By Chloe Holden, Associate Account Executive
Cleantech and renewables knocked it out of the park in 2015.
What made last year so great? The Clean Power Plan and the federal investment tax credit (ITC) extension made national headlines. Globally, an inspiring outcome at COP21, the Pope’s condemnation of climate deniers, and Bill Gates’ Breakthrough Energy Coalition got all of us thinking big. Renewables jobs are booming globally, the United States saw a record 7.4 gigawatts (GW) of new solar, and resource management caught everyone’s attention after the California drought had us all painting our brown lawns green.
And how about this year?
Read on for our cleantech and renewables forecast.
2016 is the year that:
Climate change becomes bipartisan
Cleantech and renewables are moving so fast that politicians who don’t get on board will be left in the dust. Tech that helps manage carbon emissions can also have real payoffs for job and wealth creation.
Many politicians still balk at renewables subsidies, regulations, and even whether climate change is important. But the numbers speak for themselves, and a bottom-line argument has shown itself to be effective in persuading reluctant politicians to put their weight behind cleantech. US employment in solar now outstrips employment in coal 2 to 1. The public has warmed to solar energy, with 79 percent of U.S. adults supporting further development. 2015 saw a shakeup in way party lines are drawn on renewables and cleantech – like when the Solar Energy Industries Association (SEIA) convinced Republican leaders to rally around the ITC.
2016 will see more bipartisan support for an industry that benefits every voter, in every part of the country.
Air quality becomes a real motivator
It’s time to get serious on air quality. Although asthma among children recently stopped climbing in the United States, this pollution-linked illness still affects 9.3 percent of U.S. kids 18 and under, an unacceptable rate not far from the 2009 peak of 9.7 percent.
Meanwhile, China has been issuing red alerts on air quality left and right. Recent photos of Beijing make the landscape in Mad Max look hospitable. And even San Francisco has caught wind of a surprise pollutant, with the recent discovery of a neurotoxin in the city’s fog.
Price of oil will rise this year, laying groundwork for EV takeoff
Low oil prices mean cheaper gas, undermining electric vehicle (EV) sales. Of course, people are constantly making predictions about oil – it’s a wildcard with no guarantees, as its unexpected impact on renewable energy financial markets shows.
For our part, we expect the price of oil to go up this year as the Organization of the Petroleum Exporting Countries (OPEC) struggles with deficit spending. If this happens, consumers will choose more fuel-efficient cars, and the excitement around EVs will build.
Even without a big jump in oil prices, there’s still good reason to believe 2016 will be a breakout year for EV and fuel efficiency in general. Innovation in the vehicle space is making headlines, as fuel-efficient driverless cars become a credible, not-so-far-off reality. Major companies like Toyota declare that traditional internal combustion cars are on their way out. More this year than ever before, consumers who want to replace oil will ditch the pump for EVs.
US soft costs will remain caught in a policy bottleneck
Competition is fierce in many parts of the solar value chain, and merger and acquisition (M&A) gymnastics will increase in 2016 in the downstream space. Yet innovations in software, customer acquisition and interconnectivity, installation and financing will still have to accommodate a complicated policy space. Unlike in Germany, where 20 utilities serve the country’s entire population, and acquisition costs are 1/20 of the U.S. average, U.S. solar has to navigate differences in rates and policies across 3000+ utilities and service providers.
Progressive utilities and states will lead, and innovative companies will devise solutions to soft costs. Overall, non-hardware costs will continue to be driven down in 2016. But the policy variation within the U.S. will slow the fall of solar soft costs this year.
Energy & grid security will become national security
National security is on everyone’s mind, and it’s expected to get a lot of attention this year in presidential stump speeches. Reducing dependence on oil is key, as is improving the energy grid’s resilience to external disruptions – like cyber threats. As the grid becomes more automated, we expect that cyber attacks will become a bigger deal, and we may even see a serious threat to the grid in 2016.
Renewables and tech are a vital tool for energy security. Former CIA director James Woolsey knows this – he declared in 2013 that distributed generation is our best chance to avoid attacks on the energy grid. In 2016, we predict that cyber threats will show us just how vital it is to diversify, decentralize, and protect the grid. Congress recently passed a new law that will improve information sharing within the electric power sector for security purposes. The National Renewable Energy Laboratory (NREL) announced its newest grid security initiative, which will develop new best practices for cybersecurity. In 2016, we will realize renewables can help us prevent, rather than simply respond to, modern threats.
Resource scarcity will spark big ideas
Cleantech is all about doing more with less. The European Commission recently passed a Circular Economy Package that pledges commitment to waste recycling and reuse, waste to energy, and “waste as a resource” (creating raw materials from waste). In the private sector, innovations to reduce the use of scarce resources are catching on in a big way. Antenna Group works with companies whose technology reduces the amount of silver and silicon needed in solar panels, reuses old rubber for new tires, converts waste into energy, and more.
Terms like closed-loop, cradle-to-cradle, and circular economy will become much more common in 2016 as these approaches to design and manufacturing gain traction.
Coal’s last breath
“War on coal”? Maybe just a natural burnout. Coal fell out of favor in 2015, and 2016 will see the power source dwindle even further. Coal production dove 10 percent in the US in 2015 as older plants came offline and environmental regulations dug into the industry. One of the largest coal companies in the US filed for bankruptcy just after the new year, setting the tone for the fate of US coal in 2016.
There’s still a lot left to do before coal is no more. Many developing countries still plan to ramp up coal – India is slated to double its production by 2020. Coal also dominates China’s energy mix. As these countries invest in both coal and renewables, emissions will continue to rise. We hope that renewables will grow quickly, allowing rising economies to leapfrog over the kind of intense coal energy production that fueled US industrialization.
There’s a new shine on the industry. The international community laid out a framework for climate change, and now it’s time to get back to work. Look out for these predictions in the headlines. 2016 has the potential to be a great a year for renewable energy and cleantech, and we look forward to it.