Electricity from renewable sources is becoming cheaper and more affordable, more and more new capacities are being introduced, but in the battle for attracting investments, green energy is still losing to the traditional one, analysts at REN21 say.
At the end of 2018, nearly 11 million people were employed in the renewable energy industry worldwide. Most of the jobs (about 3.6 million) were created in the solar energy segment, bioenergy (using biofuel from plant or animal raw materials) and hydropower are second with 2 million employees. The largest employer from all countries is China with 4 million employees, followed by 1.1 million employees are Brazil.
Both in the number of workers in the industry and in the capacity of power plants, renewable energy is now experiencing stable moderate growth, REN21 analysts write in the review “Status of the global renewable energy industry - 2019”. For the whole of 2018, the total capacity of renewable energy installations increased by 181 GW, or by 8%, to 2.4 thousand GW. Half of the increase came from solar energy.
REN21 is a renewable energy think tank under the auspices of the United Nations Environment Program. The organization has existed for 15 years, annually publishing a report on the state of the industry. In the 2019 document, REN21 analysts identified ten major trends in the global renewable energy market.
For 15 years, green energy around the world has turned into a mainstream, main line of industry development. By the end of 2018, 26% of global electricity came from renewable sources, and the growth rate of capacity of such power plants exceeded that of nuclear power plants and fossil fuel plants for the fourth year in a row.
Every year, green energy, which used to be expensive and meaningless, is becoming increasingly competitive. For example, the cost of a solar module since 2010 has fallen by 90%, which has made solar power plants more cost-effective than oil and coal in many countries around the world.
In 2018, the weighted average cost of energy production by new solar installations amounted to $ 85 per 1 MWh. This is 13% lower than in 2017. For fossil fuel power plants, the figure is from $ 49 to $ 174 per 1 MWh in different countries. This leads to the fact that in some places it is even more profitable to put a solar battery or a wind installation than continue to support the operation of a gas-fired power plant.
Expansion of state programs
In almost all countries (more precisely, in 162), at the government level, one way or another, goals and objectives for the development of renewable energy are indicated. All this is part of a single process: the cheaper green energy makes it more accessible, and therefore more common, which already requires state regulation. In 2018, the number of countries that introduced or announced their intention to introduce such rules continued to grow. But so far the only country that clearly aims to switch to 100% energy from renewable sources is Denmark.
Developing countries as a new market
Distributed energy supply systems continue to play an important role in connecting remote and poor areas to electricity. Small autonomous solar cells rely on 5% of the African population and 2% of the Asian population as a source of electricity. Thanks to the development of such systems, in 2017, 122 million people first gained access to electricity, but due to a lack of investment, the rate of penetration of the electric power industry in 2018 decreased.
In addition to state programs, individual provinces in different countries themselves become engines of green energy, introducing regional support programs. It often happens that it is the local authorities who set themselves more ambitious tasks than the government of the country. For example, in September 2018, at a summit in San Francisco, about 4 thousand businessmen, heads of cities and provinces from around the world called on their governments to actively combat climate change. Such pressure from below will only increase.
In addition, in June 2018, an interesting experiment with the transition to green energy was conducted in China. For more than a week, from June 20 to 28, all houses and enterprises in Qinghai were temporarily switched to the energy of water, wind and sun. True, it is worth noting that this is a sparsely populated and mountainous province with 6 million inhabitants, which is relatively small for China.
In total, by the end of 2018, about a hundred cities around the world relied on renewable energy for 70% or more. In addition to municipal authorities, the “initiative from below” has another dimension - the increase in the number of so-called prosumers, that is, consumers - energy producers. These are companies and people who rely on their own sources of electricity, such as autonomous solar panels.
Private sector role
The procurement and investment activities of companies make them key players in the renewable energy market. Five years ago, large companies from around the world created RE100 - a kind of club whose members are committed to fully switch to renewable energy in the future. By the beginning of 2018, 130 companies participated in the program, by the beginning of 2019 - already 175.
On the other hand, pressure from society and shareholders are forcing even participants in the traditional energy market to invest in new technologies. Many power plant operators refuse to use coal, and this trend continued in 2018.
In 2018, the global investment in green energy amounted to $ 289 billion, which is 11% lower than in 2017. REN21 analysts believe that this is not due to any crisis or loss of interest, but just to the cheapness of the product. Every year you can put windmills and batteries of greater power for less money.
The driver of the decline in investment was China, which remains the world leader in terms of investments (it accounted for 32% of all industry investments in 2018). In some developing countries, the ratio of such investments to GDP has reached the level of Western countries: for example, Morocco, Djibouti and Palau.
The importance of indirect support factors
Many trends in politics and business that are not directly related to green energy contribute to its development. For example, these are programs for the introduction of electric vehicles, a ban on internal combustion engines, new technologies in the heating system. The San Francisco Summit mentioned above also applies to these factors, as it was originally convened to discuss climate change, but its resolutions ultimately have an impact on the renewable energy market.
Insufficiency of current measures
The current rate of development of the renewable energy sector is not yet enough to fulfill many of the international agreements and commitments in the field of ecology at the right time. For example, this is the UN SDG7 program to increase energy efficiency and the availability of electricity by 2030. More effort is needed to keep up with the schedule.
Energy demand growth
In 2018, global energy demand increased by 2.3%, which was the highest level in ten years. The authors of the REN21 report cited the reason for the steady growth of the global economy (by 3.7% per year), as well as hot summers and cold winters in some areas of the planet, which required additional energy costs for cooling and heating, respectively.
The growth in the use of energy from renewable sources is ahead of the demand for energy in general, however, only slightly. From 2006 to 2016, on average, this share grew by 0.8% per year. There is a chance to reverse the trend, given that since 2015 the volume of newly introduced green energy capacities has consistently exceeded the volume of new capacities of traditional sources.
Another factor that cannot be ignored: the extractive industry, being the main competitor of green energy, attracts many times more investments. In 2016-2018, investments in it reached $ 1.9 trillion. In addition, affordable fossil fuel prices for energy generation will continue to support demand for it to the detriment of renewable energy development.