The consequence of Japan’s nuclear crisis and oil prices above $100 per barrel are likely to boost the global renewable energy industry in the short term, consultancy Pricewaterhouse Coopers (PwC) said on Monday.
“There’s certainly strong potential that the lack of investment in nuclear means people have to look elsewhere at low-carbon investments, so renewables is the place to go,” said Ronan O’Regan, director in renewables and clean technologies at the consultancy.
Investment in renewable energy across the globe is expected to maintain momentum seen over the course of 2010, when the number of deals in green energy projects rose 66 percent, even though the total value declined by 32 percent to $33.4 billion, PwC’s latest renewable deals report showed on Monday.
Reactions to Japan’s nuclear crisis, which saw radiation leak from reactors damaged by the March 11 earthquake and tsunami, have been mixed but many countries have taken cautious positions toward existing and new nuclear power plants.
Germany suspended two weeks ago an autumn lifetime extension on its oldest nuclear reactors for at least three months, while the world’s biggest carbon emitting country, China, has delayed an ambitious reactor building program following Japan’s nuclear troubles.
“If nuclear investments are being delayed the worst case for renewables is the same level of investment as we’re seeing today, the best case scenario is people redirecting some of their low-carbon investment into renewables,” O’Regan said.
Ongoing civil unrest in the Middle East and war in Libya have prompted fears about further oil supply constraints, which in turn recently lifted Brent oil prices to levels near $120 per barrel.
“In general high oil prices should be good news for renewables because they make the subsidy level required to encourage investment (in green energy) lower,” according to O’Regan.
Less dependence on oil imports also means more stable security of supply as countries would be less exposed to resources from geopolitically difficult regions.
Some renewable energy companies, such as Germany’s SolarWorld which produces photovoltaic technology, said they expected higher returns following the events in Japan as governments seek safer ways to cover energy demand.
Other investors are skeptical that the renewable energy boom would last as the presence of nuclear in countries’ energy mixes is widespread.
“In the longer term it’s probably back to business as usual as nuclear will come back strongly to the agenda. Therefore renewable and nuclear will compete again,” O’Regan said.
Renewable energy deals continued dominating in Europe last year, where $13.05 billion was spent, but North America came a close second as $12.951 billion worth of green energy deals were struck, PwC’s report showed.
“The momentum in North America is moving more favorably toward a low-carbon environment. It may be that that’s an interesting market to keep an eye on this year,” O’Regan said.
