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These wind turbines are produced by Windflow Technology Ltd in New Zealand. World leading technologies such as this have moved wind power in New Zealand to competitive levels of cost, even before the externalised costs of greenhouse gas emissions from fossil fuel sources of energy are taken into account. Renewable energy sources including wind, wave, solar and hydro electricity account for about 10% of world energy production, with 85% coming from greenhouse gas producing fossil fuels of varying degrees of dirtiness. The balance is from nuclear power.

There are some remaining advocates for nuclear power. However, the costs of power plant construction, the associated terrorism risks, public opprobrium in some countries and the inability of the industry to satisfactorily deal with nuclear waste combine to make it unlikely that this is energy for the future. Energy from nuclear fusion [which replicates the processes of the sun’s energy production] if it can ever be developed as a viable technology, is an altogether different story and may ultimately make energy shortages a thing of the past.

About 2 billion people have no access to electricity. Rapidly industrialising countries are escalating their energy production and consumption, but often of the dirtiest variety. OECD countries currently use about two thirds of the world’s energy consumption; this will fall to a half within a decade at predicted rates of escalation within developing nations. Global energy demand is predicted to double over the next 20 years and oil production is predicted to peak within the next decade. New oil deposit discoveries such as oil sands are harder to access and more carbon intensive. Demand and supply are therefore likely to be in collision within a decade – the so-called ‘Peak Oil’ debate. Security of supply of energy will become an ever-increasing source of conflict as much of the world’s reserves are held by countries whose ideologies are not favourably disposed towards the conspicuous consumption lifestyles that cheap energy powers for the Western world. Operation Iraqi Liberation [OIL – changed later to Operation Iraqi Freedom OIF when the Freudian slip was noticed] may become just the opening skirmish in 21st century oil wars unless urgent action is taken to reduce and ultimately eliminate dependency on cheap polluting energy the supply of which is finite.

Business opportunities abound for technologies that minimise energy use, reduce or eliminate emissions and create alternatives to reliance on non-renewable energy. Risks to incumbents through creative destruction, consumer reaction and costs of internalising pollution are set to escalate. The decline and possible fall of Detroit motor giants [GM, Ford and Daimler Chrysler] whose combined market capitalisation is now less than that of Toyota, is in part attributable to their failure to foresee the impacts of pollution and oil prices on the demand for their gas guzzling large vehicles and SUVs. Twenty five years ago Toyota moved to place quality, durability and reliability at the heart of their business model. Five years ago Mike attended the annual Toyota Dealers conference in Los Angeles which CEO Jim Press opened by saying Toyota was committing the next decade to making Toyota vehicles environmentally friendly. Betting on their future success will not attract long odds.

As with many aspects of creative destruction some of the more interesting developments in energy are taking place in developing nations. Copper wire telecommunications infrastructure, a bastion of 20th century commerce, for example can be skipped by developing nations who can jump straight to wireless technologies that are more accessible, cheaper and require less infrastructure and material usage. Solar energy to drive a local communications hub run by a micro-entrepreneur has been successfully implemented in rural areas throughout the world, notably in South Africa, India and Pakistan. The Solomons Islands [see our story] similarly use solar power to drive wireless email hub to the considerable benefit of local enterprise and education.

Lack of electricity infrastructure in many developing nations has led to interest in local generation and micro generation. This can be achieved through a variety of sources including solar, wind and micro bio-diesel generators. With battery backup these sources can provide excellent reliability and access to power in rural areas when none was previously possible. Concerns about escalating prices because of peak oil and lack of security of supply will encourage demand for these technologies in the developing and developed world alike. Add to this loss in transmission through resistance in power lines over long distance of upwards of 8% and increasing internalisation of costs of carbon fuel emissions, and these technologies will become increasingly cost competitive.