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Key Findings

The ongoing rate of technology-driven cost declines for renewable has exceeded even the most optimistic projections

The ever-lower cost of variable renewable energy has driven penetration in myriad electricity markets as varied as Germany, California, Tamil Nadu and South Australia.

Executive Summary

Even as the global economy has been locked down by the COVID-19 pandemic, May 2020 saw the renewable energy and storage sectors continue to achieve new record-breaking milestones. Stranded asset risks for the coal-fired power sector continue to grow as a result, sending global capital fleeing for the exits.

Renewable energy milestones

In May 2020:

  • A global record-low solar tariff of just US$13.50 per megawatt hour (MWh) was awarded in Abu Dhabi. This was 13% below the previous record low set in January 2020 in Qatar at US$15.60/MWh.
  • The New Mexico Public Regulation Commission (NMPRC) approved a 100MW of solar generation and 50MW of dispatchable battery storage for about US$30/MWh.
  • California awarded seven projects totalling 770MW of battery storage.
  • Siemens Gamesa announced its proposed launch of a new record 14MW offshore wind turbine, for commercial deployment in 2024.
  • In Australia, the Queensland government’s CleanCo awarded a 400MW solar contract to Neoen.
  • Two mega-renewable hydrogen projects were reported in China. GD Power Development Co. plans to build a US$2bn project with up to 2GW of renewables capacity in northern Inner Mongolia. Utility Beijing Jingneng Power Co. plans a US$3bn project with capacity of 5GW.
  • Six new or tightened coal exit policies were announced by globally significant financial institutions, taking the 2020 to-date tally to 37 announcements.
  • BlackRock completed its thermal coal miner divestment in May 2020 and put KEPCO on notice over the Korean utility’s plans to continue investing in new coal-power plants.
  • The European Union announced a record green recovery stimulus in May 2020, including €91bn a year for home energy efficiency and green heating, €25bn of renewable energy, €20bn for clean cars over two years, plus €60bn for zeroemissions trains. Corporate and financial sector momentum for decarbonisation is building globally.

The hype of hydrogen continues to build, with a record number of ever-larger renewable hydrogen electrolyser projects being announced. A decade ago, most projects were smaller than 0.2MW. Over the last three years, several projects were in the range of 1-5MW, with the largest at 6MW. This year has seen a 10MW project commissioned in Japan, while a 20MW project has commenced construction in Canada. Press reports suggest China is developing projects that will dwarf these installations.

With a 20% year-on-year decline in solar module costs to just US$0.17-0.20/watt, and collapsing global interest rates, there is no sign that solar deflation will slow anytime soon. And with China announcing a record number of solar manufacturing capacity expansions, economies of scale continue to combine with technology improvements to drive this trend.

Please view full report PDF for references and sources.

Tim Buckley

Tim Buckley, Director, Climate Energy Finance (CEF) has 30 years of financial market experience covering the Australian, Asian and global equity markets from both a buy and sell side perspective.

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