New Energy Is Gaining Momentum

Investment in renewable energy sources and technologies hit a new record in 2021 and is set to remain strong in coming years as many major economies have pledged to achieve net-zero emissions by 2050. Moreover, over the past few weeks many Western governments have committed to reduce or entirely eliminate their dependence on Russian fossil fuels after Europe’s dependence on Russian energy tied its hands and it cannot afford to impose bans on oil, gas, and coal imports from Russia after Putin’s invasion of Ukraine.

Renewable energy and renewable biofuels and hydrogen were already gaining momentum even before the Russian war in Ukraine. Now the UK, the US, and the European Union are determined to free themselves from Russian energy dependence and overhauled their energy security and strategy plans, which rely on acceleration of clean energy usage.

Faster energy transition presents its own challenges, considering the tight supply chains in key minerals and critical rare earth elements vital for battery pack manufacturing. Inflation in the costs of steel and polysilicon, combined with high energy prices globally, could reverse a decade of cost cuts and slow down the rollout of wind and solar projects due to higher costs and supply chain bottlenecks.

Record Renewable Installations and Clean Energy Investments

Despite rising costs for key materials used to make solar panels and wind turbines, additions of new renewable power capacity rose to 290 gigawatts (GW) in 2021, surpassing the previous all-time high set in the previous year, according to the latest edition of the IEA’s annual Renewables Market Report from December 2021.

By 2026, global renewable electricity capacity is expected to jump by more than 60% from 2020 levels to over 4,800 GW – equivalent to the current total global power capacity of fossil fuels and nuclear combined. Renewables are set to account for nearly 95% of the increase in global power capacity through 2026, with solar PV alone providing more than half, the IEA said.

Still, faster deployment in all clean energy sectors is needed in a scenario where the world achieves net-zero by 2050, the agency added.

Policy makers need to address challenges in permitting, grid integration, grid availability, and remuneration for offtakers in order to accelerate clean energy installations and usage, according to the IEA.

Installations and battery demand are set to jump by the middle of this decade, analysts say.

For example, rooftop solar PV installations are set to surge in the next three years, with total capacity reaching 94.7 GW by 2025, Rystad Energy said in an analysis in March. Rooftop installations have jumped by 64% in five years, rising from 36 GW in 2017 to 59 GW in 2021 and now represent 30% of the total global solar capacity.

“Small scale solar PV, including residential, commercial and industrial (C&I), and off-grid projects, are gaining momentum supported by economics and policies, with China, Japan, Germany, the US and Australia emerging as key markets. Key drivers for the high uptake in the residential sector include high retail electricity costs, low system costs, high FiTs and the available roof space,” said Gero Farruggio, Rystad Energy’s head of renewables research.

The net-zero ambitions could lead to a global surge in battery demand, which could jump 15 times by 2030 compared to 2021, Rystad Energy said in another report in March.

“Battery demand growth is inevitable as the energy transition quickens, but global supply will fall short without substantial investment or improvements in battery technology in the immediate future,” said Marius Foss, head of global energy systems at Rystad Energy.

In 2021, global investment in the energy transition set a new record of $755 billion, thanks to rising climate ambition and policy action from countries around the world, the Energy Transition Investment Trends 2022 report by research firm BloombergNEF (BNEF) showed in January.

Investment rose in almost every sector covered in the report, including renewable energy, energy storage, electrified transport, electrified heat, nuclear, hydrogen, and sustainable materials. Only carbon capture and storage (CCS) recorded a dip in investment, though there were many new projects announced in 2021.

“The energy transition is well underway, and moving faster than ever, but governments will need to mobilise much more finance in the next few years if we are to get on track for net- zero by 2050,” Matthias Kimmel, Head of Energy Economics at BNEF, said in a statement.

Governments Revise Energy Strategies To Cut Reliance on Russia

Governments, especially those in Europe, have realised they need to mobilise a lot of effort and increased financing for clean energy solutions in order to reduce their reliance on Russian energy, in the aftermath of the Russian invasion of Ukraine.

The war in Ukraine could accelerate decarbonisation, Simon Flowers Chairman and Chief Analyst at Wood Mackenzie, said a week after Putin ordered troops into Ukraine.

“Achieving net-zero depends on unity and global cooperation. Governments, companies and wider society have unanimously condemned the conflict. If that same collective will and resolve can be harnessed to tackle climate change, a 1.5 °C pathway might just be achievable,” Flowers wrote, noting that decarbonisation could be the answer to energy security.

While Europe will certainly look for alternatives to Russian gas – on which it collectively depends for more than one-third of its gas supply – it has also pledged to accelerate renewable energy and biofuels and hydrogen usage to reduce overall dependence on imports.

“A major shift will be that countries double down on low-carbon energy to bolster energy security. That means more renewables, nuclear and hydrogen. Importers won’t fall into the trap of becoming too dependent on imported fuels – they’ll want a range of suppliers,” WoodMac’s Flowers said.

The European Commission proposed in early March a plan to make Europe independent from Russian fossil fuels well before 2030, starting with gas, in light of Russia’s invasion of Ukraine. The plan will seek to diversify gas supplies, speed up the roll-out of renewable gases and replace gas in heating and power generation. This can reduce EU demand for Russian gas by two thirds before the end of the year, the Commission said.

“We must become independent from Russian oil, coal and gas. We simply cannot rely on a supplier who explicitly threatens us,” Commission President Ursula von der Leyen said.

“The quicker we switch to renewables and hydrogen, combined with more energy efficiency, the quicker we will be truly independent and master our energy system,” von der Leyen added.

Executive Vice-President for the European Green Deal, Frans Timmermans said: “Renewables are a cheap, clean, and potentially endless source of energy and instead of funding the fossil fuel industry elsewhere, they create jobs here. Putin’s war in Ukraine demonstrates the urgency of accelerating our clean energy transition.”

The Commission also continues its investigation into the gas market in response to concerns about potential distortions of competition by operators, notably Russia’s gas giant Gazprom.

The UK and the US are also looking to accelerate renewable power installations, alongside relying on their domestic oil and gas supplies or supplies from countries other than Russia. The White House finally asked the US oil producers to raise production if they can, although renewables rollout and the green agenda continue to be pillars of President Joe Biden’s energy strategy in the long term.

After the US banned imports of Russian energy, the U.S. Solar Energy Industries Association (SEIA) noted in a blog post that “there is growing consensus that we can no longer rely on foreign adversaries for our energy needs.”

“If we want to diversify our energy sources and reinforce American energy independence, encouraging solar and storage deployment and investing in domestic manufacturing is the best opportunity we have to double down on clean, and reliable energy,” SEIA said.

The UK, for its part, said it would phase out by the end of the year imports of Russian oil in response to Vladimir Putin’s illegal invasion of Ukraine.

Russian imports account for 8% of total UK oil demand, but the UK is also a significant producer of both crude oil and petroleum products, in addition to imports from a diverse range of reliable suppliers beyond Russia including the Netherlands, Saudi Arabia, and USA, the government said.

“Renewables are the quickest and cheapest route to greater energy independence. They are invulnerable to Putin’s manipulations. He may have his hand on the taps for oil and gas. But there is nothing he can do to stop the North Sea wind,” UK Prime Minister Boris Johnson wrote in an opinion piece in The Telegraph in the middle of March.

UK Business and Energy Secretary Kwasi Kwarteng commented on the role the UK North Sea operators will play in the UK’s energy security:

“Our North Sea oil and gas sector has been a major industrial success story for decades, providing jobs, tax revenue and energy security. We will continue to back this vital sector to maximise domestic production while we transition to cheap, clean, home-grown power.”

Most Scottish voters support building more renewable energy projects in Scotland to tackle climate change, with 74% saying they would think favourably of a political party which puts a strategy in place to do this, with only 6% against, according to Polling published by RenewableUK at the end of February.

“Building new onshore wind projects is also one of the cheapest ways to generate new power, so in the long term these projects will also help to reduce the UK’s dependence on fossil fuels, including volatile international gas prices,” RenewableUK’s Chief Executive Dan McGrail said, commenting on the poll.

Read the latest issue of the OGV Energy magazine HERE

Published: 11-04-2022

#mc_embed_signup{background:#fff; clear:left; font:14px Helvetica,Arial,sans-serif; }

#mc-embedded-subscribe-form input[type=checkbox]{display: inline; width: auto;margin-right: 10px;}
#mergeRow-gdpr {margin-top: 20px;}
#mergeRow-gdpr fieldset label {font-weight: normal;}
#mc-embedded-subscribe-form .mc_fieldset{border:none;min-height: 0px;padding-bottom:0px;}

Marketing Permissions
OGV Energy will use the information you provide on this form to be in touch with you and to provide updates and marketing. Please let us know all the ways you would like to hear from us:

Direct Mail

Customised online advertising

(function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]=’EMAIL’;ftypes[0]=’email’;fnames[1]=’FNAME’;ftypes[1]=’text’;fnames[2]=’LNAME’;ftypes[2]=’text’;fnames[5]=’MMERGE5′;ftypes[5]=’text’;}(jQuery));var $mcj = jQuery.noConflict(true);