THE BIG RENEWABLES TRENDS ACROSS EMEA IN 2022

In the wake of COP26 in Glasgow, a spotlight is being shone on renewables and their potential to help tackle climate change. The year ahead promises vast growth in the renewable energy industry and RES will be at the forefront of several cutting-edge trends. In this article, Stuart Lunn, Commercial Director EMEA at RES discusses the big trends in the renewable industry in 2022 across the region. 

2021 was the year that renewables took centre stage. Under the Paris Agreement, 195 countries set a target to keep average global temperature change below 2°C and as close as possible to 1.5°C. In order to deliver on these promises, COP26 agreed for the first time to accelerate efforts towards the phase-down of unabated coal power and inefficient fossil fuel subsidies. It is hoped by many that this aspect of the new Pact will accelerate the growth of renewable energy projects globally and reduce reliance on fossil fuels for energy. This is positive news as our vision at RES is to create a future where everyone has access to affordable zero carbon energy. We have the technologies to make that transition work, but we need to focus on rapid deployment to plug the gap now.   

Electrification and Green Hydrogen to reach Net Zero

Renewables-based electrification is the fastest and most efficient way to reach Net Zero – not just in the power sector, but across much of the energy spectrum. For those hard to abate sectors, where electrification isn’t the answer, green hydrogen can be the missing link to enable full decarbonisation. 

Hydrogen is already extensively used as a chemical feedstock: in ammonia production and as part of the hydro-carbon cracking process in refinery operations. The majority of this hydrogen is produced in a carbon intensive manner, accounting for 2% of global CO2 emissions. This production must be decarbonised, by switching to green hydrogen, which is produced by electrolysis of water using renewable electricity. As hydrogen production becomes cleaner, overall usage is forecast to expand to decarbonise other areas of industry, transport and power. Bloomberg New Energy Finance (BNEF) forecasts that the global hydrogen market will grow by eleven-fold by 2050.

The European Union has stated it will invest €430 billion in green hydrogen and has set a target of 40GW by 2030 to help achieve the goals of its Green Deal. Other regions, including Saudi Arabia and Australia, are also making major investments into green hydrogen. According to BNEF, in 2022 more than 20 countries are expected to release a national hydrogen strategy. Those countries that are quick to enable the conditions for rapid deployment of green hydrogen will reap the most benefits.

Scaling-up of true hybrid projects

In addition to the expansion of green hydrogen projects, the next few years will also see a rapid scaling up of fully integrated hybrid projects. Whilst there are already a large number of hybrid projects in operation globally, in many instances the assets operate independently: the renewables and storage assets are separately metered and the output is contracted under separate offtake arrangements. The rapidly falling cost of batteries, coupled with the increasing volatility of wholesale power prices, has advanced the business case for fully coupled renewables plus storage projects in many countries. The presence of battery storage allows solar and wind project owners to benefit from shared infrastructure costs, to arbitrage the effects of cannibalisation and to dynamically target valuable ancillary service and balancing mechanism revenue opportunities. Additionally, in areas of grid constraint, storage will offer the flexibility to store excess electricity during periods of curtailment before releasing it into the local grid network when there is availability.

As further revenue stacking opportunities emerge, grid availability becomes scarcer, and advances in technology and cost reductions continue, true hybrid projects will become key part of the drive towards net zero.

Offshore wind takes off

We are already seeing huge growth in the offshore wind industry. Take the recent results of Scotwind for instance which indicates that the Scottish offshore wind sector is due to grow to 25GW. To put this into context, according to trade body RenewableUK, the UK’s entire operational offshore wind capacity currently stands at c.10GW.  Elsewhere, in Germany capacity is estimated to increase by around 300 percent to 30GW by 2030, and in Norway the government has announced plans for 4.5GW of projects by 2030.

However, to deliver this scale of deployment, certain challenges on planning and grid must be addressed. In particular, in many countries there is a lack of holistic grid planning to efficiently coordinate the transmission of multiple offshore wind farms. Most offshore wind farm transmission lines are currently individual connections for each offshore wind farm and this misses material savings and network resilience. In the UK this is currently being reviewed by the ongoing offshore transmission network review (OTNR) led by the Department of Business, Energy & Industrial Strategy and supported by key players within the industry.

2022 will also be the year that floating offshore wind demonstrates its full potential. Floating structures enable the deployment of wind turbines to deeper offshore locations with higher capacity factors. Governments are responding to this emerging technology by including it in sea-bed licencing rounds. To date there have been floating project awards in both UK R4 (1 project – 480MW) and Scotwind (15GW floating out of a total award of 25GW). In Norway, as part of the seabed leasing auction taking place in 2022, 1.5GW is dedicated to floating. In South Korea, floating wind makes up 24% of its offshore wind capacity forecast for 2035 with France and Italy showing equally strong ambition for the technology.

Holistic planning for end-of-life

Across Europe several GW of operational wind farms are now approaching the end of their operational design life, and conversations are being held by asset owners around the world on the best approach for end-of-life management.  Early consideration of end-of-life strategy allows all options to be explored and informs the asset’s most optimal ongoing maintenance strategy. This may involve technical and engineering analysis to ensure safe continued operation, and a review of the cost (and availability) of consumables and spares to keep projects running.

In many markets repowering many also be an attractive option and the timing and benefits of this will need to be carefully weighed by asset owners versus the ability to life extend.

Renewable energy is key to Net Zero

It has already been an exciting start to the decade for the renewables industry as its huge growth potential has become universally recognised. To deliver on this growth, investors and asset owners will need innovative and reliable partners to navigate these emerging trends and ensure that their portfolios can be scaled both quickly and efficiently. It is clear that in 2022, renewable energy deployment will continue to accelerate at pace, and we at RES look forward to working with our partners on this journey.