PV Magazine Mexico published an end of year byline by our CEO Martin Vogt.
Find the original article here : Se vislumbra un mundo más limpio, los hidrocarburos pierden terreno
In a collective effort to decarbonize, a growing number of countries are making strides to transition away from fossil fuels and so mitigate global emissions. Global solar power installations hit 1TW capacity earlier this year, with capacity scheduled to double again by 2025 [1]. Additionally, demand for biofuels has almost recovered to pre-pandemic levels and is forecasted to continue to grow in 2023 [2], and by 2050, 56% of the world’s electricity is predicted to be generated by wind and solar photovoltaics (PV) [3].
Despite this positive outlook, the global energy sector has faced a lot of challenges in 2022. Russia’s invasion of Ukraine has led to an unprecedented global energy crisis and significant price increases for natural gas, oil, and coal. As governments across the world attempt to protect citizens from higher energy costs and curtail their dependence on Russia’s fossil fuels, the urgency to accelerate the transition to renewables has intensified [4].
Decarbonising with Solar and Wind Power
Across Latin America, government leaders have also realized that increasing investment in clean energy sources, such as solar and wind, is more cost-effective than backing legacy fuels. For example, Jamaica’s most affordable energy producer is a 51 MW solar plant, which sells its power at USD 8.5 cents per kWh [5]. Understandably, Jamaica isfocused on reducing its dependence on fossil fuels and ensuring that 30% of its electricity comes from renewables by 2030 [6]. Additionally, the war in Ukraine has led the United States to export large amounts of liquified natural gas (LNG) to Europe, forcing import prices for existing buyers in Latin America, with no long-term supply agreements, to increase.
International developers and investors continue to be confident in the region’s potential and are committed to further support the energy transition in Latin America and the Caribbean. In fact, foreign direct investment (FDI) has recovered from the pandemic’s impact and rose 56% to $134 billion across the region in 2021 [7]. Attracting international capital inflows to subsidize clean energy installations contributes to the diversification of the region’s energy mix and mitigates carbon emissions whilst boosting economic growth.
Battery Energy Storage Systems (BESS)
Latin American and Caribbean nations also have clear investment opportunities in battery storage technology. Green energy resources, such as the sun and wind, can be unpredictable and vary depending on their availability. To address this, short- and long-duration battery energy storage systems (BESS) continue to be vital to strengthen countries’ energy security and ensure a stable baseload capacity, by enabling the storage of excess energy produced by different renewable resources.
This emission-free solution can also assist grid operators to balance supply during periods of peak demand. Particularly the Small Island Developing States (SIDS), who face challenges in securing universal energy access and are more prone to adverse weather conditions, can ensure that communities living in remote locations benefit from a decentralised energy supply.
Utilising battery energy technology can potentially lead to major cost reductions. St. Kitts and Nevis is currently building what will be the first operational utility-scale solar energy and lithium-ion battery storage power plant in the Caribbean. This pioneering hybrid project will cover 30 - 35% of the island nation’s energy demand for the next 2 decades, while mitigating CO2 emissions by over 740,000 metric tonnes [8].
The global energy storage market is expected to grow 30% annually until 2030 [9], with lithium-ion batteries leading the growth in installations of battery solutions, followed by compressed air and thermal energy storage. By the start of 2040, global storage systems capacity will most likely reach 411GW [10]. This transformation is being driven by the support of ambitious climate policies across the world, including the United States’ Inflation Reduction Act, which provides more than $369 billion in funding to bolster green energy technologies [11]. The European Commission’s REPowerEU plan, which sets financial and legal measures to accelerate Europe's energy independence also supports energy storage solutions [12].
To build on the strong momentum for renewable energy and green technologies, political leaders across Latin America and the Caribbean should create regulatory frameworks that promote confidence among the private sector and foreign investors. Mitigating barriers, such as extensive permitting and approval timelines, also allows renewable energy developers to plan and finance long-term projects.
There is no one-size-fits-all solution for decarbonization, but, as the world steps into 2023, there is a clear understanding worldwide that the only path to achieve energy security and reach Net Zero targets is through the accelerated deployment of renewable solutions and a diversified portfolio of energy infrastructure.
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[1] SolarPower Europe - Global Market Outlook 2022-2026
[2] International Energy Agency (IEA) - Renewable Energy Market Update: Outlook for 2022 and 2023
[3] BloombergNEF - New Energy Outlook 2020
[4] Reuters - Ukraine crisis will speed energy transition in mid-term, says renewables agency chief
[5] PV Magazine - Solar delivers cheapest power in Jamaica
[6] Government of Jamaica - Vision 2030 Jamaica
[7] United Nations Conference on Trade and Development (UNCTAD) - World Investment Report 2022
[8] Leclanché - Government of St. Kitts and Nevis, SKELEC and Leclanché Commence Construction of Caribbean’s Largest Solar Generation and Storage System
[9] Energy Storage News - BloombergNEF predicts 30% annual growth for global energy storage market to 2030
[10] BloombergNEF - Global Energy Storage Market to Grow 15-Fold by 2030
[11] Bloomberg - Battery Storage Tops List for Climate Tech Investors: ESG Survey
[12] European Parliament - Renewable Energy, Energy Performance of Buildings and Energy Efficiency Directives: amendments (REPowerEU)
