The introduction of renewable energy in the power market has already paved the way for unstoppable growth in the coming years. Renewables have become a highly disruptive force, providing low-cost energy that is creating a very competitive option for both energy providers and consumers. In addition, the Climate Change Act 2008 and the net zero target by 2030 have accelerated aspirations – it’s no longer a question of if it will happen, but when.
With the UK and countries around the globe looking to meet ambitious net zero targets, renewables are not limited to the power sector and have expanded rapidly into other areas of the economy. For instance, the transport sector is focused on electrification and improvement in battery design, with the infrastructure to support widespread growth of electric vehicles beginning to come online. We are seeing similar aspirations in the heat industry too, with the government searching for an alternative to gas boilers and cooling systems. Renewables have a significant role to play in this electrification, as well as the reduction of carbon emissions during manufacturing. Since 1990, we have witnessed 62% reduction in emissions within the power sector thanks to renewables. In fact, sustainable energy sources supplied more power than fossil fuels for the first time in history at the end of 2019, highlighting the potential of the sector.
Even in the oil and gas sector, where we have traditionally only seen pure play utilities and niche developers engage with renewables, many more entities are getting involved. The Crown Estate recently published its Offshore Wind Leasing Round 4, suggesting approved projects could deliver a 21% increase in the offshore wind pipeline, saving the UK as much as 12.5 million tonnes of CO2 emissions a year and employing 60,000 people by 2030. Big players traditionally from the oil and gas sector entered the market very strongly, including BP, demonstrating the desire for businesses in this field to benefit from the opportunities in renewables right now and in the future.
Why have such organisations decided to broaden their horizons and move into renewable energy now? There are likely several potential reasons. Firstly, society has moved on and consumers are demanding change. In the last few weeks, the stock market has shown that consumers are not afraid to be more interventionist and to hold companies accountable. There is also a lot of pressure from shareholders and investors to be more environmentally responsible and maximise on the opportunities that renewables are creating.
Even discounting these factors, the market disruption caused by renewable energy platforms alone is enough to drive more companies into the field. Such fast-paced development means that those who don’t innovate, who step back and watch, risk becoming obsolete. Of course, it is not a singular and sudden decision to move into the renewables market, but many companies will have been working towards it for some time and will be choosing to make their move in the near future if they haven’t already. Traditional oil and gas companies will be looking to understand the renewable energy sector and transfer skills and expertise to take advantage of the benefits available.
The UK is in a very strong position within the global renewables market. In offshore wind, the UK is world-leading – we have the biggest market for related technology and more capacity installed than any other country. As such, we have already faced and worked through the challenges, learning key lessons in achieving cost reduction to deliver volume at low prices. The UK has, therefore, created demand for its skills and experience, and a strong opportunity for the export of expertise and goods. Many nations will want to utilise our workforce and products and services in order to successfully replicate our systems for even faster transitions and development. Some less economically developed countries may even be able to leapfrog straight to renewable energy sources, without following the UK’s journey from coal to gas to renewable.
The UK’s position could be further strengthened as the host nation for the UN’s Climate Change Conference (COP26), which is being held in Glasgow this November. Awareness over the climate crisis has come to the fore in recent times, with extreme weather hitting many areas of the globe from last year’s wildfires to this year’s ice and snow. The need for us all to ramp up the fight against climate change has become more evident than ever. Being in the driving seat of an event dedicated to tackling this provides an exciting opportunity for the UK to showcase its achievements to date and work towards the next steps of the transition.
For these reasons and others, there is currently a very active discussion about offshore and floating wind energy platforms. These sources cater to the need for sustainable, low-cost energy generation that will be as resilient as possible. Not only does this provide clean and cheap power to nations, but it can also make it easy to secure investment in large-scale projects. There is a strong role for onshore wind to play, bringing cheap and deliverable power. There is a great deal of innovation in the sector at large – for example, Siemens Gamesa have already announced plans to build the first 14MW offshore wind turbine.
There will, of course, be some hurdles that need to be overcome if we are to realise the full potential of the renewable energy market. For companies looking to start or accelerate their transition, future business planning can be a challenge. The pace with which technology is progressing and demand is changing as we look to reduce emissions from other sectors, makes it difficult to predict how fast this transition will go, and what the sector will look like in a few years’ time.
There may also be some resistance internally for companies looking to transition to renewables. In particular, businesses need to think carefully about where their niche or added value may be found. The key is to make a start. As mentioned, the sector is progressing quickly and to not take action soon is to risk getting out-paced by market development.
For renewable energy to really thrive and meet the targets set out within the UK and globally, we will need the skills and expertise of all industries. The energy transition space offers massive potential for those with a background in oil and gas, who will be integral to driving future change – there are many synergies to draw on and opportunities to maximise on for all. By working together to advance the renewable energy market, we can not only achieve net zero, but also strengthen the economy along the way. With expansion and development of renewables, we can deliver sustainable energy while supporting tens of thousands of jobs and saving the UK tens of billions of pounds. On a global scale, the opportunities are truly mind-blowing.
Read the latest issue of the OGV Energy magazine HERE.