Wind: watch out! The solar revolution is underway

Topics
No items found.
Ilaria Valtimora
November 10, 2017
This content is from our archive. Some formatting or links may be broken.
This content is from our archive. Some formatting or links may be broken.
Wind: watch out! The solar revolution is underway

The attendees at our sixth Financing Wind conference in London yesterday heard plenty about the growth prospects for the wind industry in the coming years.

But wind professionals should keep a close eye on trends in solar too. The growth of the utility-scale solar market has the potential to hugely increase competition with the wind industry in the coming years, as the sectors compete for investor attention.

This is a trend we have seen again in our sixth-annual Top 100 Power People report, which is due to be published on Tuesday. In this report, our cover interviewee Anja-Isabel Dotzenrath, chief executive of E.On Climate & Renewables, says she expects solar to play “the more dominant role in the energy transition” globally compared to wind. Whereas the battle this decade has been between renewables and fossil fuels, the next decade could be characterised by a major battle between wind and solar.

It is a statement that Dotzenrath is well-placed to make as E.On has interests in both wind and solar – and isn’t especially wedded to either. Currently, 4.3GW of the utility’s 5.3GW operational renewables portfolio is wind farms, both onshore and offshore.

However, the company has an ambition to grow its solar arm to the same size as its wind arm. Wind firms must take solar seriously.

That does not necessarily mean solar is a threat to wind. We see a high level of interest in investing in renewables globally as more firms divest out of fossil fuels, so there should be a larger pool of money chasing deals in both technologies.

There is indeed space for the two to co-exist. A recent analysis from global financial advisor Lazard has shown that unsubsidised levelised cost of energy for utility-scale solar plants ranges between $43/MWh and $53/MWh, compared to unsubsidised LCOE for wind, which ranges between $30/MWh and $60/MWh.

Why should wind watch out for competition, then? Well, because many utilities and investors in renewables are technology-agnostic.

In another interview in the Top 100, we spoke to BlackRock’s head of renewables in the Americas and Asia-Pacific, David Giordano, who explained that the firm’s $1.65bn Global Renewable Power II fund – which reached financial close in July – has a target portfolio of 75% wind and 25% solar. That is fine now. But, if solar returns look much better, our view is that this balance would shift.

The number of large solar projects for investors to back is certainly increasing. The first utility-scale solar plants were installed in the mid-1980s, but over half of currently-operating utility-scale solar projects came online in the past two years as effect of measures implemented by governments in countries including the US and India in order to back the growth of the sector.

In the US for example, the Solar Energy Industries Association has reported that 72% of all solar capacity installed in 2016 was utility-scale and forecast a similar 2017 figure. This exceptional growth is mainly an effect of the solar investment tax credit, implemented by the US government in 2006 and expected to phase down by 2022, which has brought costs of installing solar in the country to drop by more than 70% since 2010.

It is also worth noting that sustained growth in utility-scale solar power plants is not limited to the US. Bloomberg New Energy Finance has reported that, in 2016, 70GW of utility-scale solar projects were installed worldwide, up from 56GW in 2015. This is in contrast to wind, which achieved 56.5GW in 2016, down from 63GW in 2015.

And solar should keep getting stronger, according to some industry onlookers. A Wood Mackenzie report has shown that as oil and gas demand slows, the demand of solar and wind power plants as investment assets is set to grow. The company estimates that at current costs, we could see a $350bn investment in wind and solar to be required by 2035.

It is no surprise that firms like E.On and BlackRock would look to invest in both wind and solar. The difference is that solar is making a shift from rooftop projects to large utility-scale schemes, and that is giving these companies more solar assets to invest in. Wind and solar are not yet battling head-to-head – but they soon could be.

The attendees at our sixth Financing Wind conference in London yesterday heard plenty about the growth prospects for the wind industry in the coming years.

But wind professionals should keep a close eye on trends in solar too. The growth of the utility-scale solar market has the potential to hugely increase competition with the wind industry in the coming years, as the sectors compete for investor attention.

This is a trend we have seen again in our sixth-annual Top 100 Power People report, which is due to be published on Tuesday. In this report, our cover interviewee Anja-Isabel Dotzenrath, chief executive of E.On Climate & Renewables, says she expects solar to play “the more dominant role in the energy transition” globally compared to wind. Whereas the battle this decade has been between renewables and fossil fuels, the next decade could be characterised by a major battle between wind and solar.

It is a statement that Dotzenrath is well-placed to make as E.On has interests in both wind and solar – and isn’t especially wedded to either. Currently, 4.3GW of the utility’s 5.3GW operational renewables portfolio is wind farms, both onshore and offshore.

However, the company has an ambition to grow its solar arm to the same size as its wind arm. Wind firms must take solar seriously.

That does not necessarily mean solar is a threat to wind. We see a high level of interest in investing in renewables globally as more firms divest out of fossil fuels, so there should be a larger pool of money chasing deals in both technologies.

There is indeed space for the two to co-exist. A recent analysis from global financial advisor Lazard has shown that unsubsidised levelised cost of energy for utility-scale solar plants ranges between $43/MWh and $53/MWh, compared to unsubsidised LCOE for wind, which ranges between $30/MWh and $60/MWh.

Why should wind watch out for competition, then? Well, because many utilities and investors in renewables are technology-agnostic.

In another interview in the Top 100, we spoke to BlackRock’s head of renewables in the Americas and Asia-Pacific, David Giordano, who explained that the firm’s $1.65bn Global Renewable Power II fund – which reached financial close in July – has a target portfolio of 75% wind and 25% solar. That is fine now. But, if solar returns look much better, our view is that this balance would shift.

The number of large solar projects for investors to back is certainly increasing. The first utility-scale solar plants were installed in the mid-1980s, but over half of currently-operating utility-scale solar projects came online in the past two years as effect of measures implemented by governments in countries including the US and India in order to back the growth of the sector.

In the US for example, the Solar Energy Industries Association has reported that 72% of all solar capacity installed in 2016 was utility-scale and forecast a similar 2017 figure. This exceptional growth is mainly an effect of the solar investment tax credit, implemented by the US government in 2006 and expected to phase down by 2022, which has brought costs of installing solar in the country to drop by more than 70% since 2010.

It is also worth noting that sustained growth in utility-scale solar power plants is not limited to the US. Bloomberg New Energy Finance has reported that, in 2016, 70GW of utility-scale solar projects were installed worldwide, up from 56GW in 2015. This is in contrast to wind, which achieved 56.5GW in 2016, down from 63GW in 2015.

And solar should keep getting stronger, according to some industry onlookers. A Wood Mackenzie report has shown that as oil and gas demand slows, the demand of solar and wind power plants as investment assets is set to grow. The company estimates that at current costs, we could see a $350bn investment in wind and solar to be required by 2035.

It is no surprise that firms like E.On and BlackRock would look to invest in both wind and solar. The difference is that solar is making a shift from rooftop projects to large utility-scale schemes, and that is giving these companies more solar assets to invest in. Wind and solar are not yet battling head-to-head – but they soon could be.

The attendees at our sixth Financing Wind conference in London yesterday heard plenty about the growth prospects for the wind industry in the coming years.

But wind professionals should keep a close eye on trends in solar too. The growth of the utility-scale solar market has the potential to hugely increase competition with the wind industry in the coming years, as the sectors compete for investor attention.

This is a trend we have seen again in our sixth-annual Top 100 Power People report, which is due to be published on Tuesday. In this report, our cover interviewee Anja-Isabel Dotzenrath, chief executive of E.On Climate & Renewables, says she expects solar to play “the more dominant role in the energy transition” globally compared to wind. Whereas the battle this decade has been between renewables and fossil fuels, the next decade could be characterised by a major battle between wind and solar.

It is a statement that Dotzenrath is well-placed to make as E.On has interests in both wind and solar – and isn’t especially wedded to either. Currently, 4.3GW of the utility’s 5.3GW operational renewables portfolio is wind farms, both onshore and offshore.

However, the company has an ambition to grow its solar arm to the same size as its wind arm. Wind firms must take solar seriously.

That does not necessarily mean solar is a threat to wind. We see a high level of interest in investing in renewables globally as more firms divest out of fossil fuels, so there should be a larger pool of money chasing deals in both technologies.

There is indeed space for the two to co-exist. A recent analysis from global financial advisor Lazard has shown that unsubsidised levelised cost of energy for utility-scale solar plants ranges between $43/MWh and $53/MWh, compared to unsubsidised LCOE for wind, which ranges between $30/MWh and $60/MWh.

Why should wind watch out for competition, then? Well, because many utilities and investors in renewables are technology-agnostic.

In another interview in the Top 100, we spoke to BlackRock’s head of renewables in the Americas and Asia-Pacific, David Giordano, who explained that the firm’s $1.65bn Global Renewable Power II fund – which reached financial close in July – has a target portfolio of 75% wind and 25% solar. That is fine now. But, if solar returns look much better, our view is that this balance would shift.

The number of large solar projects for investors to back is certainly increasing. The first utility-scale solar plants were installed in the mid-1980s, but over half of currently-operating utility-scale solar projects came online in the past two years as effect of measures implemented by governments in countries including the US and India in order to back the growth of the sector.

In the US for example, the Solar Energy Industries Association has reported that 72% of all solar capacity installed in 2016 was utility-scale and forecast a similar 2017 figure. This exceptional growth is mainly an effect of the solar investment tax credit, implemented by the US government in 2006 and expected to phase down by 2022, which has brought costs of installing solar in the country to drop by more than 70% since 2010.

It is also worth noting that sustained growth in utility-scale solar power plants is not limited to the US. Bloomberg New Energy Finance has reported that, in 2016, 70GW of utility-scale solar projects were installed worldwide, up from 56GW in 2015. This is in contrast to wind, which achieved 56.5GW in 2016, down from 63GW in 2015.

And solar should keep getting stronger, according to some industry onlookers. A Wood Mackenzie report has shown that as oil and gas demand slows, the demand of solar and wind power plants as investment assets is set to grow. The company estimates that at current costs, we could see a $350bn investment in wind and solar to be required by 2035.

It is no surprise that firms like E.On and BlackRock would look to invest in both wind and solar. The difference is that solar is making a shift from rooftop projects to large utility-scale schemes, and that is giving these companies more solar assets to invest in. Wind and solar are not yet battling head-to-head – but they soon could be.

The attendees at our sixth Financing Wind conference in London yesterday heard plenty about the growth prospects for the wind industry in the coming years.

But wind professionals should keep a close eye on trends in solar too. The growth of the utility-scale solar market has the potential to hugely increase competition with the wind industry in the coming years, as the sectors compete for investor attention.

This is a trend we have seen again in our sixth-annual Top 100 Power People report, which is due to be published on Tuesday. In this report, our cover interviewee Anja-Isabel Dotzenrath, chief executive of E.On Climate & Renewables, says she expects solar to play “the more dominant role in the energy transition” globally compared to wind. Whereas the battle this decade has been between renewables and fossil fuels, the next decade could be characterised by a major battle between wind and solar.

It is a statement that Dotzenrath is well-placed to make as E.On has interests in both wind and solar – and isn’t especially wedded to either. Currently, 4.3GW of the utility’s 5.3GW operational renewables portfolio is wind farms, both onshore and offshore.

However, the company has an ambition to grow its solar arm to the same size as its wind arm. Wind firms must take solar seriously.

That does not necessarily mean solar is a threat to wind. We see a high level of interest in investing in renewables globally as more firms divest out of fossil fuels, so there should be a larger pool of money chasing deals in both technologies.

There is indeed space for the two to co-exist. A recent analysis from global financial advisor Lazard has shown that unsubsidised levelised cost of energy for utility-scale solar plants ranges between $43/MWh and $53/MWh, compared to unsubsidised LCOE for wind, which ranges between $30/MWh and $60/MWh.

Why should wind watch out for competition, then? Well, because many utilities and investors in renewables are technology-agnostic.

In another interview in the Top 100, we spoke to BlackRock’s head of renewables in the Americas and Asia-Pacific, David Giordano, who explained that the firm’s $1.65bn Global Renewable Power II fund – which reached financial close in July – has a target portfolio of 75% wind and 25% solar. That is fine now. But, if solar returns look much better, our view is that this balance would shift.

The number of large solar projects for investors to back is certainly increasing. The first utility-scale solar plants were installed in the mid-1980s, but over half of currently-operating utility-scale solar projects came online in the past two years as effect of measures implemented by governments in countries including the US and India in order to back the growth of the sector.

In the US for example, the Solar Energy Industries Association has reported that 72% of all solar capacity installed in 2016 was utility-scale and forecast a similar 2017 figure. This exceptional growth is mainly an effect of the solar investment tax credit, implemented by the US government in 2006 and expected to phase down by 2022, which has brought costs of installing solar in the country to drop by more than 70% since 2010.

It is also worth noting that sustained growth in utility-scale solar power plants is not limited to the US. Bloomberg New Energy Finance has reported that, in 2016, 70GW of utility-scale solar projects were installed worldwide, up from 56GW in 2015. This is in contrast to wind, which achieved 56.5GW in 2016, down from 63GW in 2015.

And solar should keep getting stronger, according to some industry onlookers. A Wood Mackenzie report has shown that as oil and gas demand slows, the demand of solar and wind power plants as investment assets is set to grow. The company estimates that at current costs, we could see a $350bn investment in wind and solar to be required by 2035.

It is no surprise that firms like E.On and BlackRock would look to invest in both wind and solar. The difference is that solar is making a shift from rooftop projects to large utility-scale schemes, and that is giving these companies more solar assets to invest in. Wind and solar are not yet battling head-to-head – but they soon could be.

The attendees at our sixth Financing Wind conference in London yesterday heard plenty about the growth prospects for the wind industry in the coming years.

But wind professionals should keep a close eye on trends in solar too. The growth of the utility-scale solar market has the potential to hugely increase competition with the wind industry in the coming years, as the sectors compete for investor attention.

This is a trend we have seen again in our sixth-annual Top 100 Power People report, which is due to be published on Tuesday. In this report, our cover interviewee Anja-Isabel Dotzenrath, chief executive of E.On Climate & Renewables, says she expects solar to play “the more dominant role in the energy transition” globally compared to wind. Whereas the battle this decade has been between renewables and fossil fuels, the next decade could be characterised by a major battle between wind and solar.

It is a statement that Dotzenrath is well-placed to make as E.On has interests in both wind and solar – and isn’t especially wedded to either. Currently, 4.3GW of the utility’s 5.3GW operational renewables portfolio is wind farms, both onshore and offshore.

However, the company has an ambition to grow its solar arm to the same size as its wind arm. Wind firms must take solar seriously.

That does not necessarily mean solar is a threat to wind. We see a high level of interest in investing in renewables globally as more firms divest out of fossil fuels, so there should be a larger pool of money chasing deals in both technologies.

There is indeed space for the two to co-exist. A recent analysis from global financial advisor Lazard has shown that unsubsidised levelised cost of energy for utility-scale solar plants ranges between $43/MWh and $53/MWh, compared to unsubsidised LCOE for wind, which ranges between $30/MWh and $60/MWh.

Why should wind watch out for competition, then? Well, because many utilities and investors in renewables are technology-agnostic.

In another interview in the Top 100, we spoke to BlackRock’s head of renewables in the Americas and Asia-Pacific, David Giordano, who explained that the firm’s $1.65bn Global Renewable Power II fund – which reached financial close in July – has a target portfolio of 75% wind and 25% solar. That is fine now. But, if solar returns look much better, our view is that this balance would shift.

The number of large solar projects for investors to back is certainly increasing. The first utility-scale solar plants were installed in the mid-1980s, but over half of currently-operating utility-scale solar projects came online in the past two years as effect of measures implemented by governments in countries including the US and India in order to back the growth of the sector.

In the US for example, the Solar Energy Industries Association has reported that 72% of all solar capacity installed in 2016 was utility-scale and forecast a similar 2017 figure. This exceptional growth is mainly an effect of the solar investment tax credit, implemented by the US government in 2006 and expected to phase down by 2022, which has brought costs of installing solar in the country to drop by more than 70% since 2010.

It is also worth noting that sustained growth in utility-scale solar power plants is not limited to the US. Bloomberg New Energy Finance has reported that, in 2016, 70GW of utility-scale solar projects were installed worldwide, up from 56GW in 2015. This is in contrast to wind, which achieved 56.5GW in 2016, down from 63GW in 2015.

And solar should keep getting stronger, according to some industry onlookers. A Wood Mackenzie report has shown that as oil and gas demand slows, the demand of solar and wind power plants as investment assets is set to grow. The company estimates that at current costs, we could see a $350bn investment in wind and solar to be required by 2035.

It is no surprise that firms like E.On and BlackRock would look to invest in both wind and solar. The difference is that solar is making a shift from rooftop projects to large utility-scale schemes, and that is giving these companies more solar assets to invest in. Wind and solar are not yet battling head-to-head – but they soon could be.

Full archive access is available to members only

Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.

Full archive access is available to members only

Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.