BNEF 10 Predictions Article

BNEF 10 Predictions Article

BNEF’s annual ten predictions for the global energy sector are always illuminating, if only for the honesty with which it scores itself as December rolls in. It gave itself 77 out of 100 for 2015, with no real howlers. Energy storage did not advance to where it anticipated in 2015, but it called the direction correctly, system prices did appear to fall 35 percent.

But what stands out this year? The momentum gained from a record $329bn of investment in clean energy, and the bounce from the Paris COP21 agreement in December, gives the year a positive start. The principal drivers of growth remain the same: close to 120 GW of new wind and solar assets were collectively commissioned in 2015, with wind load factors increasing and the cost of producing a solar panel falling. BNEF indicates “technical innovation in cell process and structure continues and will drive down the module price by 5% to 7% during the course of 2016.” Renewables infrastructure seems remarkably well protected from some uncertain macroeconomic factors. In Europe, lower cost wind turbines will improve performance and should tempt owners and operators into potentially repowering early. [At Aurium we would be interested to hear of such opportunities.]

The stark difference between US YieldCo and UK quoted-fund performance, which have the same business model of owning renewable assets, where the former’s share prices saw giddy peaks and sharp troughs versus steady returns in the UK, will not hold back further equity capital raising in 2016. Energy storage will likewise continue to grab the headlines. BNEF states, “Much depends on the exact timing of these big projects, but I (we) are plumping for additions of at least 750 megawatts this year, two times the figure of 374 megawatts for utility-scale plus end-user.” Carbon prices should not remain as low as EUR 7 per tonne for too long, as the Market Stability Reserve, which was agreed 18 months ago, starts to kick in. And finally, some of the forward movement will no longer be provided by governments and shifting policy but by corporations. The trend, started by IT and financial services firms initially, to get 100% of their electricity from renewables should intensify during 2016. As BNEF suggests, there’s more than enough cause for encouragement.

For further details see: http://about.bnef.com/blog/liebreich-10-predictions-for-2016-sunny-with-a-hint-of-gotterdammerung/

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