Changes are afoot in the energy sector, with increasing emphasis on renewables and rising opposition to fossil fuels. With everyone from investors to corporations to governments and world financial institutions taking action to drive a switchover, investors should be aware of some of the latest trends.
Opportunities appear abundant in renewables. In Australia, for instance, new research finds that by 2040 Australia’s energy grid could be 100% renewable if it continues deploying renewable technology just a little faster than its current pace. Currently the Australian government’s target is 20% renewable energy by the end of the decade.
The research, from Andrew Blakers, director of the Center for Sustainable Energy Systems at Australian National University, indicates that the move will come without a specific mandate to convert to renewables, since existing power stations that are dependent on fossil fuels will be replaced at the end of their service lives by plants using alternative sources.
Bloomberg New Energy Finance has also indicated that the cost for alternative energy will not be greater than that for fossil fuels, either, because wind power is already cheaper than the cost for new coal- or gas-powered production, and solar is coming down in price. The perception of alternative energy plants as high-priced, said BNEF, stems from the fact that alternatives are frequently compared to 40-year-old fossil fuel plants that are fully depreciated. When set up against the cost of new-construction plants to replace old ones that are shutting down, that is not the case.
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Blakers’ research used even more conservative technology cost forecasts to arrive at its conclusions than BNEF; it drew instead upon the forecasts from the Bureau of Resource and Energy Economics. The result was similar, but with a slightly longer timeline.
Still, the speed with which Australia is approaching 100% renewables is likely to continue, since it was already at 10% in 2010. Rooftop solar energy production is popular there, and that, coupled with plans for a fixed 41,000GWh target for large-scale renewables, could help the country blow past its milestone of 20% by 2020.
AGL Energy Ltd., Australia’s largest developer of renewable energy projects, said at the end of July that it was proceeding with the country’s largest solar power development. The 155-megawatt project will take shape at two sites in Broken Hill and Nyngan in New South Wales. It will cover a combined area four times the size of downtown Sydney, and will be built in collaboration with U.S. company First Solar Inc. The project is estimated at A$450 million ($408 million), with A$166.7 million coming from federal and A$64.9 million from state funds. The Nyngan plant alone is expected to be the largest in the southern hemisphere.
BNEF said that as wind and solar proliferate in replacement of fossil fuel power, Australia could hit 46% by 2030, and the rate of replacement could accelerate in the ten years following, as old plants are replaced with new. BNEF also said that fossil fuel could end up being pushed out of the market as alternatives and new power storage options emerge. In a report issued at the end of June, BNEF said the country is expected to install about 5,000 megawatts of large solar photovoltaic plants through 2020; at present the total in the country is 17 megawatts in large-scale capacity.
Australia is not the only country pressing forward on renewables. On the other side of the world, Peru has launched a program to bring electricity to 2 million of its poorest citizens via solar power. In the first wave of installations in early July, the National Photovoltaic Household Electrification Program installed 1,601 solar panels in the Contumaza province in the districts of Cupisnique, San Benito, Tantarica, Chilete, Yonan, San Luis, and Contai. They are expected to provide power to 126 poverty-stricken communities.