Research says Renewable sector could cannibalize its own profits

Published: 30 May 2018 By Grace Kimberley

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As wholesale power prices fall in the lead up to the renewable energy “boom”, a new report by energy market analyst Cornwall Insight indicates the future investment in additional capacity could be at risk.

According to Cornwall Insight, the increasing investment in renewable energy, matched with the sector's plummeting costs could become a significant problem in the years to follow. The analyst firm also believes unsubsidised renewables projects could become unfeasible by 2030 due to “scarily low” power prices.  

Cornwall Insight’s discoveries also included an investigation into the impact of low pricing, which suggested cheap solar and wind prices could be here to stay. Negative prices are predicted to account for 15.5 per cent of our-turn periods, says Cornwall’s analysts.

The Berkley Lab study also stated more concerns over future energy prices, as well as the need for flexible generation resources and the importance of energy storage.

Dr. Varun Sivaram, the Philip D. Reed fellow for Science and Technology at the Council on Foreign Relations says: “Failing to plan for a diverse mix of low-carbon generators could lead to the premature shutdown of some resources, such as nuclear, even when keeping those resources running might be the most cost-effective decarbonization path,”

“The value of solar or wind changes as more of it is deployed, meaning that at different penetration levels, renewable projects that cost the same amount might fall out of the money,”

“Energy markets should be structured to ensure that the mix of electric power supply achieves the desired greenhouse gas emissions level, ideally zero by mid-century, at the lowest possible cost, while assuring reliable and safe electricity supply.”

According to a Bloomberg opinion piece written by Michael Liebreich (New Energy Finance), the industry “must” stop referring to the energy market as one industry.

“Electricity is a commodity, but there are multiple ways of supplying it,” Leibreich said. “The key to cheap, resilient, clean energy lies in the ability to put together the perfect portfolio of different types of power.”

 

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