The renewable energy sector may well be one of the best examples of industrial policy, initiated by the German government's Energiewende program and subsequently emulated elsewhere,
When the definitive history of the energy transition is written, the taxpayers of Germany will deserve their own chapter. They bankrolled the green energy revolution known as the Energiewende, pioneering generous subsidies nearly 20 years ago that helped drive renewables up from 9 per cent of Germany’s electricity mix in 2004 to 32 per cent last year. As other European nations — and some US states — boarded the green power wagon, it kindled a wave of demand for wind turbines and solar panels that helped drive costs down worldwide. Solar’s price fall was especially steep after a Chinese manufacturing boom spurred global over-supply. The result was doubly miserable for conventional fossil fuel generating companies: renewables crowded them out while simultaneously driving down wholesale power prices, causing billions of euros in losses.
Doubtless renewables remain very small share of global energy consumption - oil, gas, and coal fired 86% of global lighting, cars, and home heating; solar and wind just 4.4% of global electricity; and electric cars just 0.9% of global vehicle sales. But the pace of growth is spectacular, and threatening to upend business models and markets in electricity and transportation,
Global renewable power generation capacity rose by 9 per cent last year — a fourfold increase from the start of this century — buoyed by the growth of newer sources such as solar power that shot up by more than 30 per cent. For the second year in a row, renewable energy accounted for more than half the new power generation capacity added worldwide. Sales of plug-in electric vehicles last year were 42 per cent higher than in 2015, growing eight times faster than the overall market. The storage capacity of big lithium ion battery systems more than doubled last year... Germany’s two largest power utilities, Eon and RWE, shook the industry last year when they split themselves in two, hiving off struggling fossil fuel operations from cleaner power businesses... The US solar industry employs more than twice as many workers as the coal sector, a report showed in February. Manhattan has more Tesla charging spots than petrol stations, though many are in fee-paying parking garages.
Developing countries, primarily China and India, have taken the lead in driving the market now,
Yet fast-growing industrialising nations are seeing some of the most profound changes. Towering over them all is smog-choked China, which has become a green energy juggernaut after designating renewables a strategic industry. China has more than a third of the world’s wind power capacity; a quarter of its solar power; six of the top 10 solar-panel makers; four of the top 10 wind turbine makers and more battery-only electric car sales last year than the rest of the world combined. India is eager to follow: it built one of the world’s largest solar photovoltaic farms last year; ranks fourth in the world for wind power capacity; and could become the world’s third-biggest solar market this year. It also wants to boost its use of electric cars.
And on the history of global energy transitions - wood to coal and oil, and now to renewables,
As coal gradually displaced wood, for example, it reached 5 per cent of all fuel energy in 1840 but was still only about 50 per cent by 1900... (But) Nuclear power in France went from 4 per cent of the country’s electricity supply in 1970 to nearly 40 per cent in 1982, for instance... the latest energy transition could be swifter because it is driven by deliberate efforts to curb climate change, rather than chance. Countries around the world have adopted more than 1,200 climate change laws, up from about 60 two decades ago, a study this month showed. Renewables now receive direct policy support in an estimated 146 countries, nearly triple the number in 2004. That backing has seen the cost of wind turbines fall by nearly a third since 2009 and solar panels by 80 per cent, says the International Renewable Energy Agency... In 2010, IEA projections suggested it could take 14 years before there was 180 gigawatts of installed solar capacity. It took less than seven years for the world to reach more than 290 gigawatts, nearly the entire generating capacity of Japan.
It looks increasingly likely that the big breakthrough for renewables will come from storage and possibly again industrial policy, this time in China,
Storing clean power has long been a holy green grail but prohibitive costs have put it out of reach. This has begun to change as battery production has ramped up to meet an expected boom in electric cars. Lithium ion battery prices have halved since 2014, and many analysts think prices will fall further as a slew of large battery factories are built... at least 14 megafactories being built or planned, says Benchmark Minerals, a research group. Nine are in China, where the government is backing electric cars with the zeal it has directed at the solar industry. Could this led to a China-led glut like the one that helped drive solar industry write-offs and crashing prices after the global financial crisis?
Australia may provide a glimpse of the dynamics when storage causes off-grid production and consumption and its impact on utilities,
For all the excitement about batteries, the technology is still not ready to let householders in any part of the world stick a solar panel on the roof, a battery in the garage and abandon grid power completely... In Australia, where household electricity prices nearly doubled in the decade up to 2014 and rooftop solar levels are among the world’s highest, more than 6,700 battery systems were sold last year, up from 500 in 2015... By 2020, about 1m homes could have batteries... All utility investors should monitor Australian market developments to anticipate how the market will evolve elsewhere. Battery companies flocking to Australia say it is only one example of a new breed of “prosumers”, people using renewables and batteries to produce and consume their own power... In quake-prone Japan, a hotbed of battery technology, industry leaders say it is inevitable that home solar-storage systems will become commonplace.