Heading into 2017, there was tremendous speculation about how the incoming U.S. administration would impact energy policy and development, and particularly the ramifications on worldwide renewables investment and deployment.
Mid-year, as we predicted, renewables are still full steam ahead, even in the U.S., and despite the Trump administration’s highly publicized withdrawal from the Paris Agreement (if anything, the withdrawal has catalyzed further action and solidified global commitments).
Renewables continue to break global records for both capacity and generation:
- IRENA reports that renewable installations increased by 161GW in 2016, a 9% increase over 2015, and a new record. Nearly half of this new capacity came in the form of solar.
- In March, renewables crossed the double-digit threshold for generation in the U.S. for the first time, surpassing 10%, while in the U.K., wind and solar records were both smashed earlier this summer, as the national grid exceeded the 50% mark. California alone—the world’s 6th largest economy—reached 80% renewable generation in May.
They’re doing so because the price continues to fall:
- At the beginning of the year, BNEF reported that solar is now the cheapest form of electricity in 58 countries, including India. These low prices are allowing developing countries to leapfrog fossil fuels entirely—and even bypass wind.
- In India and Australia, recent auctions have delivered a wind price lower than all other generation sources (with fierce competition from solar PV). Continuing advancements in technology—including turbine size and siting—will further drive down prices, even with the impending reduction or removal of subsidies in some markets.
These favorable conditions are attracting some unlikely allies:
- Economics are driving U.S. utility Xcel Energy to double-down on renewables, calling its ambitious goals the “steel-for-fuel” strategy. The company expects wind to be its predominant energy source by 2021.
- Shell is investing in technology, new energy, demand side management, and even renewables, via Glasspoint, an Omani solar steam generator manufacturer.
- Alphabet, parent of Google—already the U.S.’s largest commercial purchaser of renewable energy—announced the “graduation” of geothermal energy startup Dandelion from its “X” incubator, while C&I commitment to and purchasing of renewables continues to rise.
And expanding global markets:
- Dramatic increases in wholesale power prices in Australia are driving rapidly growing interest in renewables.
- On the heels of record-breaking investment in renewables, China has issued its first allotment of Green Power Trading Certificates.
- Favorable subsidies in India through the end of March 2018 continue to entice corporate buyers with operations based on the subcontinent.
What remains for 2017 is yet to be seen. There are still unknowns to emerge from U.S. energy policy, Brexit-related stalls in U.K. policy, and how grids around the world will deal with the renewables disruption—not to mention Elon Musk’s audacious ambition to build the world’s largest lithium-ion battery in South Australia to improve the stability of the electricity grid in that country.
However, there is growing consensus that “the renewables train has left the station”. The strength of favorable economics amid growing climate concerns and commitments means that a renewable future is inevitable, particularly as coal continues to decline.
This remains great news for C&I buyers, who continue to purchase renewables in record volumes. The fixed price of a power purchase agreement, for example, provides a solid hedge against wholesale market volatility like that currently underway in Australia, while the follow price of technology means that companies can theoretically save money on their electricity costs.
If you haven’t yet, there’s never been a better time for your company to join the corporate groundswell on renewables to take advantage of these tremendous market opportunities. Contact us today to speak to one of our clean tech industry experts.
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