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New energy goes mainstream as majors muscle in

7 April 2017
Renewables
energynomics

With wind and solar generators becoming more mainstream sources of energy, governments around the world are weaning the industry off subsidies and creating new openings for older utilities built on coal and nuclear power to land their own renewable-fuel projects.

Across Europe, Latin America and India, major electricity suppliers including Enel SpA, Vattenfall AB and Engie SA are proposing to build wind and solar farms, offering low-cost construction bids to win energy-supply contracts. While that can mean cheaper power for consumers, it’s eroding profit margins and increasing competition for small, independent generators who have dominated what was once considered a fringe industry, according to Bloomberg.

“What you see is that this industry is getting more mature,” said Gunnar Groebler, head of wind energy at Vattenfall, a Swedish utility that has installed more than 1,000 wind turbines in five countries. “It’s a maturity question rather than increasing risk. We’re better prepared to handle risk and also more mature in terms of project management.”

Unwittingly or not, governments and regulators are encouraging the trend through a change in the way they support renewables. Instead extending traditional subsidies and above-market prices for clean electricity, they’re auctioning off contracts to buy power from renewables. In more than 45 countries where those auctions are in place, costs typically fall as much as 50 percent for solar and 60 percent for wind within two years, according to analysis by Bloomberg New Energy Finance.

Specific figures on returns from clean energy projects vary widely and are a closely-guarded secret by the companies that win them. Even so, there is anecdotal evidence showing the big developers are triumphing over smaller ones most everywhere they compete.

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