The year ahead: Top clean energy trends of 2015
For the past 13 years, Clean Edge has published the annual Clean Energy Trends report that has sized the global market for solar, wind and biofuels and tracked everything from venture capital and stock market activity to total global investments. In the report, we also pick our top trends to watch for the coming year. Here are the trends that will matter in 2015:
- Moves toward 100 percent renewables will expand
- Energy storage will carve out a competitive advantage
- Low-cost oil could affect clean transportation, but not clean electricity
- Other regions will follow New York's fracking ban
Let’s take a closer look at the top trends and how they are likely to affect markets in 2015.
Moves toward 100 percent renewables will expand. Naysayers will tell you that renewables will remain a niche offering that’s unable to provide large amounts of total electricity supply. But in 2014, the trend toward bucking this myth was on full display. In less than two years, Apple went from primarily fossil fuels to 100 percent renewables, and Amazon.com (at least for its data center operations) recently joined other tech leaders such as Facebook and Google in announcing plans to get to 100 percent renewables.
Denmark reaffirmed its commitment of getting to 100 percent renewables for all of its energy supply, including transportation, by 2050; it’s already close to reaching its goal of 50 percent renewables on its electricity grid by 2020. Late in the year, NextEra Energy announced its plan to acquire Hawaiian Electric. While its subsidiary NextEra Energy Resources is a leader in U.S. wind and solar development, its other subsidiary Florida Power & Light has been less than a stellar supporter of renewables deployment. The next year will tell which direction NextEra plans to take Hawaiian Electric, which already had plans to reach 65 percent of its electricity sales from renewable resources by 2030.
These developments and others will shine a light on what’s possible and how getting to high-penetration renewables will become an increasingly achievable reality.
Energy storage will carve out a competitive advantage. Dozens of companies are jockeying for position in the energy storage sector, looking to provide customers with reduced costs, greater energy reliability and improved resiliency. Costs are still an issue, but those hurdles are being addressed in ways similar to the recent scale-up, and the concomitant reduction in pricing, for solar photovoltaics. In particular, commercial and industrial customers in high-cost electricity regions, especially those with rising demand charges, will be among the first to reap the benefits of energy storage.
California is one market ripe for development as it works to achieve its first-in-the-nation energy storage mandates, as is Japan, as that nation considers expanding energy storage efforts as part of its latest economic stimulus package. Opportunities are also heating up in New York and even Texas as regulators, utilities and companies look to integrate more renewables, ease strain on the grid during peak electricity demand and enable a more resilient grid. As prices come down, look for energy storage to become an integral part of the larger energy equation.
Low-cost oil could affect clean transportation sectors, but not clean electricity. The one given for fossil fuels is their volatility. Sudden and often unforeseen geopolitical events, oil spills and terrorist attacks very quickly can affect the oil price equation. Right now, with oil prices hovering around $50 a barrel (down dramatically from more than twice that level in mid-2014), it’s easy to think that the move towards efficiency and renewables will decline. But both clean-energy sources and efficiency improvements continue to be on a rapid ascent, and are in fact part of the reason why we are seeing lower oil prices.
"The story should not be how falling oil prices will impact the shift to clean energy,” said Bloomberg New Energy Finance chairman Michael Liebreich, “it should be how the shift to clean energy is impacting the oil price.” And on the electricity front, one simply needs to understand that electricity prices in the United States are not tied to gasoline or oil prices, but to the cost of electricity provided by utility companies (which continue to increase in almost all markets). If low oil prices stick around for a while — which is by no means a given — that could affect the sales of hybrids and electric vehicles in the near to mid-term. However, even on that front, vehicle mileage standards in the United States and elsewhere will guarantee that overall vehicle efficiency will continue to improve for the foreseeable future.
Other regions will follow New York fracking lead. One of the big surprises of late 2014 was Gov. Andrew Cuomo’s announced ban on hydraulic fracturing (fracking) in the state of New York. A small but growing number of communities in the United States have banned fracking, but New York’s is the first statewide ban. While supporters of the natural gas industry generally downplay the impacts of fracking, the truth is that this is not simply a right-left debate, but increasingly a regional discussion pitting oil and gas interests against other industries and the public interest at large, especially around clean water supplies. This last issue highlights the ever-growing challenges at the water-energy nexus.
While many ranchers and farmers initially supported fracking and the lease benefits that came with it, the tide may be turning in some regions. Back in 2013, for example, conservative Mora County in New Mexico became the first county in the United States to ban fracking, primarily over local concern for its water supply. Other counties and cities voted for bans in the November election, including Denton, Texas, the first city in the Lone Star State to do so. France has an outright fracking ban in place, and Germany continues to enforce restrictions and is evaluating a broader ban.
The large natural gas interests may have missed a golden opportunity to show true leadership during the early shale gas boom — but could still work to set up and enforce strong environmental regulations. But we believe that we’ll continue to see local, state and national bans if the very real concerns of citizens, especially around clean water supplies, aren’t adequately addressed.
A host of other developments are likely to affect the clean-energy sector this year. In the United States, these include the passage of the Keystone XL pipeline by the new Congress (and what steps, if any, President Obama decides to take in response); the new EPA carbon regulations and their impact on power plant emissions; the ongoing proliferation of distributed energy resources with utilities, regulators and vendors battling over the future of our energy infrastructure; and the advent of U.S.-China climate activities and collaboration. Be on the lookout for Clean Edge analysis on all of the above and more, from a February webinar on U.S.-China clean-energy opportunities to the U.S. Clean Tech Leadership Index, our annual tracking of states and metro areas, in the spring. The markets for clean energy, from hybrid vehicles and green buildings to solar PV and smart meters, continue to show annual double-digit growth, all of which we’ll be tracking in 2015 and beyond.