by Udit Garg, Director & CEO, Kundan Green Energy
We live on the cusp of major man-made tectonic shifts. A serious cause of concern lies in the existential nature of these shifts {global warming, climate change} and their innate ability to permanently alter the world {AI and nanotechnology}. At the centre of it all sits energy. It has a direct and definitive significance – conventional fossil fuels contribute very significantly to global warming.
Green energy can help mitigate climate change and ensure we have an abundance of energy. In addition to the most popular renewable sources - solar and wind power, several countries are investing in developing their hydropower capacity as they look to diversify their energy mix with a view to energy security. The world’s hydropower market, valued at US$ 251.58 billion at present, is expected to grow to US$ 356.36 billion by 2031 {a CAGR of 5.1% between 2024 and 2031}. Many traditional hydropower markets will continue to grow, as new markets will emerge. The world already added 50% more renewable capacity in 2023 than it did in 2022. In my estimation the next five years will see the fastest growth {the only significant hurdle I see is the gap in financing for developing and emerging economies}. The world’s capacities to generate renewable electricity is expanding faster than at any previous time in the last three decades. This gives us a real chance of achieving the goal of tripling global capacity by 2030 that governments had set at the COP 28 climate change conference.
In 2023 the word reached close to 510 gigawatts, with solar PV accounting for three quarter of these additions world-wide. The good thing is that under current policies and market conditions the world’s renewable capacities are steadily on course. We can (with help from governments) realize the COP 28 goal of tripled renewable energy. The fruits of persistence and scale are already here: onshore wind and solar PV are cheaper today than new fossil fuel plants almost everywhere. And also,cheaper than existing fossil fuel plants in most countries. I agree that there are major hurdles we must overcome - difficult macro-economic conditions - but on a more specific level, the most important challenge, as I understand it, that of rapidly scaling up financing and deployment of renewables in most emerging and developing economies many of which are being left behind in the new energy economy. In advanced and large emerging economies this means addressing challenges like policy uncertainty in a fragile economic environment, insufficient investment in grid infrastructures to accommodate larger shares of renewables, and cumbersome administrative barriers. In other emerging and developing economies access to finance, strong governance and robust regulatory frameworks are necessary to reducing risk and attracting investment.
This includes establishing new targets and policies in countries where they may not exist. Our collective success in meeting the COP 28 goals will depend on this. A bright spark in solar power is in the fact that solar PV and onshore wind deployment is expected to more than double in the United States, the European Union, India and Brazil over the last five years. Prices of solar PV modules declined almost 50% year-on-year --- cost reductions and deployments will continue apace. This is because global manufacturing capacities will reach 1100 GW by this year’s end, significantly increasing demand. The momentum behind renewables-based hydrogen is that only 7% of announced capacities are expected to come online by 2030. The slow pace of projects in reaching investment decisions, limited appetites from off-takers and higher production costs have impeded progress. To fully attract investors, ambitious project investments will have to be followed by consistent policies. I must mention the other important aspect of the renewables story --- biofuels. Brazil and India will drive as much as 70% of its global demand over the next few years, as biofuels reveal their potential in sectors like airlines and as replacement for diesel. We must very quickly align biofuels to the zero net pathway.
