Billions in Profits Predicted for Renewable
WASHINGTON, DC, February 12, 2001 (ENS) - Now, when energy
issues top the list on many national agendas, renewable energy markets
around the world are set to take off, the Global Environment Facility
(GEF) concludes in a new report on clean, green energy technologies.
"Renewable Energy: GEF Partners with Business for a Better World,"
predicts that developing nations will need as much as five million
megawatts of new electrical generating capacity in the next 40 years and
are ideally suited to renewable energy applications.
While people in developed countries flip a light switch or turn on a
radio without thinking twice, and increasing numbers take access to the
Internet equally for granted, two billion people - a third of the world’s
population - live without the benefit of electricity or other modern
energies. Nearly half a billion people have limited or unreliable access.
These billions of people are a vast untapped market for providers of
renewable energies, the GEF report concludes.
Global Environment Facility chairman and CEO Mohamed El-Ashry
(Photo courtesy GEF)"The opportunities for countries
and for business are enormous," says Mohamed El-Ashry, chairman and CEO of
the GEF. "Two billion people lack reliable energy, most of them in remote
areas with little prospect of connecting to an electrical grid. If
renewable energy captures just three percent of the market in developing
nations within 10 years, investments could exceed $5 billion a year."
The GEF is the major source of multilateral funding for renewable
energy in developing countries. GEF is actively seeking private sector
partners with which to develop and underwrite clean energy projects -
those with few or no carbon emissions - in developing countries. These
projects may be stand-alone or initiatives that expand large power
projects using traditional fuels.
Renewable energy includes electricity generated from solar, wind,
biomass, geothermal, and hydropower resources. Fuels, such as biofuels and
hydrogen derived from renewable sources, are also considered renewable
energy, and so is heat generated by solar thermal systems and geothermal
Solar and wind power are both harnessed to pump water in La Paz,
Bolivia. (Photo courtesy Sandia National Lab)A
transition to renewable energy is "inevitable," the GEF predicts, not
because fossil fuel supplies will run out - large reserves of oil, coal,
and gas remain in the world - but because "the costs and risks of using
these supplies will continue to increase relative to renewable energy."
Costs will increase as the environmental impacts of fossil fuel use are
incorporated into the costs of energy and as the cheapest reserves are
depleted, the GEF says.
Risks can increase as fossil fuel prices and availability become more
variable due to such factors as privatization, deregulation, and political
events. "Renewable energy avoids fuel costs and fuel price risks; thus, as
the costs of renewable energy technologies continue to fall, renewable
energy is expected to overtake fossil fuels as the lowest cost, least-risk
investment," the GEF predicts.
The report comes two weeks after the announcement in Shanghai by the
Intergovernmental Panel on Climate Change of new and stronger evidence
that greenhouse gases, primarily from the burning of fossil fuels, are
changing the global climate, and that most of the warming observed over
the last 50 years is attributable to human activities.
The world clearly needs to diversify its sources of energy, a position
increasingly recognized by companies, governments, and international
agencies, the GEF report says.
Wind energy systems are the fastest growing energy technology in the
world. Highly reliable wind turbines provide electricity under five cents
per kilowatt at selected sites with good wind resources. The next
generation of machines should cut costs further. Total installed capacity
worldwide increased by 35 percent from 1998 to 1999, amounting to more
than 13,000 megawatts.
While Germany is adding wind power faster than any other nation, India,
with more than 1,100 megawatts of installed capacity, leads the developing
world in exploiting wind.
A 50-megawatt wind farm in Koudia el Baida, Morocco, is one of a few
wind projects in developing countries to be constructed on largely
commercial terms. A consortium of three firms, including Électricité de
France (EDF), is constructing and operating the farm, financed through a
number of commercial and development banks.
Tibetan man with black and white television powered by solar panel and
charge controller for batteries charged by solar energy (Photo by
Simon Tsuo courtesy National Renewable Energy Lab)
Internationally, the solar industry has grown on average more
than 17 percent a year since 1992, the GEF has found. More than half a
million individual solar home systems already provide lighting,
entertainment, and income generation for rural households in developing
countries. Applications in off-grid telecommunications and small industry
are growing rapidly.
In the Dominican Republic, the U.S. firm Soluz has been developing a
subsidiary, Soluz Dominicana, into a successful fee for service business
that targets up to 50 percent of the population in the rural communities
it serves and charges $10 to $20 a month for electricity service from
solar home systems.
Use of geothermal power is expanding in Indonesia, Philippines, Mexico,
Kenya, and Central America. The GEF report points to even greater
potential in tapping hot dry rock deep beneath the Earth’s surface. Global
electricity generating capacity from geothermal stands at 8,200 megawatts,
about half of which is in developing countries.
In its first decade, GEF approved $580 million in grants for 51
renewable energy projects in 30 developing and transition countries. With
co-financing and other resources from governments, bilateral and
multilateral development agencies, and the private sector, total project
costs have exceeded $3 billion.
GEF investments help to remove barriers and reduce long term technology
costs, sharing some of the risks of expanding renewable energy markets.
The Global Environment Facility was formally launched in 1994 to forge
cooperation and finance actions addressing four critical threats to the
global environment: biodiversity loss, climate change, degradation of
international waters, and ozone depletion.
During its first decade, GEF allocated $3 billion, supplemented by $8
billion in additional financing, for 700 projects in 150 developing
nations and countries with economies in transition. The only new funding
source to emerge from the Earth Summit, GEF today counts 166 countries as
In the village of Cacimbas in the state of Ceara, Brazil, each of
these homes has a 50-watt solar system to power two fluorescent lights.
(Photo by Roger Taylor courtesy National Renewable Energy
Lab)GEF is the designated financial mechanism for
international agreements on biodiversity, climate change, and persistent
organic pollutants; GEF also supports the work of global agreements to
combat desertification and protect international waters and the ozone
GEF projects are executed by a wide range of public and private
partners, and managed by the United Nations Development Programme, the UN
Environment Programme, the World Bank, the UN Food and Agricultural
Organization, the UN Industrial Development Organization, the African
Development Bank, the Asian Development Bank, the European Bank for
Reconstruction and Development, and the Inter-American Development Bank.
The full report can be downloaded from the "What's New" section of the
GEF's website at: http://www.gefweb.org.