By Ben Warren on 17 May 2017
For years, those advocating a clean energy revolution have faced two undeniable barriers: the relatively high cost of renewables and, for most renewable technologies, their intermittency. As long as these barriers remained in place, the penetration of renewable energy generation would remain constrained.
As we explore in the latest issue of our Renewable Energy Country Attractiveness Index, the renewable energy sector is, finally, breaking free.
We find falling costs in the offshore wind sector beginning to deliver subsidy-free clean power, at scale, across northern Europe. With the right conditions — including a little help with transmission costs — developers are confident that the next generation of offshore turbines will be able to pay their way without government support.
This has been a remarkable story, where the industry has rapidly refined its technology and slashed costs. It shows what is possible with supportive policy and a long-term vision.
A parallel process is taking place in energy storage, albeit with somewhat different drivers. Here, the possibilities presented by electric vehicles have driven enormous investment in battery technology, leading to dramatic price declines. This is enabling battery storage to insert itself into a growing number of niches within power generation, distribution and supply.
It is difficult to overstate just how profound the impacts of wide-scale, low-cost energy storage will be on the utility sector. Ever since the first power plants were built in the 1880s, electrical engineers have grappled with the challenges of balancing, in real-time, the supply and demand of a commodity that was almost impossible to store.
These challenges have become only greater with the rising proportion of intermittent renewable energy on electrical grids around the world. Battery storage promises to address these challenges, as well as ultimately enabling the entire decarbonization of the world’s electricity supply.
The impacts on the power and utility sector will be disruptive. While the sector has generally been able to adapt to new types of generation capacity such as renewables, the rapid spread of battery technology will be much harder to integrate into legacy business models. It promises to shift power toward consumers, undermine grid operators’ investment plans and allow new entrants to challenge utilities.
It also presents an enormous investment opportunity. Utilities start with some advantages — existing customer bases, network knowledge and relationships with regulators — but they will have to move quickly. The combination of distributed renewable energy and affordable storage presents perhaps the biggest challenge to the utility sector since the switch was flicked “on” at the first Edison power plant.