For most people in Britain, however, this is not an option. Only customers
with a peak demand of over 100 kilowatts— essentially, around 55 000 large
industrial companies—can choose who supplies them with electricity.
Domestic customers must accept what they are given by their regional electricity
company (REC).

But all this will change from April next year, when the British energy market
becomes the first in the world to be opened up to full competition. Some 25
million domestic customers will be able to buy electricity from whomever they
want. People concerned about the effects of energy consumption on the
environment will at last be able to put their money where their mouths are.

Producers of renewable energy are hoping that the ending of the monopoly held
by RECs over domestic supplies will provide the break they have been waiting
for. Today, just 2 per cent of Britain’s electricity comes from renewable
sources; the government has pledged to increase this to 10 per cent by 2010.
Worldwide, renewables provide 20 per cent of energy supplies, though most of
this is accounted for by energy from burning biomass and from hydroelectric
power, which depends on geographical availability and is almost fully exploited
in the developed world. “New” renewables, such as wind power and geothermal
energy, are still viewed by some analysts as technological curiosities.

The companies pushing these new renewables claim they have the potential to
replace existing energy sources, and liberalisation would seem to offer them a
huge opportunity. But it will also mean that they have to compete for customers
in a free market, and since most alternative energy technologies are more
expensive than traditional ones, such an arrangement could stop the renewables
market in its tracks.

OFFER, the body that regulates Britain’s electricity industry, estimates that
the average price will fall to around 7.2 pence per kilowatt-hour after April
1998, a significant reduction on the current price of 8.01 pence. David Infield,
director of the Centre for Renewable Energy Systems Technology (CREST) at
Loughborough University, believes that the one renewable technology certain to
survive is wind energy. “The UK has the best wind resource in Europe,” he says.
He points out that onshore wind energy is already close to being competitive
with conventional electricity generation.

Wind power owes much of its success to the Non-Fossil Fuel Obligation (NFFO),
set up under the 1989 Electricity Act, which obliges RECs to buy a certain
amount of electricity from nonfossil fuel sources. The NFFO is financed by the
Fossil Fuel Levy, which is charged to every electricity bill. In the year to
April 1996, the levy raised some ÂŁ94 million. The fourth round of the
NFFO, announced by the government earlier this year and due to run for 20 years,
is expected to finance enough renewable electricity projects to power more than
a million homes, from sources such as landfill gas, waste incineration, wind
power and small-scale hydro.

Market forces

Liberalisation could offer opportunities for renewable technologies over and
above those offered by the NFFO. Richard Page, the junior energy minister, says:
“Over the next few years, I expect increasing numbers of renewable energy
projects to be developed and be able to generate in the liberalised electricity
market without needing support under the NFFO arrangements.”

Dale Vince, managing director of the Renewable Energy Company, which supplies
more than a dozen customers in Gloucestershire with energy from landfill gas
projects, is also optimistic. Currently, the company provides “green electricity
for the price of brown”, offering to match the price of energy from fossil fuel
sources. He admits that after liberalisation, his company will feel the pinch if
it wants to continue matching the price of conventional energy. “Any price
reduction will make the job of renewables harder and it sends the wrong
environmental message to consumers,” he says. “The last thing we need is cheaper
power. But although prices will fall in the short term, I think they will rise
˛š˛ľ˛šžą˛Ô.”

Not everyone is this optimistic. Tim Jackson, a research fellow at the Centre
for Environmental Strategy at Surrey University, says a radical new energy
policy is needed to promote renewable technologies. In Shifting the Balance
of Power, a report published by Friends of the Earth in June, he calls for
tax exemptions for renewable electricity projects not covered by the NFFO and a
green energy accreditation scheme to inform potential customers of the green
credentials of a renewable technology.

Paul Fleming, senior research fellow at the Institute of Energy and
Sustainable Development at De Montfort University in Leicester, says the whole
concept of liberalisation is misguided: “The obsession is with cheaper energy,
but what we actually want is cheaper lighting and cheaper heating.” This, he
says, has as much to do with energy efficiency as cheap energy. “Deregulation
concentrates on the supply and efficiency of generation when it should be about
the supply and efficiency of use.”

The fate of renewables in an open market will affect more than the profits of
the companies concerned. The government has been talking tough on climate change
since the UN’s Earth Summit 2 conference in New York in June, and has pledged to
reduce carbon dioxide emissions to 80 per cent of 1990 levels by 2010.
Renewables could play a crucial role in meeting that target. Jackson states in
his report that every terawatt-hour (1 billion kilowatt-hours) of renewable
electricity would reduce carbon emissions by over 200 000 tonnes, sulphur
emissions by 10 000 tonnes and particulates by 2000 tonnes.

Ultimately, though, the success of renewable energy in a free market will
depend on whether or not people can be persuaded to pay more for green
electricity. As Infield points out: “It’s not like organic food in the
supermarket, where you pay more but get something different. The end product is
exactly the same. People say in questionnaires that they are willing to pay
more, but when it comes to the crunch they often don’t. If you base your whole
energy policy around a free market you are just asking for trouble.”

A survey carried out last year for the Parliamentary Renewable and
Sustainable Energy Group by the polling group MORI suggested that over 20 per
cent of consumers would be prepared to pay more for power from green sources.
But there are fears that consumers may be put off because there is little to
guarantee that the electricity they buy is truly green. Suppliers will not have
to reveal information about the sources of their electricity, or their
commitment to energy efficiency.

To tackle these concerns, the Worldwide Fund for Nature in Britain is
developing criteria and auditing systems for certifying green electricity, along
the lines of the eco-labels that are used to certify sustainable forestry. This
will be complicated, as most renewable sources are technologically very diverse.
“The terminology of wind turbines has little in common with that of
photovoltaics,” says Jackson. “They barely speak the same language.”

This diversity is a major reason for the failure so far of renewable energy
producers to dent the energy market significantly. It also means, says Jackson,
that they “do not have as loud a voice as the fossil fuel lobby”. As their
market share increases, so will their profile, but the future of renewable
energy depends on one question: will the public buy it?

More than half the people on Earth have never made a telephone call, let alone sent a fax or used a modem. This is not surprising, since three-quarters of the world’s telephones are in just eight industrialised countries. Communications require huge amounts of money and are simply not an option for most developing countries.

In Tanzania, one of the world’s poorest nations, there are just three telephones per 1000 people, nearly half of which are in Dar es Salaam, the largest city. The waiting time for connection, even if a resident can afford it, is 39 years. Overall, the average number of telephones per 100 people in developing countries is 1.5. In Afghanistan, Guinea, Liberia, Niger and Somalia it is 0.2.

Ringing the changes

But from 1 January next year 69 countries, including 42 from the developing world, will open their doors to foreign telecoms companies under a pact signed in February during talks at the World Trade Organisation (WTO) in Geneva. For the large telecoms companies in industrialised countries, the agreement will bring huge profits from lucrative new markets in developing countries. The developing countries, for their part, are hoping to attract badly-needed investment to upgrade their outdated, inefficient networks.

The World Bank has warned that countries unable to modernise their communications face economic ruin, such is the importance today of telecoms in development. And according to the International Telecommunication Union (ITU), the UN body that monitors the industry, developing countries will need to spend $466 billion between 1993 and 2000 if they are to meet current projections of growth. Even this massive investment will only produce a global average of 14 lines per 100 people.

Despite this the WTO agreement, which covers basic telecoms such as voice calls, mobile telephones, data transmission and satellite services but not voice mail or the Internet, offers a real opportunity for ordinary people in developing countries to link up to a global information network.

However, there is deep concern that the multinationals will target their investments towards the Asia-Pacific region—where $300 billion is expected to be invested on telecoms over the next five years—rather than the poorer countries. And even if the poorer countries do attract investment, it is more likely to be directed at the affluent and more densely populated urban areas than the poorer rural regions.

A report on the future of the global telecoms market published in March by the Panos Institute, a research group in London, concludes: “If planners pay little attention to setting social priorities on how they develop their networks through liberalisation, particularly in relation to rural areas, the[ir] country may never get another chance.”

Hans D’Orville, director of the UN’s IT for Development programme, says: “The prevailing view is that if we liberalise telecoms it will attract more investment and lead to more sophisticated telecoms at the national level. But international operators are generally not interested in the rural and district level—they want to be where the business is, in the capital city. So rural areas will still need to be subsidised.” Yet it can work without subsidies. In Bangladesh, for example, the successful Grameen Bank, which offers affordable credit for rural farmers and villagers, plans to provide its own mobile telephone service to enable its members to check the price of rice or contact relatives abroad.

Rural telephones allow local farmers and business people to be more competitive. They also encourage local people to stay and work on the land, stemming the flow of migrants to the cities. The growth of the rural economy is ensured, which in turn leads to improved living conditions and better access to education.

Many people believe that for poor countries to survive in the new global telecoms market they must leapfrog traditional, cable-based communications and move straight to radio or satellite technology, bypassing the cumbersome business of laying cables and rigging transmission wires. Hopes are pinned on the new generation of telecommunications satellites. Global Mobile Personal Communications by Satellite (GMPCS) will give everyone access to a network.

At least, that is the theory. For in the beginning, GMPCS will be expensive. The Low Earth Orbit satellites that it uses will be much nearer to Earth than current telecoms satellites, so it will not be necessary to own a huge receiver to gather the signal. But many more satellites will be needed to cover the planet.

The first GMPCS system, Iridium, which should start offering services next year will consist of 66 satellites costing some $3.4 billion. With such a large initial investment, calls will be expensive—between $1 and $3 a minute. Handsets are expected to range from $700 to $3000, although they will come down quickly in price once several systems are competing for the market.

D’Orville admits that “there is still a cost question”. But he points out that telephones operated by the London-based company Inmarsat, which use existing geostationary satellites that send signals to 38 terrestrial stations, cost $10 000 each two years ago, with calls costing $20 a minute. The handsets now cost $3000 and the calls are down to $2.50 a minute. “It is still too expensive for developing countries but is coming down quickly and we are inching our way towards a global service.”

Because Inmarsat telephones are still too expensive for most local people, the company has developed a solar-powered telephone booth that can be installed in less than a day and can provide basic calls via satellite at prices similar to those for conventional long-distance calls. One of these booths was installed in the village of Sampa in rural Ghana in April.

Sampa is a trading centre for cocoa heading to and from the Côte d’Ivoire, and the telephone has meant that local farmers can check they are getting a fair price for their crops and sell to a wider range of customers. This year Inmarsat plans to install 100 of these community booths in remote places of India such as power plants, mining and oilfields and important tourist sites.

Tai Ogunderu, manager of rural and remote pilot projects at Inmarsat, says the solar-powered booths are “providing telecommunications where no services were even planned for the next five years because of the difficulty of covering such large remote areas with a conventional network”.

Many developing countries are already leapfrogging to the new telephone technology. The fastest growing markets for mobile telephones, for instance, are in Southeast Asia and Latin America, where the city of São Paulo in Brazil now boasts more mobiles than Paris. Michael Callendar of telecoms company Nortel Technology in Canada, who chairs the ITU’s task group on mobile telecoms, says more wireless telephones than wired are being added to the world telecoms network every day.

A phone in every home

Telecoms companies claim that the liberalisation of the market will speed up this process. Paul Sharma, spokesman for international issues at British Telecom, says that competition will lead to more foreign investment in developing countries. “If there is a lot of competition in, say, urban areas then rural areas become the ones to move into—there is a trickle-down effect and costs are decreasing all the time.”

But whether that competition is beneficial depends on how it is regulated. In the Philippines, the telecoms companies that were awarded the most lucrative licences also had to take on a licence to service poorer, more remote areas. This “piggybacking” idea is supported in principle by Ogunderu at Inmarsat and Sharma at BT. “The aim should be universal service, not universal access,” says Sharma—in other words, a telephone for every house, rather than merely one for every village.

There is concern that without regulation, the multinationals will end up running telecommunications in the southern hemisphere. At the World Telecommunications Policy Forum in Geneva last October, a block of Asian countries, notably Bangladesh, Pakistan, India and China, which represent more than two billion people, refused to sign a memorandum of understanding that would have allowed GMPCS providers to operate in their countries.

They argued that revenues from telephone calls would bypass their national economies and pass straight to the multinationals. For some developing countries, the fee they receive for accepting incoming international calls is their largest single source of foreign exchange, according to the Panos Institute.

The enticing combination of new technology and a freer market offer opportunities for developing countries that were unthinkable just a few years ago. They are hoping that the new global telecoms era will bring them the economic progress that the multinationals have been promising. But it could just as easily widen still further the gap between rich and poor.