Introduction: The rise of renewable energy power generation has attracted people's attention and triggered political repercussions in the United States. The Trump administration is promoting actions to subsidize the operation of coal and nuclear power plants and believes that these resources are necessary for the reliable operation of the power grid.
Driven by the decline in the cost of wind and solar power, global renewable energy spending is catching up with coal, natural gas and nuclear power plant investment. According to the IEA data from the International Energy Agency, more than half of the world’s increased power generation capacity in recent years has come from renewable sources such as wind and solar power.
According to the International Energy Agency, 2016 is the latest year for available data, about US$ 297 billion for renewable energy, and double the US$ 143 billion spent on new nuclear power, coal, natural gas, and fuel oil power plants. many. The IEA expects that by 2025, renewable energy projects will account for 56% of the net electricity generation of the year.
Cost reduction
Once the cash back incentives, tax credits, and other government incentives have given strong support, the cost of wind and solar power has dropped for a decade, making renewable energy investments more competitive. Francis O'Sullivan, director of energy research at the Massachusetts Institute of Technology, said that the cost of renewable energy has fallen over the past few years, so “wind and solar energy have become the lowest cost options for generating electricity.”
This also began to disrupt the business of manufacturing electricity and manufacturing power generation equipment. Both General Electric and Siemens are trying to reduce the demand for large gas turbines and announce layoffs. At the same time, most solar panel manufacturers in the Asia Pacific region are booming.
In many places, choosing renewable energy is "purely an economic option," said Danielle Merfeld, chief technology officer of GE's renewable energy sector. "In most places, renewable energy is cheaper and other technologies are more expensive. ."
Sustained government support in Europe and other developed economies has stimulated the development of renewable energy. However, the cost reduction is caused by other reasons. For example, China has invested heavily in domestic solar manufacturing, resulting in a surplus of cheap solar panels. Innovation helps manufacturers make longer wind turbine blades and create machines that can generate more power at a lower cost.
At the same time, renewable energy power plants also face fewer challenges than traditional power plants. Due to concerns about climate change, technical delays have plagued most nuclear power plants, and factories that burn fossil fuels face regulatory uncertainty. Pension funds seeking long-term, stable returns have invested heavily in wind farms and solar parks, allowing developers to obtain cheaper financing.
Continued investment is reshaping power structures in the world's homes and industries. According to a joint report from the Frankfurt School of Finance and Management and the United Nations Environment Programme, the share of renewable energy generation reached 12.1 percent last year, more than twice the level of ten years ago. It should be noted that these figures do not include the power of large hydroelectric dams.
Developed countries
The rise of renewable energy power generation has aroused people’s concern and triggered political repercussions in the United States. The Trump administration is promoting actions to subsidize the operation of coal and nuclear power plants and believes that these resources are necessary for the reliable operation of the power grid.
The proposal requires First Energy, the owner of Ohio Coal and a nuclear power plant, to make relief requests. This will certainly damage renewable energy and natural gas fuel power plants because fuel prices have become cheaper in recent years.
In the United States, a government tax credit policy of more than two decades has promoted renewable energy, but its future uncertainty has also affected the development of the industry. According to federal data, about 17% of the country’s electricity last year came from renewable sources, including wind, solar and hydroelectric dams. The government stated that more than half of the large-scale increase in power generated last year is renewable.
Last week, Xcel Energy announced a $2.5 billion plan to add 1,800 megawatts of wind and solar power, plus a large amount of batteries to store electricity. Xcel said that the plan needs the approval of state regulators to phase out 660 megawatts of coal-fired power generation and bring savings to consumers.
In many places, renewable energy prices now compete with fossil fuel power generation. According to the International Renewable Energy Agency, in 2017, the global average cost of onshore wind power is US$60 per megawatt, solar power is US$100, and the price of new fossil fuel facilities in developed countries ranges from US$50 to US$170.
Developing countries
The combination of reduced costs and large amounts of available capital also stimulated the growth of renewable energy in developing countries.
In November last year, Italy’s global energy company Enel SpA won a bid to build a power plant in Chile and opened it to renewable energy and fossil fuel generators. Enel will build wind, solar, and geothermal energy facilities and sell electricity at a price of about $32.50 per megawatt-hour, which is lower than natural gas or coal-fired costs of existing plants.
Recent electricity auctions show that renewable energy prices have fallen further. Earlier this year, an auction in Saudi Arabia signed a contract for the construction of a 300-megawatt solar facility at a price of US$ 17.9/MWh. The very low labor costs in the Middle East and India have led to solar energy bids hitting new lows.
Last year’s Mexican auction was submitted to the International Power Company for a bid at an unsubsidized price of US$21 per megawatt-hour. Veronica Irastorza, deputy director of NERA, an economic consulting firm and deputy director of Mexican energy planning in Mexico, said that this is much lower than the spot market price, which was about 70 US dollars per megawatt-hour last year.
Tom Heggarty, an analyst at Wood Mackenzie, an energy consultant, said: "In most of the world's markets, we can see the active construction of renewable energy in the coming years."
