Tag Archives: Renewable energy

What are the Costs of Energy – Costs and Trade-offs for Renewable

The topic of renewable energy costs is a hotly contested topic that touches on many politically sensitive areas. Over the years what has become clear however is that it is not a simple answer as to what is the best alternative for energy product.

There are country specific strategies and policies effecting every source of energy production. It is obvious however that the trend of renewable energy production is on a massive rise and this is set to continue.

“Renewable energy is a key component for energy access in developing areas as it offers a long term sustainable and currency-neutral supply. In African and global markets, we are seeing increased interest in this work and we will continue working with development agencies and institutions as well as investors as a part of a commitment to be socially impactful in our investment strategy.”

Sidney Yankson , Partner, GCP

Global

The International Energy Agency (IEA) reports that 2014 saw a record 95 GW of new wind and solar projects, and forecasts that it will account for 25% of power generation in 2018, a figure that’s up from 20 percent in 2011. Among other startling predictions were the following:

  • 72% of the over $10 trillion forecasted dollars spent on new power generation worldwide to 2040 will be invested in new wind and solar PV plants.
  • Solar is price comparable to coal in Germany, Australia, the U.S., Spain and Italy.
  • By 2040, the levelized cost is set to drop up over 60%, and as soon as 2021, it will be cheaper than coal in China, India, Mexico, the U.K. and Brazil.

In most countries, renewables must be supplemented by a basic supply of oil and gas. As gas becomes more plentiful and available, industry analysts posit that gas will be one of the flexible technologies needed to help meet peaks, and provide system stability of non-depletable energy sources.

What may contribute to this trend are the quickly declining installed costs for solar PV, as shown in the table below:

USA

According to the Energy Information Administration (EIA) and the University of Texas, from 2010 through 2013, US federal renewable energy subsidies increased by 54%, from $8.6 billion to $13.2 billion, despite the fact that total federal energy subsidies declined by 23%, from $38 billion to $29 billion. The sponsoring government’s agenda of energy independence and renewable promotion has been effective in creating long-term industry investments.

 

Germany

In Germany and in much of Europe, the government has long subsidized and promoted renewable energy. German renewable energy based electricity generation almost reached the 30% mark in 2016.

Africa

Africa is seeing a huge influx of solar and renewable projects due mainly to two related factors: need and economics. As foreign oil and gas supply costs are related to currency values, many countries face pricing issues. While the current oil prices are beneficial in that regard, the need for a sustainable infrastructure is present, so as economies in Eastern and Southern Africa rebound, many nations have subsidized the development of many projects through foreign and local investment to that end. Thus the levelized cost lower due to subsidies and low interest project debt.

Asia Pacific

In many countries, solar power is a lower cost alternative and is also heavily subsidized by the government in their purchase agreements. Thus, this region may have typically lower than average total costs. China and India lead the way with overall investment not only in the region but among many developed and BRIC nations in solar/renewable energy.

Subsidies, or Technology?

Logically speaking the cost of any energy project is directly related to not only the existing technology costs, but also macro policies and subsidies from governments. As both are changing the shift in new energy projects is making itself clear. Utility-scale batteries are now capable of competing with natural gas in terms of availability and flexibility to provide surplus generation for peak demand. When added to small micro grids, EIA estimates that by 2040 renewables will reach 74% penetration in Germany, 38% in the U.S., 55% in China and 49% in India.

As for subsidies, fossil-fuel consumption subsidies dropped in 2015 to $325 billion, from $500 billion This reflect both lower fossil-fuel prices as well as a subsidy reform process that has gathered momentum in several countries as they look at new strategies for long term infrastructure.

Investment Trade-Offs

Its clear that renewable energy will not completely replace fossil fuel as it alone can’t meet the baseload generation needs anytime soon. However, an optimal solution is to use a combined approach of both traditional and renewable, and most governments are shifting their subsidy policies accordingly.

CO2 Emissions are another major plus for solar, not only do solar production facilities produce relatively lower environmental maladies than coal and gas production, but with no emissions in the burning operations process, this can make a major impact.

New job creation from solar and renewable is projected to add net new jobs to the economy. Rising automation in extraction, overcapacity, industry consolidation, regional shifts, and the substitution of coal by natural gas in the power sector are resulting in minor job losses in regions. Globally, the renewable energy sector employed 9.8 million people in 2016 – a 1.1% increase over 2015. In 2016, jobs in renewables, excluding big hydro, increased 2.8% to  8.3 million. This is a replacement of labor force to some extent, as well as net new jobs in many countries.

 

SOURCES:

https://www.lazard.com/perspective/levelized-cost-of-energy-analysis-100/

http://www.ren21.net/wp-content/uploads/2016/06/GSR_2016_Full_Report.pdf

https://www.irena.org/DocumentDownloads/Publications/IRENA_RE_Jobs_Annual_Review_2017.pdf

http://www.mckinsey.com/industries/oil-and-gas/our-insights/lower-oil-prices-but-more-renewables-whats-going-on

2016 was the year solar panels finally became cheaper than fossil fuels. Just wait for 2017

https://www.irena.org/DocumentDownloads/Publications/IRENA_Solar_PV_Costs_Africa_2016.pdf

https://www.nrel.gov/analysis/tech_lcoe_re_cost_est.html

http://www.irena.org/DocumentDownloads/Publications/IRENA_Renewable_Energy_Statistics_2017.pdf

Financing the Transition to Renewable Energy

The rise of renewable is no news; but the transition is not so clear for many actors in the sector, both enthusiasts and those impacted by the shift. Harvard Business Review has recently been looking deeper into the question of financing  the transition to renewable energy from two different perspectives: coal workers and industrial firms.

What If All U.S. Coal Workers Were Retrained to Work in Solar?

Young coal workers, in particular, should consider retraining for a job in solar now. In fact, Research from Oregon State University suggests most coal workers should start thinking about retraining now.

The study quantified the costs and benefits of retraining such workers in solar technology and explores different alternatives to finance the shift. It identifies four different ways of financing such a shift from individual funding options, company sponsored retraining, state driven programmes and federal government initiatives.

It concludes that in general after retraining, most technical workers would make more in the solar industry than previously in coal because there is a wide variety of employment opportunities in the solar industry, and that the annual pay is attractive at all levels of education, with even the lowest skilled jobs paying a living wage.

 

How Industrial Firms Invest in Renewable Energy, Affordably

Big companies have been buying a lot of clean energy;  but making it work in terms of costs and accounting can be a hurdle for industrial companies. HBR draws lessons from Owens Corning execs and how they laid out the strategy to get over the hurdles that industrial companies face when investing in renewable energy in order to add value  to the company, and the environment.

GCP Solar’s Pilot Project in Tamale, Northern Ghana

In conjunction with Just Shea, GCP Solar distributed 384 solar lanterns to two off-grid lighting communities in Northern Ghana. These are rural areas with no current access to safe light or electricity.

GCP Solar is a distributor of the market leading Nokero® suite of solar products, such as hand-held solar lights and mobile phone chargers. A majority of the population currently use candles or kerosene to produce  light, these can have detrimental affects to their health as well as the environment.

Sidney Yankson (CEO, GCP Solar) ran one-to-one or group sessions teaching the Shea women, with an interpreter, about how to use their purchased solar lanterns. The solar lanterns were a part of their safety kit provided by Just Shea. After returning at nightfall, the feedback was already highly positive. Not only does this provide a safer and sustainable solution to bad lighting, the women actually saved extra money through buying the product. Many of them were pleased that their children could now do their homework after sundown.

The shea women collect shea nuts in remote areas in Northern Ghana. Shea butter is a popular type of moisturiser exported all over the world. 1 million women a year get bitten by snakes when picking the nuts, however now, thanks to their safety kit and solar lanterns, this figure may now be curbed. The Government of Ghana is hoping for 5GW of total power in the country in the years to come. Furthermore, they anticipate that a high proportion of this will come from renewable energy sources.

EU Energy Initative

Ghana Capital Partners CEO Sidney Yankson attends an EU Energy Initiative Partnership Dialogue Facility event held in Brussels hosted by the Africa-EU Energy Partnership (AEEP) and the Africa-EU Renewable Energy Cooperation Programme (RECP) with a focus on improving and increasing access to modern, affordable and sustainable energy services in Africa.

www.euei-pdf.org

www.africa-eu-renewables.org