How Long Will it be for Renewable Energy to Dominate the Energy Sector? The Context & Challenges

The transition from a fossil fuel dominated energy supply into renewable energy is considered as an efficient and effective way to mitigate climate change. Based on the improvement of technologies, the awareness of the public and the regulations or subsidies from governments, the renewable energy industry has developed significantly during the last several decades. According to the Global Renewables Status Report, renewables take up about 19% of global energy consumption in 2012. Among the renewables, about half is from traditional biomass, which is mostly used for cooking and heating in remote areas; while the other half is from modern renewables, such as hydropower, wind and solar.

The World Bank recently announced that they would focus on clean energy funding in the future, and would only invest in coal projects in “circumstances of extreme need” due to the risks of the impact of climate change on poverty in specific areas. A similar trend is also happening in private sectors. For instance, Rockefellers plans to switch its investment strategies towards clean energy.

Though significant improvements have been achieved, renewables are still facing several barriers in scale up. The first concern is costs. Generally speaking, traditional fossil fuel sources are still cheaper compared to renewables. In the UK, the cost of electricity generated by wind power is twice as much as that from conventional sources; and the cost of solar power is even higher. Though there has been evidence showing that solar and wind industries are beginning to show their price advantages compared with traditional sources, the development of “fracking” technology still makes natural gas a powerful competitor to renewables. Currently, a great number of renewable energy projects, especially in developing countries, are still relying on external investment or supportive policies. Thus, cost reduction is a key requirement to achieve initial motivation and healthy market. Fortunately, according to a recent UN report, the transition from traditional fuels to renewables will be affordable and will not make people sacrifice their desire of improved living standards.

Another difficulty for renewables to scale up is the balance between distribution and centralization. Distributed systems are a typical way to transfer renewable energies. However, compared with traditional centralized stations, distributed grids are not only relatively costly in terms of infrastructure construction and administrative management, but also face the challenge of stable supply. In this case, central grid systems should also work as a supplement. Incorporating renewables into the existing general gird might also work as an alternative, but there are concerns with technology difficulties and policy restrictions. For instance, the major problem through the early phase of China’s renewable energy development is connecting distributed wind and solar power to the state grid.

Besides cost and distribution, pressure from traditional energy industries might also slow down the development of renewable energies. To solve the problem of climate change, fossil-fuel industries are one of the main areas that could get improved. According to a speech from President Barack Obama, fossil fuels in the world will “obviously” have to be kept in the ground. However, replacing all the traditional infrastructure and investment with renewable energy facilities requires negotiation and takes time, especially for major players in the conventional industries.

In addition, whether, when and how to implement renewable energy projects heavily depend on specific situations in different countries. For example, China has been experiencing a rapid increase in renewable energy capacity. In 2013, China’s newly established renewable energy power capacity exceeded the capacity from fossil fuel and nuclear for the first time. Nevertheless, coal is still the lead source in China to generate power, with a share of approximate 70%. Lack of the ability to address technology gaps related to renewables energy sources sets up barriers to reduce China’s coal demand and supply; however, China is making gradual improvements, committing to reduce the share of coal in total energy consumption to 62% by 2020, compared with the level of 66% in 2013. In another example, because of the absence of clear policy, the investment on renewable energy in Australia has decreased by 70% in 2013, and there is still great uncertainty in the future.

In conclusion, renewable energy resources will greatly contribute to solving the problem of global warming. However, this industry must overcome several difficulties before it can replace traditional fossil fuels to dominate the general energy sector.