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Renewables Are Setting, Breaking New Records
Like everything else in life, capacity markets come with challenges of their own. & http://dx.doi.org/10.1016/j.tej.2013.05.013
Renewables Are Setting, Breaking New Records Despite all the doom and gloom – the global financial crisis, Eurozone default, U.S. fiscal deficits, and persistent unemployment rate, to name a few – renewable energy sources are enjoying robust growth – not just in a handful of rich countries, but increasingly in developing ones, too. The trends are hard to ignore, the momentum even harder to stop. Both wind and solar energy now account for a significant percentage of electricity demand in a wide range of nations, often enough at double-digit levels. In mid-April 2013, Prime Minister Manmohan Singh announced that India will more than double its installed renewable capacity from the current 25 GW to 55 GW by 2017. But even if this were to be achieved, India would remain predominantly a coal-burning country. Coal represents 57 percent of installed capacity and 88 percent of India’s electricity is currently generated from nonrenewable sources. For those who still believe that renewables are and will remain marginal players, there is growing evidence to the contrary. According to the latest data compiled by the Federal Energy Regulatory Commission (FERC), renewable energy sources – biomass, geothermal, solar, hydro, and wind – accounted for 82 percent of all new generating capacity installed in the U.S. in the first three months of 2013. Renewables amounted to 1,546 MW versus 340 MW from natural gas; there were no new coal or nuclear capacity additions during this period. For the month of March 2013, an unusual month, all new generation installed in the U.S. came from solar plants. Renewable sources now account for 16 percent of installed U.S. capacity, more than nuclear at 9 percent. Another example of the growing role of renewables was that they supplied 70 percent of June 2013, Vol. 26, Issue 5
Portugal’s electricity demand in the first three months of 2013, according to Energias de Portugal (EdP). True, this was an exceptionally favorable period for renewables at a time of low demand, yet it demonstrates that renewables can become big players under favorable conditions. Despite these and other encouraging statistics, pro-renewable advocates want even more, and want it sooner. A recent report published by the Union of Concerned Scientists (UCS) points to a 2012 study by the National Renewable Energy Laboratory (NREL) that suggested that the U.S. can conceivably meet 80 percent of its electricity needs from renewable resources by 2050. Why not, they ask? What needs to be done to make it happen, and happen sooner? In a similar vein, a recently released study by the Australia Energy Market Operator (AEMO) suggests that 100 percent renewable is conceivable for Australia by 2050, if not sooner. A similar study confirms the same for New York State. California is aiming for an 80 percent reduction in greenhouse gas emissioins while Germany has targeted 80 percent renewable electricity supply by 2050. Not only are small-scale rooftop PVs growing at an astonishing pace but there are a growing number of utility-scale solar plants, both PVs and concentrated solar power (CSP). Globally, over 4 GW of large-scale (meaning more than 10 MW) solar PVs were installed in 2012 alone. According to the ‘‘most likely’’ forecast scenario released by the NPD Solarbuzz Marketbuzz 2013 Report, between 2013 and 2017, the PV industry will cumulatively add over 230 GW of new capacity worldwide, almost half of it large-scale ground-mounted solar PV projects. More than half of the installations are expected to be in China, Germany, North America, and Japan. In the U.S., wind generators provided the largest share of additions to total U.S. electric generation capacity in 2012, just as in 2008 and 2009. The 2012 addition of nearly 13 GW was the highest annual wind capacity installment ever recorded in the U.S. Wind capacity additions accounted for more than 1040-6190/$–see front matter
3
45 percent of total 2012 U.S. capacity additions and exceeded capacity additions from any other fuel source, including natural gas. Of all existing capacity at the end of 2012, wind made up 5.5 percent. However, wind provided only 3.5 percent of U.S. electricity generation during 2012, reflecting a capacity utilization rate that is limited by the intermittent nature of the wind resource.
Not all this can be dismissed as hype generated by the renewable lobby. The global energy system is large and long-lasting, which means it will take several decades for renewables to become dominant players. Yet if the trends of the past two decades can be maintained for the next two, it will have a pronounced effect.& http://dx.doi.org/10.1016/j.tej.2013.05.014
Why Demand Growth May Be History Continued from page 1 bonanza – retail electricity prices are broadly rising and are projected to continue to rise – e.g., in Germany with the phaseout of the nukes. Aging and declining populations – as in Japan – suggest lower economic growth and lower electricity consumption. Buildings are not only getting more efficient and better-insulated but are increasingly generating some of their electricity needs from rooftop solar PVs and the like, generously assisted by subsidies, feed-in-tariffs, or net energy metering (NEM) laws. The continuously falling price of PVs and other forms of distributed generation (DG) coupled with rising retail tariffs in many regions of the world is turning a growing percentage of consumers into prosumers, who produce some of what they consume. The result is lower net volumetric consumption. In its latest quarterly report on Europe’s electricity markets, the European Commission points out that electricity consumption continues to fall in EU, adding, ‘‘Annual consumption in EU has fallen every year since 2008, by 1.2 percent on average. The main reason is lower demand from energy-intensive sectors such as manufacturing and construction.’’ Many attribute the fall in electricity consumption to the current economic and financial crisis afflicting Europe, and that certainly does explain most of what has been experienced since 2008. But 4
1040-6190/$–see front matter
even after the economies of Europe rebound and resume their growth, historical growth rates are unlikely to be repeated. Even China, long used to high growth rates, has been experiencing lower growth figures, a fate that is likely to afflict other developing economies. With lower growth rates in the OECD, demand for Chinese goods is likely to diminish. Another key driver is structural changes in the economies of the West away from energyintensive industries, fortified by continued improvements in energy efficiency. While opinions vary, some observers of the power industry believe that the phenomenon of lower, and possibly no, demand growth may be a new reality. That reality initially is afflicting a few mature and slow-growing OECD economies where retail prices are already high and rapidly rising, as in Japan or Italy. The pattern could be replicated in other economies as they reach similar stage of maturity and demand saturation. Australian retail prices, now among the highest in the world, provide another example of what may be behind falling demand. German electricity tariffs, expected to rise due to the nuclear phase out, are likely to dampen future demand growth in that country, no one can tell by how much. The evidence to date is spotty and limited to a few countries – and it is not clear if it is entirely due to the recent economic downturn or more permanent. In the case of Australia, virtually The Electricity Journal
Renewables Are Setting, Breaking New Records Despite all the doom and gloom – the global financial crisis, Eurozone default, U.S. fiscal deficits, and persistent unemployment rate, to name a few – renewable energy sources are enjoying robust growth – not just in a handful of rich countries, but increasingly in developing ones, too. The trends are hard to ignore, the momentum even harder to stop. Both wind and solar energy now account for a significant percentage of electricity demand in a wide range of nations, often enough at double-digit levels. In mid-April 2013, Prime Minister Manmohan Singh announced that India will more than double its installed renewable capacity from the current 25 GW to 55 GW by 2017. But even if this were to be achieved, India would remain predominantly a coal-burning country. Coal represents 57 percent of installed capacity and 88 percent of India’s electricity is currently generated from nonrenewable sources. For those who still believe that renewables are and will remain marginal players, there is growing evidence to the contrary. According to the latest data compiled by the Federal Energy Regulatory Commission (FERC), renewable energy sources – biomass, geothermal, solar, hydro, and wind – accounted for 82 percent of all new generating capacity installed in the U.S. in the first three months of 2013. Renewables amounted to 1,546 MW versus 340 MW from natural gas; there were no new coal or nuclear capacity additions during this period. For the month of March 2013, an unusual month, all new generation installed in the U.S. came from solar plants. Renewable sources now account for 16 percent of installed U.S. capacity, more than nuclear at 9 percent. Another example of the growing role of renewables was that they supplied 70 percent of June 2013, Vol. 26, Issue 5
Portugal’s electricity demand in the first three months of 2013, according to Energias de Portugal (EdP). True, this was an exceptionally favorable period for renewables at a time of low demand, yet it demonstrates that renewables can become big players under favorable conditions. Despite these and other encouraging statistics, pro-renewable advocates want even more, and want it sooner. A recent report published by the Union of Concerned Scientists (UCS) points to a 2012 study by the National Renewable Energy Laboratory (NREL) that suggested that the U.S. can conceivably meet 80 percent of its electricity needs from renewable resources by 2050. Why not, they ask? What needs to be done to make it happen, and happen sooner? In a similar vein, a recently released study by the Australia Energy Market Operator (AEMO) suggests that 100 percent renewable is conceivable for Australia by 2050, if not sooner. A similar study confirms the same for New York State. California is aiming for an 80 percent reduction in greenhouse gas emissioins while Germany has targeted 80 percent renewable electricity supply by 2050. Not only are small-scale rooftop PVs growing at an astonishing pace but there are a growing number of utility-scale solar plants, both PVs and concentrated solar power (CSP). Globally, over 4 GW of large-scale (meaning more than 10 MW) solar PVs were installed in 2012 alone. According to the ‘‘most likely’’ forecast scenario released by the NPD Solarbuzz Marketbuzz 2013 Report, between 2013 and 2017, the PV industry will cumulatively add over 230 GW of new capacity worldwide, almost half of it large-scale ground-mounted solar PV projects. More than half of the installations are expected to be in China, Germany, North America, and Japan. In the U.S., wind generators provided the largest share of additions to total U.S. electric generation capacity in 2012, just as in 2008 and 2009. The 2012 addition of nearly 13 GW was the highest annual wind capacity installment ever recorded in the U.S. Wind capacity additions accounted for more than 1040-6190/$–see front matter
3
45 percent of total 2012 U.S. capacity additions and exceeded capacity additions from any other fuel source, including natural gas. Of all existing capacity at the end of 2012, wind made up 5.5 percent. However, wind provided only 3.5 percent of U.S. electricity generation during 2012, reflecting a capacity utilization rate that is limited by the intermittent nature of the wind resource.
Not all this can be dismissed as hype generated by the renewable lobby. The global energy system is large and long-lasting, which means it will take several decades for renewables to become dominant players. Yet if the trends of the past two decades can be maintained for the next two, it will have a pronounced effect.& http://dx.doi.org/10.1016/j.tej.2013.05.014
Why Demand Growth May Be History Continued from page 1 bonanza – retail electricity prices are broadly rising and are projected to continue to rise – e.g., in Germany with the phaseout of the nukes. Aging and declining populations – as in Japan – suggest lower economic growth and lower electricity consumption. Buildings are not only getting more efficient and better-insulated but are increasingly generating some of their electricity needs from rooftop solar PVs and the like, generously assisted by subsidies, feed-in-tariffs, or net energy metering (NEM) laws. The continuously falling price of PVs and other forms of distributed generation (DG) coupled with rising retail tariffs in many regions of the world is turning a growing percentage of consumers into prosumers, who produce some of what they consume. The result is lower net volumetric consumption. In its latest quarterly report on Europe’s electricity markets, the European Commission points out that electricity consumption continues to fall in EU, adding, ‘‘Annual consumption in EU has fallen every year since 2008, by 1.2 percent on average. The main reason is lower demand from energy-intensive sectors such as manufacturing and construction.’’ Many attribute the fall in electricity consumption to the current economic and financial crisis afflicting Europe, and that certainly does explain most of what has been experienced since 2008. But 4
1040-6190/$–see front matter
even after the economies of Europe rebound and resume their growth, historical growth rates are unlikely to be repeated. Even China, long used to high growth rates, has been experiencing lower growth figures, a fate that is likely to afflict other developing economies. With lower growth rates in the OECD, demand for Chinese goods is likely to diminish. Another key driver is structural changes in the economies of the West away from energyintensive industries, fortified by continued improvements in energy efficiency. While opinions vary, some observers of the power industry believe that the phenomenon of lower, and possibly no, demand growth may be a new reality. That reality initially is afflicting a few mature and slow-growing OECD economies where retail prices are already high and rapidly rising, as in Japan or Italy. The pattern could be replicated in other economies as they reach similar stage of maturity and demand saturation. Australian retail prices, now among the highest in the world, provide another example of what may be behind falling demand. German electricity tariffs, expected to rise due to the nuclear phase out, are likely to dampen future demand growth in that country, no one can tell by how much. The evidence to date is spotty and limited to a few countries – and it is not clear if it is entirely due to the recent economic downturn or more permanent. In the case of Australia, virtually The Electricity Journal