Tag Archives: Fukushima

Business need for reduced costs drives Cleantech demand

By David Bicknell

New research from audit specialist Grant Thornton has highlighted the change drivers behind the growing demand for cleantech products to reduce business costs.

Grant Thornton’s third annual International Business Report (IBR) report on the global cleantech industry shows that in general the adoption of cleantech products and practices is motivated by the commercial need to reduce costs and increase profits. It is no longer about being ‘green’.

For example, despite short-term fluctuations, the trend for key commodity prices continues upwards for example, Brent Crude oil recently rose back above US$120 a barrel. The outlook for nuclear energy is unclear following the Fukushima disaster – Germany, for example, has opted for the renewables route – and partly due to this uncertainty, cleantech is emerging as a suitable alternative source of energy or a means of reducing  consumption of expensive resources.

Over half of the business practitioners surveyed for the IBR who choose cleantech options do so to reduce their costs (52%); with 45% making the choice as a way to increase profitability. Corporate social responsibility (CSR) requirements and environmental concerns also remain important, but are not the main reason for adoption.

This increasing maturity of the sector is filtering through to expectations of cleantech business for the year ahead creating a bullish outlook for 2012.

Compared with companies in other sectors, the Grant Thornton report suggests that privately held businesses in the cleantech sector are now among the most confident enterprises in the world when it comes to future prosperity, far outpacing the optimism found in most global industries – and with good reason.

64% of cleantech businesses interviewed expect revenue to increase this year, up from 54% the previous year. 64% of respondents also expect higher profitability this year compared to 42% in 2011.  Cleantech providers currently see the greatest demand from the developed economies of Europe (51%), and US and Canada (39%).

Nathan Goode, head of energy, environment and sustainability at Grant Thornton UK said: “Interest in cleantech is no longer just about environmental concerns, it’s about whether it offers solutions that can boost the financial performance of companies. What we’re seeing is the potential for these technologies to compete with traditional forms of energy and the expectation that over time, they should.

“Governmental support remains key in many sectors and jurisdictions for cleantech to be successful, and fluctuations in this support are causing short term volatility for the cleantech arena. The mood of optimism in the sector appears to be driven by fundamental trends and reflected in broader indicators such as oil prices.

“Cleantech is a sector on the road to commercialisation but it is not necessarily all the way there yet. We’re at a stage now where the value proposition for cleantech is to save money and consequently demand for cleantech is set to increase meaning we could be on the cusp of something very big indeed.”

Cleantech and IT

The Grant Thornton report demonstrates how the cleantech sector is in transition. There are more companies involved in R&D (42%) and IT (29%) than in previous years (31% and 22% respectively).

Goode said: “Judging by this analysis, cleantech appears to have parallels with the biotech industry in that R&D is being used to explore new concepts and applications for existing technologies. As a result, R&D and IT is receiving greater focus as companies exploit advances in areas such as storage and smart grid technologies. In addition, the sector is adopting a broader base on which to apply its learning, putting greater focus on areas such as waste and water.”

In contrast, manufacturing activity has become relatively more subdued. The number of businesses citing involvement in manufacturing of energy efficient products has decreased over the past year from 26% in the 2012 survey to 19% in 2011, although manufacturing of products for cleantech energy generation has increased marginally to 17%, up from 14% the previous year.

There could be a number of reasons for this, but the Grant Thornton report stresses that the issue of capital constraint represents a big challenge for the sector and as a result, governments.

Goode added: “Manufacturing items such as wind turbines and waste processing plants is an incredibly capital intensive business.  However, what we’re seeing is a slowing in the pace of growth as a result of constraints on raising capital.  This continues to be an issue, especially in European economies where credit is constrained.

“Governments must be mindful of acting as a brake on investment, as it will quickly become a barrier to achieving carbon reduction targets and the desire to supply businesses and households with alternative supplies of energy – and at a time when it’s really starting to compete.”

Winds of energy change blow through Germany and China

By David Bicknell

Change in government priorities and policies can drive structural change that generates significant investment and growth. That is now particularly the case in energy production projects in the aftermath of the Fukushima disaster.

From this article on Business Green, it appears that Germany  is set for a significant investment in wind power with the setting up of a number of offshore wind farms with new hydroelectric power plants in the offing too.

German energy companies and investors are ready to plough up to €60bn into overhauling the country’s power infrastructure, following the government’s pledge to phase out nuclear reactors.

The energy and water industry association BDEW issued a report on the first day of the Hanover industrial fair revealing that plans are underway to build or modernise 84 power stations with a combined capacity of 42GW.

As Business Green says, the report also provides one of the most detailed insights to date on how the German energy sector plans to cope with the government’s commitment to phase out nuclear capacity in the country post-Fukushima.

Another recent article shows that China is making similar investments in wind energy, spending the equivalent of £4bn in the North-Western Gansu region.

As Jonathan Watts reports, “Wind turbines, which were almost unknown five years ago, stretch into the distance, competing only with far mountains and new pylons for space on the horizon. Jiuquan alone now has the capacity to generate 6GW of wind energy – roughly equivalent to that of the whole UK. The plan is to more than triple that by 2015, when this area could become the biggest wind farm in the world.

“Although it is the world’s biggest CO2 emitter and notorious for building the equivalent of a 400MW coal-fired power station every three days, it is also erecting 36 wind turbines a day and building a robust new electricity grid to send this power thousands of miles across the country from the deserts of the west to the cities of the east.

“It is part of a long-term plan to supply 15 per cent of the country’s energy from renewable sources by 2020. Most of that will come from nuclear and hydropower, but the government is also tapping the wind and solar potential of the deserts, mountain plateaus and coastlines.”

Meanwhile, Britain could pump £13bn into the economy and create up to 10,000 jobs by upgrading its power distribution network with smart grid technology, according to a Reuters report.

The technology has the potential to transform the way electricity is generated, distributed and consumed just as the Internet transformed the way the world communicates.

The idea is to create a communication network to maximise efficiency in supply and demand and to cut costs for homes and businesses.

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UK smart grid could create jobs, help economy