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MBA Clubs: Manchester Business School - Energy And Industry Club

Diego Forero explains why it is difficult to find a balance between cost and efficiency in renewable energy - and why renewable sources will require regulation to incentivize investors.

Mon Jul 7 2014

Diego Forero, president of Manchester Business School's Energy and Industry Club, explains the "geopolitics" behind choosing which renewable energy source is the most cost efficient.

What are your club's big initiatives this year?

The main initiative this year has been the consolidation of relations with alumni working in the sector. Based on that, the club invited six speakers to our campus, and also organised networking events in London and Aberdeen (Scotland).

What proportion of MBS MBAs are members of the Energy Club?

We have 23 members in a class of 99 students; it is the second largest club in the class of 2015. We have a mix of backgrounds – people from oil and gas, mining, renewables, electricity and other industries are all members of the club.

What do you think is the best source of renewable energy in terms of quality and cost?

We cannot say that there is only one renewable source. It depends on the geography and the context. In some regions, solar energy is highly available and can be produced at an efficient cost. However in other regions wind power is more convenient.

On the other hand, some countries can produce hydroelectric power at lower costs, creating low incentive for investing in other renewable sources. In terms of quality it also depends on the geography, because some areas require more advanced technologies to achieve a similar level of efficiency.

Will we run out of energy on this planet? Or will the price mechanism ensure that an efficient alternative is always available?

I don't see scenarios without sufficient energy. First of all, fossil fuels will play an important role over the next 30 years. Natural gas is the first option to reduce emissions at a lower cost. Therefore, many countries are including it in their agenda.

Oil prices will remain volatile, but due to geopolitical factors, they cannot be controlled by the market. The transition to renewables still takes time and therefore renewable sources will require regulation to incentivize the investors, and guarantee competitive prices.

How significantly are concerns about global warming distorting the process by which we choose the most efficient energy source?

The impact is different according to each country. Recently, some countries have realised that the priority is not only clean energy – they also have to guarantee competitiveness. So countries need cheap energy to maintain economic growth.

This explains why some governments are promoting investments in nuclear energy. It is an option that ensures low cost and low emissions, despite the potential risks.