In 2018, US consumption of energy generated by renewable sources—wind, solar, geothermal, hydroelectric, and biomass—exceeded 2017 levels by 3%, according to the US Energy Information Administration. That includes an 8% rise in wind-powered electricity and a 22% jump in solar-generated electric power.
Expectations for 2019 point even higher. According to Deloitte, 2018 gains driven by the falling cost of wind and solar generation, improved battery storage technology, and a broad-based surge in demand remain viable. Those gains, Deloitte says, will be complemented by three key trends: new clean energy investment, policy advances, and innovative technology.
Analysts Follow the Money
Large-scale renewable energy conversions require significant capital investment, and Bloomberg New Energy Finance (BNEF) reports that worldwide clean energy investment totaled $332.1 billion in 2018. That represents an 8% decline from 2017 levels. Similarly, in 2019, BNEF anticipates that clean energy investments will drop as much as 10%.
Yet the 2018 dip in investments belied expanding capacity—most notably in the solar industry, where heightened competition resulted in a 10% increase in installations despite a sharp drop in funding. BNEF adds that it expects these conditions to continue in 2019 and that the solar and wind industries may capitalize on falling installation costs to maximize lower investment levels.
Perhaps just as importantly, Greentech Media reports deep-pocketed institutional investors with longer-term perspectives are increasingly prioritizing climate change. For example, in April 2019, Norway’s $1 trillion sovereign wealth fund received government clearance to invest in nonpublic energy projects—a market McKinsey estimates is worth $1.6 trillion worldwide.
Corporations have further bolstered demand, making deals to acquire 6.53 gigawatts of renewable power in 2018. The volume more than doubled compared to 2017 levels, and the outlook remains positive as new buyer numbers trend higher. On wind and solar alone, corporations spent 13% more in 2018 than the prior year, according to Wood Mackenzie research cited in the Wall Street Journal. The consulting firm projects the growth rate will more than double in 2019, driven in part by consumer demand.
Mixed Policies Leave Room for Uncertainty
However, optimism about potential investments is tempered somewhat by uncertainty on the policy front. For example, an American Council on Renewable Energy survey found 89% of corporations surveyed would double their planned investments in renewable projects over the next decade provided that an “ideal policy and market scenario” replaced the current landscape.
A top challenge in the US is a history of inconsistent federal incentive programs, such as investment tax credits set to decline for solar projects installed after December 31, 2019, and production tax credits for wind installations set to expire at the end of 2020.
In the absence of a reliable federal game plan, a number of states have stepped up by enacting renewable portfolio standards which require electric companies to generate a minimum level of power via renewable sources. As of early 2019, 29 states and Washington, DC, had already enated rules on renewables. States have been leaders in the push for the incorporation of storage solutions, including Maryland’s recent passage of a 30% tax credit on residential and commercial battery installations. At the local level, a number of city governments have adopted renewable energy standards ranging from New York City’s target to install 100 megawatts of solar power on public buildings by 2025 to Phoenix’s goal of being 100% carbon neutral by 2050.
Offshore wind is one area that has boasted federal support—the Department of the Interior released select ocean parcels for development, prompting several coastal states to actively pursue offshore wind possibilities.
Solutions Are Increasingly Smarter and More Efficient
As for the conversion of renewable resources into consumable energy, the industry keeps climbing the innovation curve with the development of new approaches to efficiency and improvements upon existing technology.
James Ellsmoor, director and cofounder of global solar nonprofit Solar Head of State, sees several trends emerging in 2019. The first centers on further advances in storage technology that may improve capacity while reducing costs in both residential and utility-scale markets. Meanwhile, growing numbers of microgrids that tap improved software and new artificial intelligence applications could power stand-alone communities or even tie into a larger grid system. Finally, reduced friction in the power marketplace via blockchain technology could create a noncentralized record of usage, conservation, and transactions.
More broadly, the International Renewable Energy Agency is urging its 160 members to share innovations and applications in order to accelerate the integration of wind and solar systems and enhance their versatility.
Potential Challenges Remain
While another year of renewable energy growth appears likely, the road ahead isn’t entirely clear of obstacles. These include:
- An ambivalent White House, which proposed a 70% cut to the Department of Energy’s Office of Energy Efficiency and Renewable Energy 2020 budget.
- Slowing economic growth rates around the world, which could spook investors.
- Trade issues such as new tariffs that distract players from the global benefits of increased renewable usage.
Nonetheless, allowing for the risks, the urgency around the Paris Agreement means that 2019 is set to be net positive for the world’s renewable energy outlook as industries such as solar and wind prepare for new growth.