The market for distributed renewable energy (DRE) is rapidly expanding all over the world. This is in large part due to the drop in manufacturing costs for solar and wind technology, along with increased policy incentives, and a high financial return on investment. The levelized cost of generation from wind and solar has significantly decreased over the past decade, while the cost of fossil fuel energy generation has continued to rise. Consequently, an increasing number of distributed solar and wind projects are being constructed in Latin America, Africa, the Middle East and elsewhere. DRE is not only changing the old electric utility landscape, but it is also a strong area for new investment. New global investment in renewable power and fuels was at least USD 249.4 billion in 2013 down from its record level in 2011. Despite this drop, renewables outpaced fossil fuels for the fourth year running in terms of net investment in power capacity additions.
Investors and consumers can now share in the success of the growing DRE market space, as a growing list of companies go public. Just last week, Urban Green Energy (UGE), a leader in the global distributed renewable energy market, began publicly trading on the TSX Venture Exchange, with a track record of renewable energy solutions for businesses in more than 90 countries all over the world.
Distributed renewable energy solutions are lessening global carbon emissions, and electricity bills one project at a time. By installing systems on-site (on rooftops or directly next to a site), energy flows straight from the sun and wind directly into the infrastructure it powers; no electricity is lost in translation through conduits. De-centralizing energy, and giving clients on-site, clean energy is improving life on environmental, economic and social levels for millions of people around the world.
D-REsiliency and Security
The environmental and financial benefits of DRE technologies are becoming mainstream, but the energy security advantages of these systems are less well known. DRE systems are crucial for resiliency efforts when a natural disaster strikes.
In 2011, the Fukushima Daiichi nuclear disaster in Japan reminded the global community that our energy systems are at the mercy of nature. This international tragedy brought new attention to sustainable energy alternatives.
If you look at a place like New York during Hurricane Sandy, it has become evident that we face grid reliability issues. Many businesses became inoperable due to the sole fact that they could not produce electricity for months after the storm—not only does this hurt the economy, it also affects families who have no financial plan to fall back on when their business goes under.
Whether wind, solar, or both at once, on-site power generation and battery backup can provide an extra layer of security for any business during grid disruption, blackouts and natural disasters. DRE systems also decrease electricity bills during normal operation hours by enabling users to feed excess electricity back to the grid.
The Whole Foods Market in Gowanus Brooklyn, is a prime example of the reliability of DRE. The supermarket produces enough on-site, renewable energy to stay open during a grid disruption, making it a community shelter where people can charge their phones and gain access to electricity during utility power failure.
Interest in resiliency in the wake of storms is growing. RISE: NYC, a competition created by the NYC Economic Development Corporation in the wake of Hurricane Sandy to identify and deploy creative new technologies and solutions for New York City will offer up to $30 million in funds to winners who help NYC businesses become more resilient to the impacts of future storms, sea level rise and other effects of climate change.
Public Policy, Financing and Economies of Scale Driving DRE Investments
Economies of scale are emerging all over the world, inciting policies that support the expansion of DRE. Falling prices, innovative financing methods, and technological advances have made DRE systems efficient, and cost-effective for a vast range of consumers worldwide.
New policy incentives have jump-started DRE growth in the past eight years. According to a 2014 report released by the Renewable Energy Policy Network for the 21st Century, (REN21), legislation and government policy have been driving the renewable energy market, accelerating the world’s renewable energy capacity upwards of 1,560 gigawatts (GW) in 2013. Governments all over the world have had to redefine public policy to incorporate DRE technology into their existing power infrastructure, and interestingly, in developing nations, the transition has been even more seamless.
REN21’s Renewables 2014 Global Status Report found that 95 developing nations make up the majority of the 144 countries with the most effective renewable energy legislation. Developing countries all over the spectrum are investing in DRE. In 2013, wind power became a primary focus in Africa and Latin America, solar thermal power became an energy staple in the Middle East, and renewables fueled economies in Chile and India as well. With 1.3 billion people who still do not have access to electricity, developing countries are leapfrogging the traditional grid model and offering a new model for the world on how to incorporate renewable energy.
The implementation of DRE throughout the developing world is proving that renewables are no longer limited to a small handful of countries– during 2013, strong new markets and policy incentives promoted grid-tied and off-grid renewable installations. As a result of emerging policies, renewable energy installations have reached record highs. In 2013, the world’s installed renewable energy capacity increased by 8 percent, accounting for over 56 percent of net energy additions, which are set to power approximately a fifth of the world with electricity. The levelized cost of generation from onshore wind and solar PV have plummeted over the past five years, while average global costs from coal and natural gas have risen due to higher capital costs and feedstock prices.
Nations all over the world are implementing targets to increase their usage of distributed renewable technologies. 2013 proved to be a year of growth for DRE: Japan increased its renewable energy capacity by 80% compared to 2012 levels. Other countries that increased their investment in 2013 included Canada, Chile, Israel, New Zealand, the UK and Uruguay. Although China’s investment decreased in 2013, it still installed an impressive amount of renewable energy, investing more in 2013 than did all of Europe combined (while also investing more in renewables than fossil fuels). Such developments make it evident that DRE, and renewables in general are becoming mainstream all over the world – the market is ripe for investment.
