Government support for new utility-scale capacity is being replaced with competitive auctions, the surest sign that the commercial appetite for renewables – particularly solar PV and onshore wind – is growing strong.
The IEA says that by 2024 over two-thirds of utility-scale renewable additions will be competitive. Last year they predicted it would be half, so the upward trend is clear. Most of that change is driven from faster progress than expected in China. Renewables will still see continued dependence on government-set tariffs, according to Euractiv.com.
The other positive sign is that wind and solar PV contracts are getting shorter (i.e. the revenue protection provided by long term contracts is declining in importance) where electricity markets are partially or fully liberalised and competitive financing exists, such as North America and Europe.
Long-term contracts covering more than 75% of the economic lifetime of renewable projects dominate the forecast. However, government policies have begun to expose wind and solar PV to more market and price risks, as these technologies have matured and become more competitive with fossil fuel-based alternatives.