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Renewable Forecast 2023

image credit: Free Images

 

This article presents a forecast of the renewable energy share as a percent of the total energy supply. It was done with science kit learn through python programming. The objective is to show a possible scenario considering the installed capacity since 1990s up to date and what are the future projects that have been already announced.

To begin with, it is important to consider that the culture of energy efficiency and clean energy sources is beginning to spread worldwide. Societies are trying to reach their increase of demand installing new renewable capacity, while promoting people to implement energy efficiency measures. These mechanisms are of great importance to face climate change, while generating new job positions and ensuring energy access.

 

The increase of installed capacity of renewables can be addressed to the drop on the costs of renewables especially in PV and wind turbines, the crash of oil and the shift of investors looking for new technology assets. Since 2015 the curve exhibits a linear behavior, whereas from 2006 until 2015 it had an exponential trend. Based on the International Energy Agency the share of renewables in 2019 was around 13.7% of the total energy supply, considering a fast forward scenario, after the covid-19 crisis and that countries will maintain their sustainability targets, it can be expected to increase up to 14.5% in 2023.

Energy demand has been increasing over the years, with lots of effort to reduce carbon dioxide emissions, with an increase of the share of both nuclear and renewable. The latter are attractive for investors due to being carbon emission free (for the electrical generation), helping to mitigate climate change, creating more job positions, and also promoting technological development. In contrast, the installment of new fossil fuel capacity is falling.

Many oil companies who shifted to energy companies, are now in the renewable energy market, adapting themselves to the future of electrification. This diversification of assets reduces the risks of investment and also adds more value to their portfolio.

Governments need to keep on working with the development of clean energy policies, that consider the implementation of new disruptive and alternative technologies in the fuel, gas, and electric market. Countries will need to work together in order to reach Net Zero target and it is advisable for them to do it in already established political alliances such as the European Union, the Commonwealth, etc. Allowing the private sector to have a clear, mid and long-term strategy with frameworks that support private investment.

In conclusion, renewables share is expected to increase, and governments will need to guarantee investors a set of safety measures for their capital. It is also important to consider the priority of working on stimulus plans for this share to increase with a more accelerated pace.

Discussions

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Matt Chester's picture
Matt Chester on Sep 10, 2020

This diversification of assets reduces the risks of investment and also adds more value to their portfolio.

This would seem to be a simple and straightforward approach for most fossil fuel companies to take-- so why do you think there are still holdouts not adapting and preparing for a future decarbonized energy sector?

Massimiliano Cervo's picture
Massimiliano Cervo on Sep 10, 2020

Matt, there are different ways of portfolio management, one of them (suggested by Dow, founder of Dow Jones, as the best way to diversify risk) is through diversification. 

Analyzing the stocks of the oil and gas copmanies that have part of their assets invested in renewables and hydrogen technology, did not suffer a drop as dramatic as the monomic companies. On the other hand they recovered at a faster pace from the oil crash than the previous ones. 

However, your insight is great, looking forward to further discussion on this, would be great.

Matt Chester's picture
Matt Chester on Sep 11, 2020

Interesting, so you'd suggest that these moves aren't ones of planning to transition completely away from the fossil fuel to renewable energy, but rather a strategy to have a hand in oil AND renewables AND other technologies so no matter what the future brings, they'll be covered? That's of course not surprising, they have massive investment and earnings from oil so they (and their investors) aren't going to quickly just move away from that potential profit out of a consciousness towards climate change, but rather looking to prepare to remain profitable no matter the policies & market mechanisms that emerge in the coming years

Massimiliano Cervo's picture
Massimiliano Cervo on Sep 16, 2020

Exactly Matt, I believe that major companies are diversifying preparing theirselfs for the shift of business when the time comes and the deman merits the change of plans.

 

Massimiliano Cervo's picture

Thank Massimiliano for the Post!

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