CLEAN ENERGY INFRASTRUCTURE - THE EMERGING SECTOR

Clean Energy Infrastructure and its investment merits

The investment opportunity in clean energy infrastructure is not a new phenomenon, although Lighthouse would argue that the investment merits have changed materially over the past 5 to 10 years. We have seen a combination of the maturation of certain technologies and a supporting background of increased government support including pricing support. These two factors in combination both broaden the clean energy investment set as well as lower the risk profile for the investment class in general. Set out below we detail some of these issues more specifically.

Feed-in tariffs - A feed-in tariff is a premium rate paid for electricity fed back into the electricity grid from a renewable electricity generation source. At present, feed-in regulations for renewable energy exist in over 40 countries, states or provinces internationally. Feed-in tariffs benefit the project sponsor through certain, long term above market pricing but can also be designed to fall in value over time to match the expected increased technological advances over time.
Pricing for Pollution - Increasingly the negative externalities of the various forms of pollution are now being priced by governments. This translates for example into tipping fees for municipal waste, biosolids etc that can form the basis of sound economics for biomass projects which were previously uneconomic.
Pricing for Carbon - The pricing of carbon exists today via the various global emissions trading schemes. This allows for a more level playing field with respect to future energy decision choices and supports clean energy which enjoys no extra carbon cost burden.
Renewable Energy Targets - various states and nations globally are adopting binding renewable energy targets which compel and promote the use of clean energy and facilitate the development of clean energy technologies and infrastructure. The typical medium term target is to increase renewables to 20% of the electricity supply by 2020. This is consistent with targets for Europe, USA and Australia.

Clean Energy and its role against Global Warming

The consensus scientific, government, industry and general public view is that it is beyond doubt that global warming is directly linked to anthropogenic (human) use of carbon-based fuels releasing carbon-dioxide into the atmosphere. While the science is clear the response to date has been haphazard at best. This is despite the fact that even immediate action may not prevent an increase in global temperatures of 2-3 degrees C, a temperature rise that has been forecast to cause significant global damage to crops, water sources, severe weather patterns and potentially an uncontrollable runaway positive feedback loop of increasing temperatures.

The move to a lower carbon intensive, cleaner energy generating world is but one of the many responses required to address climate change. Globally, clean energy is forecast to represent over 40% of new capacity if governments adopt their renewable energy targets. Over 1,600GW of new renewable energy capacity needs to be delivered by 2030, the equivalent to building Australia's entire electricity system every 9 months with renewable energy.