Economic slowdown, trade tensions, and recently, a global pandemic are some challenges that can impede the growth of the renewable energy industry. However, there are also opportunities for growth.
In April 2019, renewables outpaced coal in terms of electricity generated in the United States, Energy Information Administration (EIA), reports.
This is the first time such an event occurred. While it was short-lived, this is a huge milestone for renewable energy.
On the whole, the year 2019 had been good for renewable energy. According to Deloitte, the growth observed in the industry in 2019 was driven by a combination of declining costs of renewables and a spike in the competitiveness of battery storage. On top of that, the positive sentiment towards the industry also bolstered the demand for it.
In their report, 2020 renewable energy industry outlook, Deloitte also examined how the 2019 trends will impact the growth of the industry for the year 2020.
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The market in the year 2020 will be transformed due to two distinct changes.
The first one, Deloitte observed, is that state regulators have begun frowning upon adding capacity to non-renewable utilities. Their eyes are now fixated on investing in renewable energy and storage capacity to replace the ageing gas and nuclear plants in the U.S.
The second one is a growing competition not only between renewable and non-renewable energy sources but even within the renewables.
Supported by federal policies, solar is projected to increase in terms of being cost-competitive, possibly overtaking the current leader, wind, in terms of the levelised cost of energy (LCOE).
Offshore partnerships are growing in number and are expected to increase in 2020. The industry is also expected to boost efficiency by building larger turbines, taller towers, and longer cables.
The on-going coronavirus outbreak along with the recently resolved Saudi-Russia oil price war brings into the spotlight the importance of diversifying the U.S. energy portfolio. Investing in renewables will help the U.S. secure its energy dominance. This is another factor that can prod state leaders to look more into renewable energy investments.
Erratic weather patterns in recent years such as the increased frequency of hurricanes, floods, and wildfires are quickly turning renewable energy investment into an imperative. In order to ensure the resilience of the grid in unexpected events, customers often turn to microgrids, supported usually by wind and solar.
To accelerate the growth in demand, lowering the cost of batteries is also important. Deloitte observed significant decreases in the past years, however, the price of renewable energy storage continues to be a huge barrier in investing in renewables.
In 2020, Deloitte expects corporations to continue their cooperation with utilities in order to form new initiatives and support innovations.
Corporations being involved in community projects which group together small businesses and residential customers is another way to fuel collaboration and consequently, innovation.
Deloitte made these observations and projections without taking into consideration the COVID-19 pandemic we are experiencing. As discussed earlier, the coronavirus outbreak brought down oil demand and revealed the importance of diversification.
Other than that, only time can tell what would be the other effects — beneficial and detrimental — of the pandemic to the growth of the renewable industry for this year.