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Fri 31 May 2024
3 Factors That Could Accelerate the Adoption of Renewable Energy
The global energy landscape is undergoing a pivotal transformation as nations worldwide strive to meet increasing power demands

  Introduction

 

The global energy landscape is undergoing a pivotal transformation as nations worldwide strive to meet increasing power demands while combating climate change and promoting sustainability. Historically dominated by fossil fuels, the energy sector is witnessing a significant shift towards more sustainable sources. Renewable energy, crucial for achieving environmental goals and energy independence, is at the forefront of this transition. As of the latest data from the International Energy Agency (IEA), renewables accounted for approximately 29% of global electricity generation in 2020, with projections indicating an increase to 35% by 2025. Moreover, global investments in renewable power and fuels, excluding large hydro, reached a new high of $366 billion in 2021, underscoring the growing financial commitment to green energy. This article explores three key factors that could further accelerate the adoption of renewable energy, paving the way for a cleaner and more sustainable future.

 

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1 - Global Demand and Investment Dynamics

 

The rising global demand for energy, driven by population growth and economic development, particularly in rapidly expanding economies across Asia and Africa, underscores a critical challenge: the need for sustainable energy solutions that can meet escalating residential and industrial requirements. As the world grapples with these demands, renewable energy investments have surged, reflecting a significant shift in both public and private sector engagement. Solar and wind energy, as leading recipients of these investments, have seen substantial financial commitments. In 2020 alone, solar energy attracted $148.6 billion, demonstrating the sector's growing viability and investor confidence. Denmark exemplifies the potential of favorable investment climates for renewable energy. As a global leader in wind energy, the country has successfully integrated wind power to meet nearly half of its energy consumption, with wind turbines contributing to about 47% of the national energy needs. This level of integration not only highlights the technological feasibility of large-scale renewable adoption but also underscores the economic benefits, as Denmark has cultivated a robust industry around wind energy manufacturing and technology services.

  

The pace of adoption, however, varies globally, influenced heavily by international agreements and national policies aimed at encouraging the shift to renewable sources. According to Ajay Sharma, Founder of ASR Ventures in the Netherlands, during a recent Global Investment Leaders Club (G.I.L.C.) gathering: "The demand for renewable energy is consistently growing and how we scale up to meet this demand remains a pivotal challenge. Adoption of green technologies has been somewhat slow and governmental pressure to expedite this transition is not as strong as it could be, especially with looming 2030 environmental targets. I am hopeful that we might see significant policy shifts and increased adoption rates as early as 2024, potentially marking a transformative period for renewable energy investments and technology advancements." This dynamic landscape of investment and technological innovation in the renewable sector is setting the stage for a profound transformation in how energy needs are met, promising a future that is not only sustainable but also economically beneficial for countries leading the charge.

 

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2 - Innovation and Investment Interest

 

The renewable energy sector is currently experiencing a wave of technological innovations that not only increase the efficiency and output of existing renewable sources but also open doors to entirely new forms of energy generation. For instance, bifacial solar panels and perovskite solar cells represent significant advances in solar technology, with some systems now achieving efficiencies of over 22%. 

 

What is perovskite?

First identified by the German mineralogist Gustav Rose in 1839, the name "perovskite" honors Russian mineralogist Lev Perovski. Comprising calcium titanate, its chemical composition is CaTiO3. In 2009, Tsutomu Miyasaka, a scientist from Japan, pioneered the first solar cell based on perovskite material. Initial tests revealed a modest efficiency of 3%. However, substantial advancements have since been achieved, with current perovskite solar panels attaining efficiencies exceeding 25%.

 

These developments have a profound impact on the economics of renewable installations, making solar energy more competitive with traditional fossil fuels. Investment in these technologies is crucial and is increasingly supported by a combination of venture capital and government funding. This financial backing is essential for nurturing early-stage renewable energy startups that are working on groundbreaking technologies. For example, floating solar panels, which are installed on bodies of water, not only reduce land use but also decrease water evaporation and boost efficiency through the cooling effects of the water. This innovative approach illustrates how technological advancements can enhance the viability and environmental benefits of solar power.

 

Another exciting development is in wind energy, where Airborne Wind  Energy Systems (AWES) utilise drones or kites to harness wind  at higher altitudes where it is stronger and more consistent. Such systems could potentially revolutionise the field by reducing the need for large, expensive turbine structures and accessing untapped wind resources at altitudes unreachable by traditional turbines. Emerging technologies like enhanced geothermal systems and ocean energy are also on the rise, promising to tap into the Earth’s vast untapped natural energy reserves. These technologies, though still in the early stages, could drastically alter the renewable energy landscape by providing consistent and reliable power sources that are less dependent on weather conditions than solar or wind power.

 

Deniz Erkus, a partner at Leonie Hill Capital Private Limited in Switzerland, highlights the growing investment dynamic in the landscape during a discussion at a recent energy-focused forum held by the G.I.L.C.: "There is a noticeable increase in intentions to invest in renewable technologies, yet the current level of investment and project development is insufficient to meet the ambitious goals of the forthcoming green deals. To truly aim for the 1.5-degree target rather than settling for a 2.4-degree rise, a significant boost in genuine investment across the entire energy sector is imperative." This blend of innovative technology and robust investment is essential for accelerating the adoption of renewable energy, making it a cornerstone of global efforts to transition to a sustainable energy future. As these technologies continue to mature and scale, they hold the potential to transform energy systems worldwide, making renewable energy more efficient, more affordable and more accessible.

 

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3 - Technological Diversification and Energy Efficiency

 

The robustness and reliability of the global energy supply are greatly enhanced by diversifying renewable energy technologies. By investing in a mix of renewable sources—solar, wind, hydro and geothermal—countries can mitigate the natural intermittency of individual systems such as solar and wind, achieving a more stable and continuous energy output. Germany's Energiewende (energy transition) policy exemplifies this approach, promoting a balanced mix of solar, wind, biomass and hydro power. This strategic diversity not only enables more consistent energy availability but also reduces reliance on energy imports, enhancing national energy security. Moreover, the synergy between advancements in energy efficiency and the adoption of renewable energy sources plays a crucial role in maximising  the effectiveness of these technologies. For instance, the integration of electric vehicles and hydrogen fuel cells into the energy system aligns well with renewables, significantly reducing the carbon footprint of transportation. These technologies complement the broader goals of renewable energy by ensuring that energy consumption itself becomes more efficient.

 

In terms of infrastructure, advances in energy storage technologies, smart grids and integrated energy systems are critical. These innovations allow for better management and utilisation of renewable energy, smoothing out supply issues and integrating various energy sources into a cohesive system. For example, innovative heat pump and thermal energy storage technologies are pushing the boundaries of efficiency. As Sunay Gupta, Co-Founder at Windiglobe in India, notes, "We are exploring cutting-edge heat pump and thermal energy storage technologies, where heat pumps can achieve 300 to 500 percent efficiency. This means that one unit of electricity can be converted into up to five units of heat, which can then be utilized for industrial applications."

 

Costa Rica stands out as a leading example of effective national strategy in renewable energy integration. Over 99% of its electricity is generated from a combination of renewable sources, including hydroelectric, wind, geothermal and solar energy. This achievement is supported by strong national policies that promote renewable energy investments and facilitate the development of necessary infrastructure. The examples of Germany and Costa Rica illustrate successful strategies for technological diversification and energy efficiency. These strategies not only ensure a more reliable and sustainable energy supply but also position these nations at the forefront of the global transition to renewable energy. This holistic approach, encompassing diverse technologies and efficiency improvements, is crucial for the global shift towards a sustainable and independent energy future.

 

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Conclusion

 

The acceleration of renewable energy adoption is crucial for a sustainable and independent global energy future. The three factors discussed—investment dynamics, innovation and technological diversification with energy efficiency—are pivotal in driving this transition. Each element not only supports the growth of renewable energy but also ensures its integration and sustainability in the energy mix worldwide. In recognition of the importance of these factors, the Global Investment Leaders Club will be focusing on these themes in the upcoming Future of Energy Chapter III. This event will provide a place for industry leaders and investors to explore the latest trends, innovations and investment opportunities in renewable energy. To learn more about the event and to register, click here.

Participants mentioned in the article
K Ramesh
K Ramesh Kumar
Fund Manager
Rockfort Venture
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