Why renewable energy is the future focus for academia

The next 5 years will see a major transition in the way we consume energy. The current norm of energy consumption via fossil fuel means has slowly transited in a healthy mix of primarily clean energy sources such as renewable energy solar and wind. Renewable energy generation now accounts for more than 19.3% of the world’s global electricity generation with solar energy accounting for more than 30% of this generation (REN21). Academia is responsible for a large amount of this success as renewable innovations in technology, design and performance over the past decade has led to the popularity of these novel energy sources.

Major universities around the world are now adopting renewable energy into their course works and syllabus with the aim of contributing to further research innovation and preparing students on the realities on the new energy market along with all its challenges and setbacks.  

Renewable energy finance will receive a profound and encompassing focus amongst universities as they attempt to better understand how this energy source can be scaled successfully from low-risk markets in Europe to high-risk markets in Africa, Asia and Latin America. This is going to be a major challenge for academia, and one that requires in-depth research on the underlying factors affecting high-risk markets and how these issues can be identified and mitigated to successfully deploy renewable energy level.

The Vesbox Platform gives academia an advantage into understanding the underlying factors affecting renewable energy growth in more than 80 countries while also giving them hands-on knowledge into the global renewable energy market. With the Vesbox Platform, students can bring the real world of renewable energy finance into the classroom, providing them with the same information used by asset managers, finance professionals and related stakeholders in this space. To learn more about how the Vesbox Platform can deepen your research skills while giving you the necessary tools to learn how to build and analyse renewable energy financial, technical, environmental and social models, click here

Price competitiveness of renewable energy technologies

At its early inception in the 1990s renewable technologies were considered an unnecessary luxury as they were much more expensive than conventional fuels. Early deployment of renewables was therefore incentivised by government initiatives in forms of tariff subsidies and performance-based subsidies to encourage investments in OECD markets (Michael Kavanagh, 2016).  

Price competitiveness amongst renewable energy technologies is driven by the fall in the system component costs of renewable technologies, increase in demand for renewables across different markets and favourable market policies both at a local and an international scale for renewable technologies. As such, the price forecast for renewable technologies are expected to fall, in fact, both the price for wind and solar power are projected to drop by at least 5% of their current values by 2020, which will enable them to compete directly in price with conventional fuels (i.e. coal and gas) by the end of 2020 (DECC, 2013; IEA, 2014).  

Reductions in cost will help the levelized cost of energy (LCEO) for some renewable technologies become cheaper and more competitive with conventional fuels over time. For example, the LCEO measurement of renewable energy technologies in China will differ from the LCEO measurement in India due to different market conditions existing in both countries. Thus, the LCEO measurement on energy technologies in high-risk markets (i.e. non-OECD) will most likely be higher compared against low-risk markets (i.e. OECD) (IRENA, 2014). In India for example, with a good policy framework for the renewable deployment and financing conditions, solar energy has consolidated its competitive position, continuing to outbid new-build conventional gas plants in electricity auctions in 2017 (Farand, 2017). In South Africa, reduced cost in solar energy technology, good sunlight availability, strong grid infrastructures and credible utility companies have seen solar energy as the preferred energy choice against conventional gas to help meet rising electricity demand; due to this, South Africa projects that solar energy generation will overtake conventional gas power by 2030 (Modise, 2017). In the Latin American markets, the fall in the wholesale price of solar technologies accompanied by good levels of sunlight and government subsidies has also led to the increased deployment of solar energy in the region (Nagendran, 2017). To learn more about how to measure LCEO against your renewable energy investments, click here.

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