November 1, 2020
RENEWABLE ENERGY
Since the Industrial Revolution, the energy mix of most countries across the world has become dominated by fossil fuels. This has major implications for the global climate, as well as for human health. Three-quarters of global greenhouse gas emissions result from the burning of fossil fuels for energy. And fossil fuels are responsible for large amounts of local air pollution – a health problem that leads to at least 5 million premature deaths each year.
To reduce CO2 emissions and local air pollution, the world needs to rapidly shift towards low-carbon sources of energy – nuclear and renewable technologies. While nuclear sources demand a huge investment and are not immediately viable as the technology is expensive and fraught with danger, it is Renewable energy which will play a key role in the decarbonization of our energy systems in the coming decades. But how rapidly is our production of renewable energy changing? How real is this change and what technologies look most promising in transforming our energy mix?
The answers are surprising. Although having only recently been recognized as a “mainstream” energy source, renewable energy is now rapidly becoming a preferred one. And the buzz words are – SOLAR & WIND. A powerful combination of enabling trends and demand trends—evident in multiple developed and developing nations globally—is helping solar and wind compete on par with conventional sources and win. Although wind can be seasonal and sporadic, Solar power in particular represents an unending source of energy, the sun being recognized as a the only perpetual energy source known to man.
Let us look a little more closely at what Is driving this change: the enablers.
Enablers
The first enabler is that renewables are reaching price and performance parity on the grid and at the socket. Second, solar and wind can cost-effectively help balance the grid. Third, new technologies are honing the competitive edge of wind and solar.
Demand from energy consumers has mostly coalesced around three goals that the first three trends have enabled renewables to best fulfill. With varying degrees of emphasis on each goal, consumers are seeking the most reliable, affordable, and environmentally responsible energy sources.
Chief among these consumers are cities integrating renewables into their smart city plans, community energy projects democratizing access to the benefits of renewables on and off the grid, emerging markets leading the deployment of renewables on their path to development, and corporations expanding the scope of their solar and wind procurement.
These trends will likely continue to strengthen through two mutually reinforcing virtuous circles. The deployment of new technologies will help further decrease costs and improve integration. This will enable a growing number of energy consumers to procure their preferred energy source and accelerate national energy transitions across the world.
Longstanding obstacles to greater deployment of renewables have lifted, thanks to the three enablers: rapidly approaching grid parity, cost-effective and reliable grid integration, and technological innovation. Once dismissed as too expensive to expand beyond niche markets, solar and wind can now beat conventional sources on price while increasingly matching their performance. The idea that renewables present many integration problems in need of solutions has reversed: The integration of solar and wind is beginning to help solve grid problems. Finally, renewables are no longer waiting for supporting technologies to mature, but instead seizing cutting-edge technologies to pull ahead of conventional sources.
REACHING PRICE AND PERFORMANCE PARITY ON AND OFF THE GRID
The speed of solar and wind deployment and their steeply declining cost curves have surprised even the most optimistic industry players and observers. Ahead of projections and despite lingering perceptions to the contrary, wind and solar power have become competitive with conventional generation technologies across the top global markets, even without subsidies.
Wind and solar have reached grid price parity and are moving closer to performance parity with conventional sources. In fact, the unsubsidized levelized cost of energy (LCOE) for utility-scale onshore wind and solar PV generation has dropped even with or below most other generation technologies in much of the world. While resources such as combined-cycle gas turbines (CCGT) have more flexibility to follow the load curve, increasingly affordable battery storage and other innovations are helping smooth the effects of wind and solar intermittency, giving them more of the reliability required to compete with conventional sources. From a price perspective, onshore wind has become the world’s lowest-cost energy source for power generation, with an unsubsidized LCOE range of US$30–60 per megawatt hour (MWh), which falls below the range of the cheapest fossil fuel, natural gas (US$42–78 per MWh).
By the end of 2017, onshore wind capacity had more than doubled over the 2011 capacity of 216 gigawatts (GW): A total of 121 countries had deployed nearly 495 GW of onshore wind power, led by China, the United States, Germany, India, Spain, France, Brazil, the United Kingdom, and Canada—and onshore wind had reached price parity in these nine countries. In the United States, the lowest costs are in strong wind regions such as the Great Plains and Texas, while the highest are in the northeast. Globally, the lowest costs are in the nine leading countries, as well as Eurasia and Australia.
Utility-scale solar PV is hot on wind’s heels: It is the second-cheapest energy source. The high end of solar PV’s LCOE range (US$43–53/MWh) is lower than that of any other generation source. A record 93.7 GW—more than the total capacity in 2011 (69 GW)—was added globally in 2017 across 187 countries, bringing the total capacity to 386 GW, led by China, Japan, Germany, the United States, Italy, India, and the United Kingdom. Solar has reached price parity in all these markets except Japan, one of the world’s highest-cost solar markets, primarily due to high capital costs. As Japan transitions to competitive auctions, solar price parity is expected between 2025 and 2030. In the United States, the lowest costs are in the southwestern states and California. Globally, Australia has the lowest costs for solar PV and Africa has the highest due to investment costs.
The middle east has not remained immune to this solar revolution, specially Qatar. Qatar has signed an agreement with French energy giant Total and Japan’s Marubeni to build a solar power plant capable of producing 800 megawatts, a tenth of country’s peak energy demand, according to the country’s energy minister. The 800MW Al Kharsaah photovoltaic (PV) power project is the first large-scale solar power plant being developed in Qatar. In the times to come, this deployment will only increase. As a region that gets abundant sunshine throughout most of the year, and with a proliferation of vast open spaces, the terrain and climate in the Middle east offers immense potential for this energy source.
Sources:
Our world in Data. & Global renewable energy trends: Marlene Motyka, Andrew Slaughter, Carolyn Amon – DELOITTE INSIGHTS