The Van Trump Report

The Push to Renewables… and Perhaps Places to Invest?

The International Energy Agency is saying “Renewables” are set to overtake coal this decade as the world’s favorite fuel for generating electricity. Believe it or not, wind and solar power have become the cheapest form of new electricity in most of the world today. Several groups on Wall Street are predicting an energy “tipping point” at some point during the 2020s. In other words, it will be more expensive to operate an existing conventional energy power plant than to build new solar or wind farms. This theory is what’s fueling many to think we are going to make an aggressive push towards “net-zero” emissions. Personally, I don’t believe “net-zero” is possible between now and 2050, but I do believe the powers that be are wanting to work aggressively in that direction and those who want to stand in the way might get rolled up. Below are few thoughts currently circulating and some worthy of consideration and conversation: I encourage everyone to read more details in the World Energy Outlook 2020. (Source: EIA, Bloomberg, MarketPlace, University of Michigan)

Current Energy Landscape in U.S.: About 80% of the nation’s energy comes from fossil fuels, 8.4% from nuclear, and 11.4% from renewable sources. Wind and solar are the fastest growing renewable sources, but contribute just 3.8% of total energy used in the United States.

Electric Cars: If we’re going to move swiftly toward zero emissions, they are saying half of all cars sold in the next 10 years, have to be electric. 

Global Electricity: 
By 2030, 75% of global electricity will have to come from low-carbon sources. And developing nations will have to cut down their dependence on traditional energy.  

U.S. onshore wind resources have the potential to generate almost 11,000 GW of electricity, 106 times more than the current installed capacity of 103.6 GW.3,4 U.S. offshore wind resources are approximately 4,200 GW. To date, only 30 MW have been deployed, but a pipeline of more than 26 GW is in various stages of development. Over the past decade, the federal production tax credit (PTC) has significantly influenced wind development, but cycles of legislative enactment and expiration lead to year-to-year changes in investment of up to 92%.6 In 2019, the PTC was extended with a new expiration date of December 31, 2020.7 Over 9 GW of wind capacity was installed in the U.S. in 2019, a +20% increase from 2018. Based on the average U.S. electricity fuel mix, a 2.32 MW wind turbine (U.S. average in 2017) can displace 4,600 metric tons of CO2 emissions per year. By 2050, 404 GW of wind capacity would meet an estimated 35% of U.S. electricity demand and result in 12.3 gigatonnes of avoided CO2 emissions, a 14% reduction when compared to 2013.

Solar Photovoltaics (PV) are now cheaper than plants fired by coal and natural gas in most nations, the Paris-based researchers concludes in its annual report on global energy trends. PV module prices have declined to sub-$0.50-$0.70/Watt in residential systems. Those cheaper costs along with government efforts to slash climate-damaging emissions will increasingly push coal off the grid and give renewables 80% of the market for new power generation by 2030, the IEA says. It also anticipates natural gas demand slowly easing in developed nations, especially Europe, and coal dropping everywhere. About 275 gigawatts of coal-fired capacity worldwide, 13% of the 2019 total, will be shut off by 2025, mostly in the U.S. and European Union. Coal’s share of the global power supply is set to fall to 28% in 2030 from 37% in 2019. By 2040, the fuel that once was a staple of utilities will fall below 20% for the first time since the industrial revolution, the IEA concludes. That decline could be even sharper if governments pick up the pace on decarbonization. Here at home, over 13 GWdc of solar photovoltaic capacity was added in the U.S. in 2019, raising total installed capacity to over 81 GW.12 Solar accounted for 40% of new generating capacity in 2019. The U.S. Department of Energy’s SunShot Initiative aims to reduce the price of solar energy 50% by 2030, which is projected to lead to 33% of U.S. electricity demand met by solar and a 18% decrease in electricity sector greenhouse gas emissions by 2050.

Hydropower remains the largest renewable source of electricity, but solar is the main driver of growth as it sets new records for deployment each year after 2022, followed by onshore and offshore wind. The advance of renewable sources of generation, and of solar in particular, as well as the contribution of nuclear power, will be much stronger. 

Wood, mostly as pulp, paper, and paperboard industry waste products—accounts for 46% of total biomass energy consumption. Waste—municipal solid waste, landfill gas, sludge, tires, and agricultural by-products—accounts for an additional 9%. Biomass has low net CO2 emissions compared to fossil fuels. At combustion, it releases CO2 previously removed from the atmosphere. Additional emissions are associated with processing and 124 acres of land are required to generate one GWh of electricity per year. U.S. ethanol production is projected to reach 46 million gallons per day in 2050.

Natural gas fares better than other fossil fuels, but different policy contexts produce strong variations. In the STEPS, a 30% rise in global natural gas demand by 2040 is concentrated in South and East Asia. Policy priorities in these regions – notably a push to improve air quality and to support growth in manufacturing – combine with lower prices to underpin the expansion of gas infrastructure. By contrast, this is the first WEO in which the STEPS projections show gas demand in advanced economies going into a slight decline by 2040. An uncertain economic recovery also raises questions about the future prospects of the record amount of new liquefied natural gas export facilities recently approved.

Storage plays an increasingly vital role in ensuring the flexible operation of power systems, with India becoming the largest market for utility-scale battery storage. Bottom line,  it seems there will be massive investments made in renewable energy storage. 

Power Grids: 
All of these assumptions require a massive investment in power grids, which need upgrades to absorb supply from more diverse sources that only work when the sun shines or the wind blows. Investment to modernize, expand and digitize the grid will need to reach $460 billion in 2030, two-thirds more than the cost last year. That spending will help roll out 2 million kilometers of new transmission lines and 14 million kilometers of distribution networks, 80% more than was added in the last 10 years, according to the IEA. 

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