Clean energy depends on wider economy growth

LONDON (Reuters) – Clean energy has strong guaranteed government backing in long-term subsidies but its future growth hinges on wider economic recovery and European targets are in doubt, senior energy executives told Reuters Energy Summit.

The big picture for renewables is a sector which may emerge from recession as fast or faster than the wider economy, because government support is often in the form of guaranteed long-term price support.

But capital-intensive projects, such as new installations, are dependent on debt finance and for that reason the sector can only recover fully with a growing economy.

Recession would contribute to a drop in global electricity consumption in 2009 — the first annual drop in 65 years — according to the International Energy Agency (IEA), also curbing energy investment.

The IEA forecasts that renewable energy asset financing will fall 38 percent this year.

Reuters