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4 predictions for the future of renewable energy

20/05/2020
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At the beginning of 2020 we published an article about 10 of the biggest renewable energy projects to watch this year. There we talked about renewable energy as the fastest growing market sector globally and made a number of predictions about the continued expansion of the industry in the near future. Our reasons ranged from improvements in technology to increased political and social pressure on investment in green energy to a fall in costs for installing wind, solar and other renewable technologies. 

Of course the world changed dramatically since the beginning of the year, so all our predictions went out of the window. 

No-one could have known how 2020 would turn out and there is still a lot of uncertainty about the future. But we can try to evaluate where we are now with what we currently know and start to consider how things might turn out in a post-lockdown world. 

For the renewable energy industry this presents a lot of very interesting questions. Will growth return to the same level as before, will reliance on renewables grow even faster or will an economic downturn affect investment? 

Here are four predictions we can make now. 


(Image via Nicholas Doherty / Unsplash)

1. The sector is not immune to the impact of Covid-19

According to predictions by the international energy alliance (IEA) the number of new renewable power installations worldwide will fall for the first time in 20 years. Net additions of renewable electricity capacity are expected to decline by 13% compared with 2019 due to delays in construction activity, lockdown measures and social-distancing challenges, and emerging financial challenges. 

When you compare these figures to predictions made before the spread of coronavirus, the IEA now anticipate combined growth in 2020 and 2021 to be around 10% lower than their last forecasts, published in October 2019.

As expected, solar pv and wind still make up most of the renewable energy market - that aspect hasn’t changed - accounting for 86% of global renewable capacity additions. The IEA expects these areas to fall by 18% and 12% respectively compared to 2019. With much of the solar pv supply chain coming from smaller businesses it’s also thought that this particular industry will be slower to recover than wind, with forecasts for 2021 also expected to fall short of 2019’s capacity additions. 

Biofuels are often overlooked when talking about renewable energy, but the market has been steadily increasing for the last two decades, as consumers and manufacturers seek to move away from petrol and diesel. The effects of lockdown however mean that far fewer people are driving and demand for all fuels are falling. Petrol is expected to fall by 9% in 2020, diesel by 6% and biofuels by as much as 13%. 


(Image via Unsplash)

2. Renewable energy will play an increasingly important part of the global energy mix

It’s not all bad news. 

Despite the impact on the industry, renewable energy is still expected to grow in 2020. A decline in the number of new renewable power installations means that there won’t be as many new sources as last year - but it doesn’t mean there won’t be any. The IEA predicts a 6% increase in global installed renewable power capacity, which surpasses the combined size of power systems in both North America and Europe. 

In addition, a lot of the impact on the industry by Covid-19 is a delay, not an end to projects. The effects are only negative in the short term, while the long term will even itself out. The majority of delayed projects are expected to come online in 2021, with the IEA forecasting a return to the level of renewable energy capacity additions as in 2019. 

This would make renewables the only energy source to grow this year - contrasting with the likes of oil, gas, coal and nuclear. 

Existing infrastructure provides benefits as well. Following a record year in 2019 for additional capacity, there is a greater amount of renewable energy available. And these sources are generally prioritised by the grid, essentially being used up before fossil fuels fill the gap. The impact of the lockdown has meant a reduced demand for energy from industrial users and this means that renewables appear to have a larger market share. In Britain, more power usage came from renewables than fossil fuels for the first time ever, with almost half the electricity used in the country coming from wind and solar sources. 

Though you could easily argue against the data - it only accounts for such a high percentage because renewables come first and there is less power needed during this time - it is nevertheless data that political leaders will cling to. As businesses return and power usage ramps up once again, they will want to see these percentages stay the same and so greater priority will be put on increasing the renewable energy supply in line with demand.

It also highlights that there is a potential for a world powered by renewable energy sources. If Britain can take the majority of its power from renewable energy now, why can’t it continue to do so? And why can’t other countries. This is a big win for renewable energy’s potential.


(Image via Dan Meyers / Unsplash)

3. Things are unlikely to return to the way they were

The current climate presents a lot of uncertainty and there’s much talk of things going “back to normal” after lockdowns are lifted. But the reality is that while we can’t know for sure what the future will hold, it’s unlikely that the post-covid world will be the same as the one we left at the beginning of the year. 

Energy research and consultancy firm Wood Mackenzie recently released their report on “the world after covid-19: scenarios for the future of energy” - in which they use data from industry experts and analysts to set out three possible options for the future world. 

  • Scenario 1 - Full recovery

While the effects of the virus and lockdown will create a global recession, it will be relatively short lived and with the help of government intervention, economies will reach the same level of GDP as it would have if the pandemic had never happened by the end of the 2020s. 

In this scenario we could therefore expect the growth of renewables and transition of fossil fuels to ultimately fall back into the trends they were following already. That is a slow but steady increase in investment for larger scale renewable energy supply, fuelled by international calls for net-zero emissions by 2050 that may ultimately result in the sector taking over the energy market, but not for a significant period of time. 

  • Scenario 2 - Go it alone

This scenario is put forward as the potential if the virus is “more difficult to defeat”, with a longer term recession and tighter controls on import/export and global travel creating a need for shorter and more secure supply chains. 

Essentially the worst case option for everyone. From a renewable energy perspective it would mean less investment and less collaboration across nations, resulting in higher costs for new projects and technologies.  

  • Scenario 3 - Greener growth

Like the first scenario, this imagines a short, sharp recession with a strong rebound. But this imagines that instead of pushing to get back to the way things were, governments in major countries have an eye on the future, pushing stimulus programmes on supporting the energy transition. 

It may seem like an optimistic view, but there is strong reason to believe that the third scenario could be the most likely. As Wood Mackenzie highlight, we have already seen an expanded role for government in relation to businesses over the last few months, with new restrictions and measures affecting almost 4 billion people. The new normal is almost certain to involve an ongoing expanded role for government, for better or for worse, and that will involve stimulus programmes in the face of a recession. 

Faced with increased social pressure for a better environment it is reasonable to believe that there will be some tax breaks, grants or low-cost loans offered to renewable energy, electric vehicles, storage and other low-carbon technologies. 

Of course there are various political factors to take into consideration and it would stretch optimism beyond belief to suggest that all national leaders would actually look for a long-term, progressive plan instead of trying to force a return to the “normal” of the past. But there were already significant plans in place from many areas - including the European green deal and the US Democrat’s Green New Deal - that are gaining increasing support from various sectors. Many companies - including major energy suppliers such as Shell and Total - are looking at achieving net-zero, with the support of their customers and workers. Faced with a new normal, societal pressure could become the driving factor that makes this scenario the most likely reality. 

“The 'Greener growth’ scenario is in line with Wood Mackenzie’s existing projection for an accelerated energy transition, reflecting potential changes to the global energy system if governments worldwide commit to radical change to cut carbon emissions.”

The company predict that in this scenario the combined share of oil, gas and coal in total primary energy could drop to 68% by 2040, down from 82% in 2019. 

Again, there is a lot of speculation here and we can’t be sure what will happen - and you’ll have to read the full report to get the best understanding of Wood Mackenzie’s three scenarios - but by presenting the scenarios we can see a potential route that drives a stronger market for the renewable energy industry. While it’s true that anything could happen - it’s most likely that things will not return to the way they were. And that could be good for green energy.


(Image via Unsplash)

4. Renewable energy companies will drive bigger and better opportunities

Renewable energy has long been a minority competitor to the fossil fuels industry, but over the last few years it has significantly grown to show a real threat to traditional energy sources.

The maturity of the industry has given it strength to withstand economic challenges, with projects large enough to be considered vital to many areas. With all that in place already, the businesses providing that power are not going to give up their market share easily.

We have already mentioned above the greater reliance on renewable energy in Britain in the early part of 2020, and this growth over the past few years has created thousands of jobs across the UK, bringing billions in investments into the economy. The story is the same in numerous other countries as well. The strength of this means that the industry can no longer be ignored by governments, even if they wanted to, and the great potential for more investment, more jobs and more projects in the country - plus a positive social image - means that we can expect future legislation to support renewable businesses in the country.

We have already seen the resilience of the industry throughout the pandemic in Spain. With the country in lockdown, the final stages of the Núñez de Balboa 500 megawatt solar park seemed like it would inevitably be delayed - or worse. But as the largest solar array in Europe, completion represented a necessity for the area. Armed with PPE and revised safety adjustments to prevent the spread of the virus through the project, workers went back to the installation of the 4 square miles of solar panels.

The park was connected to the grid on the 6th of April and has since been supplying power to 250,000 people.

Renewable energy is no longer a minor addition to the energy sector. Millions depend on it and businesses from technical start-ups to Oil & Gas supermajors have been investing heavily in it. With governments and businesses forced to streamline their interests, it’s almost certain that many of them will continue to focus on renewable power over other areas in the future, resulting in a greater potential for growth in the coming years.

Are you ready to be part of the future of the renewable energy industry?

Fircroft’s expert recruitment teams recruit engineering and technical professionals for global roles with some of the biggest names in renewable energy. You can view all our open vacancies here, or register your CV with us today for free to ensure that you’re first in line for future jobs in this expanding industry.

Recent Comments
Nicholas, I am 100% sure you will NEVER publish, what some Oil&Gas folks like myself would say, BUT, You have asked: Are you ready to be part of the future of the renewable energy industry? May I answer, just like one of our Generals has said before, one word: NUTS !!!!
ANDRE GURSES, 20 May 2020
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Tarun Mangtani, 22 May 2020
"...It also highlights that there is a potential for a world powered by renewable energy sources..." This completely ignores burgeoning developments in advaced nuclear power plants. Just 3 days ago, Jillian Ambrose, in the Guardian, was talking the same talk, when she said: "...The returns on equity invested in offshore wind is 11%, and for solar it is 8% despite falling electricity bills..." BUT: The return on equity for advanced nuclear power plants with 2 year build programmes will be staggering for investors. NuScale's will be operational in 2026; GE Hitahi's in 2027; Rolls Royce's in 2029. By 2030, one or other of them will be available in the UK. So, all you green investors out there, make sure you can get you get your money out of renewables and into advanced nuclear, in 5 years or so. Your return on equity will be 12X greater than offshore wind (132%) and 14X greater than solar (112%). You ignore advanced nuclear power plants at your peril: https://bwrx-300-nuclear-uk.blogspot.com/2020/05/invest-90-billion-in-offshore-wind.html https://bwrx-300-nuclear-uk.blogspot.com/2020/05/fund-managers-with-424-million-to.html
Colin Megson, 22 May 2020
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4 predictions for the future of renewable energy - Time to read 11 min
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