The Next Gold Rush: Renewable Energy
The Renewable Energy industry just might be the next gold rush for businesses and investors alike. This time, we aren’t hiking into the Klondike for gold; individuals and organizations alike are turning their eyes toward the broader world, looking out for opportunities to make good on this booming initiative.
With all of its natural resources and varying biomes, Africa is a premium location for infrastructure development and investment into renewable energy. With sustainable energy investment set to grow to $57-billion by 2020, it’s clear the gold rush has already begun.
The massive desert that stretches across North Africa to the Arabian Peninsula and the Persian Gulf beyond has incredible potential for solar power. While this might seem like an obvious choice for solar technology, it has not been until recently that factors such as social pressures, oil prices, and technological readiness have combined to create tangible opportunity.
For a long time, one of the major hindrances to solar power was the expense of implementing it, but in recent years we have seen a drastically lowered manufacturing and installation cost– now, unsubsidized solar is as cheap as coal, natural gas, and wind projects.
Just last week, the Government of Canada and IFC, a member of the World Bank Group, formed an initiative to spur renewable energy growth in Sub-Saharan Africa. This program will have the Canadian government contribute $122 million USD, which the ICF will use to kindle private sector investment into renewables, aiming to improve access to affordable and sustainable energy services.
Algeria also has ambitious plans for solar energy, with a proposal for the installations of 13 gigawatts of capacity toward solar power (out of 22 total for renewable energy) by 2030. To put those numbers in conceptual terms, it’s enough power to meet a quarter of domestic energy needs whilst still reserving a significant portion for exports.
Energy exports will face a market barrier as electric storage technology strives to catch up, but in the United States, the Federal Energy Regulatory Commission (FERC) approved a new rule on Thursday that may begin to clear the way. This order’s objective is to enhance competition and promote efficiency in the electric wholesale markets, with the overall effect of greater reliability and cheaper costs. With lowering costs comes the potential for greater investment yet.
Even the oil giant Saudi Arabia has started on the renewables train, with a recent movement to diversify its economy into the sustainable energy industry. By the end of the year, the country aims to invest $7bn into the development of new solar plants and a large wind farm.
However, with big money comes big risk, and the renewables industry certainly is not immune to it. Companies that may be tempted to dip their toes into the booming sector should keep the following things in mind.
Namely, there are reputational and legal risks if an organization’s actions do not line up with their environmental claims. This may incur adverse media content, which could impact the organization’s reputation toward its employees, partners, clients, consumers, and the general public.
Furthermore, companies could be subject to litigations if they violate regional environment regulations. Beyond that, there are the ever-present natural environment risks, which encompasses things like sandstorms blocking out solar farms, as well as regional risks that may include things such as terrorism or other crimes.
Some of these threats can be mitigated with proper treatment and due diligence. For those, Centry can help!
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