Welcome to the third in our series of articles featuring industry insiders highlighting the trends and technologies we can expect to see in 2023.
Here we feature predictions from experts at renewable energy company BayWa r.e., covering green hydrogen, corporate energy sourcing, floating offshore wind and the solar distribution market.
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Green Hydrogen – Manfred Groh, Head of Hydrogen at BayWa r.e.
A major discussion point at COP27, green hydrogen is becoming widely accepted as the way to propel the energy transition forward.
But it is important to remember that green hydrogen is only one element of a wider transition towards net-zero and there remains considerable work to be done in 2023 if we are to boost its deployment and make it a real game-changer for a decarbonised economy and industry.
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Firstly, there’s the high cost of production. The most important ingredient for green hydrogen is green electricity, but we need so much more of it – this will be key regarding the role hydrogen will play in the future.
Cost reduction will likely happen over the next few years, with accelerated supply of affordable green electricity through further implementation of new solar and wind projects.
We can, and must, speed this up!
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Secondly, we also foresee a drop in costs regarding electrolysers.
Efforts will also benefit from greater collaboration around how green hydrogen is deployed.
Most of Europe’s energy needs are covered through imports. When it comes to hydrogen, we will need both, domestic hydrogen production and the import of hydrogen-based energy carriers, to achieve a diversified and economically viable energy supply.
More must be done to collaborate on the transportation of hydrogen across the globe. Natural gas pipelines could be used here, but this remains subject to international political relationships.
Despite green hydrogen being across many governmental agendas worldwide, we currently lack the regulatory framework and subsidies for it in Europe to meet high expectations.
For example, production in Europe has been almost stalled, with the European industry waiting two years for a clear definition on green hydrogen.
Next year is our opportunity to build expertise and the necessary frameworks to accelerate future development; it is an opportunity we can’t afford to miss in the fight against climate change.
Corporate Energy Sourcing – Andrea Grotzke, Global Director of Energy Solutions at BayWa r.e.
We have seen a continuously rising demand among corporates to source clean power solutions, especially through power purchase agreements (PPAs).
This is a consequence of factors such as ambitious climate targets and a growing urgency in sustainability commitments in the light of climate change, as well as increasing customer and investor expectations around companies’ green credentials.
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The ongoing energy crisis has also accelerated the need for corporations to find stable and reliable energy sources in an increasingly uncertain market environment.
With surging electricity prices and rising costs in the supply chains, long-term PPA contracts are a key tool to achieve a reliable and affordable electricity supply – even if PPA prices are going up as well.
Looking ahead to 2023, we foresee the demand for sourcing clean power solutions increasing further, which could be met in particular by a growing number of agreed virtual power purchase agreements (VPPAs).
For corporate customers, VPPAs provide a financial product for the long-term hedging of electricity purchase prices – plus a transfer of green certificate volumes across several locations or markets.
This structure is more flexible than physical delivery in just one market, in particular for corporations with electricity demand in a number of countries.
For these types of deals, we are experiencing a greater need for flexibility.
On the corporate side this is due to the unprecedented energy price level as well as fluctuations in very short timescales, and on the developer and PPA-seller side to counterbalance increased risks associated with the project, like higher CAPEX, and longer development timeframes.
We are seeing strong interest in PPAs across all company sizes and business sectors, and so it is currently difficult to predict whether mid-sized companies or any new sectors will come to the forefront of this trend over the coming 12 months.
We could feasibly see more mid-size companies coming to the stage, foremost in Europe and Asia, as these are typically the supply chain companies of global brands.
And as the global brands increase their pressure on the supply chain to source green energy, these companies will have to react.
Ultimately, the need is not sector specific – all industries must search for renewable energy solutions. The key question that remains is around the feasibility, especially for smaller companies. 2023 will be a critical year in green investment and we can expect Corporate Energy Sourcing and PPAs to play a leading role in this.
Floating Offshore Wind – Felipe Cornago, Commercial Director Offshore Wind at BayWa r.e.
Floating offshore wind is a game changer for the renewable energy industry and a key technology to fight climate change; first of all because of its ability to open up markets previously incompatible with bottom-fixed technologies and to exploit areas with higher wind potential.
Yet, despite accelerated development over recent years, there are still challenges to be addressed before its great potential can be realised.
On demand webinar: Unlocking the potential of floating offshore wind. Watch now
This is why industry and government efforts in 2023 should focus on a number of areas, including the establishment of clear regulatory frameworks as well as improving grid connection and grid planning – crucial first steps as projects cannot be launched without sufficient grid availability, which many regions currently lack.
A relatively young technology, few developers have experience building floating wind farms from start to finish, as a lack of global expertise threatens future growth.
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Over the next year, we foresee this gradually being resolved by tapping into pre-existing infrastructure and knowledge from the development of bottom-fixed offshore wind, and adapting existing supply chains for the needs of floating offshore.
We’re also seeing a blocker in the current inability to deploy standardised technological and commercial solutions, regarding the floating structures and platforms, for example.
Instead, multiple solutions with different designs are driving costs up — this will only be resolved by all stakeholders standardising and aligning on solutions.
If the next decade is to see the adoption of floating offshore wind and its growth into a leading market, the work that we do in 2023 will dictate just how successful this is.
Solar Distribution – Frank Jessel, Global Director of Solar Trade at BayWa r.e.
The past 12 months have brought into sharper focus the increasing desire for organisations and individuals alike to establish a self-sufficient energy supply.
The ongoing energy crisis has seen the world move away from its reliance on Russian fuel, and fossil fuels in general, highlighting that the only sustainable and economically viable option is to accelerate the speed at which the world transitions to renewable sources of energy.
Solar, now the cheapest means of generating power, is key in this transition, and we are seeing a rapid expansion in the adoption of solar photovoltaic systems.
We expect this to continue in 2023, with the endorsement of renewables within the residential and commercial PV market higher than ever, and the price of PV systems in particular falling mid-term due to technological improvements, decreasing freight prices and economies of scale.
This makes a potential transition possible, even during a recession.
We are experiencing a steep increase of the attachment rate for storage products, with more interest than ever in adding storage to solar systems.
We are also seeing PV plants being retrofitted with storage systems, including back-up. These trends are supporting the desire for independence from the grid.
Despite these overall positive perspectives, there are still issues that stand in the way of accelerated growth.
Disruptions in supply chains, especially because of ports closing due to COVID restrictions, are impacting market developments worldwide and the availability of certain components, such as semi-conductors.
Furthermore, a shortage of skilled workers to install PV systems means the pace is not where we need it to be, highlighting the need for an influx of talent into our sector.
Don’t miss the other articles in out Predictions series:
2023 predictions: renewables, hydrogen and grid connections
2023 predictions: Electric vehicle trends and challenges
