Renewables reaching cost-parity with fossil fuels, research finds
Low-carbon technologies are now reaching cost-parity with fossil fuels, according to a new report which states that solar cell technology is likely to have a "major impact" in the near future.
Research from global business services organisation Lloyd’s Register shows that innovation will be critical to addressing the challenges to decarbonisation. The report is based on the insights of almost 600 sector experts regarding the potential impact of green technologies and time-scale for market deployment.
Key findings of the report show that 70% of respondents believe that renewables are now cost-competitive with coal and oil, with professionals most optimistic about the advances in solar cell technology.
“We are very encouraged by the findings, which highlight not only a growing optimism across the industry but a vigorous and intelligent debate about the pathways to decarbonisation,” said Lloyd’s Register's energy director Alasdair Buchanan.
“Clearly, there are many uncertainties about exactly how the industry will evolve, but what is inarguable is that the conversation is no longer about “should we?” but “how should we do it?”
The World Economic Forum estimates that renewables in more than 30 countries have already reached cost parity without subsidies, and that two-thirds of the world should get there in the next few years.
Lloyd’s Register's report findings are based on recent shifts within the energy market; Solar costs, for instance, have fallen by more than 80% in less than decade, making the technology the world’s cheapest form of renewable energy.
While the value of stocks of notable renewable energy companies Vestas and SolarCity fell in the immediate aftermath of President Trump's election, Lloyd’s Register believes that growing global confidence in low-carbon generation could balance this out in the medium-to-long-term.
Software advances will soon improve the efficiency of existing battery storage, the report states. One of the largest software innovation is blockchain, a distributed ledger technology which Lloyd’s Register says has the potential to tap into the sharing economy and unlock a vast, decentralised energy marketplace.
Developments costs are viewed as the main barrier to low-carbon generation, with 74% of respondents of this opinion. European respondents believed that their biggest barriers are public opinion, too-stringent regulations and deployment challenges.
The report reflects a gradual accumulation of evidence which shows that renewables are now cost competitive with fossil fuels. Renewable energy sources made up nearly nine-tenths of new power added to Europe's electricity grids last year, and with the price of these technologies continuing to tumble, experts expect the demand for coal and oil to peak in 2020.
Meanwhile, innovations in storage are predicted to have huge impacts on the low-carbon sector. Tesla’s ‘Gigafactory’ in Nevada, which is due to start producing in-gouse manufactured battery packs this year, aims to reduce production costs by 30%. This effort alone is projected to boost the North American electric vehicle (EV) market by around 60% in 2017.
At a domestic level, Tesla recently launched Powerwall – a household battery storage device to provide backup home energy and an electric vehicle charging solution.