Renewable energy sources to dominate the energy mix of tomorrow
In the face of geopolitical tensions, energy security will continue to be at the top of government agendas in 2023. The search for a more secure energy system – in Europe and elsewhere – involves a number of measures from which renewable energy sources such as solar energy and wind power are likely to benefit most.
Is gas infrastructure still a good solution?
Diversifying energy supply is increasing the use of liquefied natural gas (LNG), especially in Germany. This development cannot be reconciled with climate targets in the long term, however, because gas causes significant emissions along the supply chain. Consequently, the percentage of electricity generated from gas in industrialized countries is generally falling.
The growing economic and security benefits of electrification are also helping to displace gas in other sectors, such as in the heating of residential buildings using efficient heat pumps. From the perspective of sustainability, security and economic viability, investments in new gas infrastructures are therefore likely to depreciate or lose value in the long term.
Renewable energy being developed
In contrast to gas, renewable energy sources offer local, readily available energy production that is sustainable and economically competitive. To honor the Paris Agreement, Credit Suisse estimates that cumulative wind power and solar capacity will need to increase 3.5 times from 2021 to 2030. In terms of solar energy, the existing and planned manufacturing capacities are likely to be sufficient to build 940 gigawatts of solar installations annually by 2025.
Nuclear power will also play a role, since it has the potential to complement low-carbon electricity generation in areas with limited renewable resources. Numerous factors prevent it from being used more widely, however, which means that nuclear power is not a comprehensive solution in the energy mix of the future.
Offshore wind power an economically lucrative source of energy
The development of floating wind turbines is making it possible to open up new markets and regions. Offshore wind power has a remarkable capacity factor. The ratio of actual power to potential power over a given period is potentially greater than 50%, which is more than double that of other energy sources such as solar energy.
Moreover, offshore wind power is already economically competitive: At a recent auction in the UK, for example, it offered the cheapest electricity price. This technology is expected to grow exponentially in the future.
Solar energy experiencing largest increase in capacity
In 2021, solar energy accounted for just 3.6% of the global electricity mix. This is likely to change in the future: In 2022 and 2023, solar energy is expected to record the largest increase in capacity among renewable energy sources worldwide.
In the future, solar energy projects are likely to be increasingly coupled with battery storage systems as the technology evolves and costs are reduced. In markets such as California, more than 95% of the solar installations that will soon be connected to the grid are already linked to energy storage systems. These projects are enabling developers and grid operators to manage the fluctuations in renewable energy sources more effectively.
Storing the energy generated from solar power is the key to having a complete energy supply. Focus will therefore be on storing generated electricity in addition to expanding the use of renewable energy sources.