Optimistic predictions about a ‘tipping point’ when renewables will become the dominant global source of energy have received a “reality check” from new research.
In a survey of 800 professionals working in the renewables field as well as traditional energy companies diversifying into renewables businesses, Lloyds Register (LR) found that 58 per cent believe renewables won’t become the dominant source of energy until at least 2025.
Reasons for this include high development costs, which 62 per cent of respondents said was the top argument against pursuing renewables in their country. And more than 45 per cent, including 55 per cent of respondents based in Europe, said resistance to onshore wind turbines in their countries is too strong for the sector to grow significantly.
While 36 per cent of respondents identified policy uncertainty as a barrier to renewables development, 71 per cent said advances in technology will be more important in the next five years than policy or regulatory changes. But 42 per cent of respondents agreed that reaching grid parity will not be enough to produce a sustained increase in renewables investment, and that subsidies are critical to support development in most markets.
One reason respondents rated technology advances as more significant than policies is that problems with grid connection, transmission and storage have limited the impact of individual renewable projects, LR said. According to 37 per cent of respondents, the slow development of energy storage is the most important factor inhibiting the growth of renewables, as a lack of storage limits what renewables can offer to, for example, national utilities.
In technology terms, respondents believed that small advances and process improvements will have a bigger impact on renewable power’s performance and cost-effectiveness than dramatic breakthroughs. The industry is looking to digitalization for much of this progress, LR noted, with predictive analytics, demand management and AI promising to boost economics.
According to the survey, the industry expects grid parity for solar power to be achieved first in China in 2022-23, and for wind first in Germany in 2024. Collectively, renewables are predicted to overtake fossil fuels in energy mixes in Europe and North America by 2025, in the Middle East by 2028, and in Asia Pacific and Africa in 2033 or later.
Karl Ove Ingebrigtsen, director of LR’s Low Carbon Power Generation business, said he was “heartened by the optimistic outlook and by the measured and realistic approach” the research showed.
Although the report noted that ‘tipping point’ predictions must be viewed somewhat sceptically, Ingebritsen said the findings highlighted “the technologies that are expected to deliver the greatest impact, especially in grid transformation which must be based on a sound understanding of each country’s individual ecosystem; it is clear that this is advancing alongside technology, policy and investment.”
“We are seeing a real shift in thinking by the oil and gas majors as they increase their renewable energy portfolio and diversify their offering in the market,” he added. “The halcyon days of high oil prices scuppering renewable energy growth and development is a distant memory; the energy industry is on a new low carbon growth and efficiency drive which will change the source of our energy supply forever.”
The full report is available here.