Photo © sunjaec/flickr
BOTTLING
SUNSHINE Energy experts like to arm themselves with factual curiosities—little tidbits designed to make the general population think more about energy production and their own consumption. Recently, I read such a fact in a promotional document published by Vattenfall. According to the Swedish power company, “every day more solar energy reaches the earth than 5.9 billion people could consume in 27 years.” What an incredible assertion. Given that most of the world’s current production of energy relies heavily on coal and other fossil fuels (the relics of sunshine past), we are clearly not very efficient at converting the vast potential of what is presented to us each day at sunrise. It’s not for a lack of good intentions. Vattenfall, for example, is wholly owned by the Swedish government and arguably one of the most progressive and diverse utilities in the world. Although the company has invested in new technologies like offshore wind energy, more than half of its generation mix still comes from fossil fuels. As of 2010, its portfolio included coal (44 percent), nuclear (25 percent), hydro (21 percent), natural gas (8 percent), wind (1 percent), and biomass (1 percent). While the company clearly embraces the future, its carbon footprint reflects the real struggle global energy producers
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By John Kjorstad, KPMG Global Services
face when legitimately trying to employ new technologies or convert new sources of energy.
RISKY ROUTES TO CHANGE Changing the way we generate and distribute energy is not easy. It requires long-term planning, efficient financing, and careful management of existing assets—many of which still have a lot of useful life left in them. Some countries, like Spain and Germany, have taken bold steps to accelerate change, but the Spanish stumbled when the financial burden of their actions put too much pressure on the country’s balance sheet. As a result, private investors learned a harsh lesson on the realities of political risk. Spain’s experience was unfortunate. While the country’s leaders should be applauded for creating the ideal environment to accelerate private investment and promote the development of cleaner renewable sources of energy, they must also accept responsibility for letting the situation escalate beyond their control. Governments are consistently walking a tightrope of affordability while trying to incentivize meaningful change. If they do not get the balance right, there is a very real risk that the whole policy might collapse with painful consequences.