The global outlook for renewable energy

Residential and utility scale solar PV is set to soar in Australia during 2018 but what about the rest of the world? Here we bring you some predictions about the strength of the clean energy sector on the back of lower costs for solar and wind energy and lithium-ion batteries.

In the Bloomberg New Energy Finance report The Force Is With Clean Energy the agency commented 2017 brought new records for renewable energy auctions around the world that would have been “unthinkable” just two or three years ago. As would the level of investment: now the $333.5 billion invested in clean energy in 2017 is likely to be repeated.

Looking toward 2018, global solar installations are tipped to reach 107 GW (or more), up from the higher-than-expected 98 GW reached in 2017. And according to BNEF’s 10 Predictions for 2018 the market will be dominated by China with 47-65 GW, hot on the heels of the 53 GW installed in 2017. Latin America, southeast Asia, the Middle East and Africa are also slated to contribute a reasonable amount of this year’s total.

The cost of batteries (lithium-ion pack prices) fell by as much as 24 per cent last year, and BNEF analysis suggests cost reduction trends will continue due to economies of scale and technological improvements, however the drop in 2018 will be at a slower pace than in previous years.

Given that cobalt and lithium carbonate prices rose 129 per cent and 29 per cent respectively in 2017, there will be a kick-on in terms of average cell prices in 2018 and probably trigger news reports implying threats to the EV revolution and rise of energy storage.

Despite this, BNEF anticipates average pack prices to decline by 10-15 per cent, driven by economies of scale, larger average pack sizes and energy density improvements of 5-7 per cent annually.

A stronger world economy in recent months is positive news for the transition in energy supplies and transportation, with higher oil and coal also gas prices has tipping the balance in favor of wind, solar and EVs.

On the storage front BNEF cites falling capex costs, an increasing need for flexible resources and greater confidence in the underlying technology as the drivers of the uptake of energy storage.

Global storage deployments in 2018 will exceed 2 GW/4 GWh, with South Korea once more the single largest market. The market is still fragile, however, and some expectations about the speed of deployment could be unrealistic.

“Batteries are hyped as the answer to all problems with intermittent renewables, including price cannibalisation caused by the merit order effect, system-level balancing and network constraints. Policies rather than economics alone will determine the rate of uptake.

“Energy storage remains poorly understood by many within the energy sector and by policy-makers. This matters hugely since investing in alternatives such as natural gas power plants with a 25-plus year lifetime will either create a long lock-in period that would limit opportunities for other flexible resources such as storage, or result in stranded assets further down the line.”

The global EV forecast is about 40 per cent up from 2017: sales in 2018 which will be close to 1.5 million with more than half seen in China.

Despite the Trump administration’s push to revitalise coal-fired power generation in the US, the sector will inevitably decline and 2018 is scheduled to be the second biggest year in US history for coal plant retirements, with 13 GW of projects earmarked for closure.

In other notable developments: 2018 will be the last year in which fossil fuels outpaces renewables in India, and China’s solar fever will continue to rage.