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A Critical Analysis Of Alternative Renewable Energy

Content
  1. Introduction
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Introduction

In this chapter I am going to provide brief overview and scope of the dissertation. I'll present the highlights of the major topics that'll be covered in this dissertation and summary will be presented of the later chapters. The dissertation will be research based and the research sources will be from journals, books and internet articles. Through this research I will make clear the aims and objectives of the dissertation which will be covered in this chapter. Furthermore I am going to also look upon the need for alternative renewable energy in this chapter and the benefits alternative energy brings to the surroundings, society and corporations. The growth in the choice energy industry will also be mentioned along with theoretical framework and research methodology.

Aims and objectives

The main focus of the dissertation will be on the great things about alternative renewable energy. The way to obtain traditional energy resources such as oil, gas and coal are depleting and ever increasing demand of these energy resources is drawing our attention towards alternative renewable energy thus one of the aims of my dissertation is the necessity for alternative renewable energy. Alternative renewable energy doesn't impact the surroundings, society and climate in a negative way thus the next aim of my dissertation will be the advantages of various varieties of alternative renewable energy sources. The investment in development of alternative energy sources is not a lot of primarily due to perception that investment will not match the profits made by investment in traditional energy sources. Unlike this popular opinion I've designed another aim of my dissertation which will be the advantages of alternative renewable energy to corporations. Since there exists insufficient confidence in big corporations therefore i will also consider the limitations in development of alternative energy industry and will present the answers to these limitations in my dissertation.

Justification of the topic:

In the recent past the world has heavily relied on traditional energy sources such as oil, gas and coal. The growth in industrialization in every parts of the globe particularly India and China and in developed elements of the entire world U. S, Japan and Europe has increased the global demand of oil and made these countries net importers of oil. The supply of oil by OPEC and Non-OPEC members is decreasing and there are not sufficient oil resources to meet the increasing demand of energy. Moreover oil has huge impacts on the society and the surroundings particularly by means of oil spills. The dependency on oil is changing the climate of the earth and increasing the threat from global warming. I really believe to meet the demand deficit of energy its about time that the entire world should think about investment and growth in alternative renewable energy sources. The decreasing supply of oil and its adverse impacts on the environment and society increases the dependence on alternative energy sources. Alternative energy sources bring along advantages to the society, environment and corporations and therefore it is the need of the hour that upcoming and large coal and oil companies shift from traditional energy to alternative renewable energy.

Some background to the condition:

Need for alternative energy:

As Hasan stated in his report "Introduction to alternative energy" on page 1 that the world's dependence after oil and the reduction in traditional sources of energy such as oil, natural gas, coal and nuclear power is changing the structure of this world. The earth is heavily oil dependent rather I will say dependent on oil and the growth in industrialization in all parts of the world is increasing this dependency on oil. However at exactly the same time there is reduction in the supply of traditional energy. The resources of traditional energy are limited and due to depletion these resources cannot match the demand of energy and so it is believed by every authority that without alternative energy the growing demand of energy in the future cannot be met. The global supply of coal, coal and oil is bound while nuclear energy is dangerous and therefore the discovery of alternative renewable energy sources is of utmost importance to meet up with the energy challenge. The traditional energy sources such as oil, gas, coal and nuclear power are not renewable and produce a lot of waste material and harm the surroundings. The smoke and chemicals produced by these sources pollutes the air and influences global warming. Alternatively alternative renewable energy doesn't impact the environment and for these reasons the necessity for these sources is at its peak. Alternative energy sources are environmental friendly and technologically advanced and at the same time renewable energy will strengthen the core businesses of coal and oil companies. It is believed by everything alternative renewable energy will replace the original energy in a long time.

1. 4. 2 Growth in the Renewable Energy Market:

With time the globe is seeing the growth in alternative renewable industry and greater investment is to arrive this industry from public and private sector e. g. the investment in renewable energy capacity rose from $30 billion in 2004 to $38 billion in 2005 (Alternative energy: A worldwide survey, 2007 pg 4). According to survey on alternative energy conducted by Goldman Sachs in 2007 the upsurge in investment can be attributed to following factors:

The supply of traditional energy resources is uncertain and at the same time the vitality cost is high which increases the expense of production. On the other hand the expense of renewable energy is low and the supply is unlimited.

Alternative energy reduces cost and so increases competitiveness and at the same time it allows small players to complement the threat from big players. Traditional energy doesn't bring economies of scale not energy efficiency.

Various governments through laws are promoting the utilization of alternative renewable energy e. g high tax on coal and at the same time grants for companies expanding in the alternative energy sector.

People these days are more aware of impacts of traditional energy on the surroundings and therefore for better future the support the choice energy sources.

Moreover the global survey conducted by Goldman sachs in 2007 also discovered certain macro factors are also increasing the value of alternative renewable energy and among them include:

Continued global monetary growth: The entire world is seeing the emergence of new economical powers by means of Brazil, China, India and Russia and in order for these countries to keep grow economically new alternative energy is necessary.

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Continued population growth: The world's population keeps growing and moreover folks from rural areas are shifting to cities. In order to meet the energy challenge of the growing population new cost effective alternative energy sources will be required.

. Climate change: the traditional energy is a great threat to the climate particularly by means of GHG emissions associated with fossil fuel and thus in order to protect the climate environmental friendly renewable energy is necessary.

1. 4. 3 Various forms of alternative energy:

Alternative renewable energy is a form of energy that is renewed by the natural processes of Earth and is environmental friendly such as sunlight from sunlight or wind from air. In this particular section I am going to consider various forms of alternative renewable energy sources available that have been presented by Hasan in his report "Introduction to alternative energy" on page 2, 3 and 4.

Solar energy:

Solar energy comes from the light of sun and it could be harnessed by using solar powered energy cells. Sunlight is free, easy to harness and accessible to everyone. It is difficult to harness solar power on a larger level and therefore solar power has more use in home electricity production. The only cost involved in creating solar energy is the expense of solar panels. Apart from the low priced of solar energy, the power is environmental friendly and no waste byproduct is produced through the creation of this power. At the same time solar power promotes a greener future. Sun light from the sun can be used to create solar power at a domestic level and at the state of hawaii level. Currently many households and companies create solar energy by putting solar power panels on the top of their buildings and therefore protect the environment from unfriendly waste material and at the same time benefit from low cost of energy.

Wind Energy:

Wind power is another form of renewable energy which protects the environments and creates electricity at low priced. Wind power is harnessed although use of wind turbines which are turned by the wind to create electricity. Wind is susceptible to weather conditions but in costal offshore and high altitude areas there is a steady way to obtain wind. Wind power can be used to produce electricity at a large level by using multiple turbines and at the same time at children level. Critics of wind power declare that the generation of wind power through use of turbines result in ugly noise and kill birds nevertheless the benefits by means of low priced and friendly environment outweigh the disadvantages.

Geothermal energy:

Geothermal energy is another cost effective renewable energy which draws energy from the planet's core through thermal power stations. Heat from planet boils a liquid which evaporates to carefully turn turbines, producing the electricity. The price is low because heat is free and only cost incurred is of a thermal station. Geothermal is an environmental friendly energy it doesn't pollute or produce waste and it can be used for cooling and heating purpose.

Hydroelectric energy:

Hydroelectric power is established through water and it comes from dams which harness the power of rivers. This inflatable water passes through turbines at base of dam and thus electricity is generated. Hydroelectric energy is established on macro level by the state of or companies rather than at a household level. Hydroelectric energy produces no pollution in any way and promotes a greener world.

Tidal Power:

Tidal power is another form of renewable energy that provides clean and free energy in the future. It is created when water from the ocean flows through the tidal stations and thus turbines create the.

Biomass technology:

Any form of renewable energy that may be produced from biological matter is biomass technology. Biomass can be in the form of biofuel and biogas. Through biomass technology any material e. g. dead vegetable, crops, meat and plants can be changed into create biofuel and biogas. The transformation of the materials into electricity helps you to save the price and the material which if unused is a waste product and spread pollution. Biofuel will be in liquid form while biogas will be in the proper execution of natural gas. This technology is very affordable and can be used to create electricity or satisfy any needs from oil or gas.

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1. 4. 4 Advantages of alternative renewable energy:

According to the article "Seven most appropriate alternative energy advantages" Alternative energy offers various advantages to the surroundings and society and these benefits have been explained below:

1. Municipal Solid Waste Elimination

The harmful fossil fuels will run out soon and therefore to meet the energy demand the solid waste material can be used to create energy. The municipal waste or household garbage will be utilized to generate energy and it will be very affordable and environmental friendly.

2. These Energy Sources Are Renewable

Through alternative energy there will be unlimited way to obtain energy as the sources are renewable. So be it the solar powered energy, wind power, biofuel or hydroelectricity it will not get wasted and unlimited supply will be accessible for households and industries and thus there won't be a power crisis. The oil, gas and coal resources will be finished one day however renewable energy will stay forever.

3. Local Production and Benefits

The traditional energy by means of oil and gas are produced by big players such as BP, Shell and Exxon Mobile. These businesses operate in a variety of countries and use the neighborhood resources to supply oil and gas. Moreover these resources are sold to the neighborhood population at high prices and profits are returned to the shareholders. Thus there may be nothing for the local economy and the neighborhood population. Alternatively alternative renewable energy can be made by local investors by means of large and smaller businesses. The neighborhood businesses, society and government will benefit from local production of renewable energy and benefits will be in the form of low energy cost, steady taxes, generation of jobs and returns to local investors. The renewable energy will be produced locally and the involvement of foreign companies will be minimal.

4. More Environmentally Friendly

Oil and gas result in creation of smoke and pollutants which impact the environment e. g. greenhouse gas emissions which harm the environment and donate to global warming. Thus these energy sources are increasing the temperature of planet and making it a far more dangerous place to live. Alternatively renewable energy doesn't have carbon emissions nor do they cause damage to environment. Environmentally friendly friendly renewable energy will make this earth an improved spot to live.

5. Better National Security:

The reserves of coal and oil are in order of some countries while they are simply explored and distributed by only a couple of companies this means that remaining world are dependent and on mercy of some hands. A catastrophe, unstable government or war will heavily impact the supply of oil and national security will be at threat. However on the other hand renewable energy will secure the countries more and can enhance the national security because of domestic production.

6. More Price Stability

As seen in the recent past the fluctuations in the prices of crude oil resulted in financial crises and it also afflicted the economies of many countries and left some companies on the verge of bankruptcy. The high price of traditional energy also keeps the price of production high. On the other hand renewable energy is really cheap which keeps the price low and there will be no fluctuations in prices that will lead to catastrophe.

1. 4. 5 Benefits to upcoming companies:

Oil and gas sector is dominated by way of a couple of large companies and therefore it becomes quite difficult for upcoming startups to compete with them. The high barriers to entry, limited resources and control over the production reserves by these large coal and oil companies helps it be difficult for upcoming companies to enter the traditional energy industry. However on the other hand through favorable government policies towards renewable energy, unlimited supply and local production startups from emerging and developing economies can compete on the basis of cost with these large companies. The choice renewable energy brings along various benefits for these upcoming companies that have been recognized by Goldman Sachs in 2007 during the survey "Alternative energy: A global survey" and they're explained below:

Feed-In Tariffs

In order to promote the choice renewable energy sector the government purchases power from these upcoming companies at a set rate this is defined above the marketplace price. The fixed price creates stability and reduces financing barriers for these startups. Feed in tariffs bring about stable long term payments for these businesses and also provides incentive to the producer to utilize the most effective source of energy. Through long-term stable cash inflows from the federal government the upcoming companies can compete with large organizations and at the same time their liquidity needs will addressed and profits will be generated. The subsidy which the government provides to these startups in the form of feed in tariffs help them to grow and match the threat from competition.

Tax Credits:

In certain countries government offers two types of tax credits to companies that produce electricity through renewable energy. Production tax credit is dependant on amount of energy created from renewable sources while investment tax credit is dependant on amount of investment in renewable energy projects. The tax credit can be in the proper execution of tax, sales tax or property tax. For upcoming companies the tax credits bring along a great chance to spend money on renewable energy. The tax credits in any form increase their liquidity position and allow those to expand more through money saved. The tax credits along with feed in tariffs will cause cost savings and organic growth for startups.

Minimum GHG emissions:

Regulators using countries set standards for minimum GHG emissions and encourage companies to lessen GHG emissions. Those companies that exceed the minimum level are penalized while some that are below the minimum level are given incentives. Thus for upcoming renewable companies this type of laws gives them a great possibility to get incentives under such programs as renewable will bring about minimum GHG emissions and companies will reap the benefits of incentives. Similarly certain governments have imposed carbon tax which kind of tax is discouraging for traditional energy companies and so gives a great opportunity to upcoming companies to pursue a carbon free strategy.

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Loans, Grants and Subsidies:

In order to market the choice renewable energy many governments and authorities like World Bank or United nations offer grants and subsidies for upcoming companies. The grants and subsidies can maintain the form of provision of land and technology, expertise or even low interest rate loan. Thus new upcoming firms can take this possibility to address their capital requirements and though such grants and loans can step in the choice renewable energy sector. These grants also offer great opportunities to companies within developed countries in Asia and Africa to produce power from alternative renewable energy.

Other benefits:

There are several other benefits to startups investing in alternative renewable energy sector according to article "Dollars from sense: The economical advantages from renewable energy" and these can be later passed onto the society e. g. an investment in renewable energy project by the local investor will fortify the local economy, help government by means of taxes and at the same time create jobs for the neighborhood community. Secondly because of low priced of production and unlimited provide you with the prices will remain stable and thus this will ensure steady profits and cash flows to the business. On the contrary a sharp decline in oil prices bring about losses to these big oil companies. Thirdly people now prefer energy from alternative sources because of less effect on environment so money invested in renewable energy will generate more returns than money committed to traditional energy. The increasing demand of alternative energy will lead to high returns and high profits for shareholders.

Theoretical framework

To make the analysis more effective journal of corporate governance, journals of management in science and journals of professional management were analyzed. The articles from internet were also analyzed and the theoretical framework is dependant on these journals and articles. In order to determine the huge benefits from alternative renewable energy to the environment, society and upcoming startups I'll also consider the reports of various government agencies that support these programs. Many governments in developed countries offer subsidies and grants to upcoming companies planning to expand in the alternative renewable energy and in addition financial and technical assistance is also offered from international institutions like World Bank. The policy framework and benefits made available from these institutions will be analyzed in the literature review section of this dissertation.

Methodological framework

In order to help make the dissertation fact based and reliable a lot of data was required. The study method I used to gather data was from secondary resources. Secondary resources were used first to be able to understand the topic matter and validate the aims and objectives set earlier. The secondary resources which i used were journal articles, internet articles and reports from various government agencies. A whole lot of research has been done on alternative renewable energy in conditions of benefits wanted to the economy, environment, society and companies. This research from secondary data sources will be used and analyzed with literature reviews in the dissertation. The secondary research is cheap and no problem finding moreover the information gathered is from reliable sources. The data was collected from library's database which research will be utilized to validate the research objectives. Quantitative and qualitative information is on renewable energy sector which information will be presented during dissertation.

Outline of the next chapters

I have divided the dissertation in five chapters. Literature reviews will be discussed in the next chapter and published information from reliable sources such as books and journals will be analyzed. In the 3rd chapter I am going to explain the research methods, the process used to gather data and their limitations. . In chapter 4 I'll critically analyze the info gathered earlier through literature reviews and advice and data analysis will be presented. The final chapter will provide the synopsis of the study, limitations and the necessity for future study.

Summary of the chapter

In the original part of the chapter the aims and objectives of the analysis were mentioned which are based on the necessity of alternative renewable energy, the huge benefits to the society, environment and companies and limitations of this sector. Within the later part of the chapter the summary of various alternative renewable energy methods were presented combined with the benefits to the environment and upcoming companies. Last but not the least the theoretical framework and the methodology was presented.

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