The growth in renewable energy is now a global phenomenon that continues at an accelerating pace. More than 170 countries have established renewable energy targets and of these 148 have implemented policies to encourage investment. The private sector is also being actively encouraged to work in partnership with many of these countries to deliver those targets. Renewables accounted for 61% (154GW) of new power generating capacity added globally in 2015.
Generous subsidies offered by governments - including Germany, Denmark and the UK – that have been keen to promote a transition to low-carbon alternatives to fossil fuel generation, have to a large part also been responsible for driving cost down.
The price of wind turbines has fallen by about a third since 2009 and solar photovoltaics by 80%, in some markets the levelised cost of electricity generated from some renewable technologies – e.g. onshore wind – has reached grid parity. McKinsey predict that the cost of offshore wind could reduce by 68% by 2020 and MAKE Consulting expects that that the average world levelized cost of energy for offshore wind power will be at or below grid parity already by the middle of the next decade (2020-2025).
Subsidy free and competitive
Further cost reductions are now being promoted by the partial reversal of those policies. Tighter fiscal policies in countries such as the UK has led to a more competitive approach to price support, with cheaper, more competitive generators being rewarded at the expense of those that cannot deliver cost-effective electricity.
The UK government now auctions Contracts for Difference (CfD) which provides price support to the most competitive bidders. In a recent German auction, DONG Energy’s strategy to secure concessions to build new offshore wind farms, was to offer energy prices that were effectively subsidy free, predicting that the imminent availability of larger, more efficient turbines would substantially reduce both construction and operational costs.
A quantum leap in battery technology
There is another trend which may also contribute to this green revolution in energy generation, the availability of effective and, increasingly, cheap battery storage solutions. The intermittent character of generation that relies on sunshine or wind, has been seen as a limit to the amount of renewables that can be installed. If energy can be stored when it is plentiful, and released when it is not, then the proportion of energy that can potentially be supplied by wind and PV to energy markets, can increase. As batteries become cheaper, driven down by the demand for electric vehicles, expect to see more and larger commercial storage schemes.
An even more important factor may prove to be the demand from major corporations. International corporations such as Microsoft, Google, Lego, IKEA and many other companies worldwide with commitments to sustainability, are looking to secure access to clean energy.
Whilst some governments may be losing the appetite to heavily subsidise renewables, the demand for clean energy from consumers is high. A recent Public Attitudes Tracking Survey published by the UK Department for Business, Energy and Industrial Strategy indicates that 79% of Britons support renewable energy, with support for offshore wind at 80%. But an even more important factor may prove to be the demand from major corporations. International corporations such as Microsoft, Google, Lego, IKEA and many other companies worldwide with commitments to sustainability, are looking to secure access to clean energy.
IKEA, for example, has made a corporate commitment to be 100% renewable by 2020. Arla is aiming for 50% of its energy to be obtained from renewable sources in the same time frame. Carlsberg has targets to reduce carbon emissions by 50% at their breweries by 2022 and to be zero carbon by 2030. The RE100 group of companies have committed to sourcing 100% renewable power.
Global retailer run wind turbines
Companies that cannot source this clean energy from conventional suppliers, are taking matters in to their own hands. IKEA has deployed €1.5 billion globally into renewable energy generation project and is committed to owning and operating 327 wind turbines. They have renewable energy assets in Europe and North America. The Financial Times reports that Casino owners MGM Resorts International and Wynn Resorts in Las Vegas paid over $100 million to buy themselves out of a power supply contract with the Nevada state utility (NV Energy) to secure access to energy from solar sources.
Cheaper renewable energy is also an attractive option in developing countries, that have previously been resistant to reducing their reliance on coal-fired thermal generators. It has been suggested that this was a factor leading, finally, to the successful negotiation of a global climate change agreement in Paris in 2015. The commitment of corporations and their ability to access their own supplies of clean energy is also reason for optimism despite the Trump administration’s subsequent decision to withdraw the US from that same agreement. Tim Cook CEO of Apple tweeting:
Decision to withdraw from the #ParisAgreeement was wrong for our planet. Apple is committed to fight climate change and we will never waver.
Similar comments were made by other companies, including oil and gas majors and States such as New York. What central government can’t or won’t deliver, companies, States and others now have the incentive and means to provide for themselves.
See the Energy and Climate Change Public Attitudes Tracker at gov.uk for more info
A decade of continuing increase
All in all the installed renewabale capacity has been doubled from 2007 to 2016. Hydropower is still the biggest reneweable energy source but the increase is driven by a steep rise in installed capacity in wind and solar power.