Transition to Renewables Accelerates


Two pieces of news last week highlighted the acceleration of renewables investment, driven by both climate change targets and a significant reduction in the costs of wind and PV.

Firstly, DONG Energy announced it is considering the sale of its oil and gas assets so that it can solely focus on renewables. In a recent press release, the company said it had engaged consultants to conduct a preliminary assessment of the strategic options that could result in the sale. It also confirmed its “intention to build a world-class clean energy company with a portfolio based on leading competences in offshore wind, bioenergy, and green distribution and customer solutions.”

DONG floated on the Copenhagen stock exchange earlier this year as a means of funding its transition from fossil fuels to renewables. A sale of the oil and gas arm would bring about access to more funding and enable a quicker transition, but the company stressed that it has not yet made a final decision. DONG has a goal to double its offshore wind capacity compared to 2016 from 3GW to 6.5 GW. It announced last week that it is the first company to have installed more than 1,000 offshore wind turbines.

This milestone was achieved in the same week the IEA announced that global renewables overtook coal in terms of installed power capacity and significantly increased its five-year renewables growth  forecast, lifting it by 13%. The IEA predicts that the share of electricity generation met by renewables will grow from 23% in 2015 to 28% in 2021. Strong policy support in key countries and acute cost reductions have led to fast-paced growth, particularly in China and the US. Last year, 500,000 solar panels were installed every day around the world. Cutting air pollution was also a key driving factor, particularly in China, which remains the key growth market. However, this growth is only expected to represent 50% of China’s increase in electricity demand while in the US and the EU, renewables growth will be greater than the growth in demand.

Despite the high level of renewables capacity, actual electricity generated was the greater from coal-fired plants because renewables are affected by intermittency. That is, the strength of the wind or the sun will influence the amount of electricity generated. While the increase in renewable capacity is an important milestone, the IEA report points to some concerns such as the fact that progress in the renewable heat and transport sectors is lagging behind the renewable power market.

Nikki Wilson

Nikki joined Alfa Energy in September 2015 as a Carbon Management Consultant where she advises clients on legislation, compliance, and the implementation of carbon management schemes. She is a Practitioner member of IEMA, has a postgraduate diploma in Environmental Decision Making, and has over 15 years’ experience in energy consultancy.