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Where now for sellers of green building products?

Across Europe, manufacturers and sellers of green home improvement products have enjoyed significant growth in recent years, thanks in large part to healthy public subsidies. Conscious of the need to back environmentally friendly energy sources in order to reduce their reliance on fossil fuels, many European governments have been offering financial incentives to encourage the public to choose measures like insulation or solar panels.

However, with the maturity of green energy markets varying substantially from country to country and many governments attempting to slash public spending in order to bolster their economies, these subsidies are taking a hit.

UK to slash support for green projects

In the UK, the government has proposed an 87 per cent cut to subsidies for householders who install solar panels on their rooftops - a move that the renewable energy sector has warned will have dramatic ramifications for the solar industry.

Other parts of the renewables market have also been targeted for budget reductions. In July, the flagship Green Deal scheme - hailed by ministers as the "biggest home improvement programme since the Second World War" when it was launched in 2013 - was effectively killed off after seeing disappointing take-up.

                                        iStock/iSailorr

That move came a matter of weeks after the abandonment of a decade-long effort to make all new homes carbon-neutral from 2016 onwards.

With so many major eco-friendly incentives and projects brought to an end by the government, UK suppliers of green building products could be forgiven for setting their sights on the European market instead. However, the situation is just as challenging on the continent...

Green subsidies cut across Europe

According to the EU, the solar market across Europe has reached industrial maturity. While this is positive in many ways, demonstrating that European citizens are bought into the idea of green energy solutions and home improvements, it also means that the current subsidies available across the EU are likely to tail off sharply after this year.

Germany has invested hundreds of billions of dollars in renewable energy, with the bulk of this going towards solar. In June 2014, the country hit a major milestone by generating 50 per cent of its total electricity demand via solar - equivalent to half of the world's entire solar output at the time. As such, the country appears to need little more in the way of solar subsidy.

What's more, former German environment minister Peter Altmaier told a 2013 news conference that Europe's largest economy would stop subsidising solar energy altogether by 2018 at the latest.

Italy is another major European economy that has signalled its intent to bring about an end to solar incentives. Subsidies for the sector rose from $825 million to $7.4 billion between 2010 and 2013, prompting significant investor interest from abroad. 

"The decree on [renewable energy] incentives for the next three years should be ready by the end of February, but the photovoltaic sector won't be in it," industry deputy minister Claudio De Vincenti explained at a January conference.

"The government believes there is no need to offer [solar] plants further support."

Which markets offer the best opportunities for green building products?

To a greater or lesser extent, many EU member states appear to be scaling back public support for green energy plans. But fortunately for companies selling green building products like solar panelling, there are still significant opportunities to be found elsewhere.

- Russia
The Russian Institute of Energy Strategy says the country's theoretical solar energy potential exceeds 2.3 trillion tons of oil equivalent. The amount of solar energy arriving in Russian territory over a three-day period is greater than the country's total annual electricity production.

Due to Russia's geographic location and vast size, the potential of solar energy varies significantly from one region to another. For instance, in the remote northern areas, the level of solar radiation stands at around 810 kWh per sqm per year, rising to as much as 1,400 kWh per sqm metre per year in the southern regions. The potential is greatest in the south-west, southern Siberia and the far east of the country.

Furthermore, Swedish-based bearing and seals manufacturing company SKF recently opened Russia's first building with LEED Gold certification. Among its many green innovations are a vacuum distillation system that helps to reuse 100 per cent of water throughout the production cycle; natural lighting for 90 per cent of the factory during working hours; and a further system to monitor air conditioning in the main areas of the building and record carbon emissions.

There are also various standards - albeit voluntary ones - for green building projects. For instance, 'Compliance assessment: environmental requirements for real estate' was developed alongside the country's environment ministry and clearly outlines a variety of eco-friendly goals, including targets for energy and water saving.

- Kazakhstan
The Kazakh government has ambitious plans for renewable energy adoption, making the country a potentially lucrative market for companies selling eco-friendly home improvements. By 2030, Kazakhstan aims to generate 30 per cent of domestic electricity from renewable sources, rising to 50 per cent by 2050.

Legislation to establish feed-in tariffs for renewables was introduced in 2013 and will remain in place for 15 years, providing capital subsidies to encourage investment in such technology.

What's more, Samruk Kazyna Kazakh Sovereign Wealth Fund has been used to build the Green Quarter residential and office development in Astana. All buildings in the complex with be fitted with systems designed to reduce energy and water consumption by a fifth.

- Uzbekistan
Another CIS market offering significant opportunities for exporters of green building materials is Uzbekistan. The country's potential for renewable energy sources is estimated to be around 51 billion tons of oil equivalent, the vast majority of which comes from solar.

- India
In India, the Ministry of New and Renewable Energy offers various subsidies for setting up solar projects, including a large-scale grid of rooftop solar panels. The building owner is required to meet 70 per cent of the setup cost, but will then benefit from free electricity, while the ministry provides a subsidy of 30 per cent of the total system cost to the developer allocated to the project.

By 2022, the ministry is attempting to deliver a fivefold increase in India's renewable energy generation capacity.

Another part of that effort is the programme to construct 100 Smart Cities across the country. Smart buildings boast innovations like integrated lighting and better sanitation, which ultimately leads to improvements in sustainability and environmental friendliness.

- Indonesia
As an equatorial nation, Indonesia has a high level of solar irradiation, while its dispersed population - the country is made up of more than 17,500 islands, of which 6,000 are inhabited - and mountainous terrain are major obstacles to the development of a cost-effective, connected electricity grid. 

Off-grid sources such as solar, hydro and biomass would provide an effective solution to this issue. Indonesia's solar radiation is around 4.8 kWh per sqm per day, yet just a few MW of solar photovoltaics have actually been installed, according to the International Energy Agency.

In 2012, authorities in Jakarta passed legislation that sets out minimum standards for energy efficiency in the capital's buildings. The law - which applies to office buildings over 50,000 sqm, hotels over 20,000 sqm and schools over 10,000 sqm - demands maximum energy consumption of 45 watts per sqm, and a requirement to treat and reuse waste water.


Related Events

Event20 Mar

Indobuildtech Ja..

20-24 March, 2019
INDONESIA

JAKARTA, INDONESIA
Venue: INDONESIA CONVENTION EXHIBITION CENTER (ICE)

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