Category: Analysis & Features

The renewable energy generation capacity increased by 152 gigawatts (GW), which is equivalent to 8.3% last year, the highest annual growth rate on record, according to new data released by the International Renewable Energy Agency (IRENA).

According to utilities-me.com, the Renewable Capacity Statistics 2016 found that as of the end of 2015, 1,985 GW of renewable generation capacity existed globally.

Adnan Z Amin, Irena director-general, said: “Renewable energy deployment continues to surge in markets around the globe, even in an era of low oil and gas prices. Falling costs for renewable energy technologies, and a host of economic, social and environmental drivers are favoring renewables over conventional power sources.

“This impressive growth, coupled with a record $286 billion invested in renewables in 2015, sends a strong signal to investors and policymakers that renewable energy is now the preferred option for new power generation capacity around the world.”

It was a record year for both wind and solar due in large part to a continued decline in technology costs.

Meanwhile, wind power grew 63 GW (17 per cent) driven by declines in onshore turbine prices of up to 45 per cent since 2010.

Solar capacity increased 47 GW (37 per cent) owing to price drops of up to 80 per cent for solar photovoltaic modules in the same time period.

Hydropower capacity increased by 35 GW (three per cent) while both bioenergy and geothermal energy capacity increased five per cent each (5 GW and 1 GW respectively).

Overall, capacity has increased by roughly one-third over the last five years, with most of this growth coming from new installations of wind and solar energy.

In terms of regional distribution, the fastest growth in renewable generation capacity came in developing countries.

“The significant growth rates for renewable generation capacity in developing economies are a testament to the strong business case for renewable energy,” said Amin.

“Renewables are not just a solution for industrialized countries, they are also powering economic growth in the fastest growing economies in the developing world.”

At the end of the year, hydropower accounted for the largest share of the global total renewable power generation capacity with an installed capacity of 1,209 GW, the majority of which are large-scale plants.

Wind and solar energy accounted for most of the remainder, with an installed capacity of 432 GW and 227 GW respectively. Other renewables included 104 GW of bioenergy, 13 GW of geothermal energy and about 500 MW of marine energy (tide, wave and ocean), he added.

According to new statistics released by Demnag, in the top 10 solar countries who have installed the most solar capacity, Germany leads the pack with 38,200 MW in installed capacity. China comes in the second place with 28,199 MWs & Japan in third place with 23,300MW.

Germany’s top place in the ranking is not surprising given its Energiewende focus to transition away from fossil fuels & its declared war on coal. Here is The Economist’s take on Energiewende:

“Wholesale electricity prices will be 70% higher by 2025, predicts the Karlsruhe Institute of Technology. Germany must build or upgrade 8,300km (5,157 miles) of transmission lines (not including connections to offshore wind farms). Intermittent wind and sun power creates a need for backup generators while playing havoc with business models that justify investing in them. Hans-Peter Keitel, president of the Federation of German Industry, likens the Energiewende to “open-heart surgery”.

But if it pays off Germany will have created yet another world-beating industry, say the gamblers. Alone among rich countries, Germany has “the means and will to achieve a staggering transformation of the energy infrastructure”, says Mark Lewis, an analyst at Deutsche Bank.

While Germany ranks the highest in installed capacity, China has a much higher growth rate 60% & that too with a high base of nearly 28,000 MW. In China too, the government has given solar a high priority in reducing pollution.

Analysts believe that China’s recent announcement of the Cap & Trade policy will encourage a boom in solar power generation infrastructure. This will turn kick of another race to move to solar by other countries such as India.

Germany’s wind power output in January-May rose 34% year on year and the country is on track for a third successive record year for new turbine installations, with the first wave of offshore wind farms finally coming online, a Platts analysis of the latest available data show.

According to Platts, wind turbines in Germany generated 32.5 TWh of electricity in January- May, up more than 8 TWh from a year earlier, grid operator data compiled by Platts Powervision show.

On average, wind generated 7.5 GW each hour in the first five months of 2015, the data shows. That is the equivalent output of seven modern nuclear reactors. Compared with the first five months 2013, wind output so far this year was even 71% higher, the data show. The main reason for the rise is record growth in Germany’s wind-power industry with Germany on track to install over 14 GW of new wind turbines between 2013 and 2015, averaging over 12 MW a day.

That compares with 13 GW added in the seven previous years between 2006 and 2012, or averaging just 5 MW/day, data from Platts Powervision show.

According to industry experts, the pending reform of Germany’s renewable energy law (EEG) and the introduction of an annual cap on solar in 2012 are one reason that triggered the latest boom in wind with onshore developers rushing to get projects implemented ahead of the launch of an annual cap on onshore wind this year.

Another reason for the current wind boom is delays in offshore grid links, which put back the planned start date of many offshore wind farms.

However, with the offshore grid link bottlenecks now easing, the first wave of some 3 GW of German offshore wind farms is on track to be online by the end of 2015. Offshore wind power capacity registered for direct marketing was 2.225 GW in May, a fourfold increase from a year earlier, according to the latest data from the TSOs. Last year, German offshore wind developers brought 529 MW online, doubling total installed capacity to 1.049 GW, according to the annual statistics.

Total onshore capacity was 38.116 GW as of end 2014 after a record 4.75 GW of new onshore wind capacity was installed last year.

For 2015, wind lobby group BWE still expects another significant increase of 3.5-4.0 GW, it said earlier this year.

However, the reform of the EEG, in place since August 2014, will cap future annual wind power installations at 2.5 GW for onshore wind.

Repowering of existing sites with more powerful turbines is exempt from the annual cap and more than 1 GW was added last year in a growing market, the BWE said.

The next update for new wind installations in the first half of 2015 is due in July.

The boom in additional wind capacity from 2013 to 2015 is in stark contrast to a sharp slowdown in new solar capacity, which boomed between 2010 and 2012 adding some 22 GW in those three years alone, Platts Powervision data show.

Germany’s new solar capacity fell 2014 for a second year in a row, down 42% year on year to 1.9 GW, its lowest annual level since 2007, as deeper cuts to solar subsidies have sharply reduced growth in the sector.

So far this year, Germany has added only 419 MW of new solar installations, still bringing total installed solar PV capacity to 38.7 GW.

Germany’s combined wind and solar portfolio is now estimated above 80 GW.

Combined output from wind and solar in January-May was 46 TWh with full-year estimates above 100 TWh, which would be the first time ever that wind and solar generated more electricity than nuclear in Germany.

Germany’s nuclear phase-out will start this June with the Grafenrheinfeld reactor coming offline for economic reasons six months ahead of its final decommissioning date, leaving just eight reactors with a combined capacity of 10 GW online until the end of 2017.

German day-ahead prices in April averaged Eur25.30/MWh, the lowest monthly average in more than 12 years as the seasonal drop in demand combined with strong supply from renewables as well as conventional sources.

May was the third month so far this year with average spot prices settling below Eur30/MWh with June, July and August also trading below Eur30/MWh.

By contrast, day-ahead prices in Great Britain in May averaged at GBP40.82/MWh (Eur56.17/MWh), more than double the average wholesale power price in Germany with the strong pound and the additional carbon levy boosting wholesale prices in the UK.

A Greenpeace report released on Tuesday accused utilities of hampering efforts to use renewable energy to power data centres needed for services hosted in the cloud.

According to euractiv.com, Greenpeace praised moves made by Apple, Google and other internet titans to fill a skyrocketing demand for electricity with solar, wind or other environmentally-friendly sources but lamented expansion of data centre capacity in places where utilities reliant on carbon-spewing coal fuel dominate markets.

“A growing number of companies have begun to create a corner of the internet that is renewably powered and coal free,” Greenpeace said in its 2015 click clean report.

Internet companies that have committed to being completely powered by renewable energy sources include Apple, Facebook, and Google, according to Greenpeace.

Those commitments have driven growth of renewable power in several key markets, and caused some utilities to invest more heavily in that kind of electricity generation to meet demand, the report stated.

However, some locations that have attracted data centre investments are in markets ruled by utilities with generation powered mostly by coal, gases from which are a culprit in climate change.

Examples listed included Duke Energy in North Carolina, Dominion Resources in Virginia, and Taiwan Power Company in Taiwan.

“These utilities represent the biggest obstacles to building a green internet, and will require collaborative pressure from data centre operators and other electricity customers to secure the policy changes needed to open the market up to competitors that offer meaningful options for renewable energy,” Greenpeace said.

Apple leads the charge

Apple continued to “lead the charge” in using clean energy to power internet operations even as the California-based company rapidly expanded, according to the report.

Apple on Sunday announced broadened renewable energy and environmental protection initiatives in China, including a project with the World Wildlife Fund to promote responsible forest management.

The forestland project aims to protect up to a million acres of working forests used for fiber for paper and wood products, according to Apple.

The project is expected to generate as much as 80 million kilowatt hours annually of clean electricity, enough to power about 61,000 Chinese homes.

About 87% of Apple’s global operations run on renewable energy, and the Sichuan Province solar farms will move the company closer to 100%, according to the maker of iPhones, iPads, iPods, Macintosh Computers, and Apple Watch.

Google is also pushing to rely on renewable energy, but its progress is under threat by monopolies held by coal-using utilities in some data centre locations such as Georgia, Singapore, Taiwan, and the Carolinas, according to Greenpeace.

Amazon, Microsoft, eBay, and Oracle were among technology giants who scored low grades from Greenpeace when it came to green energy deployment and advocacy.

“The magic of the internet seems almost limitless,” Greenpeace said. “But each new internet enabled magic trick means more and more data.”

Increasing demand for data, particularly streaming video, and processing power in the cloud means ramped up demand for power by data centres doing the online work.

“While there may be significant energy efficiency gains from moving our lives online, the explosive growth of our digital lives is outstripping those gains,” Greenpeace said.

The race for renewable energy has passed a turning point. The world is now adding more capacity for renewable power each year than coal, natural gas, and oil combined. And there’s no going back.

According to Bloomberg, the shift occurred in 2013, when the world added 143 gigawatts of renewable electricity capacity, compared with 141 gigawatts in new plants that burn fossil fuels, says an analysis presented Tuesday at the Bloomberg New Energy Finance annual summit in New York. The shift will continue to accelerate, and by 2030 more than four times as much renewable capacity will be added.

“The electricity system is shifting to clean,” Michael Liebreich, founder of BNEF, said in his keynote address. “Despite the change in oil and gas prices there is going to be a substantial buildout of renewable energy that is likely to be an order of magnitude larger than the buildout of coal and gas.”

The price of wind and solar power continues to plummet, and is now on par or cheaper than grid electricity in many areas of the world. Solar, the newest major source of energy in the mix, makes up less than 1 percent of the electricity market today but will be the world’s biggest single source by 2050, according to the International Energy Agency.

The question is no longer if the world will transition to cleaner energy, but how long it will take. In the chart below, BNEF forecasts the billions of dollars that need to be invested each year in order to avoid the most severe consequences of climate change, represented by a benchmark increase of more than 2 degrees Celsius.

In 2014, sales of solar panels increased by 20 percent. Although German solar producers are struggling with Asian competitors, they remain optimistic.

According to Deutsche Welle, as the cost of solar energy production continues to fall, the market is experiencing something of a boom. In many parts of the world, it has become cheaper to produce solar power than diesel oil, gas, coal or nuclear energy.

Preliminary statistics suggest that solar energy generation rose by 45 gigawatts (GW) in 2014, and achieved an output akin to that of 11 large coal or nuclear power stations. But experts say the big boom is yet to come, and are predicting an increase of 50 GW for 2015, and a continued upward trajectory in the ensuing years.

“In 2020 we expect a rise of between 100 and 150 gigawatts,” Eicke Weber, Head of the Fraunhofer Institute for Solar Energy Systems said. “The market will grow rapidly.” And if that happens, four percent of the world’s energy demand could be met with solar power.

The global solar market is changing. In its early days, it was largely a European venture, but in 2013, the surge reached China, Japan and the USA. And in 2014, many countries in Latin America, the Middle East and Africa jumped on the bandwagon.

Germany and Italy, however, have reduced their investment. The past two years have been particularly tough for German companies producing or installing solar panels. A struggling domestic market coupled with stiff competition from China pushed many companies to bankruptcy. Of the roughly 127,000 employees in the domestic solar market, 50,000 lost their jobs.

One of the problems, both for European and US companies, is the Chinese government’s policy of subsidizing solar panel production.

“It is a state-directed economy,” said Mila Nitzschke, spokesperson for Solarworld – a German company that produces solar panels. “China is trying to dominate the world market using unfair methods, by selling products below production prices.”

To protect itself from cheap imports, Solarworld pressed for anti-subsidies customs duties in the USA and Europe. It got what it wanted. Anything else, Nitzschke says, would have proved fatal.

“If we didn’t have these minimum prices, we wouldn’t have a solar energy industry in Europe anymore,” he told DW. “So it’s important that this regulation stays in place and that violations are not tolerated.”

Germany appears to have moved beyond the slump, and the industry is now pinning its hopes on falling energy production prices. They are tipped to drop by over 30 per cent in the next five years.

“Technology that will be available from 2017 or 2018 onwards will enable us to produce one kilowatthour for six euro cents in southern Germany, and as little as three or four euro cents in southern Spain,” Eicke Weber said. “This would be a lot cheaper than today.”

With energy providers, municipal utility companies and housing industry aiming to provide tenants with the capacity to generate solar power from their own roof tops, the sale of solar panels is on the rise.

“In the case of Germany, people in the sector are looking at 2015 with greater optimism,” Jörg Mayer, managing director at the German Solar Industry Association told DW. “And there is even greater optimism regarding international markets. Most companies have already realigned their strategies and are now also doing business abroad.”

As the global industry continues to grow, so does the need for skilled workers. German mechanical engineers are leaders of the pack when it comes to equipping high-tech-factories, and their 2014 turnover was up 30 percent on the year before. The outlook for 2015 is also bright. “We expect new investments in new product lines” said Peter Fath, spokesperson for the German Engineering Association’s steering committee for photovoltaic resources.

Even Solarworld, which has been through some rough times, sees the future in positive light. “We are working on increasing capacity and efficiency and reclaimed our spot as one of the leaders in the worldwide solar industry,” Nitzschke said. “We will make it back into the top ten. We are the biggest producer outside China, and that’s what we want to be in the future.”

Scientists at the eastern Lappeenranta University have calculated that China would become even more profitable if it were to make the switch to renewable energy within the next five to ten years. As the largest energy consumer in the world, China’s energy production remains a cornerstone of all global climate initiatives. The Finnish project was recently recognized in Japan for its groundbreaking simulation work.

According to yle.fi, a renewable energy research project conducted jointly by the state-owned VTT Technical Research Centre, the Lappeenranta University of Technology and the University of Turku’s Finland Futures Research Centre has successfully modelled comprehensive energy systems based entirely on renewable energy sources for China, Korea and Japan. The project was recently presented with an award for its pioneering work at a solar energy conference in Japan. Tekes, the publicly-funded Finnish Funding Agency for Innovation, has financed the joint project to the tune of five million euros.

“China possesses significant wind and solar energy resources, so a power network based on renewable energy sources has the potential to become profitable very quickly. That’s why they should move to a system like this. China is already the world’s largest investor in solar and wind energy at present,” says lead researcher Pasi Vainikka from VTT.

The Finnish researchers are confident that renewable energy sources like solar and wind power will become the cheapest form of energy production in Asia within the next ten years. What is more, energy produced in this way provides the added benefits of being inexpensive, emission-free and promoting self-sufficiency. Professor of solar energy Christian Breyer from the Lappeenranta University says the project’s large-scale simulation of functioning renewable energy networks is the first of its kind.

“A network fully based on renewable energy is possible in Northeast Asia. Renewable energy is also the cheapest form of energy production available to them there. All of the other options are more expensive. It is a new insight,” says Breyer.

Price of solar energy will drop by half

The big question when it comes to renewable energy sources is when they will become commercially viable. The Finns have concluded that in China, energy from solar and wind sources will become profitable already in five to ten years.

“Costs fall by 20 percent every time capacity is doubled. By 2025-2030 the price of solar electricity will be half what it is now. In practice, it is the cheapest form of energy production in a good chunk of the world. Our energy networks will change dramatically as a result,” says Vainikka.

Finnish energy company Fortum has already invested heavily in solar energy business in India, where tremendous growth is expected. Fortum recently connected a 10 megawatt solar plant project in the central Indian state of Madhya Pradesh to the Indian power grid.

“The share of solar energy in particular will grow in the coming years. It is definitely one of Fortum’s top priorities in India. Projects totalling hundreds of megawatts of power are announced there all the time, as well as new solar power plants. Solar energy is reaching adulthood. Soon it will manage on its own, without support,” says Fortum’s Technology Director Heli Antila.

Solar energy stored in gas

Virtually unlimited amounts of solar and wind energy are available, but the problem is non-uniform supply. For this reason, it is necessary that the energy be stored.

“We are well aware of this limitation, but it also offers fantastic potential because it is so flexible. Once solar and wind reach 50 percent of grid capacity, we will need massive internal transfer operations that transfer power from storage on a daily basis, or according to the season. In Finland, the first dark months of winter would require the use of stored energy,” says Vainikka.

Here in Finland, the solar energy saved from the summer could be stored in synthetic natural gas for use in the winter months. The existing gas network would be used as a storage facility, as it will be integrated into the other energy sectors. Vainikka says the technology to facilitate this process is already known and the energy expended to store the stock would be relatively small.

“The solar power can be stored in the existing natural gas infrastructure. We don’t actually have this infrastructure yet, but it is coming with the launch of the new LNG (liquefied natural gas) terminals that have been agreed upon. They will provide significant amounts of chemical energy that can be used in the winter time.”

VTT aims to investigate how Finland could move to the forefront of the push for renewable energy. Vainikka says 90 percent of business in the renewable energy sector is in other areas than solar panels and wind turbines, focusing instead on how electricity generated by the two sources can be transported and stored most efficiently.