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February 23, 2016

So how well is the renewable revolution really going?

By Emad Ahmed

Morocco is embracing solar power unlike any other nation. The country currently imports a staggering 98 per cent of its energy, but that’s changing with arrival of the Ouarzazate solar farm. A staggering 450 hectares of solar panels will collect thermal energy, which is then stored in the form of molten salt; when needed, this energy can then be used to power steam turbines.

Ouarzazate is just one part of the country’s ambitious plans to obtain over 40 per cent of its electricity needs from renewables by 2020: major hydroelectric and wind power schemes are planned, too. Eventually, the excess energy could be exported to Europe and neighbouring countries, turning energy into a revenue source for the Moroccan government, too.

The reason such innovative projects are now getting the green light is a recent steep fall in the cost of renewable energy production. It all comes down to the predictability of demand.

One key factor in the cost of different energy sources is a plant’s “capacity factor” – the percentage of its maximum output it can realistically achieve. Ideally you want that figure to be high: the less a plant is out of action, the more that form of energy is worth investing in.

Fossil fuel plants only need to power down for any maintenance and repairs only, so can have capacity factors of upwards of 70 per cent. But solar and wind plants don’t run anywhere close to their full capacity, especially when you consider the full calendar year. (Damn you, weather. Why can’t it be both sunny and windy every day?) As a result, their capacity factor may be as low as 20 per cent, making them uncompetitive with fossil fuels.

But in the US, at least, that is starting to change – and, Bloomberg Business argued last October, it’s a big deal:

For the first time, widespread adoption of renewables is effectively lowering the capacity factor for fossil fuels. That’s because once a solar or wind project is built, the marginal cost of the electricity it produces is pretty much zero—free electricity—while coal and gas plants require more fuel for every new watt produced. If you’re a power company with a choice, you choose the free stuff every time. 

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It’s a self-reinforcing cycle. As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed. 

Morocco is not alone in wanting to abandon the dirty fuels of our past. Despite the rhetoric from certain sections of America’s political class, data compiled by the country’s Energy Information Administration (EIA) reveals big drops in fossil fuel dependence in many states. Almost a fifth of Oklahoma’s energy now comes from renewables, and Maine’s mixed use of both hydroelectric and other forms of renewable energy now accounts for almost two thirds of its energy supplies.

California is arguably a leader in the world of environmental protection. Now, almost a third of its energy is from renewable sources – a significant feat when you recall that the state has an economy that wouldn’t look out of place in the G8. Nonetheless, like much of America – and the world – it is still reliant on harmful natural gas.

What about Britain? The cost of energy from other renewable sources is still higher than that from traditional sources. But what hasn’t helped are the subsidy cuts to the solar industry announced by the government at the end of last year, which the DECC estimated could cause the loss of as many as 18,000 jobs.

Japan is also targeting an ambitious goal of drawing a quarter of its power from renewable sourced by 2030. But that government, too, has been criticised for acting too slowly, and the country is still dependent on non-renewable nuclear energy, despite the 2011 Fukushima nuclear disaster.

However, it is supporting renewables through a feed-in tariff, which uses a subsidy to encourage energy companies to pay energy from renewable sources. (The subsidy will taper off over time.)

It seems clear that there has to be some level of government intervention in to support and encourage the use of renewables. Even though prices are now competitive, the sector’s growth isn’t coming fast enough – and that could have catastrophic consequences for our environment.

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