Overview

The world has been dependent on fossil fuels for over 200 years. Weaning us off these high-carbon-dioxide-emitting fuels is not going to occur overnight and needs to be managed in a timely and responsible manner.

Renewable energy sources are currently more expensive than fossil fuels. However, once externalities are factored into the price of fossil fuel-based power sources, for example through a price on carbon dioxide emissions, many renewable sources will become competitive.

And, while it looks like we will not run out of oil in the short term, remaining oil reserves will be harder to find in more ecologically sensitive areas, and at greater technological limits. Oil prices will ultimately rise.

According to BP's chief economist Christof Rühl, writing in the company's 2010 Review, hydroelectricity and nuclear remain the largest non-fossil fuels in the world, with a combined share of 12% in primary energy.

In third place but growing fast are emerging renewable sources - wind, solar and geothermal - which generated 1.7% of total power in 2009, with wind energy increasing its installed capacity by 31% (38 GW). Solar power generating capacity grew even more rapidly than wind, by 47% (7.3 GW), but total capacity remains much lower," Rühl notes.

For an effective energy mix, the issue is how wisely we use a range of sustainable resources. Solar and wind power may eventually emerge as the face of renewable energy but natural gas can be the bridge until these alternative energy sources are fully viable. Tried-and-tested natural gas, like the sun and wind, is not in short supply (thanks to innovations in extraction technologies) - and it generates less carbon dioxide than oil and coal (30% and 40% respectively).

Geographically, the Asia Pacific has especial renewable energy potential - and capacity is growing fast. According to a new study from investment analyst firm Frost & Sullivan, government support and the region's favourable geographical location are the main contributors to recent leaps in generation capacity. The firm said recognition of the region's resource potential and energy security concerns are driving activity in the renewable energy sector.

There is also a rising demand: according to Asian Development Bank (ADB) figures, energy demand within the broader Asia Pacific region was projected to grow an annual 2.4% until 2030. This compares to the 1.1% annual growth in demand for the rest of the world.

The big question is how involved should governments be? Should free-market forces be allowed to run their course in such an important sector? Can the state mastermind the seismic shift from fossil fuels to cleaner and greener sources, through subsidies for example?

In countries with renewable-energy government subsidies however, it is difficult for private enterprises engaged in R&D and product launches of new, unfamiliar energy alternatives to compete fairly. Subsidised firms can make themselves better off without conferring any benefits on anyone other than themselves; in laissez-faire conditions, the best of the new start-ups would triumph above all other energy providers.

In Singapore, subsidies do not exist as a matter of policy, but the clean-tech sector is part of the government's efforts to try to shift one of Asia's most energy-intensive economies onto a greener footing, as well as tap a boom in green energy and services in the region.

"We believe that Asia is going to be a huge market for clean-tech products and solutions and we want to make sure Singapore is plugged into this entire market place," said Goh Chee Kiong, Director for Clean-tech at the island-nation's Economic Development Board.

Though energy experts in Asia do not foresee solar power removing the need for grid electricity in Asia in the medium-term, research on economically feasible, large-scale energy storage solutions for utilities which can "time-shift" solar power, stable grid electricity from traditional power plants or hydro is integral. Fortuitously, like solar rays, research is not in short supply.

Facts on the ground

Spiralling global fuel prices and climate change concerns have pushed Singapore's commercial drive to tap new energy supplies and consumption choices. Its government is fast developing the country as a regional research and business centre for clean energy products and financial services such as carbon trading among corporations. On top of some of the region's lowest corporate tax rates, Singapore now offers a range of support for green corporations, particularly for those that opt to establish regional headquarters or R&D centres.

Singapore has built up its energy R&D capabilities through the development of research institutes such as The Solar Energy Research Institute of Singapore (SERIS), and the recently opened Energy Research Institute at NTU (ERI@N). Concurrently, it is also collaborating with international companies. Innovations have swiftly followed, and these have been test-bedded across the country: rooftop solar systems in public housing projects, smart grids (named "Intelligent Energy Systems") and electric vehicles.

Through research agreements with industry leaders such as REC and Trina Solar, SERIS has developed cutting-edge industry-orientated solutions in solar energy conversion. Housed at the National University of Singapore (NUS), the project has a budget of S$130 million.

A*STAR (the government agency for science, technology and research) has also recently established the Experimental Power Grid Centre that aims to be a world-class hub for technologies in intelligent and micro grids, as well as distributed energy resources.

The opening of ERI@N will add further depth to Singapore's energy R&D capabilities. The S$200m centre will eventually be staffed by 250 research scientists and engineers, but has already started to work with partners such as Bosch, Rolls Royce and Vestas on joint projects. They aim to develop practical solutions for Singapore and the world, in areas such as energy storage, wind and marine renewables, green and smart buildings, and fuel cells.

Many big-name companies use Singapore as a springboard to serve Asia's alternative energy needs. In its first foray into Asia, Bosch has invested €15m (S$25.4m) in a clean-tech base, the Research and Technology Center Asia Pacific. The German company has installed a photovoltaic system on the centre's roof, covering a surface area of more than 700 square metres.

The one-square-kilometre REC plant in Singapore, the largest of its kind, has begun test production. It is set to run at nearly full capacity in the fourth quarter of 2010 to meet demand in Asia. REC received more than 140 proposals from countries around the world for a next-generation solar production plant. In the end, availability of skilled labour, tax incentives, government support and Singapore's investment environment clinched the deal, Andersen said in an interview.

"One of the things we like about Singapore is that it is well-regulated, there is transparency and they have a strong focus on clean technology. You don't get surprises," he added.

Denmark's Vestas, the world's largest supplier of wind power systems, chose Singapore to host its regional headquarters for much the same reasons, citing the country's location, infrastructure and skilled workforce as the clincher for opening its largest research facility outside Denmark in 2008.

"What Singapore doesn't have in wind resources and in wind turbine, they have in human brain capacity," Vestas Technology R&D president Strom Madsen told the media at the time.

Sweeteners such as low trading and company taxes have also drawn 30 carbon firms to the city-state. Clean energy project developer Tricorona of Sweden has set up its global administrative headquarters in Singapore to manage sales and marketing activities on carbon credits. German utility E.ON recently moved its clean energy project development team - whose task is linked to the creation of tradable carbon emissions offsets - from Malaysia. The firm sees the region as offering strong opportunities in projects that yield UN-backed carbon offsets.

In a recent address, S Iswaran, Singapore's Senior Minister of State for Trade & Industry and Education revealed that to further diversify the country's R&D portfolio, new growth areas such as carbon capture and utilisation (CCU) and bio-energy have been identified.

The Singapore difference

"With energy demand projected to almost double in the Asia and Pacific region by 2030, there is an urgent need for innovative ways to generate power while at the same time reducing greenhouse gas emissions... Sustainable solar energy can be the clean power of the future if there are appropriate incentive and financing mechanisms in place." - Rajat Nag, managing director general, Asian Development Bank

Public agencies in Singapore have strong track records in managing and developing solutions for an urban city in a sustainable manner. By collaborating closely with industry, clean and green solutions can be co-developed for the cities of tomorrow, particularly in Asia. Clean-tech businesses that move to Singapore have found a conducive environment in which to grow, both in Asia and globally.

A "Quick Start" incentive programme exists to support the commercialisation of clean-tech innovations in early-stage companies, both local and foreign, on condition that they locate their global HQ and undertake technology-orientated activities in Singapore. In the past year, seven firms have been funded in this way.

The incentive is complemented by a range of clean-tech incubators such as Asia Cleantech Capital, NUS Enterprise, NTU Ventures and Japan Asia Investment Co., Ltd. (JAIC), who act as mentors.

Bigger-picture, Singapore has committed in the region of S$350m over five years to the renewable market. The country's alternative energy sector is burgeoning; it's expected to contribute S$1.7bn to the country's GDP and create 7,000 jobs by 2015. Widen those figures to encompass the whole clean-tech and environment/water sector, and you have 18,000 people in green employment.

Given its strategic location in the tropical sunbelt, Singapore's clean energy push centres on solar energy. The country will first see test-bedding of solar photovoltaic (PV) panels across residential housing blocks - 3.1 megawatt peak PV systems will be launched in 30 housing precincts, with a target completion date of 2015.

Manufacturing solar wafers, cells and modules has many parallels with semiconductor processes. Singapore's position as a major semiconductor hub, coupled with all-round capabilities from the precision engineering and chemicals industries, gives it a head start in the solar industry. Allowing the private sector to test-bed and demonstrate technologies on its advanced infrastructure means Singapore is in a good position to plug a gap in the global innovation continuum.

"The next phase is making Singapore a living laboratory", reiterates Economic Development Board's Goh Chee Kiong. "The idea is for Singapore to be the site of first adoption, the site of demonstration, the site of test-bedding. This is a key selling point."