- Renewable energy market

Renewable energy market situation

The renewable energy market

There are two main driving forces behind the rise of the renewable energy market.

Firstly

There is a need to electrify entire societies, including the transportation sector and energy-intensive industries such as steel and cement. Meanwhile, new industries are emerging, such as those dedicated to hydrogen production, which require large amounts of renewable electricity.

Secondly

Major financial players, such as pension funds, venture capital firms, green funds and industrial operators are showing a growing interest in the energy sector. Renewable energy sources have become the cheapest, most easily scalable, and fastest means of generating electricity. The willingness of financial investors to pay, along with the long-term nature of their investment strategy, are likely to accelerate the energy transition process.

Renewable energy market perspectives

The recent global energy crisis has added urgency to the need to accelerate the clean energy transition and highlighted the key role of the renewable energy market. Pre-crisis policies led to faster growth in updated forecasts for renewable electricity. In particular, wind and solar PV have the potential to reduce the EU’s dependence on natural gas. However, the potential impact of the new targets announced following the Russian invasion of Ukraine on the 2023 forecasts depends on the rapid implementation of policies.

In 2021, annual additions to renewable capacity reached a record, up 6 percent to nearly 295 GW, despite challenges caused by the pandemic, construction delays, and high feedstock prices. In the coming years, solar PV and wind costs are expected to remain higher than pre-pandemic levels due to high feedstock and transportation prices.

However, the competitiveness of these sources is improving due to more significant increases in natural gas and coal prices.

Anyway, with no new timely policies, growth will hold steady in 2023 as the expansion of solar PV cannot fully offset the decline in hydropower and constant wind additions.

Globally, forecasts for renewable capacity additions in 2023 have been revised upward by 8 percent, thanks to strong policy support in China, the European Union and Latin America, despite downward revisions to forecasts in the United States.

While market uncertainties present challenges, there is a new focus on energy security, especially in the European Union, which is driving an acceleration of efficiency.

Climate change and clean energy transition

The risk of climate change involves the possibility that climate changes in the short, medium, and long term may have impacts on NatPower’s business with economic/financial consequences in terms of (some examples): decreased availability of renewable resources (water, wind, and sun).

NatPower is committed, through its targets of investment in “zero emission” green technologies and in particular in wind and in solar power, to providing its contribution to the fight against climate change.