Last year was significant for the renewables industry. From the Paris Agreement to the ever-growing volume of renewable energy being generated worldwide, great progress was made across the globe, however these developments have not been without their fair share of obstacles. As we move into a new year, we also move into a changed landscape complete with new geo-political challenges (let's also not forget the political changes in the US, with a new President who is threatening to peel back US Climate Change measures introduced by the previous administration - ED).
Added to that, this year we’re likely to see more political and economic uncertainty, with national elections in both France and Germany, continued Brexit fallout, and a recent slowdown in China’s growth. These events are all likely to have an impact on local and global economies.
However, the fight against climate change remains at the top of the agenda worldwide (despite Trump), and the renewable energy industry must find ways to clearly and confidently move forward if it is to achieve the targets set out in Paris less than 18 months ago.
To successfully navigate the course in 2017, the global renewables industry must forge closer ties with the private sector, including institutional investors. These organisations don’t just have the power and the resources to create real change, they have the ability to lead the charge in driving investment into renewable energy generation and energy storage.
But first the industry must help this group to see and understand that robust returns can be generated through investment in this area. This will require greater and closer collaboration with investors and policy makers. Working together can help to strengthen the investment climate, whilst bolstering the renewables industry significantly.
Greater focus on energy storage in 2017
As more nations make the important shift away from gas and coal towards cleaner energy sources, we are starting to become more reliant on solar, wind power and other renewable energy sources. In turn, there is growing recognition that energy storage will play an absolutely critical role in the future of the global energy sector by supporting the diverse energy mix.
This will be vital to fulfil the pledge made by world leaders at COP21, to prevent global temperatures from increasing more than 2C above pre-industrial levels. Although, we of course hope that any temperature increases will be less than this.
So what’s driving this change this year? In short, the cost of battery technology has been falling year-on-year and is now becoming commercially viable in many cases. Meanwhile, new opportunities are now opening up in the energy storage market, which means that there is an ever-growing business case for investment in this area. Energy storage has a central role to play in creating a new, evolved energy system and will make a significant contribution to decarbonising our energy supply as a whole.
Over the next 12 or so months, we expect to see even more emerging markets stake their claim in the global renewables industry, and take great strides to decarbonise their energy supplies. The emerging super powers of China and India have already made considerable moves. For instance, the Chinese government has announced that it intends to invest some 2.5 trillion yuan - around $361 billion – into renewable energy production energy before the end of the decade. It is expected that wind, hydro, solar and nuclear power will help to contribute to about half of all new electricity generation in China by 2020, creating more than 13 million jobs in the country. Due to its developments in renewable energy, it has been dubbed a world leader on climate change. It’s role as the largest emitter of air pollution has now become its biggest driver as the largest investor in sustainable infrastructure. China is working quickly to undo its poor air quality which was according to [source] killing 1.6 million Chinese people every year. In fact, the country now houses five of the six top solar panel manufacturers and five of the top 10 wind turbine makers.
India also has great ambitions. The country reportedly accounts for about 4.5% of global greenhouse gas emissions. The Indian government has promised a bumper year for its solar market, with capacity set to double to almost 18 GW. The country currently has around 9 GW of solar capacity, including rooftop projects, after adding around 4 GW of solar capacity in 2016 alone, but is likely to add close to 9 GW in capacity this year. Furthermore, India has a target of setting up 100 GW of solar and 60 GW of wind energy capacity by 2022. Such is its ambition, that India has forecasted that it will exceed the Paris renewable energy target by half, generating 370 GW more of clean energy by 2027. The country has committed to generating at least 40% of its electricity from non-fossil sources by 2030.
Dubai has also hit the headlines this year as it has announced an ambitious plan to increase the share of renewable energy in the country’s energy mix. The Dubai Clean Energy Strategy 2050 is a plan that will see a sharp increase in renewables over the next 30 years. The plan includes a total investment of $163 billion over the next three decades which, if successful, will put renewable energy at the top of Dubai’s energy mix and will help the country increase energy efficiency by 40%. Of the total expenditure planned, around 25% will go directly toward renewable energy sectors. Just over $27.2 billion in investments has been earmarked for a Green Fund, while $13.6 billion will be invested to further expand the Mohammad Bin Rashid Al Maktoum Solar Park.
Under the Dubai Clean Energy Strategy, the Emirate aims to achieve 7% share of clean energy sources in the total energy mix, which is scheduled to be increased to 25% by 2030 and 75% by 2050.
It’s possible that we’ll see more global corporations jumping on the renewables bandwagon too in 2017, or at least delivering on the pledges they have made in the last couple of years. For example, in December Google confirmed that it will reach 100% renewable status this year for all of its global operations, and is the world’s largest purchaser of renewable power. But they certainly are not alone, in the aim for cleaner energy output.
RE100 is a collaborative, global initiative of influential businesses committed to 100% renewable electricity, working to massively increase demand for - and delivery of - renewable energy. Among them, British multinational insurance company, Aviva, is working to increase the amount of renewable electricity it purchases for its operations globally, and aims to procure 100% of its electricity from renewable sources by 2025. In tech, BT has put sustainability at the heart of its business, and its 2020 goals include ambitions to procure 100% renewable electricity globally. Amazingly, Apple’s operations in 23 countries already run on 100% renewable power. Worldwide, 93% of its 2015 electricity use came from renewable sources, and Apple is committed to reaching 100%. The company is also helping its manufacturing partners lower their carbon footprint, working with them to install more than 4 gigawatts of new clean energy worldwide by 2020.
However, not every tech company has made this much progress. Samsung, Oracle and Netflix were all recently called out in a report published by Greenpeace at the end of 2016, which highlighted the least green companies within the global tech industry. It claimed that Netflix has one of the largest data footprints of the companies profiled, accounting for one third of internet traffic in North America and contributing significantly to the worldwide data demand from video streaming. This naming and shaming culture that so often dominates the media is something that we’re likely to see continue this year, so it will be interesting to see whether these corporations attempt to clean up their act in the coming months.
That said, as the price point for renewable energy continues to fall, it makes more and more sense for consumers of energy to make the switch. Just last month, the World Economic Forum reported that solar and wind are now the same price or cheaper than new fossil fuel capacity in more than 30 countries. In addition, a report from Bloomberg New Energy Finance (BNEF) and the Business Council for Sustainable Energy (BCSE) cites that the cost of building large utility-scale solar photovoltaic power plants, for example, has been fallen by 50% in a mere five years. This is truly a landmark moment for the global renewables industry. And it won’t be the last. It’s a critical time for climate change with renewable energy projects being rolled out in cities worldwide. It’s been reported that renewable energy made up nearly 90%of all new electricity generation in the European Union last year, with wind energy overtaking coal to become the second largest mode of power capacity. With that in mind, 2017 already looks set to be another significant year and we are very much looking forward to seeing the fruits of the industry’s labour, as we continue to fight the negative effects of climate change.
ABOUT THE AUTHOR
Quentin Scott is marketing director at Low Carbon.
FURTHER INFORMATION
Low Carbon, http://www.lowcarbon.com/