Renewable energy has made tremendous progress in recent years, with solar power becoming increasingly cost-competitive with other power sources. However, a recent report by the International Energy Agency (IEA) highlighted the challenges that must be overcome in order for renewable energy to reach its full economic potential.
One of the key barriers to renewable energy deployment is the lack of grid and energy storage infrastructure. The IEA report noted that 60 cents were spent on grids and storage for every dollar spent on new renewable capacity, highlighting the imbalance in investment between these two areas.
- Market design and policy mechanisms are crucial for driving clean energy deployment
- Fossil fuel subsidies, permitting and planning challenges, and grid infrastructure limitations all pose significant obstacles
- Policymakers must take responsibility for creating the conditions for clean power to flourish
Another concern is price cannibalisation, where renewables penetration lowers energy prices to near- or below-zero, harming the economics of renewables and ultimately storage.
| Prospect of growing power price erosion | Harms the economics of renewables and ultimately storage |
| Price cannibalisation is strongest for solar | But holds true for all zero-marginal-cost technologies |
| Wholesale power prices will not be sufficient to drive investment levels consistent with our ETS | Other market mechanisms will continue to be needed |
Despite the challenges, some experts argue that the industry is maturing and becoming more market-driven, with a focus on economics rather than policy directive.
“Renewables 2.0” is the new paradigm, where the solar industry is becoming more self-sustaining and less reliant on government intervention.
However, BloombergNEF’s report highlights the need for policymakers to address these barriers and create the conditions for clean power to flourish.
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