The renewables industry has had a great year. How fast can it grow now? What are the issues that will shape the global energy market in 2018? What will be the energy mix, trade patterns and price trends? Every country is different and local factors, including politics, are important. But at the global level there are four key questions, and each of which answers is highly uncertain. The first question is whether Saudi Arabia is stable. The kingdom’s oil exports now mostly go to Asia but the volumes involved mean that any volatility will destabilise a market where speculation is rife. The second question is how rapidly production of oil from shale rock will grow in the US – 2017 has seen an increase of 600,000 barrels a day to over 6m. The increase in global prices over the past six months has made output from almost all America’s producing areas commercially viable and drilling activity is rising. A comparable increase in 2018 would offset most of the current Opec production cuts and either force another quota reduction or push prices down. The third question concerns China. For the last three years the country has managed to deliver economic growth with only minimal increases in energy consumption. China, which accounts for a quarter of the world’s daily energy use, is the swing consumer. If energy efficiency gains continue, CO2 emissions will remain flat or even fall. The country’s economy is changing and moving away from heavy industry fuelled largely by coal to a more service-based one, with a more varied fuel mix. The fourth question is, if anything, the most important. How fast can renewables grow? The last few years have seen dramatic reductions in costs and strong increase in supply. The industry has had a great year, with bids from offshore wind for capacity auctions in the UK and elsewhere at record low levels. Wind is approaching grid parity – the moment when it can compete without subsidies. Solar is also thriving: according to the International Energy Agency, costs have fallen by 70 per cent since 2010 not least because of advances in China, which now accounts for 60 per cent of total solar cell manufacturing capacity. The question is how rapidly all those gains can be translated into electric supply. Renewables, including hydro, accounted for just 5 per cent of global daily energy supply according to the IEA’s latest data. That is increasing – solar photovoltaic capacity grew by 50 per cent in 2016 – but to make a real difference the industry needs a period of expansion comparable in scale to the growth of personal computing and mobile phones in the 1990s and 2000s.
FT 1st Jan 2018 read more »
Michael Liebreich: It’s a new year and time to face reality. The world is shifting to a clean energy future. There’s no way we’ll still be dependent on coal and oil in 50 years. We can actually reduce overall global energy consumption. There will be game-changing reductions in battery costs and charging times. New nuclear technologies offer passive safety and solutions to waste and proliferation. Wind and solar can produce some of the cheapest power in the world.
Medium 1st Jan 2018 read more »