The latest BNEF report The shift to ‘base-cost’ renewables: 10 predictions for 2017 takes a good look at key developments in renewables markets across the globe. And with input from 120 specialist analysts around the world, the predictions should be reasonably sound. Although the Australian renewables market is not singled out, the report still makes for interesting reading. Here we bring you the main messages in a trimmed version:
BNEF’s figures for 2016 showed that clean energy investment worldwide fell 18 per cent, from 2015’s all-time high of $348.5 billion* to $287.5 billion. BNEF expects 2017 to produce a similar total to last year, again short of the 2015 record.
The abrupt slowdown in Chinese solar deployment half way through last year left the PV industry once again in over-supply and triggered a fresh plunge in module prices. Solar system costs are expected to fall at least a further 10 per cent in 2017. Modules will fall another 25 per cent or so, so that the cheapest type of standard solar module, multi-crystalline silicon, will be around 32 US cents per watt by year-end.
China anticipates renewable power investment of around $360 billion over the five years from 2016 to 2020.
Energy storage will see further strong growth, with year-on-year global commissioned capacity addition looking like exceeding 1 GW for the first time. BNEF predicts a doubling of new capacity from 2016’s 700 MW to 1.5 GW almost all of it lithium-ion batteries. With Tesla’s Gigafactory and several other large manufacturing facilities coming on stream in 2017, we are going to see a further reduction in battery prices of at least 15 per cent this year, after a 70 per cent reduction in the past five years.
Smart meters last year saw record investment worldwide of $14.4 billion, up from $8.8 billion in 2015. The market could hit $19 billion in 2017, with 69 million smart electricity and gas meters installed. Europe, Middle East and Africa will take the top spot among the regions, outstripping Asia-Pacific, as countries race to meet the fast-approaching 2020 EU deadline.
BNEF expects new solar installations worldwide to increase again, but by a more modest proportion than in recent years: 75 GW, up from around 70 in 2016.
The Chinese solar drive rate will be around 21 GW per year, down from 26 GW in 2016, and Japan will cool to about 6 GW a year from 2015’s peak of 11.5 GW.
India could add 9 GW in 2017, twice the 2016 total. Pakistan will become a 1-gigawatt-a-year market for the first time, as will Turkey and Brazil. Germany will bounce back to perhaps 1.7 GW. There will also be more utility-scale projects financed in Africa, the Middle East and Central and Southern Asia than ever before.
The US is likely to see another 12 GW or so financed.
BNEF says wind may be playing second fiddle to solar these days on a global investment basis, but the sector is nevertheless maintaining strong momentum, with another 59 GW to be commissioned in 2017, slightly up on last year’s 57 GW but still short of the 63 GW record in 2015.
The past 12 months have seen price rebounds for fossil fuel commodities but BNEF expects the rallies in both coal and oil to peter out.
A year ago, BNEF was bullish on electric vehicles and estimated 550,000 sales globally in 2016 whereas sales came in around 700,000 units, representing 56 per cent annual growth from around 450,000 in 2015. At the start of 2017, BNEF estimates a further jump to 900,000 EV sales this year, and sales could break the million mark.
Oil prices are higher than a year ago, and many highly attractive EV models are on the market with some nearing the magical 200-mile-range for $US30,000 after taxes and incentives. Further sharp falls in battery prices and decisive progress in EV charging infrastructure in 2017 will also spur sales, BNEF says.
Seven of the 10 largest quoted corporations in the world have committed to using 100 per cent renewable electricity in their operations, using a mixture of onsite solar and wind, purchasing renewable energy certificates, and power purchase agreements, either “virtual” deals with faraway generators or private-wire deals with nearby third-party power plants. The latter approach has grown strongly in the past three years, first in the Americas, but increasingly in Europe and Asia-Pacific too and by December 2016 the cumulative capacity covered by these PPA deals had reached 18 GW. BNEF expects to see this trend continue, and in 2017 anticipates a breakthrough business model: virtual corporate PPAs (i.e. non-private-wire) being signed with wind or solar projects, without any form of subsidy.
BNEF observes that from Vermont to Ukraine, the suspicion is that Russian hackers are on manoeuvres and that utilities are in their sights. Just as new immigrants are unfairly blamed for all societal problems, renewable energy will be blamed for all emerging energy system problems. The clean energy sector must think carefully about how to protect itself, but also how to contribute to grid stability, particularly through power storage and ancillary services.
We are entering an era when a catastrophic failure could potentially cascade through the energy, communications, transport, financial and industrial systems, in a way that has never been seen before. It is vital that the world invests time, brains and money now to ensure it never happens.
The election of President Trump produced dire warnings about the end of international attempts to avert climate change. China has already shown signs of willingness to step into any leadership vacuum left by the US, and it has the financial and technological firepower to do so effectively. India too has indicated that its climate ambition is likely to harden in coming years, as has Europe, and even close US ally the UK shows no signs of abandoning its leadership on the issue.
With even the Republican mainstream now admitting that climate change is happening, and that humans are causing some or all of it, the terms of the climate debate are going to change.
BNEF expects 2017 to be the third year in a row in which the global economy grows, but energy-related emissions do not.
*All dollar amounts $US.
Bloomberg New Energy Finance founder Michael Liebreich and chief editor Angus McCrone The shift to ‘base-cost’ renewables: 10 predictions for 2017.
Bloomberg New Energy Finance Future of Energy Summit will be held in New York on April 24 and 25, with London and Shanghai events later this year. https://about.bnef.com/summit/.