Beyond Greening the Blue Helmets: Renewable Energy Transitions for Peacebuilding in Conflict Settings
The Program on Conflict, Climate Change and Green Development and the United Nations announce a meeting on a new approach to clean energy: There is a striking overlap among the regions at greatest risk of conflict, those most vulnerable to climate change, and high levels of energy poverty – primarily in Africa, the Middle East and Southern Asia. Renewable energy represents an under-utilized entry point. Yet conflict-affected settings are characterized by unique challenges, and the renewable energy revolution that is transforming much of the world risks bypassing the conflict-prone states that stand the most to gain. The potential for renewable energy to deliver multiple economic, social, environmental and peace benefits in conflict settings remains largely untapped.
May 1, 2017, San Francisco - The Program on Conflict, Climate Change and Green Development, part of UC Berkeley’s Renewable and Appropriate Energy Laboratory, convened on April 28, 2017, the first of two expert workshops on the Peace Renewable Energy Credit (PREC). A newly developed financing mechanism, the PREC is designed to encourage renewable energy investment in conflict and crisis settings. The workshops provide for leaders in the fields of climate change, renewable energy/finance and humanitarian/peacebuilding to examine, refine and help develop the PREC concept. The San Francisco workshop was hosted by the Law Offices of Wilson, Sonsino, Goodrich & Rosati, and brought together a range of experts with national and international experience on climate and energy issues, renewable energy development and finance, and environmental markets. The discussion took stock of the growing linkages between climate change and conflict and looked at the potential for renewable energy to contribute to promoting peace and development in the world’s conflict regions. They examined the rationale for developing the PREC, including the limitations of the current international toolkit to effectively address conflict and humanitarian crises, and were presented with scenarios of how the PREC might be applied in existing conflict settings. Participants developed strategic and technical recommendations for operationalizing the PREC mechanism in the near term. The second workshop is scheduled to be held on June 1, 2017 in Washington DC. “As the world struggles to cope with the growing humanitarian crisis which climate change exacerbates, there is an urgent need for new thinking and new solutions”, said Professor Dan Kammen, Director of the Renewable and Appropriate Energy Laboratory. “The PREC is an important innovation that can help make sure that the benefits of the renewable energy revolution are also reaching the places of greatest need, and potentially greatest impact. We seek partners to refine the idea and to fund the pilot phase projects in South Sudan, Myanmar, and elsewhere.” “We can already see a number of conflict and crisis settings where new investment in renewable energy could provide multiple economic, social, political and peace benefits, but this is not current practice” said David Mozersky, Director of the Program on Conflict, Climate Change and Green Development. “The PREC can provide new impetus and financing solutions to help unlock the many near and longer-term benefits that renewable energy can offer in regions that suffer most from conflict risk, climate change vulnerability, and energy poverty.” The Peace Renewable Energy Credit (PREC) is one of several key initiatives that the Program has developed. More information is available at rael.berkeley.edu/conflict. For information contact: David Mozersky (email@example.com); Dan Kammen (firstname.lastname@example.org).
Using resource mapping tools, a UC Berkeley and Lawrence Berkeley National Laboratory team assessed the potential for large solar and wind farms in 21 countries in the southern and eastern African power pools, which includes more than half of Africa’s population, stretching from Libya and Egypt in the north and along the eastern coast to South Africa. They concluded that with the right strategy for placing solar and wind farms, and with international sharing of power, most African nations could lower the number of conventional power plants – fossil fuel and hydroelectric – they need to build, thereby reducing their infrastructure costs by perhaps billions of dollars. “The surprising find is that the wind and solar resources in Africa are absolutely gigantic, and something you could tap into for relatively low cost,” said senior author Duncan Callaway, a UC Berkeley associate professor of energy and resources and a faculty scientist at Berkeley Lab. “But we need to be thinking now about strategies for fostering international collaboration to tap into the resource in a way that is going to maximize its potential while minimizing its impact.” The main issue, Callaway says, is that energy-generating resources are not spread equally throughout Africa. Hydroelectric power is the main power source for one-third of African nations, but it is not available in all countries, and climate change makes it an uncertain resource because of more frequent droughts. The team set out to understand where wind and solar generation plants might be built in the future under a range of siting strategy scenarios, and how much renewable generators might offset the need to build other forms of generation. Based on the team’s analysis, choosing wind sites to match the timing of wind generation with electricity demand is less costly overall than choosing sites with the greatest wind energy production. Assuming adequate transmission lines, strategies that take into account the timing of wind generation result in a more even distribution of wind capacity across countries than those that maximize energy production. Importantly, the researchers say, both energy trade and siting to match generation with demand reduces the system costs of developing wind sites that are low impact, that is, closer to existing transmission lines, closer to areas where electricity would be consumed and in areas with preexisting human activity as opposed to pristine areas. “If you take the strategy of siting all of these systems such that their total production correlates well with electricity demand, then you save hundreds of millions to billions of dollars per year versus the cost of electricity infrastructure dominated by coal-fired plants or hydro,” Callaway said. “You also get a more equitable distribution of generation sources across these countries.” “Together, international energy trade and strategic siting can enable African countries to pursue ‘no-regrets’ wind and solar potential that can compete with conventional generation technologies like coal and hydropower,” emphasized UC Berkeley graduate student Grace Wu, who conducted the study with fellow graduate student Ranjit Deshmukh. Wu and Deshmukh are the lead authors of the study. The is available in the Proceedings of the National Academy of Sciences and on the RAEL publications site. Charting Africa’s energy future The team set out to tackle a key question for electricity planners in Africa and the international development community, which helps fund such projects: How should these countries allocate their precious and limited investment dollars to most effectively address electricity and climate challenges in the coming decades? Wu and Deshmukh gathered previously unavailable information on the annual solar and wind resources in 21 countries in eastern and southern Africa, and hourly estimates of wind speeds for nine countries south of the Sahara Desert. They developed an energy resource mapping framework, which they call Multi-criteria Analysis for Planning Renewable Energy, or MapRE, to identify and characterize potential wind and solar projects. They then modeled various scenarios for siting wind power and examined additional system costs from hydro and fossil fuels. The team concluded that even after excluding solar and wind farms from areas that are too remote or too close to sensitive environmental or cultural sites — what they term “no-regret” sites – there is more than enough land in this part of Africa to produce renewable power to meet the rising demand, if fossil fuel and/or hydroelectric power are in the mix to even out the load. Nevertheless, choosing only the most productive sites for development – the windiest and sunniest – would leave some countries with little low-cost local renewable energy generation. If, however, countries can agree to share power and build the transmission lines to make that happen, all countries could develop sites that are low-cost and accessible, and have low environmental impact, while reducing the number of new hydro or fossil fuel plants that need to be built. Callaway says that a few countries already share power, such as South Africa with Mozambique and Zimbabwe, but that more countries will need to broker the agreements and build the transmission lines to allow this. International transmission lines are being planned, but primarily to share hydropower resources located in a handful of countries. These transmission plans need to incorporate sharing of wind and solar in order to help them be competitive generation technologies in Africa, he said. Other co-authors are Daniel Kammen, a UC Berkeley professor of energy and resources, Jessica Reilly-Moman and Amol Phadke of the International Energy Studies Group at Berkeley Lab, Kudakwashe Ndhlukula of the Southern Africa Development Community Center for Renewable Energy and Energy Efficiency at the Namibia University of Science and Technology in Windhoek, and Tijana Radojicic of the International Renewable Energy Agency in Masdar City, Abu Dhabi, United Arab Emirates. The International Renewable Energy Agency supported much of the initial research. The National Science Foundation and the Link Foundation supported the expanded analysis on wind siting scenarios.
Brooke Maushund, who has worked on energy access in Nicaragua and in Africa, wrote the conference report for the Energy Net Limited summit that preceded the COP22 Climate Summit in Marrakech November 2 - 4, 2016.
This article is part of a special section of Science on sustainability. You can access the full packet of papers here.
It was just last summer that SunEdison was a Wall Street darling, the very air around the fast-growing company seeming to shimmer with potential.
SunEdison was, after all, a red-hot company in a red-hot space — renewable energy. Its market capitalization reached nearly $10 billion, putting it on a par with the likes of Wynn Resorts of Las Vegas. Among the believers betting on its stock was the hedge-fund heavyweight David Einhorn of Greenlight Capital. With plans to buy Vivint Solar for $2.2 billion, SunEdison appeared unstoppable.
And then the company went supernova. Its shares fell from around $32 last summer to 34 cents this week. Mr. Einhorn furiously tried to dump his stake in recent weeks. In early March, Vivint said, “thanks, but no thanks” and exited the deal with SunEdison.
On Thursday, to the surprise of no one, SunEdison filed for bankruptcy — one of the largest in a series of recent green-energy failures.
There is a timeless element to SunEdison’s swift demise: an executive with an Icarus complex chasing a fast-growing market embarks on an aggressive strategy fueled by cheap debt. Soar. Crash. Burn. Repeat.
Yet the collapse raises a bigger question: Can renewable-energy companies be profitable? Can green make green?
The answer, of course, is yes. Just as soon as they cross over a fundamental hurdle: finding a strategy that actually works.
“We haven’t totally figured out exactly what the business models are going to look like, for who wins and who loses,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.
Significantly, though, the sudden decline in oil prices isn’t largely to blame. The difficulties run much deeper, echoing industrial collapses of earlier eras — the telecom-industry boom and bust of the 1990s and early 2000s, and disruptive cycles before that.
On the surface, the various green-energy companies all seem to be pursuing different strategies. But there is a unifying problem they have yet to overcome: Finding enough customers to support the costly infrastructure they must first build.
SunEdison is far from being the only troubled green-energy business.
Abengoa, which grew from a small electrical equipment company in Seville, Spain, to a multinational solar and biofuel giant, is in restructuring proceedings in the United States and abroad. Solazyme, a once-promising maker of algae-based biofuels, has abandoned the energy markets and changed its name in favor of focusing on ingredients for personal care and food products for companies like Unilever and Hormel. And NRG has pulled back from its headlong rush into alternative energy as it restructures to focus on its conventional operations after the ouster of its chief executive, David Crane.
What’s remarkable is that these leading energy companies are struggling at a time when regulatory, public and investor support for the renewable-energy industry has arguably never been greater.
On Friday, world leaders are signing the Paris agreement on climate change, a sweeping commitment to lower carbon emissions that practically requires that renewable development be steeply ramped up. At the end of last year, American lawmakers extended important tax credits for green energy several more years, while in recent days, the Senate approved a broad energy bill that would further promote clean power.
Moreover, investors around the world sank hundreds of billions of dollars into clean-energy technologies last year even as the prices of competing fossil fuels — oil and natural gas — tumbled.
Though development in renewable energy climbed in the last 15 years, the industry is still widely considered to be in its early stages. Nonetheless, there has been a race among companies to develop, commercialize and eventually prosper from what many see as one of the largest tectonic economic shifts in decades.
Last year, China started construction on a massive solar farm in the Gobi desert that is expected to generate enough power to light up one million homes. Dong Energy is developing a multibillion-dollar wind farm off the Yorkshire coast that could eventually power even more.
And in the United States, the federal government recently approved a major new transmission line to move wind-generated electricity east from the Great Plains.
But all good bubbles burst. What is happening in renewable energy now has similarities to the telecommunications bubble of the 1990s. Led by hard-charging executives seeking big paydays, giants like WorldCom, Global Crossing and Adelphia started far-reaching acquisition and capital-expenditure programs — burning through billions of dollars — to buy cable companies or bury long-haul fiber-optic cable under land and sea. They were all chasing expected high demand and soaring revenues from the dawn of the Internet.
Those revenues eventually materialized, but they came too late for the first movers of the revolution. After creating a broadband glut, and buried under mountains of debt — let’s not forget the various accounting scandals and frauds — the many companies collapsed into bankruptcy.
But the infrastructure they created lived on. Last weekend, when you binge-watched the fourth season of “House of Cards” or streamed your own cooking show on Facebook Live, chances are better than not that your data zoomed through at least some of those networks.
In that case, it turned out that if you build it, they will indeed come. But as many renewable energy companies are learning, building it costs dearly.
Even before SunEdison, the landscape of green energy companies was littered with failed strategies.
Dozens of solar-focused companies around the globe have disappeared, through bankruptcy, insolvency or just shutting their doors, since 2009 when prices for solar panels plunged as competition from China increased.
Among the high-profile failures was that of Solyndra, a solar module manufacturer, which became a symbol of green energy ambitions gone awry for the Obama administration after it burned through $527 million in government loans.
Part of the conundrum for these companies is that the most effective way to cut costs has been to grow, to take advantage of economies of scale, certain forms of financing and generous subsidies that were set to expire.
But with all that growth has come debt, and an inability to show a profit, even if the companies are creating value.
“Clearly in a market that has had a lot of growth, you are going to have some companies — and in this case many companies — that try to do too much, too fast,” said Shawn Kravetz, founder of Esplanade Capital, which invests in solar power. “We’re going to continue to see a shakeout.”
The vulnerability to shifting conditions has been evident for industry leaders like SolarCity and SunPower, companies whose stock prices can swing wildly with energy markets and policy changes.
But it is especially the case at SunEdison, where its chief executive, Ahmad R. Chatila, set about expanding, seemingly in all directions at once.
With roots in making components for solar panels, SunEdison aimed to become the world’s largest renewable energy development company. It bought ventures in wind and energy storage, looked to increase manufacturing, entered big new markets and created new subsidiaries known as yieldcos to help it raise cheaper financing by buying the projects it developed.
That strategy was further complicated by questionable accounting and opaque financial reporting — SunEdison has received an inquiry from the Securities and Exchange Commission and a subpoena from the Justice Department — that confounded even experts in the field.
”This is going to be a big industry globally, but we’re stumbling and bumbling to get there,” said Erik Gordon, a clinical assistant professor at the Ross School of Business at the University of Michigan. “If they weren’t trying to beat each other to the next rooftop they wouldn’t be needing to do this financial engineering.”
Still, industry analysts and executives say that despite the fall of SunEdison, the future for renewable energy is bright.
Indeed, there are a few stalwarts in the renewable-energy race.
Take First Solar. The company, which supplies solar panels and develops solar farms, has had its share of troubles. It has been the target of shareholder lawsuits claiming it hid big problems and misrepresented its prospects. Its stock, at $62 a share, is a far cry from its bubble-peak of $311 in the spring of 2008.
But by adopting a slower-growth strategy and reducing debt, First Solar is a rarity in the green-energy industry. It is profitable. Last year, the company made $546 million on $3.6 billion in revenue.
For now, First Solar may be an anomaly, particularly amid uncertainty around the presidential election and the policy stances of candidates like Hillary Clinton and Donald J. Trump on renewable energy sources. Some warn that a lull could settle over the industry in the short term.
“The Secretary Clinton perspective on lots of distributed clean energy couldn’t be more different than the Trump view,” said Daniel M. Kammen, the director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley. “That could mean hugely different things for the growth of the industry.”