2021 Outlook: Trends In Renewable Sector

Government policies that stimulated market growth globally, including measures such as renewable portfolio standards, feed-in tariffs, and a variety of subsidies, accounted for about 60 percent of the overall cost decline.

The world’s dependence on renewables is swiftly increasing as globally countries continue to invest heavily in cost-effective sustainable energy solutions. The last few years have witnessed not just stiff competition among companies in this sector, but also an expansion of the installed capacity of solar PV. According to Ren21, 2019 was a record-breaking year for renewable energy, as installed power capacity grew to over 200 gigawatts, which is the biggest increase till date. Prior to the pandemic, 2020 was also set to be another record year for new renewable energy capacity considering the amount of new solar panels, wind turbines, and other sources of energy that were installed around the world. However, the COVID-19 pandemic has disrupted economies and supply chains around the globe, forcing companies to downsize budgets, shift priorities, and delay capital construction projects, owing to the growing financial uncertainty. As per the findings of the International Energy Agency, the renewable energy sector, like nearly every other, has been impacted by this global crisis, and hence, “what is in store for 2021” is not a very clear picture. Amid the chaos, here are some of the trends that I believe will likely define the renewable energy industry in the year to come.

Digitization

2021 will see widespread digitization at all levels of the power system, from production and infrastructure to end-user devices. Energy 4.0, as it is called, will enable the industry to implement intelligent energy and power management solutions based on machine to machine and machine to human interactions. As new technologies continue to emerge to meet the growing needs in the solar energy industry, one trend to look for is the use of machine learning, such as through microgrid controllers and artificial intelligence. New software is further helping shape the future of how businesses can implement AI and machine learning in technology for solar energy. Companies in this sector are leveraging AI to identify and track trends in energy generation and consumption. Smart energy further helps forecast the achievable production of a specific wind or solar plant.

Digitally controlled robots and drones have gained popularity in the last decade. While the renewable energy industry relies on inspections to maintain safety standards to effectively power the world, it involves a great deal of time and human effort. To that end, drones are being implemented to fly overhead utility sites, and quickly identify damage on everything from wind turbines to solar panels, thereby preventing potential problems before they escalate. They further enable the creation of digital site twins, elevation data calculations, and 3D maps. In addition, industrial robots are also being used for a myriad of applications, especially for cleaning of solar panels. The two types of robotic solutions used for this are dry cleaning robots and robots using water. Dry cleaning robots are more in demand because of their capability of saving gallons of water which would have been used for cleaning panels in the solar farms.

Dropping hardware costs

Over the past decade, the energy sector has faced increasing pressure from various stakeholders, from consumers to utility-scale power plants, to reduce the cost of renewables while simultaneously improving the adoption rate of renewable energy. The dramatic drop in the cost of solar photovoltaic modules, which has fallen by 97 percent over the last four decades, is often touted as a major success story for renewable energy technology. This study covering the years 1980 to 2012 inferred that the policies and technology changes caused most of the cost savings. Government policies that stimulated market growth globally, including measures such as renewable portfolio standards, feed-in tariffs, and a variety of subsidies, accounted for about 60 percent of the overall cost decline. Changes in modules and manufacturing processes further affected the cost. While solar cell technology improved greatly over this period, the improved production processes also cut the number of defective cells produced and thus improved yields, leading to significant economies of scale. Assuming that the dynamics and fundamentals of renewables will not change over the long term, renewable energy production costs will keep plummeting because of these technology breakthroughs and also the exponential growth of manufacturing. These costs will keep falling in the coming years, allowing low-income countries to more easily pursue renewable energy projects, making it accessible to one and all.

Batteries is where the action is

The solar storage market is evolving rapidly and will look completely different a year down the road. Batteries are increasingly being sold along with every new solar PV system. 2021 will ring in the age of mass solar-plus-storage solution deployment, allowing businesses and residents to tap into renewables more efficiently, protect against outages, save money and live more sustainably. As more homeowners and businesses deploy PV systems to reduce their electricity bills and ensure backup power, simple net metering will increasingly be replaced by time-of-use rates and other billing mechanisms that aim to align power prices with utility costs. A century of lead-acid battery dominance has entrenched 48 volts (DC) as the standard battery system voltage. Systems with voltages up to 1,000 VDC are deployed using standard lead-acid cells, but it is only practical for engineered commercial and industrial or utility systems. Among lead acid, lithium ion, and saltwater, lithium ion batteries have proved to be the best option for a solar panel system.

New forms of storage like flow batteries are also coming to light that have a longer lifespan than the standard lithium-ion batteries. According to JMK Research, the cost of battery storage is expected to reduce by 15-20 per cent to fall in the range of $250-$270 per kilowatt hour (kWh) by 2021 from the present range of $300-$320 per kWh. However, solar systems with batteries are going to be about twice as expensive as traditional grid-direct installations, so in that sense, we will see actual costs increase as the mix shifts toward batteries.

Renewable energy goes consumer with rooftop solar

Although by the end of 2019, solar energy only represents 1.5 percent of US energy sources, it is poised to gain enormous market share in the coming year. The US government introduced solar tax credits in 2006, which created a boom in the solar industry. Since then, the price of solar panels has steadily dropped to affordable levels for manufacturers. The cost of solar energy, including installation, in 1956 was about $300 per watt, while this year, it has already come down to $3 per watt. While over 90 percent of Americans want solar, only about half want to pay for it, which is why 30 percent federal solar tax credits through 2021 are vital to the industry. Solar will continue to grow in demand as more businesses embrace it and report energy savings. Today, as per Energy Sage, the US is the world’s number two solar power generator, based on total PV installed capacity in megawatts.

In other solar news, as a part of the plan to liberalize its energy market, Japan will be ending tax breaks for commercial solar installations in 2021. A tax reform plan is expected this month. On the same veins, finally, after years of failed attempts, Germany will provide homeowners with tax incentives for energy-efficient renovations, allowing them to deduct 20 percent of the costs for renovations of up to 40,000 euros from their taxes. Australia’s Renewable Energy Target has started a Solar Credits program under which every megawatt-hour of qualifying energy generation is eligible for renewable energy certificates. These certificates might as well be a discount voucher on the cost of installing your solar system.