Renewable Energy Growth Set To Slow Amidst Political Uncertainty
The renewable energy industry is expected to see a significant slowing over the next five years, according to the International Energy Agency, unless political and policy uncertainty is dealt with.
These were the findings from the International Energy Agency’s (IEA) third annual Medium-Term Renewable Energy Market Report, released Thursday. According to the report, global renewable energy generation is expected to rise by 45% and will make up nearly 26% of global energy generation by 2020, however, those figures could be better, as annual renewable energy growth in new renewable power is set to slow and stabilise after 2014.
Renewable energy expanded at its fastest pace to date in 2013, according to the report, with renewable energy generation estimated to be on par with energy generated by natural gas. However, despite strong anticipated generation growth, the IEA believe that renewables are facing a transition period as new generation, capacity additions, and investment are all expected to level off through 2020.
“Renewables are a necessary part of energy security,” said IEA Executive Director Maria van der Hoeven. “However, just when they are becoming a cost-competitive option in an increasing number of cases, policy and regulatory uncertainty is rising in some key markets. This stems from concerns about the costs of deploying renewables.”
As we have seen in countries such as the United States, Australia, and Germany, uncertainty in renewable energy policy can have dramatic impacts on the stability of the industry, specifically in terms of investment. The IEA make note that for the renewable energy industry to maintain its strong growth pattern, policies need to provide the certainty investors need to commit to backing the industry as it grows.
“Governments must distinguish more clearly between the past, present and future, as costs are falling over time,” van der Hoeven added. “Many renewables no longer need high incentive levels. Rather, given their capital-intensive nature, renewables require a market context that assures a reasonable and predictable return for investors. This calls for a serious reflection on market design needed to achieve a more sustainable world energy mix.”
Renewable energy is playing a big part in none-OECD countries, representing almost 70% of renewable energy’s growth in 2013, yet meeting only 35% of the fast-growing energy needs of those countries — coal, in many cases, is filling the gap, which is representative not just of how far we have to go, but how far renewable energy can go.
However, “increased policy and market risks cloud the development picture, raising concerns over how fast renewable can scale up to meet long-term deployment objectives.”
An executive summary of the report is available for download (PDF).
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Uncertainty? Let’s see–the sun will shine for at least 1 billion more years. Hmmmm.
Good point. The only certain investment is with RE. Life span of a fossil fuel power plant may be around 40 years and is vulnerable to price hike and availability of fossil fuels.
It is absolutely certain that fossil fuels will run out.
IEA is in the hands of fossil and nuclear.
no reason to pay attention on their predictions
only in future to proof how far IEA was wrong.
The problem isn’t renewables. The problem is information on renewables. It frankly sucks. Here’s an example of installed cost. This is typically what’s necessary for investment from either governments of private sector:
EIA 2010 PV Capital Cost (150 MW plant): $4,943/MW
EIA 2013 Correction PV Capital Cost (150 MW): $3,873/MW
Northwestern Power & Conservation PV capital Cost 2012 (100 MW): $2,850/MW
It was hard to find this information, even with my superhuman googling capabilities. Somebody needs to pull together investment information that is clear and understandable, i.e. cleantechnica or similar. Big institutional investors typically don’t get sucked into sales and marketing, hopefully. This kind of discrepancy is confusing. I’m going with the low end. And assume the capital cost for a 100 to 150 MW PV plant is even lower for 2014. Conventional plants probably keep rising in capital costs.
Capital or installed cost for the plant is where owners need money through investments. Like quick. This could be from governments, utilities or private markets. The O&M cost or other metrics are important (essential) for the overall decision making scheme. Confusion is what kills commercialization and market entry. That’s why fossil fuel is spending so much money on confusion.
This information needs to be updated, spelled out, repeated. EIA doesn’t seem to up-to-speed.
“According to national weighted average system prices by market segment, residential and utility system prices dropped quarter-over-quarter, while non-residential prices increased over Q4 2013.
From Q1 2013 to Q1 2014, residential system prices fell 7%, from $4.91/W to $4.56/W. Quarter-over-quarter, installed prices declined by 1%. Installed prices came down in most major residential markets including California, Arizona, Massachusetts, and New York.
Non-residential system prices fell 5.7% year-over-year, from $3.95/W to $3.72/W, while quarter-over-quarter installed costs increased by 4%. Higher priced government/nonprofit projects accounted for the majority of installations across the top five non-residential markets, which include California, Arizona, Massachusetts, New Jersey, and New York.
Utility system prices once again declined quarter-over-quarter and year-over-year, down from $2.14/W in Q1 2013 and $1.96/W in Q4 2013, settling at $1.85/W in Q1 2014.”
http://www.seia.org/research-resources/solar-market-insight-report-2014-q1
This data is collected by the SEIA and Greentech Media. It’s about time for the 2014 2nd quarter data release.
Here’s a suggestion. Establish a weekly or monthly cleantechnica PV and wind economics and decision making post. Call it the “Bob Wallace Report.” Establish a sticky post at the left or right column of the blog. I’m not the one who needs the excellent above information. Data typically needs come from a clearinghouse like EIA. Clearinghouses lend credence to a decision and CYA for decision makers. EIA really needs an outside push. Perception may be initially murky to some, but if you’re information proves to be accurate week over week, it becomes a go-to data relay source. This may force EIA to up its game. Greentech media and industry trade groups are probably very accurate, but they don’t give backup a decision maker. Somebody pushing a conventional plant will point out the data source in about 3 seconds upon presentation of Powerpoint slide.
Here’s a model report from EIA:
http://www.eia.gov/forecasts/capitalcost/pdf/updated_capcost.pdf
The focus may be power plant level, since that impacts government and institutional investors more. Here’s some metrics:
Nominal capacity (MW) or Heat Rate (BTU)
Overnight Capital Cost ($/KW)
Fixed O&M ($/Kw-yr)
Variable O&M ($/MWh)
The NREL seem to have decided to step in to backup the inadequate EIA on utility wind and solar costs, though they don’t put it that way. Mark Bolingers’ annual review of utility solar (link) , and Ryan Wiser’s of wind (link), are now the go-to sources for the USA. That still leaves out residential solar. There is nothing as good in the USA as the German BSW price index for small solar.
Out-of-date information on prices damages the debate. Frank’s paper for Brookings, and Bill Gates’ endorsement of confusionist Lomborg’s misleading take on energy poverty, are recent examples. Even the eminent and independent experts of IPCC WG3 used obsolete wind and solar prices.
Secretary Moniz please note, A consumer price index is much harder to get right then this, and every developed country does it as a mater of course, sending out observers to sample prices in thousands of shops for hundreds of products.
Why aren’t we becoming much more independent from the for-profit grids?
I’d rather just cut them off from a revenue stream (albeit smaller) they could “earn” by cooperating in providing convenient, reliable, and more resilient smaller grids that we can give and take from? Where does this work well? Maybe San Diego? Perhaps the Chevy Volt All Electric Car Community, Austin Texas Pecan Street project, where the Volts are not only charged from the grid, but can supply energy back to the grid (paying the Volt owner) when they don’t need it. See https://www.youtube.com/watch?v=V8EySKwRlBo
I was surprised, though, to not be able to pick the community out from the airliner as I flew over it. I’d expected all the houses to have solar panels, but didn’t see even one. Am I confused about what I’d think would be a no brainer (or are they disguised as ordinary roof tiles)?
Do I need to ask why the costs discussed only involve utility sized projects, the types that only profit motivated investors think they can profit from even as the costs go down?
Go look above at Bob’s numbers. Utility solar is under $2/W. Residential solar is over $4/W.
Even with substantial profits, solar bang for the buck is much better with the utilities.
I agree.
Both utility and residential solar is getting a lot cheaper, while fossil fool based systems only get more expensive (and damaging to the environment, health, water security, reducing sustainable food while making it more expensive, etc).
I’d encourage as much local solar simply to make more resilient local grids possible, and ideally have publicly owned and controlled or mutual, co-op type grids, to provide what I would think the better mix of convenience, reliability, and resilience during emergencies, etc. Besides, if you own your system, nobody can change the rates, or cut it off.
To me, the private profit seeking big utilities have overplayed their hand, trying to get us almost totally reliant on them as the cost to provide the services could have been dropping.
If the privatized “utilities” want to keep a hand on the decreasing revenue stream, they should provide the best and most cost effective service they can. They really are good at providing convenience and reliability, but with the bigger grids required, do it at a trade off in letting them have more control over something I’d rather have more capability to do with or without them.
1. Predictions of the rate of renewables, Solar PV and WInd in particular, from the IEA have been wildly incorrect on the pessimistic side. Why should anyone think they know what they’re talking about here?
2. The cost of Wind and Solar PV have been dropping to the point were they are cost effective without any subsidies in many markets now. Their cost is still dropping. Low-cost storage is now coming to the market. Political policies are not going to have much influence on the global growth of these technologies. These horses have already left the barn.
The IEA has been consistently predicting renewables will level off for the better part of a decade now. They’ve been consistently wrong.
Why would we believe this prediction is suddenly more prophetic than all those which came before it?
Oh, come on, you don’t trust the IEA’s “expertise”? 🙂
http://cleantechnica.com/2014/08/12/experts-misleading-people-renewable-energy/
” as annual renewable energy growth in new renewable power is set to slow and stabilise after 2014. Renewable energy expanded at its fastest pace to date in 2013, according to the report”
Maybe if they keep saying it, that nasty RE stop growing. Been calling for it every year.
Solar just refuses to follow orders from the IEA. 😉
You can be sure that the fossil fuel corporations are applying every bit of their entrenched wealth and political power to ensure that the IEA’s gloomiest projections for the renewable energy industries come true. As far as they are concerned, solar and wind energy represent an existential threat.
The IEA are a policy shop. They naturally believe that it’s policy that determines the progress of renewables. That was true enough before grid parity: no high German FIT, no installation. After grid or socket parity, everything changes, and policy only affects things at the margin, like gas taxes. The renewal or not of the wind PTC won’t affect the trajectory of wind power in the USA by very much. Solar isn’t there quite yet, so policy makes a difference: contrast Spain and Japan. or Florida and California.
The IEA are surely right to criticise policy uncertainty. Chopping and changing, often in the interests of an allegedly better theory, is disruptive and delays investment. Investors are better off in Chile – “You’re on your own” – than in Catch-29 jurisdictions of constantly changing rules, which is pretty much everywhere else.
The IEA is anti non Utility generation because it offers current ratepayers a path toward “energy freedom” (after system payback) and also freedom from paying for transportation fuel/gas since eVehicles can now be charged up using ones own PV panels…
What is really happening is that Big Energy is trying every trick in the book to keep people from installing as much Solar as they can, so any reports from them are suspect at best.