Renewables growth will need to double to meet 2°C climate goal | RenewEconomy

Renewables growth will need to double to meet 2°C climate goal

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S&P analysts finds renewables industry has become a mature market, but installs will need to be double BAU by 2040 to meet 2 degrees warming limit.

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The global renewable energy industry has overcome the growing pains faced by emerging industries, and has emerged, de-risked sector that will achieve steady growth in coming decades, an assessment by analysts S&P Global Ratings has found.

In a new analyst report published by S&P Global on emerging trends and risks within the global energy transition, the global market analysis firm has predicted a positive future for the renewables sector, driven by falling costs and enabled by emerging energy storage technologies, and that investment of more than $10 trillion will be needed through to 2040 in clean energy, to meet a 2 degrees warming limit.

According to S&P Global Ratings, over the last two decades, the renewable energy sector has successfully achieved successful de-risking of large-scale solar and wind projects and is expected to grow at an average annualised rate of 7 per cent each year through to 2040.

“Worldwide investments in renewable energy infrastructure assets have been astronomical and at quite a sprint, totalling $2.6 trillion from 2010 through 2019 according to Global Trends in Renewable Energy Investment 2019, by BloombergNEF (BNEF) and the United Nations Environment Programme,” S&P Global Ratings said in its assessment.

“Globally, renewable capacity additions outpace fossil fuel with solar emerging as the dominant technology. Key drivers of this meteoric growth have been government and corporate policies (as expressed through FITs, tax incentives, and PPAs) to meet clean energy goals, as well as declining installation costs, with economies of scale that are leading to grid parity.”

S&P found that the growth in new renewable generation capacity has significantly outpaced additions from fossil fuels and nuclear power, and that this trend is likely to continue as the costs and risks associated with renewable technologies are further reduced.

Source: S&P Global

While S&P sees strong growth in the renewables sector continuing, it expects that fossil-fuelled generators will continue to deliver the majority of electricity in 2040, but there is the potential that the renewables sector will see substantially stronger growth if governments put in place policies consistent with limiting global warming to no more than 2 degrees.

Global warming of two degrees would see a substantial increase in the level of investment in renewable energy projects, with S&P global predicting that twice as much new renewable electricity generation will be produced under a 2-degree scenario, compared to the current ‘business as usual trajectory’.

Under the more ambitious scenario, the global share of electricity generation provided from fossil-fuels would fall to as low as 30 per cent by 2040.

To achieve this, S&P Global Ratings estimates that an additional $5.2 trillion in renewable energy investment will be needed through to 2040, in addition to a ‘business as usual’ forecast for investment of $6.9 trillion

S&P Global Ratings sees the crucial challenges that remain for the renewable energy sector can be addressed by new enabling technologies, particularly energy storage. While the technology costs and construction risks of renewable energy projects have been significantly reduced, the ability to successfully manage the strong growth in variable energy supplies will emerge as the next challenge that the sector will face.

Innovation, and repeating the de-risking process for energy storage and demand response technologies will be the key to continued growth in renewables, according to S&P Global. This will be key to avoiding shortfalls in the supply of electricity on the one hand, and limit the need the curtail renewable energy generators on the other.

S&P Global Ratings described the growing impact of curtailment as a ‘cannibalisation risk’ where strong investment in renewable energy projects like solar is outpacing investment in network and storage infrastructure, causing both new and existing projects to reduce output and forego potential revenues.

“With renewables coming of age, S&P Global Ratings expect that while low risk, fixed price contract structures may still be available, new structures with a degree of merchant risk, the rise of corporate power purchase agreements and counterparty risks, new technologies, and new policies for renewables will add to the complexity of renewable credit,” S&P Global Ratings said in a statement.

“For solar this is even clearer since solar generally operates at the same time of day. Specifically for PV technology, this implies that the higher the penetration of PV assets generating, the lower the prices at the generation times. Hence, the capture price entitled for a PV asset could be well lower than a wind asset generating during the night. Consequently, this cannibalization effect could undermine the profitability of PV producers.”

However, S&P Global Ratings aintains a positive outlook for the sector and is confident that the emergence of a large-scale deployment of financially viable energy storage infrastructure will be possible, and help address constraints on renewables in global energy markets.

This includes astronomical growth in large energy markets, including a 10-fold increase in the United States market for battery storage by 2023.

“The end game for renewables remains linked to innovation and technology, as battery storage development, automation of grids and aggregating of assets, and dynamic supply management of renewables should ultimately transition renewables from an intermittent source to closer to base-load,” S&P Global Ratings said.

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  1. Jon 9 months ago

    The generation is the (relatively) easy part.
    The more difficult part is getting the energy from the point in space and time that it is generated to match up with the point in space and time that people want to use it.
    The points in space is pure transmission, again (relatively) simple with more transmission.
    The points in time is a bit trickier, Demand Management has a big role to play here, the first issue is that we need to get past the people who say it s”blackouts” and “turning peoples ACs off” and chase the basics.

    Nearly every home in the western world has Hot Water storage, generally connected to an “of peak” power supply, the task to synchronise that dynamically with the generation profile isn’t difficult with the current technology, ripple control, wireless etc.

    Qld for example has a ripple control system for off peak, to me that is a bigger lever for CleanCo to take ownership to pull than Wivenhoe, don’t get me wrong, I love the fact that CleanCo has Wivenhoe.

    Wivenhoe has been operating with 1 pump at ~250MW.
    Lets say the average household HWS has a 2kW element, that’s 500 houses per Mw, that’s 125,000 houses to equal Wivenhoe’s pump capacity.

    The 2016 Census said that the was 900,000 houses in Brisbane, that’s 7.2 Wivenhoe pump equivilents at one ripple control command.
    There are no “round trip efficiency losses” as the energy usage is synchronised with the solar generation, and it’s stored at the point of use.

    If those HWSs run for 5 hours, that’s 10kWh of energy stored in every home.

    Not all energy storage systems need to be big shiny expensive projects, we need some “Big Batteries” of the Chemical, Pumped Hydro, Compressed air style buts lets grab some low hanging fruit on the way.

    • JackD 9 months ago

      From memory, in SE Queensland’s Energex Distribution area, storage HWS units are heated during the day (as well as at night?) under signal controlled circumstances. So I would have thought not a lot to be gained in that region as its already absorbing generation during the day.

      In Victoria, most Storage HWS units are heated in the period 11PM to 6AM. That would enable some of day time solar peak to be absorbed into Hot Water.

      However the trend and supported by Governments, is the push to migrate people to solar hot water or highly efficient heat pump hot water. Less generation will be absorbed in these HWS heaters than your old bog standard Resistive Everhot unit.

      In saying that, groups like 1414 should gear up to benefit from excess generation being utilised at low or perhaps, no cost to in material phase-change processes.


      • Jon 9 months ago

        By running the system 24 hours a day rather than at a focussed time of excess power the demand isn’t managed. That is the opportunity, manage it.

        If all the HWS were heat pump (which would be great) and used 1/3 of the energy that’s 2.4 Wivenhoe equivalents in Brisbane.

  2. JackD 9 months ago

    In taking note of:

    S&P Global Ratings described the growing impact of curtailment as a‘cannibalisation risk’ where strong investment in renewable energyprojects like solar is outpacing investment in network and storageinfrastructure, causing both new and existing projects to reduce output and forego potential revenues

    The issues going to be the ability to move surplus electrons to areas / regions where electrons are scarce (i.e required). Whilst storage is a good idea to keep the electrons local, once storgae is completely full when charging up is required; or completely empty when drawdown is required, it’s then of little use.

    On the balance of probabilities and especially in Australia, there are areas of excess electrons which are far away from areas where there are shortages of electrons.

    Unless one can transport them in tankers, the only way really is to transmit by wire (i.e transmission). Some of you might say that Microwave could be used but that’s some way off into the future.


  3. Jens Stubbe 9 months ago

    The generation from renewables has exactly 10 doubled from 1998 to 2018 globally (12% on average). Considering that hydropower, geothermal, wave energy and biomass has only grown slowly the wind and solar growth has accounted for most.

    To create a just world based 100% on RE by 2040 the growth has to be 22% annually.

    At least two large RE companies grows fast enough currently to meet the entire global energy demand on their own, so at one point or the other Jinko Solar will have to slug it out with Vestas.

    Vestas has sold more wind power than has been installed in North America, Africa and Australia combined and is widening the gap.

    The unfortunate situation globally is that FF and Nuclear subsidies are rising fast while the market are constantly being rigged more and more against RE.

    The rising FF and Nuclear subsidies are the main reason why the RE industries are not growing as fast as needed despite the phenomenal drop in cost of energy and the equally impressive quality improvement and rise in capacity factors.

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