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‘Green’ Energy is Critical for a Secure Energy Supply

Green energy systems are essential in securing energy supply and protecting the environment, according to a new report from Lloyd’s 360 Risk Insight and UK think tank Chatham House.

The report finds that the reliance on fossil fuels combined with rising demand from developing economies is pushing the search for reserves into more risky territories, citing the oil spill in the Gulf of Mexico as an example. However, the report also indicates that this could drive the transition to more cost-efficient clean and renewable energy systems.

The report, “Sustainable Energy Security: Strategic Risks and Opportunities for Business” (PDF), indicates that energy price spikes and supply disruptions will become more frequent due to rising consumption, insufficient investment, and threats to installations and transport.

In addition, the cost and associated risks will increase the price of fuel at the pump and impact a wide range of commodities in the short to medium term. Together with political pressure to reduce greenhouse gases and protect the environment, businesses will be forced to become more energy efficient and adopt renewable energy, say report analysts.

The report also finds that businesses need to assess their vulnerability to energy volatility as there is potential for both financial and environmental risks.

But there are plenty of opportunities as well. The expected level of investment in renewables and clean energy — up to $500 billion per year by 2050 — generates plenty of opportunities for business, but the lack of a global agreement on carbon reduction is slowing commitment and investments, according to the report. Report analysts recommend that governments set clear policies and create certainty in the transition to a low carbon economy.

The report also warns that businesses need to prepare for a new set of risks as energy system changes, citing that many renewable technology systems use rare materials (China produces 97 percent of the world’s rare earth metals supply, almost 100 percent of the associated metal production, and 80 percent of the rare earth magnets.) and the increasing reliance on electricity and IT could raise vulnerability to cyber attacks. Analysts advise businesses to reassess global supply chains and increase the resilience of their operations.

Business sector risks:

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One thought on “‘Green’ Energy is Critical for a Secure Energy Supply

  1. It’s all about the RECs (renewable energy certificates) and FERC is about to steal all of them (NMPRC rule 572.13.c.1.b; NMPRC case 05-00352-UT). I was at the Science, Tech, and Telecom Committee yesterday (Monday, June 7, 2010; State Capital) and Dr. Daniel Fine from New Mexico Institute of Mining and Technology told the committee that Federal Law would preempt State Law in regards to renewable energy, and that the “revenue” was going towards deficit reduction. Existing [pv net-metered] participants would get an upfront check to satisfy existing contracts. He seemed to imply that these events would occur before the end of JULY.

    It would seem to be confirmed: RECs will soon become just an energy tax, not a currency. Investors will not be able to harvest RECs for their own investment interest; only the utility and the government will be buying and selling RECs. The rest of us will simply pay the tax.

    On Thursday, June 03, 2010, at the Re-Energize America conference held in Las Cruces, New Mexico I asked the following question to Matt Rogers (Senior Advisor to the Secretary of Energy for the Recovery Act):

    “Do you believe that third party ownership of commercial scale PV grid-tie systems in conjunction with open market trading of decoupled renewable energy certificates will drive electricity prices below current wholesale prices?”

    Matt Rogers answered: “yes”

    The fantastic picture I am describing is this: An investor (from a cold, dark state) pays to put a solar array on the rooftop of a local New Mexico business (lots of sun). He gives the electricity to the business at discount (ppa; approaching FREE over time) and sells the RECs on an open auction. Lots of similar investors do the same, and soon the price of electricity falls for all. The state’s economic development department now says to prospects: bring your company to New Mexico, we have cheap/free electricity. The effects are far greater if the owner of the generator owns the RECs. Current open market REC prices appear to be above 30 cents/kWh in the Northeast


    …but kiss that all goodbye. FERC is about to steal ALL the RECs and the only benefit you might receive is through a power purchase agreement whereby you fix your electric rate for a period of years, but have NO possibility of harvesting/benefiting from the RECs. Now, no
    economic growth potential exists, no investment-return, and the small renewable energy business owner soon becomes extinct; for it will only be through the utility company and the government (PACE?) that you will purchase and install solar arrays (or wind turbines). Remember, RECs are
    a currency if the owner of the generator owns the RECs (572.13.c.1.a); RECs are a tax if the utility or government owns the RECs (NMPRC 572.13.c.1.b; PRC 05-00352-UT).

    “Renewable Energy Certificates” implies asset and ownership.
    “Renewable Energy Credit” implies you have no ownership nor control of its value.

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