Great Expectations: The Renewable Energy Landscape of 2024
What’s coming up in 2024? OWC’s CEO, Will Cleverly, shares some predictions on the trends, challenges and milestones in store for the year ahead.
A very warm welcome to 2024 from me and all at OWC. The weather is still crisp in the UK, but the renewables market seems hotter than 2023 already (and Liverpool FC are 5 points clear at the top of the premier league), so I’m in a buoyant mood!
Though 2023 had ups and downs, especially in our core market of offshore wind, it’s still looking like a massive ~440 GW of renewables were installed. That is more than the entire capacity of Germany and Spain combined!
Offshore wind, while it was a tumultuous year – my colleague John MacAskill covered this recently – still achieved a record 12.3 GW projects to financial close in 2022!
But enough of looking back, what can 2024 have in store for us? I am going to focus on a few segments and trends.
The Power of Solar
Solar led that huge 2023 leap in new generation capacity with the US, China and Europe each setting installation records. There are some making predictions that the annual installations of solar will slow down in 2024 as the industry matures. Whilst that reflects a common growth S-curve, I am going to predict that 2024 will outstrip 2023. While we saw inflationary pressures hit solar components early in 2023, a significant reduction in PV module prices was observed towards the end of 2023 which appears to be continuing into 2024. Consequently, the demand side, as shown at COP28 with its call for tripling of capacity by 2030, combined with the relatively low LCOE, will continue to make solar the technology of choice for most markets. This ongoing demand trend combined with increased co-location of storage, easing grid management, and decentralised solar power, will see this segment achieve new heights this year.
Prediction – top of the league
For more on our Solar PV services, reach out to Director of Onshore Renewables Richard Abrams for a meeting, or catch him at InterSolar North America from 17-19 January.
Offshore Wind Breaks Records
While we hit a bump in the road in offshore wind, we will continue to see huge GWs of new potential capacity added to our global pipelines. Obviously, this prediction does not need me to shine my crystal ball too much. So let us look at a few markets in detail.
US lease auctions
Following lacklustre participation in the Gulf of Mexico lease auction in August 2023, BOEM intends to hold a second lease auction in the Gulf of Mexico (GOMW-2) in 2024, this time for up to 9 GW worth of installed capacity. Lease auctions are also planned for the Central Atlantic (mid-2024) and Oregon (late-2024). We anticipate the participation in the Central Atlantic to be healthier than we saw for the Gulf of Mexico – bidders will again be competing for fixed-bottom sites adjacent to states with offshore wind offtake solicitations, which should drive up both participation and valuation of the sites. The Oregon lease auction, meanwhile, will be a strong indicator of the industry’s appetite for future floating wind developments in the US, and foreshadow what may be expected in Maine later this year or next.
Colombia’s first seabed lease auction
In Q1 2024, bidders will begin to submit documentation to qualify for the first seabed lease competition in Colombia. Qualified bidders will be allowed to choose one site within a pre-identified development area, as well as nominate an additional site. Partnerships and experience will be key in qualifying for the lease competition – OWC anticipates participation from a handful of independent power producers, some major foreign utilities, and the national energy company Ecopetrol.
Prediction – back challenging for glory
For more on our Offshore Wind services in the US and LatAm, reach out to our Americas Director, Jeff Fodiak, or catch up with our Director of Growth Hannah Abend, who will be speaking at Floating Wind Solutions in Houston on 6 February.
The Hydrogen Question
Hydrogen, or rather green hydrogen, has been on the energy transition cusp for the last few years.
There is an obvious requirement for green hydrogen, especially to decarbonise parts of the energy systems that are harder to electrify and to supply the existing demand in the fertiliser and chemical industries. A wave of projects are being developed in the US and globally, but to me there tend to be several challenges including understanding the complex economics, the risks involved throughout the development and operation of these projects, and the practical measures to mitigate these risks.
There has been some progress, especially on larger projects: Hy24, one of the parties behind Sweden’s H2 Green Steel hydrogen project, was one of the first in Europe to reach FID with agreed loans now in the administrative phase, and of course, the huge Air Products NEOM project, which we are delighted to be involved in, also achieved financial close. However, others have been delayed, such as the UK’s Gigastack project.
There have been financial commitments from the governments of the US, Canada, Australia, Japan, South Korea and some European countries to support the development of green hydrogen projects and technologies. Particularly, the December leak of new criteria that, to qualify for the full tax credit in the US, electrolysers would have to run during the same hours that the wind or solar farms were operating, and that clean electricity is to be from newly built sources, will push further waves of renewable and power-to-X projects. However such criteria are challenging to existing renewable projects, those wishing to convert partly their energy into hydrogen at times.
Combining these, I can see 2024 will favour the brave. It may well be the breakthrough year for hydrogen developers who understand the risks and invest accordingly.
Prediction – dark horse, battling away
OWC’s Head of Hydrogen, Nguyen Dinh, will be happy to discuss how we can support your upcoming project. Reach out today to start a conversation.
Conclusions
I could go on, but why make more rods for my back come the end of the year! What I do know is that 2024 will be another record-breaking year in many ways for our renewables industry. The challenges will be met and worked out as we remorselessly move towards decarbonising our power systems.
It was Abraham Lincoln who said “the most reliable way to predict the future is to create it”. I think he is right, and at OWC we work every day to help our clients create a clean, emission-free, renewable energy future.
Will Liverpool still be top at the end of the season? Doubtful I’m afraid. But renewables will be.
Get in touch with the OWC team today to hear more about how our experts can assist with your 2024 projects: