Monday, May 21, 2007

Alternative energy Q&A hosts an "Ask the expert" Q&A on alternative energy investing with Robin Batchelor and Poppy Allonby of the BlackRock New Energy Fund.

Here's a sample from that Q&A session with FT readers:

Q: What types of electricity generation are likely to be commercially viable while reducing carbon emissions?

Paul Davies, Adelaide, Australia

Robin Batchelor and Poppy Allonby: Some forms of alternative energy are cost competitive today. In many cases producing electricity from wind and geothermal are cost competitive when compared with traditional energy sources such as natural gas.

Furthermore, if one assumes there is a cost associated with emitting green house gasses such as carbon dioxide, the economic positioning of alternative energy increases further.

In certain geographic locations where high domestic prices prevail, or incentive schemes are present, the range of alternative energies that are cost competitive increases, e.g. solar photovoltaic in Japan and Germany.

Remember, however, that some of these of these alternative energy technologies are only "competitive" because of subsidies, as I believe is the case of solar photovoltaic panels in Japan and Germany.

In order to be truly competitive, the energy should be generated at a lower cost per unit without the use of subsidies, something that might actually hinder the development of cost-effective energy platforms.