How Global Firms can Benefit from the Worldwide Rush into Renewable Energy Sources
Global Energy Revolution Underway
World over, there is an energy revolution going on. The transition from nonrenewable energy sources such as Coal and Oil towards Hydro, Solar, Nuclear, Wind, and Electric sources of energy means that there are business opportunities for global firms wishing to tap into the boom. Indeed, except for the United States, which under President Trump, has been regressing towards oil and coal, most of the other developed nations such as Germany, France, the United Kingdom, and emerging countries such as China and India as well as other developing nations are moving towards renewables.
As can be seen from the massive investments into Solar power in India, Wind Power in Germany, and Hydro in China, it is clear that this energy shift necessitated by Climate Change and rising Pollution levels would soon become a necessity.
Indeed, the recent events in New Delhi and Beijing, where extreme smog and particulate matter that caused air quality to become toxic are all signs that soon, most of the world would embrace renewables with an urgency never seen before.
Further, the fact that oil is running out as well as coal becoming dirtier in terms of the effects that it has on extraction, and use means that there is another reason for this energy shift.
The Worldwide Rush into Renewables Presents Opportunities for Investments
Thus, global firms and investors who are seeking to profit from this renewable energy revolution can benefit through investments into these sources. Already global investors such as Softbank, and the Indian telecom giant, Bharti Airtel, are ramping up their investments into the Indian Solar sector.
With the Indian government setting itself an ambitious target of installing 100 Gigawatts of Solar Capacity by 2022, it is clear that there is scope for massive investments in the Billions of Dollars. Also, because there are concerns over Nuclear Power after the 2011 Fukushima Nuclear plant meltdown due to the Japanese Tsunami means that renewables would see an uptick in interest as well as investments.
Moreover, the Climate Change Accord that was signed in Paris in 2015 mandates the signatories to embrace renewables and hence, it is also a requirement for many nations to transition to renewables. Given all these trends, it is only natural for global firms and investors to sense the Next Big Business opportunity and seize the moment to ensure that profitability and returns on their investments.
How Global Firms and Investors can benefit
Coming to the specific ways in which global firms can benefit, there are subsidies and incentives for such firms to invest in renewables that are being provided by governments around the world. For instance, both the European Union or EU and India offer massive subsidies to firms that invest in solar and wind power. In addition, China is providing incentives to its SOEs or State Owned Enterprises as well as foreign players to invest in the Hydropower sector.
Further, there are some concerns that Hydropower entails displacement as well as disturbance to the natural ecosystems which means that it might be placed lower in priority when compared to the other renewables.
Having said that, Hydropower remains the best bet for many nations especially the developing ones as the scale of power generated and the lower cost per unit of power that it provides means that it is indeed attractive in some cases.
Moreover, Hydropower has the additional benefit of Irrigation gains in terms of the Dams being used for both power generation as well as for irrigating the farmlands and hence, it is indeed a key priority for many nations that the global firms and investors can note.
Future Energy Sources
A key source of renewables in the future would be Electric power from small size batteries and compact Electrolyte cells as well as Hydrogen powered electric cells. When compared to the other renewables, electric and Hydrogen powered sources are more expensive and this can deter some nations from embracing such sources.
There are many nations including India that are funding research into this source of renewable power with the particular aim of making them cost effective as well as efficient. In addition, this energy source provides synergies in terms of making cars and other vehicles less or no emissions based though it does not offer the scale that other renewables provide.
The key aspect to note here is that some countries have abundant sunlight throughout the year and some of them are windy most of the year, and some of them receive copious rainfall and hence, the energy mix that each nation has in terms of renewables would be determined by these natural endowments and characteristics.
Thus, global investors and firms can use these aspects to do their due diligence before committing investments into the renewables as per the profitability and other aspects.
Lastly, the key point to note is that collectively, we as a species have to necessarily shift to renewables if we are to navigate the challenges of climate change as well as sustainability in addition to contending with depleting oil and coal reserves.
Moreover, the infrastructure that is needed for renewables to be transformed into large-scale power sources has to be built over the longer term.
To conclude, there are opportunities galore for global firms and investors to profit and that too with the noble cause of helping humanity and hence, this would be a classic case of how capital and profit motives can align with the common good.
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