Lower costs are expected to make wind and solar projects more profitable
The falling cost of renewable energy will increasingly allow wind and solar projects to make money without subsidies, say the top executives in Europe’s power industry.
Leading energy companies are becoming more confident that the renewable sector will be able to attract increased investment irrespective of government policies.
Peter Terium, chief executive of Germany’s Innogy, and Francesco Starace, his counterpart at Enel of Italy, said renewable power would have to compete on economic merit with traditional sources of electricity as subsidies are withdrawn.
The announcement earlier this year of plans for two German offshore wind farms that would operate without subsidies was a sign of things to come, they argued.
Speaking at a green energy conference in London, Leonhard Birnbaum, chief operating officer for renewables at Eon of Germany, also said wind and solar power could prosper without handouts.
“No other industry has guaranteed returns,” he said. “[Subsidy-free renewables] need to be possible otherwise we would be asking for subsidies eternally and we cannot expect that.”
Research published by Bloomberg New Energy Finance at the conference projected further sharp drops in the cost of renewable power as the industry matures.
[Subsidy-free renewables] need to be possible otherwise we would be asking for subsidies eternally and we cannot expect that.
Renewables were forecast to receive almost three-quarters of the $10.2tn of global investment in new power generating technology between now and 2040. During that time, the cost of solar power is expected to fall by a further 66 per cent and onshore wind by 47 per cent, undercutting the majority of existing fossil fuel power stations by 2030.
Jérôme Pécresse, chief executive of renewable energy for General Electric, a manufacturer of wind turbines, said the falling cost of renewables had overtaken political interventions as the main driving force behind the green revolution.
Mr Pécresse said the Oklahoma project “makes sense in terms of cost and technology,” adding: “The impact [of policy] is becoming more and more marginal”.
Bloomberg research also predicted tumbling battery prices would make electric vehicles (EVs) cheaper to buy than those with internal combustion engines in most countries by 2025-29. This would lead to EVs making up more than half of new car sales worldwide by 2040.
Mr Starace said Enel was investing in 10,000 electric charging points around Italy to support the roll out of EVs. Mr Terium said Innogy had similar plans.
”Infrastructure for EVs was something that “we might leave to the Chinese or Koreans eventually” but in the near-term it was important to establish technology standards and help build the market, Mr Terium said.
Mr Terium said the shift from fossil fuels to electric power in road transportation — increasingly seen as a long-term threat to oil and gas producers — was a big growth opportunity for utilities.