How Power Relations Influence the Growth of Renewable Energy - Case Study Example

CEO Report – Renewable Energy Name Student no: Topic no: Executive summary Both the report and essay addresses the influence of power relations in the growth of a renewable energy industry in a common. The issue has been looked in a context of a small firm which wants to venture into the renewable industry in Australia or Germany. According to the report, power relations in a given country are capable of influencing the growth of an industry. Before venturing into a renewable industry in a given country, the report recommends looking at; research and development support from the government, available government policies, power sector control and government support for renewable energy sector. Australia lags behind Germany in a renewable energy industry due to differences in power relations. The options available according to the report are venturing into either Australia or Germany renewable energy sector. The report recommends venturing into Australia renewable energy sector in the developed technologies such as wind and solar. The current efforts by the Australian government present the industry with a bright future. Despite the conflicts of interests between the state and federal government powers, there has been a consensus. The collaboration of state and federal governments have made several policies and introduced incentives which are good for the industry. Most of the government support has been aimed on the developed technologies such as wind and hydropower. Australia offers more advantages than Germany due to lower start up costs, low competition and a larger market. Issues for consideration Power relations play a part in establishing an industry in a given country. The government business relations and the policies set by the government determine the ability to venture into renewable power. Governments have been committed to reduce dependance on fossil fuels but each have set their policies depending on their type of government and the pressure available. Before venturing into renewable energy, it is important to look at several factors that can give the viability of the project. The factors to consider are; research and development support from the government, available government policies, power sector control and government support for renewable energy (Neuhoff, 2005). Government support for renewable energy Development of renewable energy requires a lot of government support such as in Germany. Power relations in a government determine the level of its participation in research and development. It is important to understand that the government collaborates with other countries in research and development in renewable energy. Globalization has made it vital for international cooperation of states in the development of alternative sources of energy. Unless the government is committed to collaborate with other countries to combat climate change, commitment to research and development is bound to be low (Neuhoff, 2005). Available government policies on renewable energy Available policies on power generation play a very vital part. While some of the governments have established clear renewable energy policies others have not. The power relations play a very vital part in coming up with policies. Some of the governments may be keen on establish policies that reduce the investment costs on renewable energy, increase public investment in the sector and price setting policies. The power relations enables several states to come together, set energy targets and comes up with policies that favors use of renewable energy in a bid to reduce carbon emissions (Neuhoff, 2005). Available control on energy generation It is important to know the control available in power generation in a country before venturing. In some countries, the power utilities have a great control on renewable energy. There are monopolies in the energy production sector and distribution. This implies that a private developer may face hurdles as they try to establish power generation facility. Without an elaborate legal framework, it is hard for private power developers to succeed in these countries. The developer may be forced to sign power purchase agreement making it hard to plan and finance the project. Government support The existing government has the power to support or neglect the renewable energy sector. If the power system in place is democratic, the pressure from the citizens may force the government to be more supportive. The government is liable for the investment environment in a country. This is due to fact that government support can be able to give a country a competitive edge in the renewable energy sector. Collaboration of government with other countries can enable transfer of technology which is needed in the renewable energy sector. Thus, this is a very important issue to consider (Neuhoff, 2005). Options for expansion The firm can venture into renewable power generation in Australia or Germany. Australia have been advocating for renewable power generation though it lags behind Germany in implementation (Frondel, Ritter & Schmidt, 2008). Option 1 Venturing into Australia renewable energy industry in developed technologies (wind and hydropower) Benefits The country has been active in establishing the renewable power generation sector. There has been enactment of policies and laws which supports renewable energy in the country. The country has high potential for renewable power generation. There have been incentives on industries and households to increase their use of renewable energy which may favor the industry. Large market for renewable energy. Risks The poor government intervention has made the country to lose their competitive edge in the industry. There is low innovation in the renewable energy sector in Australia leading to importing of technologies. Option 2 Venturing into renewable energy sector in Germany Benefits The government has been very supportive to the renewable energy industry. The country has well established energy policies (Morthorst, 2003). Germany is a leader in the renewable power sector and has favorable power relations which enable collaboration in technology development in the sector with other countries. The country is committed to the industrial nation’s agreement to cut carbon emissions by 40% by 2020 (Frondel, Ritter & Schmidt, 2008). There is an efficient infrastructure for the renewable power sector. Risks The main risk in the Germany renewable energy sector is competition. The country has a lot of industries in the sector, which have led to a competitive environment (Frondel, Ritter & Schmidt, 2008). High start up costs may be involved in Germany. Spiraling energy prices experienced in the country have been blamed on renewable energy (Traber & Kemfert, 2009). Recommendation I would recommend for the firm to venture into Australia renewable power industry. Essay Introduction Power relations in Australia play a very big role in the renewable energy sector. Due to global warming, the Australian government has been on the forefront to combat climate change. One of the means used is through advocating for renewable energy. The government has come up with renewable energy policies that are aimed to combat carbon emission. There have been establishment of mature technologies which have been favored for their low investment risks. The country power relations have made it to be embedded into larger societies (Lukes, 2005). The country has been able to use its power in the global arena for the pursuit of collective goals. This is seen in the implementation of the global policies on carbon reduction and participation in global politics on how to combat global warming (Zahedi, 2010). For a small firm that wants to venture into renewable energy generation, Australia is more preferable in mature renewable energy technologies. The country has low competition and has established incentives in the sector. The pressure from the civil societies and public for action against climate change makes it easier for a friendly environment. This essay address firm interest to venture into the Australia renewable energy sector and how power relations affect the growth of the industry in the country. Australia has been participating in the international decision making regarding climate change. The country participated in the 2012 State of the Climate report, which concluded that burning of the fossil fuels have been the major contributor to global warming (CSIRO & BOM, 2012). The concerns internationally and locally have made countries to commit on increasing the renewable energy use. Being an international player in global efforts on climate change mitigation, the country has been able to meet several global targets on carbon reduction. This has been done through support to the renewable energy sector in the country. The government came up with policies to enable it exploit the renewable energy. Australia has the highest average solar radiation and large deposits for geothermal (Zahedi, 2010). Though the cost of exploiting renewable energy in Australia have been cited to be higher than renewable energy, government pressure has been able to make it favorable. The clean energy framework developed by the government is aimed at enhancing innovation and exploitation of renewable energy. The policy has been able to address the non price barriers that exist in the market. The policy is also set to enable and support mature technologies due to their lower costs (Martin, 2012). Government decision plays a vital part in enhancing innovation. The power of making decisions pertaining to the development of the sector lies on both federal and state governments (Woodward, Parkin & Summers, 2010). The government has invested a lot of capital in the renewable energy sector with an aim to boost the clean energy technologies. It is important to understand that the state power is affected by globalization. Globalization has made the flow of information across borders more easily which in turn leads to enhanced exchange of technology (Owen & Deirdre, 2008). Though the powers in the state may only support mature technologies, they have been affected by globalization which may bring new technologies. The state has been supporting the generation of renewable energy through Renewable Energy Target (RET). RET has advocated that 20% of the power generated in the country should be from renewable sources. This gives the industry great hopes for expansion (Zahedi, 2010). Despite this, the support has been mostly on the developed technologies which have left out other newer technologies. For a new business, the venture should be aimed at wind or hydro energy generation since the sectors have great support from both federal and state governments. Being mature technologies, the costs are low and have higher incentives. Less mature technologies have not been able to benefit from RET which makes it costly to invest in them (Neuhoff, 2005). Government intervention in the renewable energy sector in Australia implies that there can be cost internalization. The government has been working to ensure that they internalize the environmental costs while at the same time making sure that the industry is competitive. The government is also liable to making the assistance provided more transparent. If the government increases the support for the non renewable energy sector, the renewable energy sector is bound to experience difficulties. In Australia, the focus and support for the renewable energy sector have been a lot. Carbon price has been able to stimulate the renewable energy sector. The government support has been transparent which have made other policies to remain relevant (Martin, 2012). Another support that the Australian government has made available to the renewable energy sector is the Feed in Tariff (FIT). The feed in tariffs have been able to support the installed technology owners, which makes them important for new ventures. Despite this, the pressure from other power institution led to its reduction and phase out in some states. The use of FIT has been able to support the smaller scale generation though it had ignored large and medium scale players (Zahedi, 2010). Australia power sector reconstructing policies are favorable for the renewable power generation. The government has been able to offer a good environment for new companies on the renewable energy sector. Both the state and federal governments have been able to come together and establish the way forward in their power sector. There have been an establishment of green cities initiative within the states and a lot of efforts have been put in hybrid power generation. For a new investor in the country, the legal framework has made it easier to enter into the market. The public participation in government has enabled their voice to be heard on support for the renewable energy (Martin, 2012). Australia is a federal parliamentary democracy. This implies that the country consists of both state and local governments (Woodward, Parkin & Summers, 2010). The main issue in coming up with policies is competition between local and state governments. The country drafted energy policies are through the collaboration and agreements between the local and state governments (Martin, 2012). One of the effects of the power relations in Australia renewable energy sector is the competing priorities between local and state governments. This has in some cases resulted in complex policies which have affected the sector. The power of the state and local governments has to come into a consensus before a decision is implemented (Woodward, Parkin & Summers, 2010). For example, the differing priorities in the government power structure have in some instances led to wrong incentive structure on renewable power. The state government has therefore been unable to capture incentives as compared to the federal governments in the renewable energy sector which results into conflicts on incentive policies and differing motivations. This has been the main hurdle in the renewable energy sector. New participants and technologies have been slow to be adopted due to conflicting policies and complexity. The challenges that a new firm in the renewable energy sector faces includes the administrative hurdles. The policies are also unstable due to interventions by state and local governments. There have also been support for the existing electricity sources by the government which may hinder the development of the renewable energy sector in the country (Zahedi, 2010). Conclusion The existing power relations in a country have a profound effect on the establishment of the renewable energy industry. The industry growth is subject to the government policies and power relations in making decisions. It is important to understand that renewable energy have been advocated by governments globally due to its ability to combat global warming. Australia power relations have enabled the country to embed itself into a global society. For a firm venturing into renewable energy sector, Australia posses the best market. The power relations in the country are able to support the renewable energy sector. The firm should venture into the developed technologies such as solar and wind energy since they are more supported by the government. The established polices in the renewable energy sector in Australia are more beneficial to established technologies and have little support for the new technologies. The barriers that exist from government power relations are international hence they can be easily addressed. Despite the barriers, the country still poses a good environment due to current government efforts. Continuous government efforts and cooperation with global players on renewable energy makes the industry attractive. The states and federal government have been able to enact policies that are aimed at stimulating the sector. According to set target by RET Australia aims to have 20% of their generated power from the renewable sources. There is less competition as more players in renewable energy have not entered the market. The existing legal framework in Australia enables a renewable energy firm to register and produce power more easily than in some nations such as Germany. References CSIRO & BOM. (2012). State of the Climate 2012, in Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Bureau of Meteorology (BOM), Australia. Frondel, M., Ritter, N. & Schmidt, C. M. (2008). Germany’s Solar Cell Promotion: Dark Clouds on the Horizon, Energy Policy, Vol.36, no. 11, p. 4198-4202. Lukes, S. (2005). Power: A radical view, Palgrave Macmillan, p.1-53. Martin, N. J. (2012). Developing renewable energy supply in Queensland, Australia: A study of the barriers, targets, policies and actions, Renewable Energy, 44, 119-127. Morthorst, P. (2003). National environmental targets and international emission reduction instruments, Energy Policy, Vol. 2, no. 1, p. 73-83. Neuhoff, K. (2005). Large-Scale Deployment of Renewables for Electricity Generation, Oxford Review of Economic Policy, 21. Owen, E. H. & Deirdre, O. (2008). Business, Government and globalisation, Palgrave Macmillan. Traber, T. & Kemfert, C. (2009). Impacts of the German Support for Renewable Energy on Electricity Prices, Emissions, and Firms. The Energy Journal, Vol.30, no. 3, p. 155-178. Woodward, D., Parkin, A. & Summers, J. (2010). Government, politics, power and policy in Australia. Pearson Australia, p. 304-315. Zahedi, A. (2010). Australian renewable energy progress, Renewable and Sustainable Energy Reviews, Vol. 14 no. 1, p. 2208-2213. Read More