Global outlook of renewable energy by Maria van der Hoeven

Global outlook of renewable energy by Maria van der Hoeven

Politics and politicians have a role to play in the global outlook for renewable sources of energy, just as much as technologists, researchers or scientists, said Maria van der Hoeven, Senior Associate Fellow of the Clingendael International Energy Programme. After 20 years as a politician she has observed the changing energy markets, and the increasing need for energy.

“The energy landscape is changing – but not as fast as some think – on three fronts; climate change, secure energy supply, and economic development,” she said. Mitigation of climate change depends on reducing energy use, and decarbonising energy. The demand for energy is expected to grow in developing countries, where the mix of technologies providing energy is undergoing change, broadly according to four interdependent trends:

  1. Decentralisation and consumer empowerment
  2. Digitisation
  3. Greater integration and service orientation from industrial sectors, processes, new jobs and skills
  4. Decarbonisation.

Sector distinctions may fade

Energy consumers will play a more important role, she said, but several important challenges remain, including creating stability in the grid. New technologies will bring new solutions, but changes will not take place at the same pace in all countries. The distinctions between sectors of the energy industry may fade as changes take place, and with a new mix of incumbents and new arrivals. New renewables still play a quite small role in absolute terms, but the landscape is still dominated by fossil fuels. In most economies, decarbonisation is accelerating, but in developing economies, renewables are expected to meet only a proportion of energy needs.

Maria van der Hoeven’s recommendations are:

  1. Support innovation in market integration
  2. Create stable and sustainable policy frameworks
  3. Reduce the cost of financing and improve its risk profile

New realities

Seeing that solar and wind power are growing fast worldwide, and that increasing capacity leads to new realities in the scale of costs ‒ and costs are coming down ‒ means that solar and wind are now priced competitively against fossil fuel electricity in many countries.

“So further sustained deployment of these energies will mean economies of scale and further cost reductions", she said, and referred to Bloomberg New Energy Finance’s 2017 report. Investors need a strong financial case ‒ in addition to the environmental case ‒ because many large-scale infrastructure projects are characterised by long lifetimes and a requirement for large finance deals, so changes to the structure of the industry are needed now. In order to capitalise on the wins and gains available, Maria van der Hoeven described what’s needed in the future; a taxonomy (scheme of classification) of policy support and public funding, as well as changes in human behaviour, societal innovation and technological innovation. All of industry has a part to play, she said.

The intermittency of solar and wind power is an extra challenge, as is the current structure of electricity markets. How can increased flexibility – facilitated by digitalisation ‒ be rewarded? A holistic approach is needed for generation and storage, for example from electric vehicles (EVs) connected to a smart grid that can be used to store electricity from renewable sources, or using clean molecules such as hydrogen. These are new business models and new rules and regulations in which digitalisation is paramount.

Consistent and stable policy

In conclusion, consistent and stable policy is crucial, said Marian van der Hoeven. The differences in established and emerging economies are huge and need to be balanced; innovation research is crucial for bringing costs down and discovering new technologies. And a meaningful price for CO2 and further standards on efficiency and emissions are needed. “The future is in our hands, you have to start work today. Taking the future seriously means there is no room for business as usual,” she said. Answering questions from the audience, Maria van der Hoeven said: “I didn’t like it at all that biggest economy in the world stepped out of the Paris climate agreement but she also pointed out that the USA cannot withdraw immediately, and she hopes that the large amount of countervailing opinion in the USA would have an effect.