Rocky road ahead for clean energy sector, says Deloitte

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Renewable energies are becoming less alternative and more mainstream (118 countries have renewable energy targets in place). However, global investment in the sector is set to continue to decline in the short term from the 11 percent fall seen in 2012, according to a Deloitte report.

“Over the long term, the sector will be more attractive, as technology improves and costs decline. In the meantime, investors need to choose their spots wisely, because it’s not going to get any easier anytime soon,” Jane Allen, from Deloitte Renewable Energy comments.

How should companies get prepared for that?

First of all, firms need to bridge the cost disparity gap with fossil fuels, which according to the report received almost twice the amount of government-funded support than the total amount of public and private sector investment in renewable energy in 2012: a total of $523 billion in subsidies, in contrast to the $269 billion of total investment in renewable energy in 2012.

Second, it is crucial for them to endure the so-called “shale revolution”, since this type of gas has created new uncertainty for the near-term investment prospects of renewable energies. “There is no easy answer to the question of how to mitigate this risk or otherwise endure the revolution,” the report says, because in some ways, it is unavoidable: “growth in the renewable energy sector is not likely to increase while gas prices are as low as they are.”

Businesses should take advantage of subsidies but also weigh infrastructure investment and realize that centralized power generation and distribution are less in demand: consumers and businesses are starting to generate their own energy.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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