WHY WILL RENEWABLE ENERGY INCREASE

There is a common perception that renewable energy is an expensive option However, renewable energy is now close to, or even cheaper than, fossil fuel options in a number of countries A report by the US Lawrence Berkeley National Laboratory suggests that by 2020, the cost of solar PV will be cheaper than the cost of onshore wind globally Renewable energy is also becoming more cost competitive as technology advances and economies of scale develop, creating a virtuous circle that will continue to drive down costs The price of oil, one of the main inputs for fossil fuel generation, has increased to more than $114 per barrel creating an incentive for players to switch to renewable sources The current level of subsidies for renewable energy is not expected to be sustainable in the long term However, as the cost of renewable energy continues to fall, the cost of fossil fuel generation will increase as a result of the need for higher taxes to meet climate change commitments Renewable energy is also expected to benefit from better technology and improved efficiency, such as the increasing use of battery storage and new smart grid systems, which will facilitate greater integration of renewable energy into the grid WHAT ARE THE CHALLENGES? One of the main obstacles to the further development of renewable energy is the lack of a robust regulatory framework in many countries Countries that have taken a clear policy decision to decarbonise their energy mix have seen strong results In the EU, for example, the 2020 renewable energy target has already been met, and the region is expected to exceed its 32% target for 2030 The UK is also one of the few European countries that has a legally binding target However, some countries, including the US, Australia, Japan and China, have no binding renewable energy targets and are not expected to meet their non-binding targets The lack of a clear policy environment is also a challenge for investors as they do not know where to allocate their capital Finance is also a major challenge Renewable energy has traditionally been financed through feed-in tariffs or renewable energy certificates, but these schemes are being removed in many countries Instead, governments are introducing auctions and tenders, which can be complex and expensive for developers The lack of policy and finance has had a negative impact on the development of new projects in the past