There are many reasons renewable-energy technologies are the fastest-growing technologies in the world.
It could be because of their relatively small environmental footprint; it could be their tremendous positive local economic impacts; or it might be the fact that they use fuel that is produced right here at home. However, the real reason renewable-energy technologies have been growing is the same reason any successful business is sustained: the almighty dollar.
Over the past several years, the rising cost of fuel for fossil plants has had Tennessee residents, lawmakers, and business owners paying a bit more attention to their monthly utility bill, wondering just where their money is going. In Tennessee, we've spent the past 20-plus years with the luxury of relying on old power plants, built decades ago. However, the need to retire some of the more costly fossil plants, coupled with rising fuel costs, are causing this region to once again debate which generation resource will produce the most cost-effective, reliable power in the future.
Across the nation, utilities are backing away from building large power plants as they traditionally have. New coal plants have much higher construction costs; the fuel is more costly, and the industry is staring down the barrel of future regulation.
The cost of new nuclear plants, which several years ago appeared attractive, is now being seen as economically irresponsible.
Recently, Federal Regulatory Energy Commission Chairman Jon Wellinghoff stated that new nuclear cost was around $7,000 per kilowatt (approximately the same as the cost of solar, and much more expensive than the $1,800 per kilowatt for wind energy). He continued speaking about new nuclear and coal plants stating, "We may not need any, ever."
This could not be true if there was not another proven, reliable, cost-effective answer. That answer is renewable energy.
The reality of new traditional generation costs has paved the way for the cost-competitive renewable energy technologies of wind, solar and biomass. As the costs of traditional electricity sources have escalated, renewable-energy costs continue to fall.
Utilities across the nation have used renewable-energy technologies as a price hedge against today's rising fuel costs to lock in long-term competitive electricity rates. When coupled with smart-energy efficiency investments, utilities including TVA should start to bank on renewables for a growing percentage of our future generation.
The question of whether we can hedge our prices by deploying large-scale renewables was answered in 2008, when TVA's own study, conducted by McKinsey and Co., showed that the TVA region has more than 13,000 gigawatt-hours of cost-competitive renewable energy generation sources.
This did not include any solar generation, which has experienced the most dramatic drop in prices over the past 12 months, resulting in the industry claiming they will reach "grid parity" by 2012 — the point at which ratepayers can produce electricity at a cost equal to electricity purchased from a utility.
Ultimately, the question is not "What is the cost of renewables?" It is, "What is the cost of the alternatives?"
ITER Nuclear Fusion advances tokamak magnetic confinement, heating deuterium-tritium plasma with superconducting magnets, targeting net energy gain, tritium breeding, and steam-turbine power, while complementing laser inertial confinement milestones for grid-scale electricity and 2025 startup goals.
Key Points
ITER Nuclear Fusion is a tokamak project confining D-T plasma with magnets to achieve net energy gain and clean power.
✅ Tokamak magnetic confinement with high-temp superconducting coils
✅ Deuterium-tritium fuel cycle with on-site tritium breeding
✅ Targets net energy gain and grid-scale, low-carbon electricity
It sounds like the stuff of dreams: a virtually limitless source of energy that doesn’t produce greenhouse gases or radioactive waste. That’s the promise of nuclear fusion, often described as the holy grail of clean energy by proponents, which for decades has been nothing more than a fantasy due to insurmountable technical challenges. But things are heating up in what has turned into a race to create what amounts to an artificial sun here on Earth, one that can provide power for our kettles, cars and light bulbs.
Today’s nuclear power plants create electricity through nuclear fission, in which atoms are split, with next-gen nuclear power exploring smaller, cheaper, safer designs that remain distinct from fusion. Nuclear fusion however, involves combining atomic nuclei to release energy. It’s the same reaction that’s taking place at the Sun’s core. But overcoming the natural repulsion between atomic nuclei and maintaining the right conditions for fusion to occur isn’t straightforward. And doing so in a way that produces more energy than the reaction consumes has been beyond the grasp of the finest minds in physics for decades.
But perhaps not for much longer. Some major technical challenges have been overcome in the past few years and governments around the world have been pouring money into fusion power research as part of a broader green industrial revolution under way in several regions. There are also over 20 private ventures in the UK, US, Europe, China and Australia vying to be the first to make fusion energy production a reality.
“People are saying, ‘If it really is the ultimate solution, let’s find out whether it works or not,’” says Dr Tim Luce, head of science and operation at the International Thermonuclear Experimental Reactor (ITER), being built in southeast France. ITER is the biggest throw of the fusion dice yet.
Its $22bn (£15.9bn) build cost is being met by the governments of two-thirds of the world’s population, including the EU, the US, China and Russia, at a time when Europe is losing nuclear power and needs energy, and when it’s fired up in 2025 it’ll be the world’s largest fusion reactor. If it works, ITER will transform fusion power from being the stuff of dreams into a viable energy source.
Constructing a nuclear fusion reactor ITER will be a tokamak reactor – thought to be the best hope for fusion power. Inside a tokamak, a gas, often a hydrogen isotope called deuterium, is subjected to intense heat and pressure, forcing electrons out of the atoms. This creates a plasma – a superheated, ionised gas – that has to be contained by intense magnetic fields.
The containment is vital, as no material on Earth could withstand the intense heat (100,000,000°C and above) that the plasma has to reach so that fusion can begin. It’s close to 10 times the heat at the Sun’s core, and temperatures like that are needed in a tokamak because the gravitational pressure within the Sun can’t be recreated.
When atomic nuclei do start to fuse, vast amounts of energy are released. While the experimental reactors currently in operation release that energy as heat, in a fusion reactor power plant, the heat would be used to produce steam that would drive turbines to generate electricity, even as some envision nuclear beyond electricity for industrial heat and fuels.
Tokamaks aren’t the only fusion reactors being tried. Another type of reactor uses lasers to heat and compress a hydrogen fuel to initiate fusion. In August 2021, one such device at the National Ignition Facility, at the Lawrence Livermore National Laboratory in California, generated 1.35 megajoules of energy. This record-breaking figure brings fusion power a step closer to net energy gain, but most hopes are still pinned on tokamak reactors rather than lasers.
In June 2021, China’s Experimental Advanced Superconducting Tokamak (EAST) reactor maintained a plasma for 101 seconds at 120,000,000°C. Before that, the record was 20 seconds. Ultimately, a fusion reactor would need to sustain the plasma indefinitely – or at least for eight-hour ‘pulses’ during periods of peak electricity demand.
A real game-changer for tokamaks has been the magnets used to produce the magnetic field. “We know how to make magnets that generate a very high magnetic field from copper or other kinds of metal, but you would pay a fortune for the electricity. It wouldn’t be a net energy gain from the plant,” says Luce.
One route for nuclear fusion is to use atoms of deuterium and tritium, both isotopes of hydrogen. They fuse under incredible heat and pressure, and the resulting products release energy as heat
The solution is to use high-temperature, superconducting magnets made from superconducting wire, or ‘tape’, that has no electrical resistance. These magnets can create intense magnetic fields and don’t lose energy as heat.
“High temperature superconductivity has been known about for 35 years. But the manufacturing capability to make tape in the lengths that would be required to make a reasonable fusion coil has just recently been developed,” says Luce. One of ITER’s magnets, the central solenoid, will produce a field of 13 tesla – 280,000 times Earth’s magnetic field.
The inner walls of ITER’s vacuum vessel, where the fusion will occur, will be lined with beryllium, a metal that won’t contaminate the plasma much if they touch. At the bottom is the divertor that will keep the temperature inside the reactor under control.
“The heat load on the divertor can be as large as in a rocket nozzle,” says Luce. “Rocket nozzles work because you can get into orbit within minutes and in space it’s really cold.” In a fusion reactor, a divertor would need to withstand this heat indefinitely and at ITER they’ll be testing one made out of tungsten.
Meanwhile, in the US, the National Spherical Torus Experiment – Upgrade (NSTX-U) fusion reactor will be fired up in the autumn of 2022, while efforts in advanced fission such as a mini-reactor design are also progressing. One of its priorities will be to see whether lining the reactor with lithium helps to keep the plasma stable.
Choosing a fuel Instead of just using deuterium as the fusion fuel, ITER will use deuterium mixed with tritium, another hydrogen isotope. The deuterium-tritium blend offers the best chance of getting significantly more power out than is put in. Proponents of fusion power say one reason the technology is safe is that the fuel needs to be constantly fed into the reactor to keep fusion happening, making a runaway reaction impossible.
Deuterium can be extracted from seawater, so there’s a virtually limitless supply of it. But only 20kg of tritium are thought to exist worldwide, so fusion power plants will have to produce it (ITER will develop technology to ‘breed’ tritium). While some radioactive waste will be produced in a fusion plant, it’ll have a lifetime of around 100 years, rather than the thousands of years from fission.
At the time of writing in September, researchers at the Joint European Torus (JET) fusion reactor in Oxfordshire were due to start their deuterium-tritium fusion reactions. “JET will help ITER prepare a choice of machine parameters to optimise the fusion power,” says Dr Joelle Mailloux, one of the scientific programme leaders at JET. These parameters will include finding the best combination of deuterium and tritium, and establishing how the current is increased in the magnets before fusion starts.
The groundwork laid down at JET should accelerate ITER’s efforts to accomplish net energy gain. ITER will produce ‘first plasma’ in December 2025 and be cranked up to full power over the following decade. Its plasma temperature will reach 150,000,000°C and its target is to produce 500 megawatts of fusion power for every 50 megawatts of input heating power.
“If ITER is successful, it’ll eliminate most, if not all, doubts about the science and liberate money for technology development,” says Luce. That technology development will be demonstration fusion power plants that actually produce electricity, where advanced reactors can build on decades of expertise. “ITER is opening the door and saying, yeah, this works – the science is there.”
Wall Street Fossil Fuel Pivot signals banks reassessing ESG, net-zero, and decarbonization goals, reviving oil, gas, and coal financing while recalibrating clean energy exposure amid policy shifts, regulatory rollbacks, and investment risk realignment.
Key Points
A shift as major U.S. banks ease ESG limits to fund oil, gas, coal while rebalancing alongside renewables.
✅ Banks revisit lending to oil, gas, and coal after policy shifts.
✅ ESG and net-zero commitments face reassessment amid returns.
✅ Renewables compete for capital as risk models are updated.
The global energy finance sector, worth a staggering $1.4 trillion, is undergoing a significant transformation, largely due to former President Donald Trump's renewed support for the oil, gas, and coal industries. Wall Street, which had previously aligned itself with global climate initiatives and the energy transition and net-zero goals, is now reassessing its strategy and pivoting toward a more fossil-fuel-friendly stance.
This shift represents a major change from the earlier stance, where many of the largest U.S. banks and financial institutions took a firm stance on decarbonization push, including limiting their exposure to fossil-fuel projects. Just a few years ago, these institutions were vocal supporters of the global push for a sustainable future, with many committing to support clean energy solutions and abandon investments in high-carbon energy sources.
However, with the change in administration and the resurgence of support for traditional energy sectors under Trump’s policies, these same banks are now rethinking their strategies. Financial institutions are increasingly discussing the possibility of lifting long-standing restrictions that limited their investments in controversial fossil-fuel projects, including coal mining, where emissions drop as coal declines, and offshore drilling. The change reflects a broader realignment within the energy finance sector, with Wall Street reexamining its role in shaping the future of energy.
One of the most significant developments is the Biden administration’s policy reversal, which emphasized reducing the U.S. carbon footprint in favor of carbon-free electricity strategies. Under Trump, however, there has been a renewed focus on supporting the traditional energy sectors. His administration has pushed to reduce regulatory burdens on fossil-fuel companies, particularly oil and gas, while simultaneously reintroducing favorable tax incentives for the coal and gas industries. This is a stark contrast to the Biden administration's efforts to incentivize the transition toward renewable energy and zero-emissions goals.
Trump's policies have, in effect, sent a strong signal to financial markets that the fossil-fuel industry could see a resurgence. U.S. banks, which had previously distanced themselves from financing oil and gas ventures due to the pressure from environmental activists and ESG (Environmental, Social, and Governance) investors, as seen in investor pressure on Duke Energy, are now reconsidering their positions. Major players like JPMorgan Chase and Goldman Sachs are reportedly having internal discussions about revisiting financing for energy projects that involve high carbon emissions, including controversial oil extraction and gas drilling initiatives.
The implications of this shift are far-reaching. In the past, a growing number of institutional investors had embraced ESG principles, with the goal of supporting the transition to renewable energy sources. However, Trump’s pro-fossil fuel stance appears to be emboldening Wall Street’s biggest players to rethink their commitment to green investing. Some are now advocating for a “balanced approach” that would allow for continued investment in traditional energy sectors, while also acknowledging the growing importance of renewable energy investments, a trend echoed by European oil majors going electric in recent years.
This reversal has led to confusion among investors and analysts, who are now grappling with how to navigate a rapidly changing landscape. Wall Street's newfound support for the fossil-fuel industry comes amid a backdrop of global concerns about climate change. Many investors, who had previously embraced policies aimed at curbing the effects of global warming, are now finding it harder to reconcile their environmental commitments with the shift toward fossil-fuel-heavy portfolios. The reemergence of fossil-fuel-friendly policies is forcing institutional investors to rethink their long-term strategies.
The consequences of this policy shift are also being felt by renewable energy companies, which now face increased competition for investment dollars from traditional energy sectors. The shift towards oil and gas projects has made it more challenging for renewable energy companies to attract the same level of financial backing, even as demand for clean energy continues to rise and as doubling electricity investment becomes a key policy call. This could result in a deceleration of renewable energy projects, potentially delaying the progress needed to meet the world’s climate targets.
Despite this, some analysts remain optimistic that the long-term shift toward green energy is inevitable, even if fossil-fuel investments gain a temporary boost. As the world continues to grapple with the effects of climate change, and as technological advancements in clean energy continue to reduce costs, the transition to renewables is likely to persist, regardless of the political climate.
The shift in Wall Street’s approach to energy investments, spurred by Trump’s pro-fossil fuel policies, is reshaping the $1.4 trillion global energy finance market. While the pivot towards fossil fuels may offer short-term gains, the long-term trajectory for energy markets remains firmly in the direction of renewables. The next few years will be crucial in determining whether financial institutions can balance the demand for short-term profitability with their long-term environmental responsibilities.
India Coal Power PLF rose as capacity utilisation improved on rising peak demand and hydropower shortfall; thermal plants lifted plant load factor, IPPs lagged, and generation beat program targets amid weak rainfall and slower snowmelt.
Key Points
Coal plant load factor in India rose in May on higher demand and weak hydropower, with generation beating targets.
✅ PLF rose to 65.3% as demand climbed
✅ Hydel generation fell 14% YoY on poor rainfall
✅ IPP PLF at 57.8%, below 60% debt comfort
Capacity utilisation levels of coal-based power plants improved in May because of a surge in electricity demand and lower generation from hydroelectric sources. The plant load factor (PLF) of thermal power plants went up to 65.3% in the month, 1.7 percentage points higher than the year-ago period.
While PLFs of central and state government-owned plants were 75.5% and 64.5%, respectively, the same for independent power producers (IPPs) stood at 57.8%, even as coal and electricity shortages eased across the market. Though PLFs of IPPs were higher than May 2017 levels, it failed to cross the 60% mark, which eases debt servicing capabilities of power generation assets.
Thermal power plants generated 96,580 million units (MU) in May, 4% more than the programme set for the month and 5.2% higher than last year, partly supported by higher imported coal volumes in the market. On the other hand, hydel plants produced 10,638 MU, 10% lower than the target, reflecting a 14% decline from last year.
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Peak demand of power on the last day of the month was 1,62,132 MW, 4.3% higher than the demand registered in the same day a year ago, underscoring India's position as the third-largest electricity producer globally.
According to sources, hydropower plants have been generating lesser than expected electricity due to inadequate rainfall and snow melting at a slower pace than previous years, even as the US reported a power generation jump year on year. Data for power generation from renewable sources have not been made available yet.
Marine Renewables Canada Offshore Wind integrates marine renewables, tidal and wave energy, advancing clean electricity, low-carbon power, supply chain development, and regulatory alignment to scale offshore wind energy projects across Canada's coasts and global markets.
Key Points
An initiative to grow offshore wind using Canada's marine strengths, shared supply chains, and regulatory synergies.
✅ Leverages tidal and wave energy expertise for offshore wind
✅ Aligns supply chain, safety, and regulatory frameworks
✅ Supports low-carbon power and clean electricity goals
With a growing global effort to develop climate change solutions and increase renewable electricity production, including the UK offshore wind growth in recent years, along with Canada’s strengths in offshore and ocean sectors, Marine Renewables Canada has made a strategic decision to grow its focus by officially including offshore wind energy in its mandate.
Marine Renewables Canada plans to focus on similarities and synergies of the resources in order to advance the sector as a whole and ensure that clean electricity from waves, tides, rivers, and offshore wind plays a significant role in Canada’s low-carbon future.
“Many of our members working on tidal energy and wave energy projects also have expertise that can service offshore wind projects both domestically and internationally,” says Tim Brownlow, Chair of Marine Renewables Canada. “For us, offshore wind is a natural fit and our involvement will help ensure that Canadian companies and researchers are gaining knowledge and opportunities in the offshore wind sector as it grows.”
Canada has the longest coastlines in the world, giving it huge potential for offshore wind energy development. In addition to the resource, Canada has significant capabilities from offshore and marine industries that can contribute to offshore wind energy projects. The global offshore wind market is estimated to grow by over 650% by 2030 and presents new opportunities for Canadian business.
“The federal government’s recent inclusion of offshore renewables in legislation, including a plan for regulating offshore wind developed by the government, and support for emerging renewable energy technologies are important steps toward building this industry,” says Elisa Obermann, executive director of Marine Renewables Canada. “There are still challenges to address before we’ll see offshore wind energy development in Canada, but we see a great opportunity to get more involved now, increase our experience, and help inform future development.”
Like wave and tidal energy, offshore wind projects operate in harsh marine environments and development presents many of the same challenges and benefits as it does for other marine renewable energy resources. Marine Renewables Canada has recognized that there is significant overlap between offshore wind and wave and tidal energy when it comes to the supply chain, regulatory issues, and the operating environment. The association plans to focus on similarities and synergies of the resources in order to advance the sector as a whole, leveraging Canada’s opportunity in the global electricity market to ensure that clean electricity from waves, tides, rivers, and offshore wind plays a significant role in Canada’s low-carbon future.
US power grid modernization addresses aging infrastructure, climate resilience, extreme weather, EV demand, and clean energy integration, using AI, transmission upgrades, and resilient substations to improve reliability, reduce outages, and enable rapid recovery.
Key Points
US power grid modernization strengthens infrastructure for resilience, reliability, and clean energy under rising demand.
✅ Hardening substations, lines, and transformers against extreme weather
✅ Integrating EV load, DERs, and renewables into transmission and distribution
✅ Using AI, sensors, and automation to cut outages and speed restoration
The power grid in the U.S. is aging and already struggling to meet current demand, with dangerous vulnerabilities documented across the system today. It faces a future with more people — people who drive more electric cars and heat homes with more electric furnaces.
Alice Hill says that's not even the biggest problem the country's electricity infrastructure faces.
"Everything that we've built, including the electric grid, assumed a stable climate," she says. "It looked to the extremes of the past — how high the seas got, how high the winds got, the heat."
Hill is an energy and environment expert at the Council on Foreign Relations. She served on the National Security Council staff during the Obama administration, where she led the effort to develop climate resilience. She says past weather extremes can no longer safely guide future electricity planning.
"It's a little like we're building the plane as we're flying because the climate is changing right now, and it's picking up speed as it changes," Hill says.
The newly passed infrastructure package dedicates billions of dollars to updating the energy grid with smarter electricity infrastructure programs that aim to modernize operations. Hill says utility companies and public planners around the country are already having to adapt. She points to the storm surge of Hurricane Sandy in 2012.
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"They thought the maximum would be 12 feet," she says. "That storm surge came in close to 14 feet. It overcame the barriers at the tip of Manhattan, and then the electric grid — a substation blew out. The city that never sleeps [was] plunged into darkness."
Hill noted that Con Edison, the utility company providing New York City with energy, responded with upgrades to its grid: It buried power lines, introduced artificial intelligence, upgraded software to detect failures. But upgrading the way humans assess risk, she says, is harder.
"What happens is that some people tend to think, well, that last storm that we just had, that'll be the worst, right?" Hill says. "No, there is a worse storm ahead. And then, probably, that will be exceeded."
In 2021, the U.S. saw electricity outages for millions of people as a result of historic winter storms in Texas, a heatwave in the Pacific Northwest and Hurricane Ida along the Gulf Coast. Climate change will only make extreme weather more likely and more intense, driving longer, more frequent outages for utilities and customers.
In the West, California's grid reliability remains under scrutiny as the state navigates an ambitious clean energy shift.
And that has forced utility companies and other entities to grapple with the question: How can we prepare for blackouts and broader system stress we've never experienced before?
A modern power station in Maryland is built for the future In the town of Edgemere, Md., the Fitzell substation of Baltimore Gas and Electric delivers electricity to homes and businesses. The facility is only a year or so old, and Laura Wright, the director of transmission and substation engineering, says it's been built with the future in mind.
She says the four transformers on site are plenty for now. And to counter the anticipated demand of population growth and a future reliance on electric cars, she says the substation has been designed for an easy upgrade.
"They're not projecting to need that additional capacity for a while, but we designed this station to be able to take that transformer out and put in a larger one," Wright says.
Slopes were designed to insulate the substation from sea level rise. And should the substation experience something like a catastrophic flooding event or deadly tornado, there's a plan for that too.
"If we were to have a failure of a transformer," Wright says, "we can bring one of those mobile transformers into the substation, park it in the substation, connect it up in place of that transformer. And we can do that in two to three days."
The Fitzell substation is a new, modern complex. Older sites can be knocked down for weeks.
That raises the question: Can the amount of money dedicated to the power grid in the new infrastructure legislation actually make meaningful changes to the energy system across the country, where studies find more blackouts than other developed nations persist?
"The infrastructure bill, unfortunately, only scratches the surface," says Daniel Cohan, an associate professor in civil and environmental engineering at Rice University.
Though the White House says $65 billion of the infrastructure legislation is dedicated to power infrastructure, a World Resources Institute analysis noted that only $27 billion would go to the electric grid — a figure that Cohan also used.
"If you drill down into how much is there for the power grid, it's only about $27 billion or so, and mainly for research and demonstration projects and some ways to get started," he says.
Cohan, who is also author of the forthcoming book Confronting Climate Gridlock, says federal taxpayer dollars can be significant but that most of the needed investment will eventually come from the private sector — from utility companies and other businesses spending "many hundreds of billions of dollars per decade," even as grid modernization affordability remains a concern. He also says the infrastructure package "misses some opportunities" to initiate that private-sector action through mandates.
"It's better than nothing, but, you know, with such momentous challenges that we face, this isn't really up to the magnitude of that challenge," Cohan says.
Cohan argues that thinking big, and not incrementally, can pay off. He believes a complete transition from fossil fuels to clean energy by 2035 is realistic and attainable — a goal the Biden administration holds — and could lead to more than just environmental benefit.
"It also can lead to more affordable electricity, more reliable electricity, a power supply that bounces back more quickly when these extreme events come through," he says. "So we're not just doing it to be green or to protect our air and climate, but we can actually have a much better, more reliable energy supply in the future."
UK Offshore Wind Expansion will make wind the main power source, driving renewable energy, offshore projects, smart grids, battery storage, and interconnectors to cut carbon emissions, boost exports, and attract global investment.
Key Points
A UK strategy to scale offshore wind, integrate smart grids and storage, cut emissions and drive investment and exports
✅ 30% energy target by 2030, backed by CfD support
✅ 250m industry investment and smart grid build-out
✅ Battery storage and interconnectors balance intermittency
Plans are afoot to make wind the UKs main power source for the first time in history amid ambitious targets to generate 30 percent of its total energy supply by 2030, up from 8 percent at present.
A recently inked deal will see the offshore wind industry invest 250 million into technology and infrastructure over the next 11 years, with the government committing up to 557 million in support, under a renewable energy auction that boosts wind and tidal projects, as part of its bid to lower carbon emissions to 80 percent of 1990 levels by 2050.
Offshore wind investment is crucial for meeting decarbonisation targets while increasing energy production, says Dominic Szanto, Director, Energy and Infrastructure at JLL. The governments approach over the last seven years has been to promise support to the industry, provided that cost reduction targets were met. This certainty has led to the development of larger, more efficient wind turbines which means the cost of offshore wind energy is a third of what it was in 2012.
Boosting the wind industry
Offshore wind power has been gathering pace in the UK and has grown despite COVID-19 disruptions in recent years. Earlier this year, the Hornsea One wind farm, the worlds largest offshore generator which is located off the Yorkshire coast, started producing electricity. When fully operational in 2020, the project will supply energy to over a million homes, and a further two phases are planned over the coming decade.
Over 10 gigawatts of offshore wind either already has government support or is eligible to apply for it in the near future, following a 10 GW contract award that underscores momentum, representing over 30 billion of likely investment opportunities.
Capital is coming from European utility firms and increasingly from Asian strategic investors looking to learn from the UKs experience. The attractive government support mechanism means banks are keen to lend into the sector, says Szanto.
New investment in the UKs offshore wind sector will also help to counter the growing influence of China. The UK is currently the worlds largest offshore wind market, but by 2021 it will be outstripped by China.
Through its new deal, the government hopes to increase wind power exports fivefold to 2.6 billion per year by 2030, with the UKs manufacturing and engineering skills driving projects in growth markets in Europe and Asia and in developing countries supported by the World Bank support through financing and advisory programs.
Over the next two decades, theres a massive opportunity for the UK to maintain its industry leading position by designing, constructing, operating and financing offshore wind projects, says Szanto. Building on projects such as the Hywind project in Scotland, it could become a major export to countries like the USA and Japan, where U.S. lessons from the U.K. are informing policy and coastal waters are much deeper.
Wind-powered smart grids
As wind power becomes a major contributor to the UKs energy supply, which will be increasingly made up of renewable sources in coming decades, there are key infrastructure challenges to overcome.
A real challenge is that the UKs power generation is becoming far more decentralised, with smaller power stations such as onshore wind farms and solar parks and more prosumers residential houses with rooftop solar coupled with a significant rise in intermittent generation, says Szanto. The grid was never designed to manage energy use like that.
One potential part of the solution is to use offshore wind farms in other sites in European waters.
By developing connections between wind projects from neighbouring countries, it will create super-grids that will help mitigate intermittency issues, says Szanto.
More advanced energy storage batteries will also be key for when less energy is generated on still days. There is a growing need for batteries that can store large amounts of energy and smart technology to discharge that energy. Were going through a revolution where new technology companies are working to enable a much smarter grid.
Future smart grids, based on developing technology such as blockchain, might enable the direct trading of energy between generators and consumers, with algorithms that can manage many localised sources and, critically, ensure a smooth power supply.
Investors seeking a higher-yield market are increasingly turning to battery technology, Szanto says. In a future smart grid, for example, batteries could store electricity bought cheaply at low-usage times then sold at peak usage prices or be used to provide backup energy services to other companies.
Majors investing in the transition
Its not just new energy technology companies driving change; established oil and gas companies are accelerating spending on renewable energy. Shell has committed to $1-2 billion per year on clean energy technologies out of a $25-30 billion budget, while Equinor plans to spend 15-20 percent of its budget on renewables by 2030.
The oil and gas majors have the global footprint to deliver offshore wind projects in every country, says Szanto. This could also create co-investment opportunities for other investors in the sector especially as nascent wind markets such as the U.S., where the U.S. offshore wind timeline is still developing, and Japan evolve.
European energy giants, for example, have bid to build New Yorks first offshore wind project.
As offshore wind becomes a globalised sector, with a trillion-dollar market outlook emerging, the major fuel companies will have increasingly large roles. They have the resources to undertake the years-long, cost-intensive developments of wind projects, driven by a need for new business models as the world looks beyond carbon-based fuels, says Szanto.
Oil and gas heavyweights are also making wind, solar and energy storage acquisitions BP acquired solar developer Lightsource and car-charging network Chargemaster, while Shell spent $400 million on solar and battery companies.
The public perception is that renewable energy is niche, but its now a mainstream form of energy generation., concludes Szanto.
Every nation in the world is aligned in wanting a decarbonised future. In terms of electricity, that means renewable energy and for offshore wind energy, the outlook is extremely positive.
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