Solar remains leading renewable energy solution
The increasing interest in renewable energy projects has driven up the scale and capacity of the facilities. AmInvestment Bank
KUCHING: Renewables installations in solar, wind and storage facilities are set to rise by 40 per cent year on year (yo-y) to a record 140GW globally after experiencing a dip in the second quarter of financial year 2020 (2QFY20) due to Covid-19 project delays.
This is predominantly driven by solar photovoltaic ( PV) solutions, followed by onshore wind installations.
According to AmInvestment Bank Bhd (AmInvestment Bank), with Europe relatively flattish in new capacity additions, China is expected to be the main driver for renewable capacity increase with an addition of 50GW this year, followed by the US at 30GW.
However, 55 per cent of 2020 global capacity additions are still under construction with completion expected by 4QFY20.
“The increasing interest in renewable energy projects has driven up the scale and capacity of the facilities,” it said in a special report. “In 2020, only 16 per cent of the 140GW global additions comprise projects below 50MW, versus 59 per cent in 2017. Projects above 500MW account for seven per cent of 2020 additions compared to almost nil in 2017.
“While green hydrogen projects account for only 30GW – 14 per cent of total renewable capacity – of announced 2020 projects, the prospective pipeline could easily double to 63GW. The leading electrolyser contractors are Hydrogenics, Siemens and ThyssenKrup.”
The vast majority of industrial hydrogen, currently produced from natural gas through steam methane reforming processes, is referred to as brown, grey or blue hydrogen.
However, hydrogen can also be produced by the electrolysis of water by using an electric current to decompose water ( H2O) into its component elements of hydrogen and oxygen. If this electric current is produced by a renewable source such as solar PV or wind turbine, the clean hydrogen produced without CO2 emissions is called green hydrogen.
However, electrolysers are currently expensive due to lack of scale as well as the high containment cost of hydrogen gas, which is highly flammable and erodes metal pipes. Hence, these costly hydrogen solutions currently require government support and incentives.
“The transition of oil & gas companies from fossil fuels have spurred joint venture partnerships as well as merger and acquisition activities in the renewable sector, with Total tripling its capacity this year,” AmInvestment Bank added.
“Shareholder and green agenda activism has accelerated plans to spend a capex of US$ 200
billion by 2030 with almost all majors committing to achieve net zero emissions by 2050 with plans to divest their overseas oil and gas investments. Europe and Japan have committed to this target by 2050 and China by 2060.”
The shift towards renewable energy in Malaysia has already been underway over the past three years with Petronas
operating 448MW of solar capacity in India and Southeast Asia, and presently developing another 212MW.
AmInvestment Bank saw that in Malaysia, Petronas is operating and developing 50MW of solar capacity, part of that to supply to 15 Tesco stores. Amongst local service providers, only Yinson has taken the plunge by investing US$ 30
million for a 95 per cent equity stake in a Rising Son Energy, which has a 160MW solar farm in Bhadla Solar Park Phase II, Rajasthan, India.
Nevertheless, the research house envisage a slow adoption of renewable projects by local O&G providers given that a large segment is currently burdened by high gearing amid a low oil price environment.