1. NS4960 Spring Term 2017 Prospects for Renewable Energy

2. Overview
Oxford Analytica: Prospects for Renewable Energy, November 21, 2016
The U.S. and China, world’s two largest economies as well as carbon emitters announced their ratification of the Paris Agreement in September 2016
Earlier in 2016 prices for renewable energy in select regions set historic lows below fossil-fired plants
Renewable energy seems to have passed the tipping point toward gradual adoption as the primary source of electric power

3. Strategic Summary I
Continued improvements in technologies and economies of scale are helping unsubsidized renewable energy prices compete with fossil fuels
Improvements in power storage technologies and smart grids will soon mean countries are able to rely on wind and solar for baseload power
The global interest rate environment is favorable – and is expected to tighten only slowly, keeping projects financially viable
Renewable energy is no longer being driven simply by concerns about global climate change

4. Strategic Summary II
While environmental concerns were key in boosting industry in the past, green energy now also has favorable economies on its side.
In the U.S. it would take time to roll back the Clean Power Plan (CPP) and
Federal tax credits cannot be removed – providing time for renewables to increase competitiveness
The profitability of the renewable sector hinges on the development and proliferation of different technologies

5. Power Generation I Wind and Solar main renewable energies
Traditional power has high variable costs as it requires
Commodity inputs that are bought in distant markets
Shipped and subject to significant price volatility
Also subject to great political risks as
Resources are often controlled directly by governments (or non- state armed groups) and
Pass through transit countries
Renewables face significant upfront fixed costs but variable costs are low as the inputs are free

6. Power Generation II
Once established solar irradiation and wind are free of government interference
Economies of scale and technological improvements are reducing the costs of photovoltaic cells (PVCs) and wind turbines relative to their output.
May 2, 2016 Dubai Electricity and Power Authority Received a record bid of 2.00 cents per kilowatt hour for supplying electricity from its solar park
This subsidy free price is cheaper than coal-fired power in this domestic market
The price was achieved partially due to the availability of low cost debt financing to the winning consortium

7. Power Generation III
Average wind-generated energy prices have also come down to under 5 cents per kilowatt hour worldwide
This is a lower price than building new fossil burning plants
In Australia, Chile, California, Italy and Jordan there are projects underway that will make renewables cheaper than traditional energy
Deutsche Bank anticipates that solar power will be cheaper than fossil fuels in 80% of the world within a few years.

8. Energy Storage I
Wind and solar are somewhat complementary as wind speeds are higher at night.
Efficient power storage is needed for these sources to be relied on for baseload electricity
A competing trend in large batteries is “energy” versus “power”
“Energy” batteries are ones with long durations and cycle times
They store electricity at times of abundant inputs and discharge on demand

9. Energy Storage II
“Power” batteries refer mostly to lithium-ion units that provide fast ramp-up for discharges lasting a couple of hours
Firms like Tesla have focused on “power” applications, but “energy” is likely to have a longer run impact as it provides greater scale.
Also lithium-ion batteries could become expensive given the amount of lithium expected to be consumed by electric vehicles and uncertainty of supply for the metal

10. Smart Grids I
One certainty in renewables revolution – the energy infrastructure will become more complex.
The unidirectional system where utilities alone produce and sell electricity is no longer tenable
Solar energy results in democratization of energy whereby households and small businesses can generate their own power and sell their surplus
A electricity network with a multitude of producers, energy storage systems and accounts that both consume and supply is highly dynamic
Smart grids using modern communication and computing technologies along with real-time data gathering and analysis will bring more efficiencies to energy networks

11. Smart Grids II Demand Response
Demand Response uses this technology to match demand better with available supply, introducing market mechanisms into energy consumption
Demand response can reduce peak loads, thus lowering power failure risks and resulting in savings for the consumer and less wasted energy
Utilities benefit by not having to maintain expensive idle capacity

12. Smart Grids III Microgrids
Utilities are overhauling their entire networks, but some also see an opportunity to create their own microgrids – localized grids that can
Generate
Transmit and
Store
Energy, relying on the central grid only for emergencies
Microgrids make sense in their
Pooling of resources to achieve efficiencies and economies of scale
Increasing communities bargaining power
Improving overall energy efficiency and reduce the amount of energy lost in transmission

13. Outlook
Global power is undergoing a transformation akin to what happened to telecommunications in the 1990s.
Costs will plummet
Consumers will become energy independent
While a shakeup among incumbent energy players, whether commercial or state, will be inevitable
Government initiatives and shifts in capital allocations will result in renewable energy prices gradually reaching competitiveness against fossil fuels
Oil producing countries and traditional energy companies will join the energy revolution rather than fight it.