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Money alone does not bring success

As budgets tighten in a large number of crisis-stricken developed economies, the attention of policymakers is moving away from greenhouse gas emissions and green energy. In Europe, CO2 emissions rose by 2.4% in 2010 against the previous year.

The EU's target of bringing emissions down 20% from 1990 levels by 2020 will not be met unless countries take some action. The low price of EU carbon permits is not helping either.

Inevitably, renewable-energy sources are getting caught up in the cost-cutting frenzy (see page 28). The governments of debt-ridden countries such as Spain are planning huge cuts to existing support for renewables, which the wind industry claims will wipe out large chunks of this sizeable industry. More modest savings are being made in the UK and Italy, stoking fears that investors will move to more attractive locations.

In the US, renewables received a significant boost under the Obama administration's American Recovery and Reinvestment Act, which translated into $14.67 billion in subsidies for all renewables in 2010. But more traditional energy sources such as gas, coal, oil and nuclear also received substantial help last year, amounting to $6.6 billion. This is no small sum for well-established technologies. Worldwide, a recent study by the International Energy Agency shows that governments spent $500 billion on subsidies to fossil fuels last year.

Wind power is no longer a nascent industry based on experimental technology, but ensuring that the right conditions are in place for it to thrive is still essential. Only superficial observers of the energy sector would believe that financial support is the sole factor behind its success. The lesson from the countries where renewables have achieved the most is that a full suite of measures - including a sufficient price for the energy generated, along with good grid access, streamlined permitting procedures and widespread public support - must be deployed.

An EU report monitoring the success of renewable-energy support across the continent finds that complex permitting procedures and a strong anti-wind lobby in France have resulted in lower growth rates than you would have expected from the feed-in system in place. In Hungary, very rapid growth was achieved in 2010 from a very low starting point, but the country's potential is limited by grid constraints.

Overall, the report finds that countries that adopted models based on fixed prices or premiums for the electricity generated - including Portugal, Spain and Germany - have been the most effective in boosting renewables growth while delivering reasonable profits for investors. The quota system preferred in places such as the UK and Italy has typically delivered higher profits for onshore wind electricity - resulting in windfall profits for investors.

When it comes to offshore wind, which is still in the early stages of development, Denmark emerges as the most successful early adopter of this technology, with the UK catching up fast and Sweden and Germany also ranking high.

With fragile economies struggling to deal with the global crisis, thousands of jobs on the line and entire industry sectors fighting for survival, governments would be ill-advised to just look at the bottom line and blindly cut renewables subsidies. By the same token, the wind industry needs to up its game to ensure all the ingredients required for its prosperity are in place.

Nadia Weekes is editor of Windpower Monthly

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