Edward Chow, Senior Associate at the Energy Security & Climate Change Program at the Center for Strategic and International Studies, in his interview with the Daryo correspondent, discussed the challenges facing the global renewable energy industry from a business perspective. One of the critical hurdles is providing investors with a sense of security regarding future pricing.
Chow clarified that US investors considering the construction of solar plants in Uzbekistan are seeking a comprehensive understanding of the pricing situation before making any informed decisions.
He also stressed that market pricing is crucial. Still, it can be not easy politically because many believe that access to energy is a public good that should be supplied by the government, much like security or health.
'The question is, how can we achieve market pricing? Coming from a free market economy, I believe that prices should be determined by supply and demand. If the government wants to assist disadvantaged individuals, it should provide them with financial aid rather than interfering with electricity or gas pricing. This approach ensures fairness and accuracy in pricing', he said.
According to Edward Chow, understanding stable and attractive investment terms that can last for decades is a crucial requirement for any investor, especially those from the Western world, such as Americans. While this may not be a top priority for investors from Saudi Arabia or China, American companies primarily focus on maximizing profits for their shareholders.
'American companies do not work for the American government, which means that they are not entitled to any subsidies or special treatment', he added, highlighting that it would benefit the US government to offer incentives to American companies that invest.
Edward Chow stressed that Chevron, an American multinational energy corporation, decided to venture into Kazakhstan independently. The company took a calculated risk to establish a foothold in the region.
The CSIS expert also highlighted that nuclear power makes up around 18% of total electric power generation in the United States.
'There is a lot of discussion and debate surrounding the future of nuclear energy in our country. It's challenging to replace such a significant portion of non-carbon-emitting energy with something else, especially when we're also trying to replace coal and gas-fired power plants. Therefore, it isn't easy to imagine an energy transition in the US where nuclear doesn't play a role. However, every country has a different approach to nuclear energy. For example, France has one version of what should happen, while Germany has a different version. In the US, the question is how to replace aging power plants with new nuclear technology. That's why we're researching fusion technology and licensing small modular reactors with less financial risk than large power plants. But in the former Soviet space, the issue is more about how dependent a country wants to be on a sole supplier of nuclear fuel rods. If a country is only dependent on one supplier, they are entirely reliant on that supplier, which is not ideal. Therefore, it's crucial to have a diversity of suppliers to avoid being too dependent on any single supplier', Edward Chow said, adding that it is hard to imagine a zero-carbon economy where nuclear power plays a minor role.
From his perspective, the solar energy industry faces a significant challenge in terms of market pricing. Providing energy for free makes it difficult to create commercial projects out of renewables.
'While gas will continue to play a significant role in the global energy mix, Turkmenistan faces unique challenges due to its geography and distance from key markets. Transporting gas economically to where it is needed is a complex task. Nevertheless, I anticipate that China will remain a significant gas consumer as its economy continues to grow. Although China is the largest producer of renewable energy globally, it has the scale also to consume a significant amount of gas. The development of Galkynyş and the pipeline routes and the companies involved will continue to be of great interest. Despite the challenges posed by location and geography, I am not concerned about the future of gas, as we are likely still a decade or two away from peak gas consumption'; whether gas will remain a valued energy commodity over the long term is an open question that we will continue to watch closely', he clarified.
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