Determinants that influence renewable energy investments

Abstract

The Kyoto Protocol, Global Climate Change Agenda and imperative to reduce greenhouse gas emissions has gained significant traction recently as decision makers attempt to mitigate the impacts of climate change. Energy that is produced from non-renewable energy sources, such as fossil fuels, is a significant contributor to greenhouse gas emissions, and by displacing non-renewable energy production and consumption with renewable energy production, greenhouse gas emissions can be reduced. This is particularly relevant to the mining industry, which is a significant consumer of energy, particularly energy from non-renewable fossil fuel sources. Consumption of renewable energy for mining related activities presents a cost saving opportunity for the industry and could support mitigating the effects of climate change. This research aimed to identify the main determinants that influence decisions in energy investment projects, and specifically, to determine the most influential determinant in energy investment decisions, particularly in the mining industry. Through interviews of subject matter experts in the mining industry, sustainable development, renewable energy and renewable energy project investment and finance, the results suggest that Life of Operation, i.e. life of mining asset or operation, was the most influential determinant in making energy investment decisions. Security of Energy Supply in which cost, reliability and availability are secured through the energy investment closely follows as the second most influential determinant. The Global Climate Change Agenda may create an enabling environment for renewable energy investments, however the key drivers in such decisions are the financial aspects of the investment.