Emerg­ing mar­kets poised to lead pack on re­new­able en­ergy

The Star (St. Lucia) - Business Week - - FRONT PAGE - BY FT COR­RE­SPON­DENT

Emerg­ing mar­kets are set to eclipse de­vel­oped na­tions next year in their ca­pac­ity to gen­er­ate wind and so­lar power as equip­ment costs fall and the en­ergy mar­ket ap­proaches “peak coal”, ac­cord­ing to Moody’s, the credit rat­ing agency.

Emerg­ing mar­kets are set to eclipse de­vel­oped na­tions next year in their ca­pac­ity to gen­er­ate wind and so­lar power as equip­ment costs fall and the en­ergy mar­ket ap­proaches “peak coal”, ac­cord­ing to Moody’s, the credit rat­ing agency.

While de­vel­oped coun­tries have long been lead­ers in re­new­able power gen­er­a­tion, emerg­ing economies are close to over­tak­ing them, bring­ing their to­tal in­stalled ca­pac­ity of wind and so­lar to 307GW and 272GW — re­spec­tively 51 per cent and 53 per cent of global ca­pac­ity, ac­cord­ing to Moody’s cal­cu­la­tions.

China ac­counts for the lion’s share of the up­surge. But Mid­dle East and north African coun­tries are sched­uled to have in­stalled 14GW in so­lar plants by the end of 2018 — a sev­en­fold in­crease from 2015. Cen­tral and South Amer­ica are also ex­pected to reach 14GW, nearly five times more than in 2015, while In­dia is set to hit 28GW, a jump of nearly six times.

“Every­one knows the cost of in­stalling so­lar and wind en­ergy has been com­ing down, but re­cently we have seen prices hit­ting extreme lows in places such as Mex­ico, Chile, In­dia and Abu Dhabi,” said Swami Venkatara­man, se­nior vice-pres­i­dent at Moody’s In­vestors Ser­vice.

“This fall in costs is def­i­nitely chang­ing the cal­cu­lus of [emerg­ing mar­ket] gov­ern­ments, al­low­ing them to pur­sue re­new­ables much more ag­gres­sively,” he added.

An­other fac­tor is the on­set of “peak coal” in the en­ergy mar­ket. In 2013, the US En­ergy In­for­ma­tion Ad­min­is­tra­tion pro­jected that world coal de­mand would rise 39 per cent by 2040. Now it is ex­pect­ing growth of just 1 per cent.

The at­trac­tive­ness of wind and so­lar power de­rives mainly from tech­no­log­i­cal ad­vances that are slash­ing costs and eras­ing the need for sub­si­dies, with the trend seen as by no means over.

“Nu­mer­ous key mar­kets re­cently reached an in­flec­tion point where re­new­ables have be­come the cheap­est form of new power gen­er­a­tion, a dy­namic we see spread­ing to nearly ev­ery coun­try we cover by 2020,” said a re­cent re­port by Mor­gan Stan­ley, the in­vest­ment bank.

“The price of so­lar pan­els has fallen 50 per cent in less than two years. All-in costs for wind power in coun­tries with favourable wind con­di­tions can be as low as one-half to one-third that of coal-fired or nat­u­ral gas-fired power plants, and wind tur­bine out­put will in­crease ex­po­nen­tially as wind blade lengths con­tinue to in­crease,” the bank added.

The pop­u­lar­ity of so­lar power in emerg­ing mar­kets is grow­ing more quickly than that of wind. By the end of 2019, Moody’s es­ti­mates, emerg­ing mar­kets will host 353GW of so­lar ca­pac­ity — a 2.6-fold in­crease over 2015 lev­els — eclips­ing an es­ti­mated 349GW of wind power, a level 1.5 times higher than in 2015.

The cost of stor­ing power in bat­ter­ies, a short­com­ing that has ham­pered adop­tion of re­new­able en­ergy, is also de­clin­ing rapidly, with bench­marks that had been pro­jected for 2020 be­ing reached over the past two years, Mr Venkatara­man said.

Cheaper stor­age should not only help re­solve the in­ter­mit­tent gen­er­a­tion prob­lems of wind and so­lar plants but could also cut the price of elec­tric cars, giv­ing them mass-mar­ket ap­peal within a few years, Mr Venkatara­man added.

(Source – Getty Im­ages)

Tech­no­log­i­cal ad­vances have slashed costs and cut the need for sub­si­dies

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