Barriers to intermittent renewables and battery storage tumbling down
by Mike Scott, April 5, 2019
The astonishing growth of the renewable energy sector shows little sign of slowing, as costs continue to plummet, along with the cost of energy storage, to remove many of the barriers to using intermittent renewable generating sources in a range of applications. Much of this is down to the fact that the cost of battery energy storage is one third lower than this time last year.
A third of the world’s total electricity generating capacity is now renewable, new figures show, with almost two thirds of all new electricity generating capacity now zero-carbon and emerging and developing economies leading the way in growing the market.
The latest report from the International Renewable Energy Agency (IRENA) shows that clean energy capacity grew by 171GW, or 7.9%, with the overwhelming majority of that coming from solar and wind energy. More than half of new capacity (61%) was added in Asia but Oceania saw the fastest rate of growth, with a 17.7% increase in capacity last year. Asia was second, with Africa’s 8.4% increase putting it third.
The growth in the sector is being driven by the compelling business case as much as because of the need to decarbonise, said IRENA Director-General Adnan Z. Amin. Analysis from Bloomberg New Energy Finance shows that onshore wind and photovoltaic solar have continued to plummet down the cost curve, falling by 10% and 18% respectively to $50/MWh for onshore wind and $57/MWh for solar projects starting construction in early 2019. But the cost of batteries and offshore wind in particular have fallen even further, down by 35% and 24% respectively.
“The strong growth in 2018 reflects an ongoing shift towards renewable power as the driver of global energy transformation,” Amin said.
However, despite the rapid growth in renewables, growth in non-renewable sources has shown little sign of slowing down, with growth on average of about 115GW per year since 2000. While fossil fuel capacity has dropped in Europe and North America, it has been replaced by rapid expansion in Asia and the Middle East since the turn of the century.
As a result, “renewable energy deployment needs to grow even faster, to ensure that we can achieve the global climate objectives and Sustainable Development Goals,” Amin added. “Countries taking full advantage of their renewables potential will benefit from a host of socioeconomic benefits in addition to decarbonising their economies.”
Solar continues to be the most popular technology, with additional capacity of 94GW, 24% growth on the previous year. The biggest markets were all Asian – China, India, Japan and South Korea, while the USA, Australia and Germany were also big markets. However, there was also significant growth in some newer markets, including Brazil, Egypt, Pakistan, Mexico and Turkey.
Wind power, with 49GW of new capacity, lags some way behind solar, with China (20GW) and the USA (7GW) accounting for more than half of growth between them. Other 1GW+ markets were Brazil, France, Germany, India and the UK.
China was the only market to add a significant amount of hydropower capacity last year, at 8.5GW, and it also led the way in bioenergy.
Despite this, hydro still accounts for around half of global installed renewable capacity (1,172GW of the 2,351GW total), with most of the rest comprising wind (564GW) and solar (480GW) assets, IRENA’s annual Renewable Capacity Statistics 2019 says. At current growth rates, solar will overtake wind in terms of installed capacity within the next few years. However, the staggering year-on-year cost reductions in the price of solar power, which have been driven by the enormous expansion programme in China, may be coming to an end.
Although the LCOE of solar PV has fallen 18% in the last year, a huge proportion of the reduction was the result of a slowing of Chinese expansion that led to a huge global supply glut of modules. If the government does not take its foot off the brake, that will affect the entire global market.
Nonetheless, the growth in renewable capacity is likely to accelerate over the next few years, as the burgeoning in green generation capacity is complemented by increasingly cost-competitive battery energy storage. Bloomberg New Energy Finance, in its most recent report on the Levelized Cost of Energy (LCOE) has revealed that the cost of lithium-ion storage is more than a third cheaper than a year ago, with a MWh of storage falling 35% to $187/MWh.
This is making hybrid solar-battery and wind-battery projects increasingly competitive with traditional coal and gas generating assets in a range of applications, such as frequency management and peak power provision, without subsidies.
Tifenn Brandily, energy economics analyst at BNEF, said: “Solar PV and onshore wind have won the race to be the cheapest sources of new ‘bulk generation’ in most countries, but the encroachment of clean technologies is now going well beyond that, threatening the balancing role that gas-fired plant operators, in particular, have been hoping to play.”
Another notable development has been the continued fall in the price of offshore wind, once seen by many observers as a technology that would struggle to cut costs significantly for a decade or more. Yet in the last year, the LCOE for offshore wind has fallen by almost a quarter (24%), driven by the switch to auction programmes for new capacity and the successful development of much larger turbines, which bring massive increases in the amount of power each turbine can generate.
Just five years ago, the MWh cost of offshore wind was more than $220/MWh. Today it is below $100/MWh.
Elena Giannakopoulou, head of energy economics at BNEF, commented: “The low prices promised by offshore wind tenders throughout Europe are now materializing, with several high-profile projects reaching financial close in recent months. Its cost decline in the last six months is the sharpest we have seen for any technology.”
And that despite the fact that “the LCOE per megawatt-hour for onshore wind, solar PV and offshore wind have fallen by 49%, 84% and 56% respectively since 2010. That for lithium-ion battery storage has dropped by 76% since 2012, based on recent project costs and historical battery pack prices.”
The economics and the technological capabilities of renewables and energy storage mean they are now in a position to dominate the energy landscape in coming decades and reduce the stranglehold of traditional fuel sources over the market.