The race to zero

The power demand outlook remains muted as economies are going through deep recessions caused by the pandemic. That has not, however, stopped the march of green power. Or prevented new sustainability commitments by corporate leaders, with Reliance Industries the latest to reveal plans to go “net-zero”. 

A few key announcements capture the trends of the moment: 

Resilient clean power investments: Investment in new renewable energy capacity remained resilient in the first half of the year, according to the latest update from BloombergNEF, rising 5 per cent to $132 billion. Though investment in solar, onshore wind and biomass declined, there was a big jump in offshore wind financing. 
 

Against an investment of $32 billion in offshore wind in the whole of 2019, the total in the first half of the year was $35 billion, with as many as 28 offshore wind farms finalised. These included the largest ever, the 1.5 gigawatts Vattenfall Hollandse Zuid array off the coast of the Netherlands, costing an estimated $3.9 billion, plus the UK’s 1.1 gigawatts SSE Seagreen project and the 600 megawatts CIP Changfang Xidao farms off Taiwan.

China remained the largest clean energy investor, accounting for almost a third of global investment in the first half of 2020. 

 

 

Even cheaper solar: There was a fresh record for the cheapest solar project, with the Emirates Water and Electricity company awarding the contract for the 2-gigawatts Al-Dhafra plant at just 1.35 US cents per kWh. There are questions around this tariff — mainly around what incentives have been included to enable this — but there are many in the industry who see it as one step closer to the 1-cent-tariff milestone. The project will be commissioned in 2022. 

Countries with more sunlight and more space can export power to countries not similarly advantaged, and that is what Australia proposes to do. It fast-tracked an ambitious A$22 billion ($16 billion) plan last week to export power from a giant solar farm in the country’s north to Southeast Asia via undersea cable. The status recognises the “strategic significance” of the project, which is expected to inject billions of dollars into the economy and create thousands of jobs, Angus Taylor, Australia’s minister for energy and emissions reduction, said. 

Green hydrogen: Cheap green power can enable green mobility on the one hand, and green hydrogen on the other. To fully decarbonise the world economy, it is likely that a clean molecule will be needed, and hydrogen is well placed to play this role, according to BloombergNEF. It can be produced by using electricity to split water in an electrolyser. If the electricity used is renewable, the hydrogen is referred to as green, or renewable, hydrogen. 

The European Commission announced a hydrogen strategy last month involving an estimated investment of ^470 billion (over $500 billion) by 2030. It aims at three things: 

• Green hydrogen production
• Manufacture and installation of electrolysers
• A euro-denominated market for green hydrogen 

Europe’s plan to be a net-zero greenhouse gas emissions economy by 2050 will require the use of hydrogen in hard-to-abate sectors like steel and heavy transport. It has, therefore, decided to take the lead on hydrogen. The bulk of the proposed investment will be used to build 80-120 gigawatts of solar and wind capacity, which will be harnessed to produce green hydrogen. 

Corporate India and net-zero: In July, Reliance Industries Chairman Mukesh Ambani talked about becoming the “world’s leading new energy and new materials company”, in addition to announcing a net-zero-carbon ambition. He also said: “We will replace transportation fuels with clean electricity and hydrogen…We will build an optimal mix of reliable, clean and affordable energy with hydrogen, wind, solar, fuel cells and battery.” 

Microsoft announced a carbon-negative ambition earlier this year. It aims to reach this goal by 2030 and “remove from the environment more carbon than we have emitted since our founding by 2050.” 

The software giant is also one of the founding members of the “Transform to Net-Zero” initiative launched last month to help the movement to net-zero. Wipro is one of the nine founding members, along with Nike, Starbucks, Danone, Mercedes-Benz and Unilever. 

One way to move towards net-zero is buying green power. Microsoft is one of the top buyers of renewable power globally. Last month also saw the largest-ever corporate green power purchase deal, with Taiwan Semiconductor Manufacturing Company (TSMC) signing a power purchase agreement to buy the entire output of Orsted’s 920 megawatts offshore wind farm. TSMC is Apple’s main chip-making partner.

The writer is editor – global policy for BloombergNEF. She can be reached at vgombar@bloomberg.net