UAE Will Benefit From Its Global Leadership In The Clean And Renewable Energy Sector

UAE Will Benefit From Its Global Leadership In The Clean And Renewable Energy Sector

The UAE Will Benefit From Its Global Leadership In The Clean And Renewable Energy Sector, as per Saeed Mohammed Al Tayer, MD&CEO of Dubai Electricity and Water Authority (DEWA), in a SOLAR QUARTER article reproduced below.

The image above is of the World Economic Forum


The UAE Will Benefit From Its Global Leadership In The Clean And Renewable Energy Sector – MD & CEO of DEWA

 

UAE Will Benefit From Its Global Leadership In The Clean And Renewable Energy Sector

A file photo of HE Saeed Mohammed Al Tayer, MD&CEO of Dubai Electricity and Water Authority (DEWA)

The presence of the Middle East and North Africa region on the global sustainability agenda continues to grow. The region is witnessing significant momentum in accelerating climate action and strengthening bridges of international cooperation to mitigate the repercussions of climate change. This can be seen from the hosting of the 27th Conference of the Parties (COP 27) in November 2022 in Sharm El Sheikh, Egypt, and preparations of the UAE to host COP 28 in Dubai Expo City in November 2023, which will accelerate the pace of climate action to combat climate change and global warming. Choosing the two countries to host COP 27 and COP 28 marks the beginning of a series of regional events that will last for 18 months, placing the Arab world at the centre of global activities in mitigating climate change.

The two conferences highlight the region’s role in the sustainability agenda by adopting effective strategies to adapt to climate change and mitigate its effects. The two conferences are also of particular importance for supporting climate financing for developing countries and supporting energy transition sustainably and equitably for all relevant parties, consolidating constructive partnerships between the public and private sectors. They also enable bridging the gap between ̒the South and the North ̓ and between the developing and developed countries. This helps to find innovative green solutions to the challenges posed by climate change, ensuring long-term economic and social benefits for the region and the world and achieving a more sustainable future for all.

COP27 has provided many meaningful opportunities for the UAE’s investments, making COP28 essential for expanding economic growth and prosperity with lowered emissions. The UAE will also benefit from its track record in reducing emissions, its global leadership in the clean and renewable energy sector, as well as its good relations, that consolidate the bonds of communication and dialogue; and mobilize efforts to transform climate action into opportunities for economic development and diversification. Moreover, it aims to support the implementation of the outputs of the previous COPs to achieve the Paris Agreement and raise awareness in society on their role that can bring about a positive effect in reducing their carbon footprint. This aligns with the wise leadership’s vision to make COP28 the most successful global environmental conference.

COP28 is also an important platform to highlight the UAE’s journey toward achieving comprehensive sustainable development, the foundations of which were laid by the late Sheikh Zayed bin Sultan Al Nahyan. This is turn, is supported by the wise directives of His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE; and His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to ensure a balance between economic growth and the sustainability of natural and environmental resources. This journey has resulted in the country assuming a leading global position in diversifying energy sources, through massive clean energy projects, the largest and most efficient solar power plants, in addition to being the first country in the region to use nuclear energy for peaceful purposes to generate electric power. Oil and gas in the UAE are also among the least carbon-intensive in the world. The UAE is the first country in the region to ratify the Paris Agreement and to announce a strategic initiative to achieve Net Zero by 2050. The UAE also hosts the headquarters of the International Renewable Energy Agency (IRENA). The UAE has invested more than US$50 billion in clean energy projects in 70 countries including 40 developing nations and recently announced the UAE-US Partnership to Accelerate the Transition to Clean Energy (PACE). The project will catalyze US$100 billion in financing, investment, and other support and will deploy 100 gigawatts of clean energy globally.

To further spearhead the transition towards a green economy, the UAE Cabinet, Chaired by His Highness Sheikh Mohammed bin Rashid Al Maktoum, approved the UAE to join the Global Alliance for Green Economy, announced by the World Green Economy Organization (WGEO) during the World Green Economy Summit 2022. The Alliance will play a pivotal role in promoting climate action, food security, and climate resilient development. WGEO called for supporting this global alliance to accelerate the transition towards a green economy, achieve the goals of sustainable development, and the implementation of the Paris Agreement by harnessing financing, technology, capacity building, and other factors that contribute to enabling a green economy.

In Dubai, we have developed major projects and strategic initiatives implemented by the Dubai Electricity and Water Authority (DEWA) to achieve the goals of the Dubai Clean Energy Strategy 2050 and the Dubai Net Zero Carbon Emissions Strategy 2050 to provide 100% of Dubai’s total production capacity from clean energy sources by 2050. Among the most prominent of these projects is the Mohammed bin Rashid Al Maktoum Solar Park, the world’s largest single-site solar park using the Independent Power Producer (IPP) model, with a production capacity of 5,000 megawatts by 2030. DEWA is also implementing several leading projects to diversify clean energy sources. These include multiple clean and renewable energy sources and technologies such as PV panels, CSP, and green hydrogen production using solar power, which is the first of its kind in the MENA region to produce hydrogen using solar energy. DEWA is also working on pumped-storage water technology using clean energy in Hatta, the first of its kind in the GCC region. DEWA has also implemented several projects to increase energy efficiency.

Furthermore, in 2022, the first-ever MENA Week was hosted by the UAE Government, represented by the Ministry of Climate Change and Environment (MOCCAE), the World Green Economy Organization (WGEO), and DEWA, in collaboration with the UNFCCC, which accelerated the momentum towards COP 27.

In the UAE, we do not rest on our laurels. We continue our relentless efforts to achieve carbon neutrality and support the transition to a green economy. We look forward to COP28 in the UAE to make a tangible impact on climate neutrality, reduce greenhouse gas emissions, consolidate our positive contribution to climate change, transform challenges into opportunities, and anticipate and shape a brighter future for all humans.

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Investing in MENA Green Hydrogen can Drive . . .

Investing in MENA Green Hydrogen can Drive . . .

 

Investing in MENA Green Hydrogen can Drive Global Steel Decarbonization

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MENA. Green Hydrogen. Bigstock

Owing to its significant solar and wind potential, the Middle East and North African (MENA) region has the opportunity to lead the decarbonization of the global steel industry.

Emphasized in a recent report by the Institute for Energy Economics and Financial Analysis, the regional steel industry – which currently represents one of the most competitive globally – has already taken significant strides to decarbonize through the application of direct reduced iron-electric arc furnace technology (DRI-EAF).

 

Now, with new opportunities emerging across the green hydrogen landscape and government objectives to accelerate the transition even further, the MENA region is set to lead the world in the adoption of green hydrogen within the steel industry.

“The MENA region can lead the world if it shifts promptly to renewables and applies green hydrogen in its steel sector. MENA has an established supply of DR-grade iron ore and its iron ore pelletizing plants are among the world’s largest. In 2021, MENA produced just 3% of global crude steel but accounted for nearly 46% of the world’s DRI production,” said Soroush Basirat, author of the Institute for Energy Economies and Financial Analysis report.

With the region offering the highest potential for photovoltaic power globally – with theoretical production estimated at more than 5.8 KWh per m² – converting existing gas-powered generating plants to green hydrogen would create a carbon-free steel industry in the region. Decarbonizing the steel industry aligns with the World Bank’s prediction that by 2050, more than 83GW of wind and 334GW of solar will be added to the regional energy mix, improving the provision of clean energy and making the conversion to green hydrogen-powered steel production that much simpler.

“MENA’s knowledge of this specific steel technology is an invaluable asset. This production knowledge, abetted by further work on iron ore beneficiation, pelletizing and DR plants, is among the most important steel decarbonization pillars, and will greatly assist MENA’s transition. Compared to other regions, MENA’s existing DRI-EAF capacity means that no extra investment is needed for replacing the base technology. All new investment could be focused on expanding production of green hydrogen among other renewables. If it acts fast, MENA has the potential to lead the world in green steel production,” Basirat said.

Reaping Benefits of Renewable Energy

Reaping Benefits of Renewable Energy

MENA Region Falls Short of Reaping Benefits of Renewable Energy

The image above shows solar panels used to generate renewable energy at the Sustainability Pavilion during a media tour at the Dubai Expo 2020. KARIM SAHIB ©AFP

Ali Noureddine

This article has been translated from Arabic.

The main economic challenge caused by the reliance on fossil fuels for energy production is the effect of changing oil derivative prices on the price of electricity production. This is precisely what transpired in 2021, when the average price of a barrel of oil increased by around 68% year over year and fuel consumption soared as economies resumed activity following widespread closures caused by the coronavirus pandemic in 2020.

The Ukraine conflict’s consequences made the situation even worse this year. The average price of a barrel of oil increased by 50% over the previous year due to shortages in Russian energy supply, despite sustained high global demand for oil as the world struggled to recover from the pandemic’s impacts.

As a result, the price of power produced from fossil fuels rises proportionally to every rise in the value of crude oil, putting additional pressure on consumers as well as raising the cost of production in various economic sectors.

The drawbacks of solely relying on fossil fuels

Fluctuations in the cost of electricity production are not the sole difficulties resulting from a reliance on fossil fuels to generate power. The problems grow more severe for countries importing oil derivatives because the amount of hard currencies needed to import fuel increases in parallel to the rise in oil prices, linking these countries’ financial stability to the price of oil.

As a result, economic growth forecasts and the financial stability of oil-importing countries are often linked to expectations in oil prices. Furthermore, oil markets often witness harsh interactions between oil-producing countries, which have a vested interest in higher prices, and oil-importing countries, which push for measures to rein in oil prices.

These issues only underscore the significance of the fact that, according to figures from the International Renewable Energy Agency, the cost of producing electricity using even the cheapest fossil fuels is still four times higher than producing an equal amount of power through renewable energy. In fact, the same figures indicate that the energy generated using renewable energy over the past resulted in about $55 billion in savings.

Thus, with the cost of producing electricity using solar energy has decreased by 88 per cent between 2010 and 2021, the continued use of fossil fuels to generate power has become a far more expensive practice compared to renewable alternatives.

The importance of renewable energy in the Arab region

Today there are ample reasons to push societies toward producing electricity by using renewable energy as an alternative to fossil fuels, but for the countries of the Arab region the need for this direction is more pressing. With the growth rates of populations in these countries surpassing global growth rates, they witness an inordinately high energy demand.

In addition, many oil-importing Arab countries such as Lebanon, Syria, Sudan and Egypt suffer from severe and long-term monetary crises, which are exacerbated with every rise in global prices of basic goods, including oil, as result of increasing pressure on their balance of payments with the rise in the cost of imports.

The Arab region has a wealth of potential for renewable energy, partly because it has the highest solar brightness, or sunlight exposure, across the globe. The Middle East and North Africa region enjoys the benefits of a solar ray with productivity that ranges between 4 and 8 kilowatt-hours per square meter, according to research by the United Nations Environment Program. It is also distinguished by a low occurrence of clouds, which enables it to use sunlight to produce power for most of the year.

The International Renewable Energy Agency’s statistics, which show that every square kilometer in the MENA region receives solar energy yearly equivalent to the output of 5.1 million barrels of oil, may be used to quantify the significance of this renewable energy.

Therefore, it is obvious that the Arab area can benefit significantly from renewable energy, not only by supplying its own population and economic sectors’ energy demands, but also by exporting power to other parts of the world.

It is important to note that certain Arab nations, like Egypt, already have electrical networks that link them to numerous European and African nations. This serves as a foundation for the infrastructure needed to build systems for power export.

Existing renewable energy projects in the Arab region

Even though their strategic location presents Arab countries with numerous advantages in terms of renewable energy, only four nations, namely Egypt, the United Arab EmiratesSaudi Arabia and Morocco, have embarked on ambitious projects in this area.

That is not to say that other Arab countries, do not have programs, small projects, and plans in the works for the production of renewable energy, but such projects are small in scope compared to the volume of their electricity needs. As a result, they continue to remain heavily reliant on fossil fuels for power generation.

Egypt is now significantly ahead of other nations in the area in its use of renewable energy as a power source. Mohamed El-Khayat, head of the Renewable Energy Authority, confirmed that his country had raised the contribution of renewable energy to Egypt’s total electricity production to 20 per cent, the highest proportion in the region compared to other Arab countries.

Egypt is also currently striving to raise this ratio to one-third by 2025 through new projects, which include producing 16 percent of Egyptian electricity from wind energy, 7 per cent from solar cells, and 10 percent from hydroelectric energy. The rest of the energy produced from traditional sources will depend on gas extracted from the Egyptian fields, ensuring the country’s energy self-sufficiency.

On the other hand, the UAE’s energy policy is centered on solar energy projects to achieve its objective of using renewable energy to ensure 50 per cent of the country’s power production by 2050 while depending on nuclear energy to secure an additional 25 per cent of overall electricity production. As a result, just 25 per cent of the UAE’s energy demands will be met by fossil fuels, reducing the country’s dependency on them.

As for Saudi Arabia, last year the kingdom saw the highest growth rate among Arab countries in the generation of electricity through renewable sources, increasing its production of renewable energy by 301 per cent over the previous year.

According to Saudi plans, the contribution of renewable energy to the total locally produced electricity is expected to rise to 30 per cent by 2030, alongside plans to develop electricity delivery networks that would later allow it to export the surplus to neighboring countries.

Morocco is the most ambitious among Arab countries in terms of power production. It had already successfully increased the proportion of electricity produced from renewable sources to 37 per cent in 2021 – wind energy (13.4 per cent), solar energy (7.03 percent) and hydroelectric (16.57 per cent) – and Morocco plans to increase that contribution to 52 per cent by 2030.

Much more is needed

The figures show that these four Arab countries are giving great importance to renewable energy, not only for the sake of economic stability but also to reduce the impact of fossil fuels on the environment.

However, the scope of these projects remains modest considering the opportunities available in the Arab region, given that it is mostly limited to only four countries and absent from the vast majority of other Arab nations in the region.

This is due to the fact that most Arab countries have limited available financial resources that can be invested in renewable energy. In addition, even the four countries leading the transition to renewable energy in the Arab region are suffering from delays in implementing some of the projects stipulated in the official plans. They will likely fail to meet their targets in a timely manner.

As things stand now, countries of the Arab region can best make use of their potential in renewable energy by looking into partnerships with the private sector, which can help attract foreign investments to the energy sector and contribute to generating clean energy at competitive rates.

These countries should also develop an intraregional electrical grid to enable those that have already started to invest in renewable energy to export their surplus energy to countries suffering from power shortages.

A viable option would be to establish joint investment funds that would enable countries with surplus capital to invest funds in clean energy projects in other countries, thus benefiting both parties simultaneously.

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Energy partners collaborate on renewable energy in the MENA

Energy partners collaborate on renewable energy in the MENA

ESI Africa informs that Energy partners collaborate on renewable energy projects in the MENA region. Let us see how elaborate collaboration is in this context. 

Would it be like that New partnership to support solar energy in the Sahel? (Image above)

 

MENA: Energy partners to collaborate on renewable energy projects

Middle Eastern energy partner NewMed Energy has entered into a Memorandum of Understanding (MOU) with Enlight Energy regarding exclusive collaboration for a fixed term on the initiation, development, financing, construction and operation of renewable energy projects in the Middle East and North Africa.

The collaboration entails the development of solar projects, wind projects, energy storage and other relevant renewable energy segments in several target countries, including Egypt, Jordan, Morocco, the UAE, Bahrain, Oman and Saudi Arabia.

As part of the Joint Venture, NewMed will utilise its business connections in the aforementioned target countries, with active involvement from Yossi Abu, CEO of NewMed Energy Management Limited. The Enlight Corporation will provide the joint operations with professional design, development and management services in the interest of promoting the Joint Venture.

In view of the MOU, NewMed intends to convene a general meeting which will include on the agenda a proposed resolution that will allow it to act and make investments in renewable energy projects in an aggregate investment amount of $100 million.

Control during the projects’ construction and operation stages will be held by Enlight. The MOU stipulates provisions with respect to the parties’ rights to appoint board members of the Co-Owned Corporations based on their holding rates and it also stipulates that Abu will serve as Chairman of the Board of the Co-Owned Corporations in the first 24 months.

Under the MOU, it has been agreed that resolutions of the Co-Owned Corporations will be adopted by a majority vote, subject to certain minority interest protections to be granted to NewMed. Provisions have also been specified with respect to the manner of financing of the operations of the Joint Venture and the investments in projects to be made thereunder, based on the relative share of each of the parties.

The term of the parties’ exclusive collaboration will be 3 years as of the date of signing of the detailed agreement. This may, under certain circumstances, be extended up to a term of five years as of the date of signing of the detailed agreement. Following the expiration of the Term of Exclusivity, the collaboration will continue with respect to projects that shall have commenced prior to the expiration date.

Energy partners collaborate on renewable energy in the MENA

Nasi Hako

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Keeping Cost of Renewables Low Is Not Enough

Keeping Cost of Renewables Low Is Not Enough

Francesco Luise in IMPAKTER Energy elaborates on a successful Energy Transition that requires more than keeping the cost of Renewables low because it is not enough.

 

For a Successful Energy Transition: Keeping Cost of Renewables Low Is Not Enough

Keeping Cost of Renewables Low Is Not Enough Francesco Luise

So far, the narrative has focused on cheap renewables to counter fossil fuels, but without well-functioning and diversified supply chains to ensure energy security, the energy transition is at risk

Adding to the list of novelties of our times, we now have the first global energy crisis. And it comes at a time in which we still struggle to make the switch to renewables that is necessary for international energy security.

That’s what the International Energy Agency’s boss Fatih Birol told the Sydney Energy Forum, where global energy and climate leaders had gathered this week.

The energy crunch has not even peaked yet, Birol specified. Energy prices are currently expected to increase by 50% on average in 2022.

The discussion was centred on how to scale up and strengthen supply chains for the clean energy technologies needed to ensure a secure and affordable transition to net-zero emissions.

For the occasion, the International Energy Agency (IEA) has published a series of reports from which we learn that the level of geographical concentration in global supply chains has reached (very) unsustainable levels and can hinder the global energy transition.

Where we’re at with renewables: Still far from what we need

For the first time, the two main variable renewable energy sources – solar and wind – generated more than 10% of electricity globally in 2021. Albeit good news, this is still far from what we need: the IEA says we should target 70% for 2050, IRENA 63%.

Keeping Cost of Renewables Low Is Not Enough
Source: Ember

This might seem counterintuitive, as solar and wind installations keep breaking records. In 2022, following yet another global annual installation record with 167.8 GW of capacity grid-connected globally in 2021, solar PV has passed the Terawatt milestone.

Furthermore, tenders for solar PV projects awarded below the USD 2 cents level are no longer surprising. Last year, a new world record was set in Saudi Arabia with a winning bid of 1.04 USD cents per kWh. But the latest development in solar auctions is a first negative bid of minus 4.13 EUR cents per kWh – meaning the developer accepts to pay the electrical system instead of being paid for the power the plant generates over the duration of the contract – that won a Portuguese floating solar tender in April 2022 (a hybrid project including wind capacity and battery storage, which will overcompensate the negative returns from the solar plant).

The global wind industry had its second-best year in 2021, with a total power capacity now up to 837 GW. In particular, offshore wind power had its best year in 2021 with 21.1 GW of capacity commissioned, three times more than in 2020 and bringing its market share in global new installations to 22.5%.

Yet, despite the remarkable growth rates, a joint study by the Global Solar Council and the Global Wind Energy Council found that there will be a 29% shortfall in the projected wind and solar capacity required in this decade to keep the world on a net-zero pathway.

Keeping Cost of Renewables Low Is Not Enough
Source: GWEC, GSC

Driven by the increasing cost of materials, freight, fuel and labour, the cost of new-build onshore wind has risen 7% year on year, and fixed-axis solar has jumped 14%. Thus, the global benchmark levelized cost of electricity (LCOE) – the price at which the electricity generated should be sold in order for the system to break even at the end of its lifetime, used to plan investments and to compare different power sources – has temporarily retreated to where it was in 2019.

High commodity prices and supply chain bottlenecks have led to an increase of around 20% in solar panel prices over the last 12 months and delays in deliveries across the globe.

Keeping Cost of Renewables Low Is Not Enough
Source: BloombergNEF

So, although the gap with fossil fuel power generation continues to widen due to oil and gas prices rising even faster, challenges across the renewables supply chain are becoming increasingly worrying.

The role of China: A renewable energy stronghold

China has the world’s largest solar and wind power capacities, and not by a tiny bit. A third of all solar PV and half of all wind global additions in 2021 were installed in China. 

To put this into perspective, according to SolarPower Europe, China added some 55GW of solar capacity last year, twice as much as the second largest market – the United States – and as much as the other top five markets combined. A new year-on-year record, which brings the total capacity of the country to over 300GW.

Over the last decade, government and industrial Chinese policies focused on solar power as a strategic sector have enabled huge economies of scale and shaped the global supply, demand and price of solar PV. Pushed by higher prices and less confident policies, the global solar PV manufacturing capacity has thus increasingly left Europe, Japan and the United States and flowed into China.

As a result, the Asian country now dominates the entire global supply chain and has taken the lead on investment and innovation.

China has invested over USD 50 billion in new solar PV supply capacity – ten times more than Europe − and created more than 300,000 manufacturing jobs across the solar PV value chain since 2011, the IEA reports. In addition, the country is home to the world’s 10 top suppliers of solar PV manufacturing equipment.

China is the most cost-competitive location to manufacture all components of the solar PV supply chain, with costs 10% lower than in India, 20% lower than in the United States, and 35% lower than in Europe.

That’s why today China’s share in all the key manufacturing stages of solar panels exceeds 80% and for key elements including polysilicon and wafers, this is set to rise to more than 95% by 2025. Basically a monopoly on solar tech.

Supply chains are choking

China’s market has been no less than vital for the downward trend in the costs of renewables and, in particular, to make solar PV the most affordable electricity generation technology in many parts of the world. However, such a major concentration poses significant threats to the energy transition and security of supply that governments must address.

Pressure on global supply chains created by abrupt Covid-related closings and re-openings of world economies – and China has adopted even more stringent lockdown measures than anyone in the West, causing serious economic disruptions both in China and abroad – has been compounded by Russia’s invasion of Ukraine. And now, supply disruptions and soaring prices are affecting a wide range of key commodities across the globe and causing political tensions and even crises, notably in Ecuador and Sri Lanka.

Fierce competition for raw materials, bottlenecks in manufacturing capacity and logistics, pressure on margins across the entire value chain, combined with long lead times for mining projects, risk undermining the pace of clean energy transitions. Without concrete action, the crisis will worsen.

To be on track for net-zero by mid-century, global production capacity for the key building blocks of solar panels – polysilicon, ingots, wafers, cells and modules – would need to more than double by 2030 from today’s levels and existing production facilities would need to be modernised. Despite improvements in using materials more efficiently, in fact, the solar PV industry’s demand for critical minerals is set to expand significantly.

The US Secretary of Energy Jennifer Granholm told the Sydney Energy Forum that accelerating the clean energy transition “could be the greatest peace plan of all” and that it is truly about energy security and nations’ independence.

But as governments around the world are seeking to limit the worst effects of climate change while abandoning risky fossil-fuel dependencies, they need to turn their attention to ensuring the security of renewable technologies supplies as an integral part of clean energy transitions.

In other words, global energy security needs to be redefined to include the supply of the minerals, materials and manufacturing capabilities necessary to deliver clean energy technologies, and cover areas such as energy consumption, emissions, employment, production costs, investment, and trade and financial performance.

In stronger and diversified supply chains lie big opportunities

Attention needs to be increasingly focused on the high reliance of many countries on imports of energy, raw materials and manufacturing goods that are key to their supply security.

To expand and diversify the global production of renewable technology, reducing supply chain vulnerabilities is critical for a secure transition to net zero emissions. But such efforts also offer significant economic and environmental opportunities, explains the IEA.

New solar PV manufacturing facilities along the global supply chain could attract USD 120 billion of investment by 2030. And the solar PV sector has the potential to create 1,300 manufacturing jobs for each gigawatt of production capacity, with the most job-intensive segments being module and cell manufacturing, and could double total PV manufacturing jobs to one million by 2030.

Improving recycling capabilities also entails great opportunities. Recycling solar panels keeps them out of landfills, but also provides much-needed raw materials with a value approaching $80 billion by 2050.

If panels were systematically collected at the end of their lifetime, supplies from recycling them could meet over 20% of the solar PV industry’s demand for aluminum, copper, glass, silicon and almost 70% for silver between 2040 and 2050 according to the IEA.

To inform the conversations at the Sydney Energy Forum, the IEA has published a series of new studies, including the Securing Clean Energy Technology Supply Chains report, which contains specific insights for the Indo-Pacific region that is home to major raw material producers such as Australia for lithium and Indonesia for nickel.

The report identifies five pillars for governments and industry action: Diversify, Accelerate, Innovate, Collaborate and Invest.

It recommends improving the efficiency and speed of permitting and approving clean energy projects and critical mineral production while maintaining high environmental and labour standards and promoting robust recycling industries to reduce demand for raw materials.

Increasing and prioritising investment in research and development, as well as in the training of skilled local workforces, can lead to technologies and manufacturing processes that rely on smaller quantities of critical minerals or on a more diversified mix.

Shifting from cheap energy to energy security

So although renewables are still by far the cheapest form of power today, it’s necessary to recede from the “cheap” narrative and rather concentrate on renewable sources’ true (and unique) potential to generate energy security at stable prices – at consumer, developer, operator and decision-maker levels.

Cheap comes at a price.

Not only has China’s industry drawn concerns about human and labour rights but the electricity-intensive manufacturing of solar PV is mostly powered by fossil fuels because of the prominent role of coal in the parts of China where production is concentrated – mainly in the provinces of Xinjiang and Jiangsu, where coal accounts for more than 75% of the annual power supply.

Solar panels still only need to operate for four to eight months to offset their manufacturing emissions and then have a lifetime of 25 to 30 years. However, these CO2 emissions could be reduced with a less carbon-intensive power mix.

In this regard, Europe holds the highest potential — says the IEA — given the considerable shares of renewables and nuclear available, followed by countries in Latin America and sub-Saharan Africa that have strong hydropower output.

Building solar PV manufacturing infrastructure around low-carbon industrial clusters can unlock the benefits of economies of scale. Solar and wind sectors could look at energy storage and e-mobility examples of gigafactories in the EU and the US, applying a more modularised approach to their value chains.

One of the priorities is to designate extensive suitable areas (land and maritime) for renewable projects and improve auction design. Auctions are important as they allow for higher project bankability due to fixed returns for investors for long periods of time.

Volumes on offer in the renewables wholesale market, however, are often not in any way aligned with climate targets nor with investor interests. This distorts the market and can lead to insufficient remuneration for investors to provide the high upfront working capital needed for large-scale renewable energy projects.

Featured Photo Credit: Oregon Department of Transportation.

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