Expert Perspective

　　

The "World Energy Blue Book: World Energy Development Report (2018)" pointed out that global energy is accelerating its transformation towards high-efficiency, clean, and diversified characteristics, and the global energy supply and demand pattern is entering a stage of profound adjustment. The development of renewable energy in various countries around the world is mainly concentrated in solar energy, wind energy and biomass energy, aimed at accelerating the energy transition process, improving energy security and reducing dependence on fossil energy.

    The report believes that the signs of active transition to green, low-carbon and other clean energy and renewable energy in countries around the world are mainly reflected in several aspects, namely, the active transformation of energy policies, the continuous decline of power generation costs, and the shift of energy investment to green and clean energy. , Further optimization of the industrial structure and energy consumption structure, and the development and application of artificial intelligence in the field of renewable energy.

    Major countries in the world have unanimously accelerated the development of low-carbon and even "decarbonized" energy systems. Developed countries in Europe and the United States have successively put forward clear energy transition plans, transition goals, and promotion measures. This is an important forerunner of profound changes in the international energy system under the background of new technological revolution, climate change, and green and low-carbon. In terms of power generation costs, IRENA (International Renewable Energy Agency) data shows that in the next two years, the cost of renewable energy power generation including biomass energy, hydropower, etc. will be almost the same as the cost of fossil fuel power generation, while the cost of power generation The decline is also an important signal that the world's energy development has entered a new era. With climate change and the signing of the Paris Agreement, the acceleration of the global energy transition has made the long-term prospects of renewable energy more certain, the investment risk reduced, and the investment scale has exceeded US$200 billion for seven consecutive years. Judging from the current international renewable energy investment situation, wind power and solar photovoltaic power generation are the two main areas of renewable energy investment.

    The report also pointed out that in terms of renewable energy investment in various regions of the world, the focus of renewable energy investment is gradually shifting eastward, and renewable energy investment in emerging economies represented by China, India, and Brazil is basically in a stable state. , Between 2006 and 2015, the average annual growth rate of investment in clean energy by emerging economies was nearly 52.4%, and global renewable energy investment has been increasing.

    Renewable energy costs will soon be lower than all other energy sources-a wave of corporate mergers and acquisitions is setting off in the energy industry. At present, we count 12 large European utility companies (about half of the index stocks in the industry) recently announced (or have been reported by the media) mergers, divestments or acquisitions that may greatly reshape each business. . The most recent acquisition comes from the offshore wind power company Orsted, which recently announced that it will acquire Lincoln Clean Energy (LincolnCleanEnergy) to expand its business to onshore wind power in the United States.

    Does this type of corporate approach make sense? We think so, because the fundamental factors of this industry are indeed changing. Until recently, wind and solar projects in most parts of the world have relied on generous subsidies-meaning that renewable energy can only grow at a rate that the government is prepared to fund. But in the past year, large-scale wind and solar projects seem to show that they can develop independently without any subsidies or tax incentives. This means that renewable energy can begin to grow at a high speed under the impetus of technological development, without having to follow the speed of the instructions of the energy ministers of various countries.

    The second factor is that governments have been tightening costs. In countries where subsidies are available, companies must now bid for subsidies through competitive auctions, and once the subsidies are exhausted, these companies may still have to bid with each other for the best project site. This auction model is advancing innovation and efficiency at a speed that is beyond everyone's expectations. In the UK, the tender has cut the cost of offshore wind energy by more than half in just three years. In Germany, it reduced the price of renewable energy by about half compared to 2015.

    All these cost pressures have another important effect: to promote renewable energy companies to a new global scale competition. First of all, the scale of wind and solar farms is getting bigger and bigger. Some solar projects now have more than 1 million single solar panels, and offshore wind turbines can be taller than skyscrapers, with blades approaching 100 meters in length. Second, as these companies manage to put more purchasing power into the supply chain and obtain more synergies, data, and operational expertise from the portfolio of renewable energy projects, their own scale is becoming larger and larger. In the global auction model, the winner has to put all these potential advantages on the table.

    This is why the structure of this industry needs to be changed. Historically, utility companies have always been regional competitors, usually confined to a national market. In the domestic market, familiarity with the local political and regulatory environment is the key. They are not always successful: British utility companies (which face the risk of lower electricity prices and nationalization) are a case in point. However, the map of Europe still shows a platter of national-level competitors.

    In the future, this map may become very different, and may be more similar to the oil and gas industry, with a few larger companies competing for global market share. In this way, we may see a new type of enterprise-can be called "wind and solar giant"-their portfolio of renewable energy projects all over the world, the scale may be 10 to 20 times the current size.