Related Articles
Forward article link
Share PDF with colleagues

Renewables face increasingly level playing field

Adoption of green energy will only grow, as technology makes renewables increasingly cost competitive

Opponents of renewable energy—a broad church that can stretch from economists lamenting subsidies' distortion of competitive markets to climate-change-science deniers, and from hydrocarbons industry incumbents to uncompromising single-issue environmental lobbies—have a problem.

Their inconvenient truth is that these technologies are well on their way to making the most compelling argument for their future expansion, that of making rational and unsubsidised economic sense.

The ongoing recovery in hydrocarbons prices, and, in Europe, by renewed EU emissions trading system carbon market buoyancy, after years of cheap emissions permits, are partial contributors to this greater economic viability. But technological improvement and lower costs within each renewables sector is the most sustainable driver for continuing and accelerating growth.

Wind power costs are clearly on a downward trajectory. In 2017, the UK awarded electricity supply contracts to offshore wind at a guaranteed price of £57.50 per megawatt-hour, almost half the price of previous deals and also significantly lower than the £92/MWh "strike price" agreed for a much more controversial zero-carbon generation project, the Hinkley C nuclear plant.

Barnaby Wharton, head of policy at trade association Renewables UK, says onshore wind could bid even lower, but the current UK government has put its expansion on hold. Offshore wind's improving economics still mean UK installed capacity will rise to 30 gigawatts by 2030, from 8GW currently, Wharton says.

In more equatorial climes, solar is king. Proposed solar farms have been outbidding alternatives including coal in new Mexican generation capacity auctions at prices down to $17.70/MWh. The US, Saudi Arabia, India, Chile and world leader China have also seen low-priced solar winning bids. Globally, solar capacity is forecast to expand by almost 600GW to 1TW by 2023—more than all other renewable energy technologies combined—according to the recent International Energy Agency's (IEA) Renewables 2018 report.

Biofuels in demand

In the transport sector, electric vehicle and battery technologies are maturing. Some vehicle manufacturers are already moving away from liquid fuels altogether, and several governments have set deadlines for the phase-out of conventional vehicle sales. Demand in the transport biofuels sector has also grown this year, although the driver may be more price increases in traditional refined products rather than improved technology and lower costs for their plant-based alternatives.

Not everything is rosy in the renewables garden. Biofuels face questions around land use and social issues, including deforestation and competition with food crops. Advanced or algal biofuels are still not commercially available at any scale.

And widespread electrification of sectors such as transport or heating bring their own challenges, including the significant investment in, and planning of, additional generation capacity and grid infrastructure that this demand surge would require.

Carbon capture stalled

While increased wind and solar capacity, particularly with further progress on reducing its costs, will help to fill that supply gap, these power sources will, by their nature, remain intermittent and unpredictable. The battery storage innovations that are, at a smaller scale, benefitting electric cars' development are being adapted for much larger grid-integrity batteries. Other energy storage, such as power-to-gas and pumped storage are also seeing greater interest.

The consensus remains that conventional gas-fired plants, with their relatively smaller carbon footprint, will play a major role in partnering intermittent renewables. But if gas is to play more than a "bridge fuel" role, it will require carbon capture and storage, which has largely stalled globally.

Overall, renewable energy will continue to grow strongly to 2023, accounting for 40% of energy consumption growth, according to the IEA. But even with renewable energy technologies becoming increasingly competitive, appropriate policies and market design are critical.

This projected expansion is still seen as insufficient to meet the UN IPCC's 1.5°C global warming target—which could lead some governments to target fossil fuels use even more aggressively, with potential further boosts to renewables' growing momentum.

Also in this section
Cheap gas stalls EU's carbon price revival
25 April 2019
A slump in gas prices has contributed to the denting of the previous rally in carbon prices
COP fudges market mechanisms
11 February 2019
UN climate talks shy away from key implementation issue
Developing a green economy in Saudi Arabia
4 January 2019
Decarbonisation policies are gaining serious traction in the kingdom, as the pressing need to reduce CO2 emissions forces a rethink of the oil giant's priorities