A new study published this week by Lloyd’s Register, based on surveys of 800 professionals and experts from around the world, reveals that renewable energy sources like solar and wind are likely to begin reaching grid parity around the world beginning in China in 2022, but that despite this, sustained increases in investments will still be hard to come by.
Lloyd’s Register published its 2018 Technology Radar report this week — the fourth year the report has been published — which this year focuses on renewable energy and asks the question, when will renewable energy become the dominant source of energy in the world?
The research is based on surveys of 800 professionals and experts from around the world, as well as insights and opinions from industry leaders.
“Our latest Technology Radar – Renewable Energy research reflects the most current and forward-looking attitudes, actions, and investment behaviours in both global and local renewable energy markets,” explained Alasdair Buchanan, Director of Lloyd’s Register’s Energy business. “These trends are striving to shape tomorrow’s sustainable energy mix and are framing a clear end in sight for a big transformational shift in sustainable energy provision.”
“It is this insight and the future-forward energy implications that position Lloyd’s Register’s 2018 Technology Radar Renewable Energy report as essential to investor, developer, operator and regulator strategies for the years ahead.”
The key finding was that the respondents believe solar will reach grid parity first in China in 2022, followed by Spain and the United Arab Emirates in 2024, and then Australia and the United States in 2025. Things are definitely different for the wind industry, however, with experts expecting grid parity to begin in Germany and the UK by 2024, the US and Denmark by 2025, and then out to 2033 in Sweden.
Overall, only a minority of respondents believe that renewables have already overtaken fossil fuels in their respective country, or is likely to do so in the next two years, while 58% expect that it will not happen until after 2025. Even then, however, 42% of respondents believe that reaching grid parity will still not be enough to cause a sustained increase in renewable energy investments and that subsidies are therefore critical to support developments across most markets.
“I am heartened by the optimistic outlook and by the measured and realistic approach that is displayed throughout the results and insights in this year’s research,” added Karl Ove Ingebrigtsen, Director of Lloyd’s Register’s Low Carbon Power Generation business. “It illuminates the outlook for renewable energy – and highlights the technologies that are expected to deliver the greatest impact, especially in grid transformation which must be based on a sound understanding of each country’s individual ecosystem; it is clear that this is advancing alongside technology, policy and investment.”
One wonders, however, whether the report’s “measured and realistic approach” accurately takes into account the incredible decreases in technology costs we have seen over just the last few years. Deeper within the report, the authors explain that “despite subsidies and technology advances, high costs remain a barrier to reaching parity and to faster renewables growth.” Specifically, according to Lloyd’s survey, “62% say that high costs remain the primary argument against pursuing renewables in their country. Respondents involved in solar development are only slightly less emphatic on this point, with 59% agreeing.”
Another roadblock highlighted by the report which seems to misjudge the current state of play is the idea that energy storage is “Another major inhibitor to the growth of renewables, and to their greater attractiveness to utilities.” Specifically, the authors of the report explain that “the most frequently cited obstacle by survey respondents to the growth of renewables in their country’s energy mix is the slow development of storage technologies.”
Neither of these points is necessarily incorrect across the board — when you throw out some of the leading clean energy and energy storage countries, those countries with nascent industries are likely encountering higher costs due to lack of scaling — but it seems that maybe the predictions that grid parity will stretch out into the 2030s, specifically for the onshore and offshore wind industries, misses the point of the scaling and expansion currently in play. Against that, however, is the fact that government uncertainty, especially across Europe and in the United States, could possibly mitigate any current gains being made across clean technology industries, and therefore giving more credence to the opinions of those surveyed by Lloyd’s Register.