“Please tell us about the Global Trends in Renewable Energy Investment 2020 report. What are the key findings that the report accentuates upon?”
Few of the key findings of the report are:
a. This year the report highlights a few records for renewable energy investment:
The highest solar power capacity additions in one year, at 118 GW.
The highest investment in offshore wind in one year, at USD 29.9 billion, up 19 percent year-on-year.
The largest financing ever for a solar project, at USD 4.3 billion for Al Maktoum IV in the United Arab Emirates.
The highest volume of renewable energy corporate power purchase agreements, at 19.5GW worldwide.
The highest capacity awarded in renewable energy auctions, at 78.5GW worldwide.
The highest renewables investment ever in developing economies other than China and India, at USD 59.5 billion.
A broadening investment, with a record of 21 countries and territories investing more than USD 2 billion in renewables.
b.This year the report has a focus chapter analyzing the renewable energy commitments made by governments for 2030 through their energy plans, and corporates who committed to 100% renewable sourcing of their energy needs and compare the equivalent renewable capacity and investment with what was done during the last decade and what the Paris agreement requires. The report estimates that the renewables commitments made in their energy plans by 87 governments and the members of the corporate of the RE100 initiative have would lead to 826GW of renewable capacity to be installed, corresponding to approx.. 1 trillion of USD. That compares with the 2.7 trillion investment made and the 1,200 GW capacity built during the past decade, and the report estimate that to reach the Paris agreement minimum goal of 2°C, 2,836GW of new renewables capacity plus 167 large hydro would be necessary for a cost of approx.. 3.1 trillion US dollars. Commitments are therefore less than the 1,200 GW added in the past decade and are short of what is needed for Paris Agreement but somehow within reach.
c.Continuation of three trends seen in previous years: (i) continued strength of renewable energy investment. Investment for new capacity represented 282.2 billion US dollars in 2019. Capacity investment globally has remained relatively consistent since 2014, fluctuating in a 50 billion range between 265 and 310 billion. Behind this consistent level however hides a continuous, almost exponential growth of capacity built. Renewables capacity doubled between 2014 and 2019. It went from 854 GW to 1,627 GW; (ii) secondly and this explains the first one, the continued decrease in renewable energy costs. The report estimates that the Levelized cost of electricity for solar PV decreased by 15% in the second half of 2019 compared to the same period one year before. And by 83% compared to 2009. If solar PV shows the biggest reduction, the wind also posts a continuous cost decrease. The numbers for on-shore wind would be 49% fall over ten years and for off-shore wind 51%. (iii) thirdly continued dominance of renewables in terms of new power capacity additions over fossil fuels and nuclear. Renewables accounted for 78% of the new net power capacity additions last year in the world. In terms of investment, renewables represented slightly less than 75%.
“The cost of installing renewable energy has hit new lows. What kind of opportunity does it provide for the economies to boost investments into future capacity expansion?”
The report estimates that an estimated two-thirds of the world’s population now live in countries where either solar or wind or both is the cheapest option for new electricity capacity. The report also shows the record level of PPAs signed by corporations. Those illustrate that renewable energy is now a cost-effective investment, in addition to its benefits in terms of carbon emission reduction, public health, and suitability to decentralized energy solutions for energy access.
“The COVID-19 pandemic has resulted in massive slowdown within the renewable energy sector. What kind of recovery reforms help the sector for warranting a sustainable future?”
The report does not give estimates regarding the impact of COVID 19 pandemic on renewable energy investment.
A recent IEA report (Global Energy review 2020) does and indicates that renewables were the only energy source that posted growth in demand for the year till 28 April, driven by larger installed capacity and priority dispatch and that renewable energy demand is expected to increase in 2020 because of the low operating costs and its preferential access to many power systems
“As per the report, what has been the kind of investment trends that the sector has witnessed over the years. What are the key factors that will impact future investments?”
Cost decrease is expected to continue even though maybe not with such a sharp fall and will continue supporting investment. Incentivizing policies will always have a supporting impact on renewables even though their cost-competitiveness is there for two-thirds of the world, and countries have to honor their commitments to the Paris agreement. Other supporting factors include health considerations as well as the necessary progression of renewable energy into other energy sectors (transport, heating and cooling for industry and buildings). Limiting factors include the integration of renewables in the transmission systems and national grids.
“With the current crisis situation, what prospects do you see for the global shift to complete renewables for future power generation?”
The analysis for the next decade brought this year is based on hard commitments made by countries and corporates in their 2030 energy plans
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