A line from American folk singer Bob Dylan’s 1964 classic, ‘The Times They Are a-Changin’’, has deep resonance for the position in which the domestic and international electricity supply industry currently finds itself. Dylan, who was recently awarded the Nobel literature prize (a fact he has scarcely acknowledged), sings: “The order is rapidly fadin’. And the first one now will later be last, for the times they are a-changin’.”
The order in the electricity sector is indeed changing, and more rapidly than many would have expected. Just listen to what the World Energy Council (WEC) had to say in a statement issued last month ahead of the World Energy Congress, held in Istanbul, Turkey: “The world is undergoing a grand transition . . . Over the coming years, this energy transformation has the potential to change the way in which we produce and consume energy . . . The next decade will begin to define the winners and losers of the energy transformation, making it crucial to understand the new realities for the energy sector.”
One of the ‘new realities’ outlined by the WEC is that the technology revolution in the energy sector is beyond a “tipping point”. Solar and wind power will continue their rapid growth and the electrification of energy use is “an unstoppable trend”.
The WEC statement followed on the heels of a report by the International Energy Agency showing that global electricity sector investment rose 4% to a record $682-billion in 2015, with power genera- tion accounting for over 60%, or $420-billion, of that total.
The ‘World Energy Investment 2016’ report also states that investments in renewables-based generating capacity accounted for more than two-thirds of power generation, or $288-billion. Wind power comprised the largest share of total investment in 2015, at 37%, followed by solar photovoltaic at 34%. Hydropower accounted for over 20%, while other sources (bioenergy, solar thermal electricity, geothermal) made up nearly 10%. For the first time in 2015, investments in renewables-based capacity also generated more than enough elec- tricity to cover global electricity demand growth.
That said, the rise in renewables will not follow a straight line – a fact highlighted by a recent Bloomberg New Energy Finance (BNEF) report showing that global clean energy investment slumped, between July and September, to it weakest quarter since 2013.
Investment in renewable energy and energy smart technologies worldwide totalled $42.4-billion in the third quarter, BNEF reports. However, the figure represents a 31% fall from the second quarter and a material 43% slump from the equivalent three-month period of 2015. The weak performance was attributed to a summer lull in offshore wind financing in Europe and a further stage in the slowdown in project funding in China and Japan.
Nevertheless, the underlying trend towards solar and wind remains strong, with US Energy Department figures suggesting that solar capacity in that country will have nearly tripled in size by 2017, while wind will continue to grow, albeit less rapidly than was the case in 2015. It is arguably enough to bring to mind lyrics from yet another Dylan classic: “The answer my friend is blowin’ in the wind. The answer is blowin’ in the wind”.