Quote: "However oil prices continue to reach record highs and many see no end in sight for the current trend. Some even predict oil prices to reach US$150 per barrel next year. Furthermore, its substitutes are also soaring to new highs".
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Thu, 08 Nov 2007
JP/Are we running out of 'alternative' energy sources?
With oil prices on the rise, it is getting more difficult to find "alternative" sources of energy. However if current trends continue, the use of solar energy -- widely regarded as expensive -- may become a more attractive choice.
The recent uptrend in oil prices has intensified the pursuit of substitute energy sources, with coal, gas and bio-energy becoming the most popular choices. Many expect a shift toward these alternative sources would help ease demand for oil prices and eventually lower the price of oil.
However oil prices continue to reach record highs and many see no end in sight for the current trend. Some even predict oil prices to reach US$150 per barrel next year. Furthermore, its substitutes are also soaring to new highs.
As widely known, Indonesia is in the process of building 40 coal-generated power plants through its Fast Track Program to replace oil-based power plants. But as this takes time, coal prices are rising as global demand for the commodity intensifies, particularly from booming China.
Coal prices have risen 51 percent from the beginning of this year to US$78 per ton in late October.
The problem is that growth of global demand for energy is currently perceived to be insatiable with the current sources of non-renewable energy. Scores of coal-generated power plants are being constructed in countries such as China and India to support their rapidly growing economies, and the market for coal is also apparently growing larger, pushing up prices.
Gas is another story. It may be used as a source of alternative energy in more developed countries with adequate infrastructure, as its price is much lower than the price of oil.
While it is true that gas prices in Indonesia are half the equivalent price of subsidized High Speed Diesel (fuel used mostly for power plants) and one third the price of unsubsidized HSD, Indonesia lacks the infrastructure to fully utilize the benefit of using gas.
Indonesia is currently building gas infrastructure, but it will be years before the whole country can benefit from it.
The key issue is that both coal and gas, just like oil, are sources of non-renewable energy which will also disappear one day. To tackle the global energy problem, common wisdom suggests that alternative sources of renewable energy will have to be developed. But which ones?
Biofuel has been grabbing headlines as one option. Indonesia itself has started developing bio-energy by using Crude Palm Oil (CPO). However, since CPO is already in high demand from the food industry, the surge in demand has led to an increase in CPO prices by over 65 percent this year.
So CPO, albeit renewable, has become another expensive alternative to oil.
There is one alternative worthy of considering: solar energy. Solar energy is usually produced by using a solar cell or photovoltaic (PV) cell; a device that converts light into electricity using a photoelectric effect.
As a tropical country, Indonesia enjoys sunshine for almost the entire year, providing the country with an abundant source of solar energy.
Even though building a PV solar plant is estimated to cost around US$8.5 million per megawatt capacity, or more than five times as expensive as a coal-fired power plant, the source of energy to produce electricity is free; the sun.
Meanwhile, if Indonesia is to build coal power plants to provide electricity in remote areas, supplying coal to the power plants would be an arduous task given the limitations in infrastructure.
And given the increasing trend in current "alternative" energy sources, it may only be a matter of time before solar power becomes a more feasible choice.
Numerous countries, including Spain, Germany and China, have initiated solar projects. Indonesia, too, should promote similar moves to foster the use of renewable alternatives.
This could be achieved by giving subsidies to renewable energy research or people who use renewable energy as their source of energy.
With the emergence of new economic powers in the world and the increase in global demand, competition for energy will not die down anytime soon. Therefore, we should be well prepared.
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