`Alternative' now in the mainstream

Weekend Australian
Saturday 28/6/2008 Page: 5

THE hot news for alternative energy in 2008 is that, in an environment of record crude oil prices and accelerating policy measures to deal with global warming, it may not be "alternative" any longer. Many of the alternative energy options that emerged from the 1970s oil crisis soon lost their appeal when crude prices fell back to record low levels in the 1980s, keeping gas and coal prices in the cellar too.

Non-conventional energy - especially for power generation - is expensive and can't compete with fossil fuels in a low-price environment. What makes 2008 different - in Australia and most of the developed world as well as in fast-growing economies such as China and India - is the combination of cost penalties and regulation bearing down on fossil fuels on the one hand, and the flow-through of extra-high oil prices to gas and coal costs on the other.

While mainstream renewable energy options such as hydro-electricity, wind and solar will vie for the largest share of the new markets for green power, alternative energy proponents can see significant niche opportunities emerging for their products. Some, such as using banana and sugarcane wastes as fuel for electricity in northern Australia or capturing gas from big city landfill sites to burn in turbines, are not new at all - they have just languished in markets where cost made them non-viable.

Others, such as wave power, where several Australian designs are vying with overseas concepts to achieve a breakthrough, are starting to attract serious investor interest because subsidies can pull them through to profitability as their conventional competitors feel the heat of carbon restrictions.

The enlarged Mandatory Renewable Energy Target proposed by the Rudd Government is estimated to make a total of more than $11 billion available in subsidies between 2010 and 2020 as it is phased in and $1.8 billion a year thereafter. Even though a large part of this revenue is expected to fall to the wind sector, with geothermal power forecast to starting gaining market share from the middle of the next decade, there will be multi-million dollar "crumbs" available for energy alternatives.

The chances of wave power are expected to rise because developments can often also provide a desalination service. along with power supply. Concentrated solar power (CSP) - using heat to drive turbines rather than simply converting light to electricity through photovoltaics - is seen as enhancing its prospects when a CSP farm can be linked to a gas or biomass plant to provide round-the-clock electricity supply.

While the flame of investor interest burned brightly only briefly in the 1970s during the oil price shocks, this time investors around the world are tipping billions of dollars in to "green energy." More than $US70 billion was invested globally in 2006 in "clean tech" companies, 43 per cent more than in 2005 and more than treble the 2003 contribution, and the investment levels reportedly held steady in 2007 despite the initial impact of. the worldwide lending crisis.