We are experiencing a transformative moment for renewable energy. In the recent past the high cost of renewable energy has deterred rapid expansion in this industry. Yet accelerated growth in this sector through innovations in technology and shifts in the commercial landscape presents a viable challenge to fossil fuels domination. Last year, for the first time, the share of renewables in new power generation (53.6 percent) exceeded that of fossil fuels and installed renewable energy capacity reached 16.2 percent of the global power capacity
Between 2006 and 2015, $2.2 trillion was invested in renewable energy and the International Energy Agency projects that figure to rise to $7.4 trillion by 2040. Solar and wind are the drivers of this market with photovoltaic and thermal solar power being the fastest growing renewable energy technology.
At the moment solar power is growing faster than NREL (National Renewable Energy Laboratory) can track. The data currently has Asia dominating the solar manufacturing market with a massive 86 percent of the world’s 40GW total PV module production with China representing 64 percent of global production. Europe is at 9 percent and the U.S trails behind with only percent. You will continue to see solar trade wars raging across the Atlantic and Pacific Oceans with the above figures. The Clean Power Plan in the U.S., the Paris Agreement and the accelerated deployment in China, and a global switch to renewable energy will encourage venture to invest in solar in a big way. There is a pressure for policy leaders across the globe to treat clean energy as a trade priority and collaborate with other countries effectively.
China is currently way ahead of the rest of the world when it comes to wind energy additions – 91.4GW of cumulative wind power capacity, (2013) with U.S next in line with 61.1GW. It seems like a big lead that is only going to get bigger as China added another 20.7GW in 2014 with U.S. installing only 4.7GW (Bloomberg New Energy Finance) and this year China installed another 20 -23GW of wind capacity.
The U.S. leads worldwide biofuels production. While its growing fast it’s still miniscule compared to petroleum based fuels. Bioenergy is still lagging behind due to diminished governmental subsidization, concern over the diversion of farm products from food to energy and continued barriers to commercialization of bioenergy technologies such as algae and cellulosic ethanol.
Fuel cell vehicles are an even smaller piece of the pie. While these vehicles dominate headlines their deployment across the energy system is small with lack of growth with only 53 operational hydrogen fueling station in operation in the U.S.
In the U.S. natural gas is currently cheap and considered relatively clean. Natural gas will remain popular because of the low price; it is the second pillar of the U.S. Clean Power Plan yet might begin to see U.S. utility scale and large commercial power purchase agreements facing margin pressure.
Hydropower, the largest source of renewable energy, and geothermal power growth remains relatively flat comparatively.
There is a definite trend of emerging/developing economies entering the renewable energy sphere with fervor. They have been able to leapfrog the international technology curve by adopting renewable energy technologies that originated in the developed market. There are also more forgiving regulatory structures which enables fast tracking of renewable energy projects to meet the increasing demand for power.
However, weaker economies in some countries on the African continent and Latin America and civil unrest in the Middle East will affect the deployment of solar in those countries.
The U.S. has a long journey to make regarding energy efficiency. However, 52.1 percent of commercial energy consumption and 46 percent of residential was due to electrical system energy losses which translates to about half of U.S, demand being wasted. So this is a huge opportunity for smart grid technologies and making a shift towards distributed generation away from centralized power supplies. We will hopefully see accelerated investment in storage technologies and start up storage companies.
At this moment solar and wind power are able to compete with fossil fuels due to the dramatic fall in costs around renewables even as oil and natural gas prices decline. This is due to current technology that allows for the speedier construction of renewable energy plants. A solar plant takes between 3-6 months to be built with around 9 months for wind farms compared with several years for coal and CCGT sites. This accelerates time to market and an ease on project financing. Globally the attractiveness of fossil fuels has declined for the international investor community with the mounting pressure for greenhouse gas reductions.
The world is still heavily dependent on hydrocarbons and so there will need to be a surge of spending on infrastructure for renewable energy, even in industrialized countries, to fulfill the COP 21 international agreement on greenhouse gas reductions.