Opportunities and Challenges in the Transition to Clean Energy
The global push towards renewable energy is accelerating as businesses and governments tackle climate change. While advancements in technology and decreasing costs have made clean energy more viable, challenges such as affordability, availability, and infrastructure persist.
Renewables: A Growing Priority for Businesses
As climate risks become more evident, businesses are increasingly shifting from fossil fuels to renewable energy sources. Policies like carbon taxes and green incentives in countries like Singapore are driving this change. Judy Lee, Chair of SMRT Corporation’s Sustainability Committee, noted a cultural shift in how energy is perceived: “Energy is now seen as a social impact issue rather than merely a commodity.”
Technological advancements, including better battery storage, hydrogen solutions, and more efficient solar panels, are improving access to renewable energy. Eric Jost, EY Asean Energy Leader, highlighted that these innovations, alongside increased investment in green technologies, are ensuring renewables remain competitive over the long term.
Distributed Energy Solutions
Innovative solutions like distributed solar and mini-grids are gaining traction, especially in regions where large-scale renewable plants are impractical. These systems provide smaller communities and businesses direct access to clean energy without relying on national grids. Jennifer Tay of PwC Singapore pointed out that financing models such as leasing agreements make these systems more accessible, even in rural areas.
Hurdles on the Path to Clean Energy
Despite progress, fossil fuels still dominate the global energy mix, comprising 70-75% of total consumption. Subsidies for fossil fuels, amounting to 7% of global GDP, further complicate the transition. In Singapore, businesses face challenges such as limited renewable energy imports and the intermittent nature of renewables, requiring investments in storage solutions to maintain grid stability.
Regulatory constraints also hinder progress, with rooftop solar generation limited to businesses with suitable infrastructure. Off-site power purchase agreements (PPAs) and green tariffs are needed to meet demand, but these markets are still developing.
The Business Imperative for Sustainability
Moving to renewable energy is no longer optional for many companies. Commitments like RE100, which aim to source 100% renewable electricity, are pushing businesses to green their operations and supply chains. Beyond cost considerations, sustainability is now tied to reputation, litigation risks, and long-term resilience.
Jost emphasised the shift from compliance to value-driven initiatives: “Participation in clean energy must align with organisational values and long-term strategies.” CFOs are urged to factor in costs associated with climate change—such as carbon taxes and natural disaster recovery—when planning for greener energy adoption.
Looking Ahead
The renewable energy transition represents both a challenge and an opportunity for businesses. By embracing innovation, investing in infrastructure, and fostering collaboration, organisations can not only reduce emissions but also build a more sustainable and resilient future.
