September 22, 2011

World: 10 reasons renewable energy may beat the projections

Five percent? That's the EIA's projected global increase in renewable energy generation by the year 2035. You'd think that nearly 30 years of technological, business and environmental inroads would make a bigger dent in the world's future energy mix.

Aren’t we supposed to be living the solar dream by then? Won’t we be driving to the beach in algae-powered vehicles? Won’t we all revel in our views of majestic wind turbines? The utopian vision of our energy future may not exist in our lifetimes, but it has to have a better outlook than the one released this week.

The short of the report: By 2035, world consumption is going to rise more than 50 percent. (So, yes, that’s five percent growth on 50 percent more power). We’re going to be just as reliant on fossil fuels as we are now. And our carbon problem is going to get worse — much worse. But the International Energy Outlook is quick to point out that it doesn’t take into account any policy changes that may affect the energy mix across the world. The renewable industry knows better than anyone that policy is king, and that the success of a growing industry is tied directly to that government support.

The world currently revolves around prices for fossil fuels, especially oil. There are other factors at play, though, that could make renewable energy a bigger player in the decades ahead.

Third World Emergence:

U.N. Secretary-General Ban Ki-moon has said that renewable energy will lead developing nations out of energy poverty. So it stands to reason that in places like Sub-Saharan Africa and India, renewable energy will find a growing market. But his statements are in stark contrast to the report, which finds that developing nations will drive the energy consumption, but not necessarily with renewable sources. There are, however, some hopeful signs led by large corporations and small communities. In areas often powered by fuels like kerosene, there is little existing infrastructure with which to compete. Some large-scale projects, such as what we are seeing in Kenya, may prove that massive wind farms or large geothermal plants are the best ways to power growing economies. One look at a solar insolation map shows how vast and untapped large-scale solar is as a global energy source. Or will the solution include more small-scale and localized approaches, such as what is being done in Bangladesh? Developing nations are fairly new as investment areas, so successful projects early on could go a long way toward turning economies toward renewables and away from fossil fuels.

Grid Parity and New Technology:

We won’t have to wait until 2035 to find grid parity, considering it’s already here in some select areas. Pricing will truly be the transformative force that redefines the world’s energy mix. Once we’re at true grid parity, it will become a matter of retiring existing fossil fuel plants. Consider two companies that are making huge strides toward grid parity. First Solar announced it is developing a thin-film cell with a 15 percent efficiency in mass production. GE, meanwhile, is working to create a 10- to 15-MW turbine. Advancements like these will combine with the inevitable manufacturing gains that come with greater scale to make grid parity a reality perhaps sooner than later.

EPA Rules and Retiring Coal Plants:

In the U.S., environmental concerns are likely to force the closure of some of the most inefficient coal plants. Solar and wind are likely to compete or partner with natural gas as the replacement source once the older coal plants go offline. Across the rest of the world, coal use is expected to remain relatively flat. But in Asia, it is expected to continue its meteroic rise. Will the trend last? Residents across Asia — and especially China — are becoming more vocal about the effects of industry on the environment. In a consumer poll released in June, 53 percent of respondents in China listed climate change as the world’s single greatest challenge. And just this week, 500 villagers in eastern China rioted outside a Jinko Solar factory over environmental concerns. If the massive growth is coming, and it’s fueled by the dirtiest of fossil fuels, it’s likely the developing world's citizenry, with its growing voice, will have a say in the matter.

Nuclear Concerns:

The Fukushima nuclear crisis may go down as the single natural event that’s had the greatest impact on our energy future. The political fallout from the tsunami-stricken plant has moved two of the industry’s biggest supports — Germany and Japan — to re-evaluate their energy policy without the use of nuclear power. As a result, both nations have positioned themselves as leaders in renewable integration into their current mix. Could a nuclear giant such as France reconsider its strategy, especially if Euro giant Germany emerges even stronger? The anti-nuclear shockwaves were felt in the business world this week when Siemens cited Germany’s move as the reason the company is wholesale pulling out of the nuclear industry.

Partnership With Gas:

Natural gas, at least in the United States, is abundant and cheap. And the prices are expected to remain fairly stable, though fossil fuels always come with some volatility. Solar and wind have intermittency concerns that can be solved by natural gas, at least until storage becomes a viable option. Natural gas has emissions issues that are solved by solar and wind. Christopher Berendt of Drinker Biddle told an audience during a recent ACORE presentation that natural gas and renewable energy plants have a distinct advantage over both nuclear and coal plants. First, they can be built more quickly and they come with lower capital costs. Plus, having companies like GE on board will lead to more investor confidence and, eventually, more renewable generation.

Military Leading the Way:

The American military has always been an incubator of technology. Now, the U.S. military is seeing solar, wind, ocean and biofuel technology as key components of the nation’s security. This has the potential of lending vast amounts of credibility for those on the outside of the debate and it has the ability to also force a scale-up in production that the commercial market may not be ready to support. Innovation on U.S. bases and the battlefield alike could eventually be sold to other nations that also seek energy security, thus spawning growth that would reverberate into the commercial market.

A New Wave of Marketing:

Despite the inroads made in recent years, a surprising number of consumers have given little thought to how their energy is generated. Maybe that will be one of the unintended consequences of the Solyndra fiasco (they say all publicity is good publicity, right?) The bottom line is the more consumers consider where their power comes from, the more they may then tailor their buying habits accordingly. That’s the hope for the wind industry, which recently launched a WindMade label that will soon tell consumers what percentage of renewable energy was used for certain products on store shelves. The thinking is that once you go straight to consumers, they will drive the market through their purchasing decisions. The same could happen at the pump, if drivers are presented with real, competitively priced renewable fuel options. This is the aim of the new initiative, FuelChoiceNow.

Building Standards:

Often the debate is about the cost of adding solar energy to existing systems. But what if the energy system was integrated into the design from the beginning? What if you didn’t need to calculate how much it would cost to add solar panels to your roof because all roofs already incorporated solar and this was a mandate for all new construction? Oftentimes, integration means that the costs of the solar embedded into the roof or the walls is offset by savings in construction materials. Renewable energy standards built into a policy structure would make new construction more energy efficient and more cost-effective long-term. Hawaii already mandates solar hot water on all new homes built in the state.

Growth Through Crisis:

It’s an unfortunate reality that change happens through crisis. The Chernobyl disaster is credited with sparking the Green movement in Germany. Public backing of renewables has certainly been bolstered by oil spills from Exxon Valdez to BP. We’re seeing hotter weather, bigger storms and more extreme droughts in many areas, and climate change is growing in acceptance across the globe, if not in the United States. Whether it’s a man-made occurrence or a natural disaster, these events often tick the needle closer to renewable sources of energy and farther from fossil fuels and nuclear energy.

Carbon Markets:

Carbon trading in the U.S. is dead, right? Well, the utility-focused Regional Greenhouse Gas Initiative in the northeastern part of the country is gaining business support, though it has become a political pariah in places like New Jersey and New Hampshire. In California, the country’s first industry-focused carbon trading program is expected to launch in 2013 after much legal wrangling. In Europe, the EU trading program has faced a bumpy road, including a recent report that says carbon permits under their current cap-and-trade system are “underpriced.” The region, though, is also considering a new program based on airline emissions. It has received stiff opposition from many nations outside Europe, so the path forward may be a difficult one. If it were to succeed, however, it could open up a new market and help to launch an aviation biofuels industry that is currently looking to get off the ground.

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