Only the most starry-eyed optimist would have predicted that renewables could thrive, let alone grow, during a time of slow economic growth. While it’s true that in regions like Europe, wind and solar power were helped out of the gate by government incentives and subsidies, the falling costs of solar and especially the rising cost of natural gas and other forms of power generation have now made renewables competitive. Total electricity generation in Europe has declined steadily since the highs of 2007, from 3392 TWh to last year’s 3259 TWh. But during that time combined wind+solar have taken enormous market share, from a 3.19% share in 2007 (108 TWh) to a 9.78% share (319 TWh) last year. | see: Contribution of Solar+Wind Consumption (yellow) in Total EU Electricity Generation - TWh 2000-2013.
Increasingly, power inputs like coal remain cheap to source, however, the infrastructure required to burn sources such as coal is more costly than ever. Wind and solar are also exerting downward pressure on EU power rates. Lower prices “leave a trail of blood in our balance sheet,” Bernhard Guenther, chief financial officer at Germany’s RWE said recently.
Because oil is so sparingly used in the EU, the great game in this region has fully moved to the powergrid and the impossible has already come into view: lower than expected electricity rates are now emerging as marginal contributions from wind and solar have already tipped this market into slight oversupply. It may not be clear just yet, but Europe’s first mover status as the region to embrace renewables early will grant the region competitive advantages as energy transition completes.
—Gregor Macdonald, Editor of TerraJoule.us, monthly ebook/newsletter covering the macro of global energy.
Gregor is generous with his knowledge and a superb follow if you are interested in green energy.
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