Alternative energy

Alternative energy is a general term for any form of energy that can be substituted for another form. Natural gas, for example, can be an alternative for coal or oil. Clean coal technologies can be an alternative for hydro, nuclear or natural gas. Nuclear energy can be an alternative for hydroelectricity or thermal power plants fueled by coal, natural gas or oil. Many alternatives have emerged because of environmental concerns over the use of fossil fuels.

Renewable energy is the term for energy sources that are replenished continuously. Examples include wind, solar, tidal power and hydro. Distributed electricity generation refers to small energy sources, such as micro turbines and fuel cells, that generate electricity on-site for industrial operations, buildings and homes.

The drawback with these renewable and alternative energy supplies is that they tend to be more expensive or face technical hurdles. Renewable energy sources such as wind are also limited by the intermittent nature of wind flows.

Although they still rely on subsidies, the costs of wind energy are approaching economic levels. The cost of wind power has decreased significantly, from about 30 cents per kilowatt-hour in the 1990s to between eight and 12 cents per kilowatt-hour today. Government researchers in the U.S. and the U.K. predict that the cost of wind power could further drop to between 3.4 cents and 5.5 cents per kilowatt in 2020, becoming competitive with conventional forms of electricity generation.

Another technology that offers promise over the long term is fuel cells, battery-like devices that efficiently convert hydrogen to electricity. Fuel cells produce no pollution when operating. However, producing hydrogen for use in fuel cells can cause pollution. For example, extracting hydrogen from natural gas produces carbon dioxide. A number of fuel cells are now under development, some with government and industry.

As market opportunities grow, wind power, fuel cells and other forms of alternative and renewable energy could make modest but important increases in their share of the global energy mix over the next decade.

This trend will be facilitated in part by a growing commitment by energy companies to identify and capitalize on emerging markets for environmentally sustainable energy sources.

BP Amoco is mostly in the business of finding, extracting, refining and distributing fossil fuel based energy. However, over the past few years, BP Amoco has shaped much of its investment strategy around “next generation” fuels and technologies. This has included not only expanding traditional oil and gas businesses but also moving into new areas such as solar photovoltaics.

Other companies such as Shell, Texaco and Canadian-based Suncor Energy have similar initiatives under way to claim stakes in the future energy market. Shell and Texaco have established new businesses to meet the expected growth of fuel cells. And in 2000, Suncor announced a $100 million fund to invest into alternative and renewable energy projects.

A good example of this investment is the SunBridge Wind Power Project, Saskatchewan’s first large-scale wind power facility. Commissioned in early 2002, SunBridge is a $22-million, 50/50 partnership between Suncor and Enbridge, a large Canadian energy pipeline and distribution company. The project generates over 11 megawatts of electricity from 17 turbines at Gull Lake, Saskatchewan.