Home / NEWS / Global renewable energy cost declines prompt surge in growth – Moody’s


Global renewable energy cost declines prompt surge in growth – Moody’s

by Baset Asaba on Sep 7, 2017




Moody's Investors Service has released a pair of new reports on global renewable energy generation, focusing on cost declines driven primarily by low capital costs and improved operating efficiencies.

As more countries shift to renewable procurement through competitive auctions and move away from reliance on subsidies, renewables will continue to transition from being a marginal supplement to a central focus of national energy policies.

Falling costs of renewable energy also reduce risks for top carbon-emitting nations as they move toward compliance with the Paris Agreement, according to the reports, which were released in advance of Climate Week NYC.

Along with declining capital costs, wind and solar power have benefitted from higher efficiencies, making both technologies more competitive with fossil fuels in many parts of the world.

Wind and solar are expected to see strong growth globally over the next few years as many countries move away from subsidies to incentivize new renewables.

"Emerging markets are a key market for growth in renewables, with countries such as China and India leading the charge as new renewables become competitive with other sources of power even in developing nations," according to Swami Venkataraman, a senior vice president at Moody's and the lead author of one of the reports.

Moody's views a lower reliance on subsidies as positive for renewable energy generators, as over time it alleviates the cost on end consumers and relieves the political pressure on governments to address affordability concerns.

Additionally, auctions enable governments to respond more quickly to market developments, help push down costs for end consumers and provide a clear signpost for the future project pipeline.

"The number of countries procuring renewables capacity by competitive auctions has been increasing, as governments seek to limit the burden on consumers and respond more rapidly to evolving industry dynamics," says Christopher Bredholt, a vice president and senior analyst at Moody's and the lead author of one of the reports.

Some recent auctions have produced record low pricing, although the results should be interpreted with caution since the terms and conditions of the contracts awarded, as well as their operating risks, vary across markets.


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