It’s been a rollercoaster year for renewables. The price of solar and wind plummeted, China smashed its target for solar installations, but Donald Trump also withdrew the US from the Paris climate agreement. So what do the experts predict for 2018?
Renewable energy costs will continue to fall
Solar prices have dropped by around 62% since 2009, while offshore wind costs have also halved in recent years, reaching £57 per megawatt-hour in 2017. As a result, governments are seeing record-low prices for solar and wind at power auctions, and subsidy-free solar and wind farms are now being developed.
Jennifer Delony, the associate editor of Renewable Energy World, believes that the rise of country-level auctions for renewable capacity is a trend that will continue to drive down prices in India and other countries – particularly in the case of solar photovoltaic (PV). “It’s just the sheer power of competition in those auctions,” she says, “and I expect that competition to keep barrelling forward next year.”
Mark Sisouw de Zilwa, technical director, oil and gas at ING, notes that investment in renewables remained consistently high throughout 2017 but did not rise much, largely due to falling prices and overcapacity issues in countries like China and Germany – a trend that may well continue into 2018.
China will push ahead with its ambitious energy plans
Although China is the world’s biggest polluter, it is also the global leader in solar generation. Over the past decade, its solar PV capacity has increased by a factor of nearly 800, with more than 54 gigawatts expected to be installed in 2017 alone. “They’ve surpassed their solar PV 2020 targets already, and I expect them to hit their wind target in 2019, so they’re making great progress,” says James Wilde, managing director, innovation, policy and markets at the Carbon Trust.
In total China plans to invest £292bn in renewable power by 2020. Commitments made at the Paris climate summit will also introduce a cap on the coal-burning that has caused severe air pollution in many of its cities, with carbon dioxide emissions predicted to peak by 2030.
The country’s long-awaited national emissions trading scheme – the world’s largest – was launched on 19 December 2017. This will effectively put a national price on carbon emissions across the Chinese power generation sector, which is still heavily dependent on coal-fired power plants.
Eight large-scale carbon capture and storage projects are also underway, and China hopes to become a global leader in electric vehicle manufacturing and adoption. “China is investing more in R&D than Europe is,” says Lisa Fischer, a policy advisor at energy think tank E3G, “so they’re really driving the industry around renewables.”
Corporations will make bold commitments
By the end of 2016, the US retailer Target had 147 megawatts of solar installed on 300 of its stores, making it one of the leading corporate US adopters of solar power – and it’s far from alone in embracing renewables.
Apple’s new campus in California runs on 100% green energy, and Goldman Sachs is one of several banks that have joined RE100 – a group of powerful companies committed to being powered by 100% renewable energy.
Wilde expects the number of corporations making ambitious renewables pledges to increase in 2018, and says the trend has been driven by “the falling costs of renewables, the fact that corporates want secure energy, and also some of the market opportunities associated with distributed grids and generation.”
Gerben Hieminga, a senior economist at ING, says green investors are also pushing harder for the disclosure of corporations’ exposure to climate change, and NGO campaigns are also having an impact on company behavior – a trend that may gather pace in 2018.
The renewables industry will generate more jobs
According to a report by the International Renewable Energy Agency, around 9.8 million people now work in the renewables sector worldwide. In fact, wind turbine service technicians and solar photovoltaic installers are the fastest-growing occupations in the US. And the £17.5bn that will be invested in the UK offshore wind sector should also create thousands of new jobs.
“In a way, the renewables industry is quite a manpower-intensive compared to the fossil fuel industry,” says Sisouw de Zilwa. “You need a lot of wind turbines, which have a lot of moving parts, to generate a similar amount of power to a coal or gas plant. Therefore you also need more maintenance people to keep electricity running.”
However, while demand for workers is certainly growing, “there’s also a huge shortage of skilled people, so that could be a limiting factor on the speed of the energy transition,” says Hieminga.
Competition in the battery market will increase
In 2018 Tesla should complete its Nevada giga factory, the biggest battery factory in the world. Not to be outdone, China has announced plans that will grant it the capacity to provide almost 120 gigawatt-hours of battery cells a year by 2021. And large-scale battery factories are also planned for Sweden, Hungary, Poland and Germany.
In April 2017 the UK also announced the Faraday Challenge, the first phase of a £246m investment in battery technology designed to boost research and development and put the UK at the forefront of the energy storage market.
However, it’s important to note that lithium-ion batteries are not the only form of energy storage that could see growth in 2018. “You can use pumped-storage hydroelectricity or compressed air energy storage, but you can also use water-based batteries, solid-state batteries, or hydrogen converted by electricity,” says Sisouw de Zilwa. “There’s a lot of different ways to store energy.”
Regards,
