Glencore chief’s comments contested by renewables advocates

Sceptical comments expressed about the progress of renewable energy by the head of Glencore have been challenged by renewable energy advocates.

Last week, Anglo-Swiss mining giant Glencore‘s chairman Tony Hayward told the Institute of Directors annual conference in London that renewables was decades away from being cost competitive with conventional power generation such as offered by coal and gas.

Hayward said he didn’t expect competitiveness to be at parity until around 2051, adding, “In 15 years’ time, if someone really does achieve a technological breakthrough akin to a mobile phone, an iPhone that will change the energy picture going forward.”

The view appears at odds with a growing consensus which maintains that costs are continually coming down. Hayward’s comments indicate his belief that this achievement is being overinflated.

This perspective is not shared by Dr Jonathan Marshall (right), Energy Analyst with the Energy and Climate Intelligence Unit, who claims the evidence paints a different picture. He told Power Engineering International, “In many nations, renewables are already at ” or approaching ” grid parity with fossil fuels, while growing global enthusiasm for effective carbon pricing will further damage margins at struggling coal and gas-plants.”

“Add into this the rate at which renewable costs are falling, set to shave another 41 per cent and 60 per cent from the cost of onshore wind and solar PV by 2040, and we will see the balance tip further away from fossil fuel generation.”

à‚ “In 2015, global investment in green energy was $286bn, more than double that poured into coal and gas. Installation of renewable energy also topped other sources for the first time, with the majority in developing countries. If Mr Hayward is correct, and renewables will fail to compete until the latter half of the century, oneà‚  must ask, “why is so much money being pumped into these technologies?”

à‚ Meanwhile Steve Sawyer (above left), secretary general of the Global Wind Energy Council was more blunt in his response to the former BP chief’s comments, telling Power Engineering International, “Mr. Hayward should get out more. He should visit Brazil, Mexico, Chile, Peru, South Africa, Morocco, Egypt and large parts of the United States and the many other markets around the world where wind power (and solar) are already competing head to head with fossil fuels for new build ” and they’re winning, by a considerable margin in some cases.”

Oliver Joy, spokesperson for WindEurope, referred to Hayward’s remarks as ‘outdated.’ He pointed to two tenders in recent months in the Netherlands and Denmark, which he says, have shown that offshore cost reduction is exceeding everyone’s expectations with price levels that put it on a par with traditional technologies.

“These are just a couple of examples and it will take a little more time before these prices become the norm ” but clearly the ambition, technology and knowledge is there. It’s just a case of getting the volumes and policies right in European markets.”

“In short, it simply makes economic sense to be investing in these technologies. And it’s not just governments. Big corporates are taking the lead too. Tech giants and multinationals are deciding to go straight to the source, using power purchase agreements with providers to service their operations.”

“It is an outdated idea to think of renewables as a niche technology that will never be able to compete. The strides in cost reduction, particularly in the last decade, have been immense in both onshore and offshore.”

Meanwhile independent energy analyst Rob Lalor of EnAppSys saidà‚ the point where renewables and storage produce cheaper electricity might be unreachable but nevertheless remains an ambition worth striving for.

He acknowledged that the goal of renewables under ideal windy/ sunny conditions providing power at a lower cost than a CCGT station is able to generate during the same period of time has been acheived to an extent but further progress is not guaranteed.

“The next phase of cost competitiveness comes when renewables combined with storage, demand response and/or other technologies can work together to provide a stable and predictable generation shape that can match demand and deliver power when need on demand; and do so whilst keeping the overall cost of electricity down.”

“As a challenge this will become increasingly hard to achieve as the reduced demand for coal and gas that arises as a result of increased renewable generation, will inevitably drive down the cost of gas and coal as they become an increasingly shunned source of energy.”

“Despite this it should be kept in mind that the role of renewables has not been focused on delivering a cheaper source of electricity, and instead has been focused on providing a better source of electricity. This undoubtedly creates challenges in terms of cost effectiveness and for the role of fossil fuels in the global economy; and the point where renewables and storage can provide power cheaper than fossil fuels, may never be reached, but remain a target worth aiming towards.”

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