The future is closer than you think for some forms of alternative energy
Concentrated solar power and solar photovoltaic power combined and selective carbon capture sequestration technologies constitute key opportunities for the Middle East. What’s Next for Alternative Energy?, examines the state of seven of the most significant alternative-energy technologies—advanced biofuels, electric vehicles (EVs), concentrated solar power (CSP), solar photovoltaic (PV), onshore wind, offshore wind, and clean coal through carbon capture and sequestration (CCS).
Several alternative-energy technologies are approaching inflection points in their development, and the day when they could have a profound impact on the global energy landscape could come far sooner than is commonly assumed, says a new report from The Boston Consulting Group (BCG).
The report titled What’s Next for Alternative Energy?, examines the state of seven of the most significant alternative-energy technologies—advanced biofuels, electric vehicles (EVs), concentrated solar power (CSP), solar photovoltaic (PV), onshore wind, offshore wind, and clean coal through carbon capture and sequestration (CCS).
Among the report’s key findings:
Advanced biofuels, CSP, and solar PV will see accelerating adoption and growth. They are on track to change the global energy mix far earlier than is often assumed. Their costs are falling rapidly, and they are on the path to becoming largely cost competitive with both CSP and solar PV Levelised Cost Of Energy (LCOE) potentially falling to less than $0.10 per kilowatt-hour by 2020.
Onshore wind power will see steady adoption and continued growth. It is already cost competitive with conventional energy sources in prime sites, where it can deliver an LCOE of $0.09 or $0.10 per kilowatt-hour, and its cost will continue to fall. In contrast, offshore wind will likely struggle to move beyond purely subsidy-driven growth and will only grow in a few countries willing to continue heavy subsidies.
Clean coal through CCS will have very slow adoption and won’t be viable for the next decade or two for a number of reasons, including slow progress toward demonstrating large-scale viability and moving down the cost curve. Nevertheless, the CCS technology can be vital for cutting carbon emissions from conventional fuel power plants if and where its economics can be significantly improved by specific applications such as Enhanced Oil Recovery (EOR).
The Boston Consulting Group (BCG) has highlighted several key findings of high relevance when defining and revisiting alternative energy strategies for the Middle East:
Solar CSP is moving quickly down the cost curve and by 2020 could become competitive with conventional generation sources, largely moving away from governmentally-driven growth. The cost for Solar PV is also declining rapidly and despite inherent challenges posed by its intermittent nature, the technology could also have a disruptive effect on the current status quo.
In the Middle East, solar technologies have the potential to supply a relevant share of local energy demand, once cost competitive. However, reaching nominal power parity in the region may take longer than other markets given the direct and cheap availability of fossil fuel, as well as the existence of power generation subsidies. The business case for the competitiveness of solar technologies and its position in the merit order should therefore be assessed considering conventional fuels market prices i.e. including an opportunity cost view: countries would need to remove any distortion from the economic benefit analysis.
Once cost competitive, significant land requirements in sites with high irradiation and availability of transmission networks will constitute major barriers for a large scale roll-out of solar technologies. This could create an opportunity for the Middle East to play a role as solar power exporter to adjacent regions, particularly to Europe. Although challenges are still numerous and many unresolved, projects such as the Desertec initiative are already paving the way for the existence of a future solar export market.
Developing both local and export solar markets will require a solid set of competencies in project development and potentially, where relevant, in technology R&D and industrialisation. The relatively small scale of national markets in the Middle East creates challenges to build strong centers of expertise, making regional cooperation a key area to investigate in order to develop competencies and disseminate best practices throughout the region.
Despite the general CCS limited disruption potential in the medium term, there are specific areas of opportunity that can be selectively targeted and developed. In particular, using captured CO2 for Enhanced Oil Recovery (EOR) can boost the CCS value chain economics and exhibit viable business cases. This would depend on the proximity between large CO2 emission sources and adequately suitable oil fields, which may be the case in the region e.g. in Abu Dhabi, where the proceedings from incremental oil revenues and/or natural gas savings may make such projects quite viable.
CCS –EOR globally is expected to remain a niche market, given the limited opportunities with respect to CO2 availability (in large steady quantities) co-located with suitable oil reservoirs. But the unique advantages of the region, and in particular Abu Dhabi, would position it as a potential incubator for CCS-EOR technology development and roll-out. This should not be ignored by governments who need to ensure the proper playing field for such a development (policy, regulation, governance, etc).