"The high oil price will be a trigger for more investment. In the 1970s there was a huge peak in government spending on renewables," said Piotr Tulej, manager of the renewable energy unit at the Paris-based International Energy Agency (IEA).

"We see money going to solar and wind. Governments recognise the fact that those technologies have entered the market and see the necessity for further development to make them more efficient and cheaper."

Last Friday, Spain approved measures to more than double its production of renewable energy with most coming from new wind power projects.

Shares in solar and wind power companies have climbed sharply since the start of the year on hopes of an investment boom in response to high oil prices and a European Union drive to curb greenhouse gas emissions.

The share of renewables in the energy supply for IEA countries rose to 5.5 percent in 2001, from 4.6 percent in 1970 with most of the increase from 1970 to 1990.

Lower oil prices led to a slowdown in green energy growth from 1990 onwards, according to IEA research.

RENEWABLES MORE COMPETITIVE AGAIN

As soaring oil prices increase the cost of generating electricity from fossil fuels, traditionally expensive renewable power is becoming more competitive.

"Rising oil prices do have an impact on the attractiveness of renewables on a global scale," said Tulej.

"Oil...has a direct impact on electricity prices for consumers."

High power prices will help renewable projects find finance -- often a problem for many schemes despite government-backed subsidies in many countries.

"High electricity prices make renewables more viable...this helps with returns and financing," said Richard Slark of UK-based energy consultants ILEX.

In Britain, many wind projects have struggled to find funding after a slump in electricity prices in 2001 following reforms to the power trading market.

The UK is facing an uphill battle to meet its target of generating 10 percent of its electricity from green sources by 2010, up from around three percent currently.

In Europe, interest in renewables has also been reignited recently by a drive by countries to curb their greenhouse gas emissions to meet their commitments under the Kyoto Protocol on climate change.

HYDRO NOT POPULAR

Tulej said he did not expect to see much investment in IEA countries in the more traditional technologies, large-scale hydropower and geothermal projects.

Most suitable rivers have already been dammed and new projects face opposition from environmentalists who argue they damage the landscape.

Tidal power is also in the spotlight but the technology is in its infancy, comparable with wind power in the 1970s.

The British government has given grants to a number of tidal and wave power projects.

"The main obstacle are material and technological barriers and (grid) interconnections with the mainland," said Tulej.

Rocketing oil prices are also raising demand for biofuels made from crops including sugar cane and corn.

Sugar prices are hovering near a seven-year high as cane is increasingly being diverted into producing sugar-based ethanol.