging genuinely clean and renewable energy technologies.

September 2004 Newsweek Article on Alternative Energy Investment


3 Comments:

Blogger Engineer-Poet said...

Why should higher oil prices lead to greater investment in wind and solar?  They do not compete in the current market; oil goes almost entirely for transportation, while wind and solar produce mostly electricity and low-grade heat.  With current vehicles there is no way for most renewables to address the issue of high transport-fuel prices.

The lack of coupling between transport energy and the electrical grid is both a problem and an opportunity.  It's a problem because we currently have no way to address a shortage of petroleum (e.g. from a pipeline failure) by drawing power from the grid instead; it's an opportunity because the lack of coupling represents some of the low-hanging fruit which can be picked to address the issue quickly.

First you have to establish a large population of electric and plug-in hybrid vehicles, then investment will flow to alternative energy suppliers in reaction to oil price increases.

(And whoever chose the settings which disabled cursor keys in the text-entry box here needs to be smacked upside the head.  This is just wrong.)

5:07 p.m., September 18, 2004  
Blogger James said...

Hi Engineer-Poet,

As I write this comment I'm having no problem using the cursor keys. You sure this isn't an issue with your individual machine/ browser?

James
altenergyblog

5:28 p.m., September 18, 2004  
Blogger Engineer-Poet said...

It was a problem, cured when I closed oocalc (strange, that).  Unfortunately there is no way to edit a comment once entered.

8:01 p.m., September 18, 2004  

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