The role of renewables in global power

Renewables were an integral topic throughout CERAWeek by IHS Markit, not just in discussions on power day but throughout the week. The agreement throughout discussions was that the build-out of renewables will be massive, the cost reductions are real, and the impact of renewables will be substantial on the full energy system. Over the past 10 years, renewables have shifted from playing a marginal role in global energy systems to being integral.

Different ways to address intermittency of renewable power sources

The role of batteries, as an enabler, was well understood during discussions. Lithium-ion was seen as the dominant technology, as it benefits from the growth in the automotive sector. However, the consensus was that batteries cannot be the only answer to intermittency, because they are perceived as too expensive-despite rapid cost declines-and offer only limited-duration storage. One concern was whether the supply of raw material, in particular cobalt, can keep up with current battery expansion plans linked to the rapid development of electric mobility. Hydrogen was discussed as a possible answer to the longer-term storage problem, as was green gas or power to X in combination with carbon capture, use, and storage, with some companies already involved in this area.

Clear shift in focus from cost to the value of renewables

Despite continuing cost decreases, the value of solar declines as more solar is added, which led one panellist to argue for the need for a technological breakthrough to stop solar penetration from plateauing. In another panel, it was argued that the relative value of wind increases in areas with high photovoltaic penetration. The value of an increasing share of distributed generation and the role of utilities in managing this transformation was another topic of discussion. This focus on value leads to a portfolio approach for power generation, rather than a technology approach, and explains the increasing interest in hybrid renewables that combine solar and wind with other power sources. Microgrids were also mentioned a few times, and the role of gas as a partner to renewables was a theme throughout the week. But the most dramatic question that was raised repeatedly was, if most of the new capacity is renewable, why not all of it?

Great interests in sessions focusing on new technologies

Excitement around technologies such as digitalization, big data, artificial intelligence, and blockchain-and how these technologies can address the challenges of increasing penetration of renewables-were key themes. At the same time, there was little consensus on the business models and organizational changes required to leverage these new technologies. Blockchain was a particularly hot topic, with 12 sessions this year, compared with zero last year. However, there was relatively little discussion on the implications for policy and the opportunity for regulators to actively help shape this transition.

While the theme of the conference was "tipping points," for power markets and renewables the consensus was that evolution is more likely than revolution. Learn more about our power and renewables market coverage.

Eduard Sala de Vedruna is Senior Director, Power, Gas, Coal, and Renewables, for IHS Markit.

Posted 29^th March 2018

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.