The West is slowly weaning itself off fossil fuels. This is due to popular pressure arising from adverse environmental effects, but also concerns over the long term sustainability of fossil fuels as a resource.
While investments in renewable energy (biomass, wind and solar etc.) have been relatively modest so far, recent data from the World Bank shows spending in this sector is on the rise.
This growth in investment has been largely reliant on incentives and subsidies provided by governments, to companies in the energy sector in support of actual innovation and other research into sustainable alternatives. This trend is now changing.
Decentralising power generation
The decentralisation of power generation and the focus on renewable energy is growing fast. The days when large enterprises monopolised the market are fading. Advances in technology and innovation, supported by incentives have ensured Small-Medium sized enterprises (SME’s) (and in some countries, home owners, farmers and land owners) across the globe are able to produce, store, and provide energy to their communities in the form of off-grid solutions. These small businesses often introduce ingenious cutting edge solutions to the power sector which will contribute in varying degrees to the consumption targets set out by the states.
A good example is Nigeria, where the government, facing a lack of infrastructure, high replacement costs and inadequate power supply, is inviting new players into the sector to provide off grid solutions. .
SMEs have a competitive advantage arising through their local expertise, knowledge of the communities they operate in and ability to easily generate revenues giving them an edge over the larger players in the sector.
Further global data
£254 billion – projected market value of the clean energy sector for SME’s in Latin America by 2025 (World Bank).
£36 million – allocated by the Pakistani government to encourage SMEs to invest in renewable energy at a subsidised interest rate of 6% for renewable energy projects.
£34 million – amount of capital that the Swedish International Development Cooperation Agency (SIDA) and Africa Enterprise Challenge Fund (AECF) agreed to use to fund projects on renewable energy over a five-year period. The fund supports innovative commercial businesses in the agricultural and technology sectors, with the aim of reducing rural poverty, promoting resilient rural communities and creating jobs through private sector investments.
Europe is also actively supporting SME’s in the energy sector. The Small is Beautiful campaign has been launched by SolarPower Europe whose aim is to promote small-scale, locally owned installations. However, the European market is not yet considered “fit” for these installations because it is monopolised by bigger players. Policy makers are urged to draft legislation that will support small-scale installations of renewable energy.
Ultimately, the EU is aiming for a target of 30% renewable energy consumption by 2030. However, for this goal to be achieved it is estimated that European economies will need to invest roughly £41,3 billion.
Ultimately, the EU is aiming for a target of 30% renewable energy consumption by 2030.
The question is whether the decentralisation of energy production can help EU states achieve this ambition sooner and more cost effectively?