Transcript Prospects for Alternative Energy

NS4054
Fall Term 2015
Prospects for Alterative Energy
Overview
• Oxford Analytica, “Prospects 2015: Alternative Energy,”
November 21, 2014
• Main idea
• Alternative energy although a minority in overall global
energy supply will expand in next two decades
• For climate targets set by China and the United States to
be met, alternative energy must provide a much larger
proportion of energy supply
• In U.S., political fighting between White House and
Congress will delay major investments in and assistance
to alternative energy.
2
Renewable Energy I
• Renewable energy technologies, although representing
12% of total U.S. power generation are the fastest source
of electricity
• Wind, solar, geothermal and biomass are becoming
increasingly cost competitive with hydrocarbons in
certain regions even as green subsidies and tax credits
expire
• Trend looks to continue
• Given that many companies and labs are investing in new areas
of research, and
• Developers are laying the groundwork for large, utility scale
projects
3
Renewable Energy II
• Elsewhere in the world renewable energy has large
potential even if much of that is untapped
• In Latin America outside of Brazil, renewable energy
provides less than 5% of electricity
• Technologies based on the use of biomass have been
expanding rapidly due to availability of wastes produced from
forest industries
• In Europe, Germany has invested heavily in its renewable
sector after decision to close nuclear plants
4
Renewable Energy III
Price competitiveness
• Cost of energy from new utility-scale wind power plants
is increasingly competitive with conventional electricity
fuels.
• Technological improvements are rapidly making turbines more
productive, while
• Transport costs that represent up to 20% of a wind farm’s cost
have dropped considerably
• The US DoE reports that the cost of wind energy has declined by
43% over the last four years.
• Solar remains significantly more costly than its
competitors -- although
• The relative cost of utility-scale solar power has declined the
most among all resources
• Average price of solar panels has dropped 80% since 2008
5
Renewable Energy III
• Long-Term Economies
• In the long run, wind and solar technologies are expected
to decrease in cost and eventfully reach grid parity.
• While total per country greenhouse gas (GHG) emissions
continue to increase, GHG per unit of GDP are
decreasing, indicating increasing efficiency and
renewable energy
• On a per capita basis,
• the GHG emissions of developed nations are steadily falling
• while those of developing countries continue to rise, particularly
China
• The main barriers to transferring new technologies to the
developing world are the high costs of these
technologies
6
Renewable Energy III
• Oil Price Decline Impact
• In the U.S. power sector, immediate climate targets favor
a shift to natural gas plants
• Historically, due to the capital-intensive nature of
alternative energy projects, renewables only became
competitive when oil and natural gas prices are high.
• However, in the US electricity sector, oil and renewables hardly
compete.
• For solar and wind power, lower oil prices will have little impact –
gas prices are more relevant.
• Lower oil prices may slightly boost renewable investment
since they threaten the viability of some shale
developments
• However, if prices stay low, the US export ban on
petroleum products persists, companies will likely slow 7
their investments in shale.
Renewable Energy III
• Technical Advancements
• Vibrant research and development activity in the
renewables sector
• VolturnUS, a prototype floating wind turbine off the coast of Main
launched in 2013
• In wake of its success the DOE recently signed an agreement to
build tow full-scale models, to be put in the water by 2018
• Firms working to make crystalline silicon parts more
efficient for solar PV sells
• Other efforts explore potential of thin-film cells of
different materials
• Although silicon remains more efficient and durable, thinfilm offers some advantages over conventional
crystalline cells
• lower manufacturing costs,
• lighter weight
8
Renewable Energy III
• With political divides in Washington, several US
renewable energy incentives are likely to lapse – wind
production tax credit and the investment tax credit.
• The investment tax credit, which covers 30% of a renewable
energy project’s capital costs due to expire in 2016
• However USEPA will still play an important role in
• Setting transportation standards and
•
Otherwise regulating carbon dioxide as a pollutant
• Achieving the US goals will also require continuing
support at the state level
• Currently 29 states have renewable energy portfolio standards in
place and
• California and the North-East have cap-and-trade systems
9
Renewable Energy III
• The Chinese renewable energy commitment translates to
installing 1,000 gigawatts of non-fossil energy capacity
• Equivalent of installing one 7.5 megawatt wind turbine
every hour until 2030
• In addition to adding capacity, China will need to upgrade
its grid and adapt its contract structure with energy
production facilities to create the grid flexibility required
for he oncoming addition of renewable energy
10
Summing - Up
• In the short term political and economic forces will favor
conventional energy sources.
• In the U.S. the wind production tax credit and the investment tax
credit are likely to lapse
• Low oil and gas prices will place competitive pressures on
renewable energies
• However the long-term trends remain encouraging for
alternative energy
• The cost of electricity for solar and wind power is decreasing
dramatically
• Climate targets will encourage higher rates of efficiency and
lower carbon emissions per unit of GDP
• Will require heavy investments in renewable energy
11