Kathryn Ryan’s interview earlier this week with Michael Eckhart, Managing Director and Global Head of Environmental Finance and Sustainability at the giant investment bank Citigroup was arresting. He was in New Zealand as a keynote speaker at the Wind Energy Conference and Ryan asked him about a recent report from Citi, Energy Darwinism: The Evolution of the Energy Industry, which claimed the world is entering the age of renewable energy and explored the consequences for generators, utilities, consumers and fossil fuel exporters. There’s a good exposition of the report on this blog post.
Eckhart explained the three big costs in producing electricity – the fuel, paying off the loan for the plant, and operational maintenance. In the case of coal and natural gas generation all three costs are involved and there’s no way of knowing what the cost of the fuel will be in the future. With wind and other renewables “there is no fuel cost at all: none”. Once the loan for the plant is paid off there are no further costs other than operational.
Ryan asked why investment in renewables is dropping as the costs are coming down. Eckhart in reply spoke of an anomaly:
“We had a very successful industry emerging coming out of the United States, Europe … manufacturing these solar cells, these solar panels, and along came China, and China just produces things at a lower cost and China made a priority – this became a priority industry under the government of China … and they came out with panels costing half as much.”
Continue reading “Citibanker: the age of renewables is here”