Powering the planet, lowering the cost of energy, and drastically reducing carbon emissions are the major concerns for mankind in the 21st century. To secure the future for ourselves and generations to follow, it is crucial to act now to reduce the consumption of energy and reduce greenhouse gases. Such issues have raised the preference for renewable energy sources all over the world. But there are several challenges that companies dealing with renewable energy sources face. These challenges hinder the growth of the green economy and obstruct governments from achieving their sustainability goals. In this article, we have talked about those challenges to help power and clean energy companies transform the way they operate, globally.
The world’s energy needs are constantly on the rise, and power companies are looking at all sorts of possibilities and modes to fulfill the increasing demand. It’s a tough task to produce enough electricity to power the needs of all the people across the world. A traditional source such as fossil fuel has been used on a wide scale as the most significant source of energy. However, due to environmental concerns and increasing emissions, governments across the world are slowly reducing their dependence on fossil fuels and are switching over to a cleaner source of energy. As a result, renewable energy sources have been grabbing the headlines more often. The APAC region has been regarded as the prime example for the adoption of renewable energy sources for their power requirements. Numerous reports estimate the energy demand in the APAC region to nearly double by 2030. The region is on the right path to meet such demands even after reducing their dependence on traditional sources. The Chinese government is expected to move away from energy production from coal, which kills thousands of people each year. So, what does the renewable energy future look like in the Asia-pacific region?
China is a world leader in wind energy generation and has ambitious plans to triple its solar power capacity by 2020. The country is aiming to raise its solar energy generation to 150GW and wind energy generation to around 250GW by 2020. Although the renewable energy sources accounted for approximately 14% of Chinese power, they expect to increase this figure to 22% by 2020. In 2017, China announced to scrap their plans to build 85 coal-fired power plants and instead pour about $350 billion into renewable energy. Additionally, the authorities reported that the country had exceeded official targets for carbon intensity, energy efficiency, and the share of clean energy source.
Similar to China, in 2015, India also announced their ambitious goal of increasing the renewable energy power capacity to 175GW by 2022. This plan includes increasing the solar capacity to 100GW, wind energy to 60GW, bioenergy to 10GW, and hydropower to 5GW. If they achieve this target, then they will witness a five-fold increase in power capacity in a span of seven years. Currently, India is the fourth largest installer of wind power behind China, the US, and Germany. India has been largely helped by the falling solar installation prices, with the rate falling as low as 4 cents a kilowatt hour to add 250MW of solar capacity in Rajasthan.
The shift towards a renewable energy future seems to be picking up steams in Japan. After the Tohoku earthquake, 2011 Tsunami, and triple meltdowns at the Fukushima nuclear power plant, the Japanese government introduced a feed-in tariff system to promote renewable energy. The scheme made it mandatory for utilities to purchase wind, solar, mini-hydro, and geothermal energy at a fixed rate for the specified number of years. A report from IEEFA expects Japan’s solar energy to account for 12% of electricity mix by the year 2030. The report also estimates the renewable capacity to reach 159GW by the year 2030.
The success of solar farms in Thailand coupled with positive development in other clean energy resource puts Thailand right on track to achieve its goal to reach the share of renewable energy by more than 37% by 2036. Additionally, the development of ultra-fast charging battery in Singapore is showing a promising renewable energy future as it can charge batteries up to 70% in just two minutes.
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The origins of nuclear energy can be traced back to 1932 when physicist Ernest Rutherford discovered that immense amount of energy was released when lithium ions were split by protons from a proton accelerator. After subsequent discoveries from Niels Bohr and Albert Einstein, nuclear energy was able to power nuclear reactor for energy generation. Today, uranium, a common element in the Earth’s crust, is the element of choice for conducting nuclear fission for generating electricity. Going by today’s consumption rate of the element, numerous studies estimate the reserves to last for another 200 years’ worth of supply. Nuclear energy is distinct from any other source of energy and has its own sets of pros and cons.
Advantages of nuclear energy
Continuous electricity generation
Nuclear power unlike other sources of energy is independent of natural conditions. For instance, solar and wind energy is highly dependent on hours of sunlight or wind which doesn’t usually coincide with fluctuating energy demands. A nuclear power plant is generating electricity about 90% of the annual time which is relatively high compared to other forms of renewable energy. In comparison, natural gas generates an average electricity of 50% of the annual time, while coal and wind produce energy at almost 51% and 32% respectively.
A significant advantage of using nuclear power over fossil fuel is the relatively low amount of fuel it is required to produce an equivalent amount of energy. The cost of nuclear fuel, i.e., uranium, accounts for only 20% of the cost of electricity generated. Such high levels of efficiency also make it easier in transportation, handling, and extraction of nuclear fuel and subsequently reduces the overall costs in the supply chain.
Clean source of energy
The only byproduct generated out of a nuclear power plant is used uranium which is safely stored in pools or concrete containers. Unlike other fossil fuel source, it does not emit CO2 causing air pollution and acid rain. Of all the clean energy sources like wind, solar, and hydro, nuclear power is the most significant source of clean-energy generation in the US contributing to 64% of the total output.
Disadvantages of nuclear energy
The radioactive waste generated as a byproduct of nuclear power is hazardous and has to be carefully stored and monitored for several thousand years. Although high-security standard is maintained to store this waste effectively, accidents can still happen with deadly consequences for both humans and nature. A nuclear or radiation accident such as Fukushima Daiichi nuclear disaster, Chernobyl disaster, and Three Mile Island accident have posed serious questions to the safety of nuclear energy.
High capital investment
Although the fuel source of nuclear power, uranium, is relatively low, the cost of electricity is significantly driven by the high rate of initial investment for constructing a nuclear plant. So nuclear plant will have to run for a number of years in order to recoup the initial investment. Additionally, nuclear plants also have a limited life; after expiry, they have to be dismantled. The construction time for a nuclear power plant usually takes 4-5 years with a payback period of over 30 years which is relatively high considering other source of energy.
Fossil fuels can be mined in many parts of the world, which is not particularly accurate for uranium, which is a very scarce resource. Only a handful of countries have uranium ores, and getting the approval from several international authorities is a tiresome process before building a nuclear power plant. As a result, not many countries can depend on nuclear energy to fulfill the energy demand.
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Renewable energy has the potential to solve a majority of the energy shortage and demand issues around the world. And what is the cherry on top of the cake? That is, it’s extremely pocket-friendly. The benefits of renewable energy have attracted a large number of players to formulate new technologies by implementing clean energy sources. But the journey to success for renewable sources of generating energy is not as easy as it seems to be. Commercialization barriers faced by new technology, price distortions from existing subsidies, high transaction cost, and inadequate information are some of the few drawbacks that players seeking to venture into the renewable energy market face. Let us discuss a few of them in detail:
Renewable energy requires a considerable amount of initial investment, especially in the technology involved to harness energy from these sources. It also involves the cost for finding the apt sites to set up the infrastructure necessary for generating energy. For e.g., to generate wind energy, developers must first identify the most apt site with the appropriate flow of wind to set up the windmills. Also, the costs associated with the installation and maintenance of the infrastructure for renewable energy is also high.
Lack of information
In most cases, the successful implementation of a product or a service depends greatly on the level of information that the customers have on them. With renewable energy, many customers are still not fully aware of its applications and benefits. To add on, there are many false rumors making the rounds about renewable energy that adds to the customer’s confusion. For e.g., there is a common belief that solar and wind energy are not dependable because they are available only during the times sun is shining or the wind is blowing.
Comparatively smaller size of players
The companies and players undertaking clean energy projects are usually smaller in size compared to the established giants in the energy industry. Therefore, the resources and exposure available to these companies are much lesser. Also, they have limited ability to communicate with the customers and lesser say in regulatory and legislative proceedings, which makes it more difficult for them to establish themselves in the market.
High transaction costs
As mentioned earlier, players in the clean energy industry are less established and are smaller players. Therefore, proving their credit-worthiness to banks or negotiating contracts becomes an expensive affair. Also, being small players becomes a major drawback in convincing residential customers to pay for renewables as it gets a little tricky to gain their trust unless it is an established brand.
To know more about the opportunities in the renewable energy industry and the major market challenges and threats
The energy industry comprises of the petroleum, gas, electrical, coal, nuclear, and renewable energy sectors. In recent times, renewable energy has started taking precedence over non-renewable energy sources such as petroleum and coal. This is because of rising consumer awareness towards global warming and government initiatives to curb pollution. Although both the renewable and non-renewable energy industry is growing at a healthy rate, there are some challenges faced by both these sectors.
Challenges Faced by the Energy Industry
Meeting Decarbonization Targets
In the 2015 Paris Climate Conference, 200 countries committed to COP21, which has identified an ambitious set of goals. In a bid to limit the global warming activities across the world, countries are putting up legislations to curb emissions and provide incentives to businesses with lower or no carbon emission. Numerous reports list that 41% of the world’s total CO2 emissions are caused by the energy industry companies, resulting in initiatives to decarbonize energy supply with renewable energy resources. To show its commitment to COP21, countries such as UAE have vowed to reduce its fossil fuel subsidies and have invested US$163 billion in renewable energy projects. Also, nations and companies having positive carbon balance can sell its carbon credit to companies with higher emissions. Such incentives discourage companies to reduce its carbon footprint and the energy industry players to opt for such alternatives.
Ease of Access and Affordability
Energy access has been largely limited to only the developed and urbanized parts of the world. The accessibility problem is still posing as a significant challenge to the energy industry. The energy prices vary across the globe depending on numerous factors. In multiple regions, the affordability issue seems to be more prominent as it drives the prices of all other consumer goods. For instance, Germany has the highest rate for per kilowatt hour of electricity at 28.18 euros, which is compelling the manufacturing units in the country to outsource production to the low-cost region.
Investment and Returns
The level of investments required for energy generation projects is so significant that it usually has to be backed up by investments from world bank or governments. The typical project cost for energy generation runs over billions of dollars. For instance, in 2005, a conference on renewable energy investment in India had private companies committing around $200 billion in investments into green energy. With such massive investments, the pressure on returns is much higher. The increasing cost of operations and maintenance can reduce the plant availability for power supply to the grid; thereby, diminishing the returns. Additionally, regulatory approvals, construction and technology risks create a significant challenge for the energy industry in delivering energy projects on time, within the stipulated cost and quality targets.
To know more about challenges faced by the energy industry, huge capital requirements, ease of access and affordability, and decarbonizing targets:
The world leaders and power corporations have been prioritizing clean and renewable energy in order to promote sustainability and fulfill the ever-increasing power demand across the world. Many alternatives exist in the form of solar energy, hydropower, nuclear energy, and natural gas. But, amongst all the available alternatives, wind energy is considered to be the most efficient, almost double in terms of energy efficiency (Levelized Cost of Electricity LOCE), compared to the second most efficient energy source, geothermal energy. To convert wind into energy, large wind turbines are installed which can generate 50-750 kW of electricity. A lot of wind turbine manufacturers are investing in research and development to develop the efficiency of this energy source.
Vestas Wind Systems is a Danish company involved in the manufacturing, distribution, installation, and servicer of wind turbines. Founded in 1945, Vestas generated revenues of around €8 billion in the year 2015. Recently though, Vestas shares dipped by 20% after it lowered its profit guidance on concerns over US subsidy cuts.
Goldwind is a Chinese wind turbine manufacturer and one of the largest wind turbine manufacturer in terms of total installations. Amongst one of the largest wind turbine manufacturers, Goldwind also provides power technology services, technology transfer services, along with investment and sale of wind power projects. Earlier this year, Goldwind Americas has signed 60MW wind turbine supply orders with One Energy.
Established in 1984, Enercon is focused on delivering high-quality projects on strict timelines with high emphasis on their customers, service, shareholders, and employees. The German wind turbine manufacturer has worldwide power installation of 43.1 GW with 26,360 wind energy converters (WEC) installations across the world.
Siemens is one of the most recognizable names amongst other wind turbine manufacturers. According to Reuters report, Siemens had a market share of about 63% of European offshore wind turbines in the year 2015. Siemens is highly focused on driving down the cost of wind turbines down and make it viable even without subsidies.
Suzlon Group is an Indian wind turbine manufacturer, which operates across 18 countries with 17,000 MW of wind energy capacity installed globally. The company is highly driven to enable sustainable development across the world. Out of 17,000 MW capacity worldwide, Suzlon has added over 11,000 MW of wind power capacity in India.
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The importance of renewable energy has been skyrocketing among innovators and companies owing to the increasing focus on environmental protection and sustenance. Innovators from different parts of the world are leaving no stone unturned to find more ways of resorting to clean energy. Here is our pick of top innovations in renewable energy that are most likely to make it big in the future:
Jet Stream Power
A small-scale US/Indian company known as Skymill Energy is trying to harness the high-altitude jet-stream winds that blow at a speed of over 200mph at almost 30,000ft. Skymill Energy is doing this by using a remote rotary-lift aerial vehicle such as a helicopter, which is attached to a generator on the ground to harness this renewable technology. This source of clean energy promises vast renewable energy, no pollution, easily available materials and straightforward technology.
Humus Analysis is a French company that makes compost from food waste products from the oil industry and also municipal wastes. This company is also looking at building soil which is fertile enough to support grass and edible crops in the long run. Their technology will prove to be a significant source of renewable energy in the long run and will help reduce water use and save energy significantly.
Coldinnov is a small French company that specializes in developing PV-powered solar refrigerators. This technology is best suited for off-grid villages, remote bars wanting to make ice, or even in healthcare centers. Solar refrigerators use advanced insulation, eliminating the use of batteries or converters. They keep the temperature cool for more than 75 hours.
The electronics giant Hitachi is developing new renewable energy technology with de-salination plants that pumps saline water with the help of PV electricity and then cleans the water using reverse osmosis technology. This technology can be used to purify and use saline water, thus, helping in water conservation in the long run.
In 2001, an Indian hydro-geologist named Ritesh Arya found groundwater at over 11,000ft in the Himalayas. He is backed by three Nordic research groups and also by the Norwegian oil giant Statoil. They are trying to discover new geo-thermal sources in places that weren’t thought of before. Geo-thermal energy created from these sources could be a great provider of renewable energy.
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The industrial and commercial players are increasingly becoming a part of the “go green bandwagon.” The motivation for this paradigm shift to clean energy could be cost-cutting, pressure from regulatory mandates, or the desire to be more socially responsible. This has called for an increasing demand for renewable energy sources in the commercial sector; as a result of which, companies are looking at the latest and most innovative sources to implement into their business processes.
What is it: Bioenergy is a type of renewable energy that is derived from biomass, i.e., any organic matter coming from plants or animals that had been living recently. This is mainly used to create heat and electricity or for the production of LPG (Ethanol and Biodiesel). Although bioenergy releases almost the same amount of carbon dioxide as compared to fossil fuels, environment neutrality is maintained through the replacement plants that are grown as biomass to remove a significant amount of carbon dioxide from the atmosphere.
How companies can use it: The usage of bioenergy by companies depends on the operations they undertake, some of the ways this renewable energy can be incorporated into your business are –
- Switch over to fleet vehicles that use bioenergy as fuel
- Equip manufacturing facilities to burn biomass directly; the steam produced can be captured by a turbine to generate electricity
- Waste from livestock in farm operations can be used to generate electricity using small modular systems
What is it: This type of renewable energy or clean energy is derived from the heat of the earth. The geothermal plants use heat that is sourced either from heating rocks or reservoirs of underground hot water to generate electricity.
How companies can use it: Geothermal energy can be used by companies on a large scale. Here are some of its uses for a business organization:
- Heating office buildings or manufacturing plants
- Facilitates the growth of greenhouse plants
- Water at fish farms can be heated
- Aiding several industrial processes; g., pasteurization of milk
What is it: Solar energy is the renewable energy source derived from sunlight. Photo-voltaic systems using solar cells are used to convert sunlight into electricity.
How companies can use it: Business entities have a wide range of opportunities to exploit using solar energy –
- Solar energy can be incorporated into the organization’s cooling, water-heating, and ventilation systems to cut down costs
- Solar energy can be used to power agricultural and manufacturing operations
- Companies can incorporate solar power transportation and save money
What is it: Wind is a renewable source of energy that is harnessed from capturing the wind flow into turbines and converting it into electricity.
How companies can use it: Wind energy is one of the most sustainable sources of energy for a business to cut its electricity costs.
- Can be used by organizations to substitute their existing electrical supply
- The large farms can be converted for using wind energy alongside regular farming; this helps them to use this energy for personal purpose as well as gain more money by leasing them out