By now, most would agree that renewables play a vital role in the global transition to a low or zero-carbon economy. The science is there to support it and the level of awareness of the key role played by renewables within the framework of energy transition is higher than ever before. But this is not the only reason that we should sit up and take note of what’s happening in the renewables sector. As first generation assets mature and increase in efficiency, and new technological developments are offering a broader array of options than in the past, it’s clear that renewables are here to stay. And it’s no longer only developers and investors leading the charge towards renewables, but also consumers themselves, who are looking for ways to become 100 percent renewable in the energy they use and increasingly considering alternative technologies and innovative solutions to address the low-carbon challenge.
This is great news for the environment, as well as our future energy security, but why is this happening?
In part because it’s simply good business sense. As wind and solar technologies have become more mature and able to produce more significant amounts of energy with successive generations of development, these technologies have become more efficient and cost-effective, which has led to declining production costs for these types of energy and greater consumer interest in them as a result.
At the same time, there is growing pressure from investors, customers, and employees, who want to see the companies they engage with acting in a socially-responsible way. Not to mention that recognizing climate change as a risk factor for many sectors and industries is gaining significance for investors, who are keen to see that their investments are being protected by executives taking environmental risk factors seriously and actively implementing steps to mitigate them.
Overall, the future looks bright for renewables, in terms of their ongoing development and implementation as well as their return on investment. But investors continue to be cautiously optimistic. There are still obstacles to be overcome and risks to take into account, so it’s hardly surprising that investment in renewables is most attractive in countries with welcoming and stable regulatory environments, including subsidy mechanisms, tax incentives and opportunities for direct investment in large-scale projects. Well-designed policy can provide assurance to investors looking to participate in developing the renewables sector. However, opportunities for good margins on investment are not evenly spread across the globe. In Europe and the West, growing competition is increasing valuations of renewables assets, while in Asia, both in developing and developed countries, the competition is only getting started.
In the Belgian context, a long-term view of a sustainable energy mix is urgently needed to sustain investor confidence, ensure stability and continuity of supply, whilst also contributing towards Belgium’s ongoing shift to a low or zero-carbon economy. All players in the energy market are currently being confronted with the same trilemma:
- How do we achieve our climate objectives,
- How do we keep energy affordable,
- How do we guarantee a reliable, safe energy supply?
It’s important to note that it’s not just energy companies facing this challenge; all energy stakeholders are finding themselves under pressure to transform: regulators, government, investors and the energy companies themselves. It didn’t help that Belgium was initially slow to get started on tackling the challenge - thanks in part to the fact that energy is spread across various different policy levels. That said, Belgian governments provided significant momentum with the energy pact that was signed at the end of March 2018 and, together with renewed impetus from the EU, as well as increased coverage in the global media in recent months, this momentum is helping to bring relevant energy players together to identify a positive way forward.
To make the most of this momentum, stakeholders now need to have access to the same accurate information, including learning lessons from what is happening abroad as well as providing and sharing testing against the current regulations. By doing this we can reinvigorate the sector, encourage innovation to flourish and develop evidence-based policy that supports a long-term sustainable energy mix for Belgium.