Balance of power tilts from fossil fuels to renewable energy: VIDEO
July 26, 2016
Balance of power tilts from fossil fuels to renewable energy
Indian workers construct part of the France-India Solar Direct Punjab Solar Park project in Muradwala
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Ed Crooks
These are strange days in the energy business. Startling headlines are emerging from the sector that would have seemed impossible just a few years ago.
The Dubai Electricity and Water Authority said in May it had received bids to develop solar power projects that would deliver electricity costing less than three cents per kilowatt hour. This established a new worldwide low for the contracted cost of delivering solar power to the grid — and is priced well below the benchmark of what the emirate and other countries typically pay for electricity from coal-fired stations.
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In the UK, renowned for its miserable overcast weather, solar panels contributed more power to the grid than coal plants for the month of May.
In energy-hungry Los Angeles, the electricity company AES is installing the world’s largest battery, with capacity to power hundreds of thousands of homes at times of high demand, replacing gas-fired plants which are often used at short notice to increase supply to the grid.
Trina Solar, the Chinese company that is the world’s largest solar panel manufacturer, said it had started selling in 20 new markets last year, from Poland to Mauritius and Nepal to Uruguay.
It is not only renewable energy that is throwing out such remarkable news. Production costs in the US shale oilfields have been cut by up to 40 per cent in the past two years, according to Wood Mackenzie, the research company. Cargoes of liquefied natural gas have been heading from the US to the Gulf, making the surplus in North America available to the markets of Dubai and Kuwait even though they sit within the world’s largest oil and gas producing region.
The implication of those stories is to suggest there are momentous changes under way in the global energy system, undermining received wisdom in the sector. It is clear that the world is shifting toward renewables and — as a proportion of total consumption — away from oil, gas and coal.
Within the markets for fossil fuels, some sources such as gas are becoming favoured over others such as coal. The question for policymakers and industry experts is how far and how fast these changes can go.
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Down the decades, an attitude of cynicism in the face of the latest trends has generally been the smart position to take on energy. Assets such as oilfields and power plants are big investments that have operational lives lasting for many decades, and so the fuel mix and fleet of power-generating assets turns over slowly.
While renewable energy has been growing fast, it is coming from a very low base. “Modern renewables” — mostly biofuels, wind and solar, but not hydro or traditional biomass — provided just 2.5 per cent of the world’s primary energy last year, according to BP.
That said, there are examples from history of when energy systems have changed rapidly after reaching tipping points. Oil consumption had been growing steadily through the late 19th and early 20th centuries, but really took off during and after the first world war, as warships switched from coal to fuel oil and armies became mechanised with petrol- and diesel-engine vehicles.
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