The rising power of renewables
The increasing use of renewable energy is key to limiting climate change to under 2°C, the threshold set by the Paris agreement. If this limit is exceeded, climate change is expected to have devastating and irreversible impacts. Electricity generation is a vital part of meeting the goals as it reduces the amount of fossil fuels burnt for energy. The IEA predict that by 2040 renewables will make up 40% of total power generation. Denmark current leads the field in renewable energy generation with 59% of its power coming from renewables.
According to the IEA, 2017 has seen an increase in electricity generation from renewables of 165 gigawatts (GW) due mainly to cost reductions and government policy changes. This is expected to increase to 40% by 2022, with a potential for a further 30% increase to 1150GW in capacity should changing government policies lift barriers to growth. Examples of such policies are subsidies or tax breaks.
China, India and the USA are expected to account for 66% of this expansion in renewable capacity; in India, low prices for both solar PV and wind technologies are expected to encourage growth, whilst in China rising concerns over city air quality are driving policy change.
Importantly there has been a 50% growth in solar PV capacity across the globe – it is the world’s fastest growing source of power. This is mainly due to improvements in technology as well as reductions in price of production and purchase.
The battle isn’t over yet
Whilst there have been numerous improvements in increasing the capacity, availability and affordability of renewable energy, there are still challenges.
Integration of renewable energy into the grid is becoming a critical challenge for governments. This is because of the variability in renewable energy production altering the baseload of energy available. In Germany, for example, solar energy capacity can cover electricity demand from 12pm to 2pm but not at other times; increases in capacity are therefore likely to cause mid-day grid instability.
This is coupled with the current inability to store large amounts of energy. Continuous sources of fuel are required to balance supply and demand – renewable sources are not continuous and dependable and must therefore be stored in reserve to meet the demands. This can either be conquered through improved battery storage or through smart grids which can alter energy flow to meet demand. Currently, neither are widespread or highly developed due to limited demand and high cost.
Join the fight
Increasingly businesses are responding positively to the climate change agenda driven by COP21, government policy and investor and stakeholder interest, by making a commitment to buying renewable energy. So much so that many of world’s most influential companies have signed up to the RE100 initiative and committed themselves to purchasing 100% renewable power.
We find that companies typically adopt complimentary approaches to reach their 100% renewable energy target, combining procurement methods such as green tariff contracts with suppliers, unbundled renewable energy attribute certificates (RECs), power purchase agreements (PPAs) and on-site generation projects.
This increase in demand for renewable energy will encourage some of the trends in the rise of renewables with improvements in technology coupled with decreases in price also playing an important role.