Renewable energy grew tremendously in 2015 and should continue booming, supported by inexpensive technologies, a global effort to reduce CO2 emissions, and global governmental support.
The International Renewable Energy Agency (IRENA) reports renewable energy jobs reached an estimated 7.7 million in 2014, excluding large hydropower. In December 2015, the U.S. government extended the Business Energy Investment Tax Credit (ITC) for photovoltaic (PV) and solar thermal technologies to further propel the industry. And after the 2015 Paris Climate Conference, 187 countries submitted climate action targets in an attempt to reduce greenhouse gas emissions (see page 26). Though still a small portion of production and consumption, the International Energy Agency (IRENA) predicts renewable energy will represent the largest single source of electricity growth throughout the next five years.
Brent crude oil prices remain low entering 2016 and are not expected to reach their 2008 peak anytime soon, if ever, and production should continue to slow. Motions to lift the oil export ban could help with job creation by opening more domestic output, but that could in turn hurt refineries by forcing a higher domestic price. Natural gas production continues to rise in the U.S. creating job growth, though anti-fracking efforts threaten and slow this growth. For example, in 2015 the Interior Department passed legislation to impose stricter measures to protect groundwater from fracking operations on more than 750 million acres of federal and tribal lands.
Fossil fuel flux
America’s oil and natural gas industry supports approximately $1.2 trillion in U.S. gross domestic product and provides tens of millions of dollars a day to the federal government in royalties, bonuses paid at lease sales, and taxes. With the right energy policies, the oil and natural gas industry could support as many as 1 million additional American jobs in 2025 and 2.3 million by 2035, according to a 2015 study by Wood Mackenzie reported in the American Petroleum Institute’s State of American Energy Report http://goo.gl/iOwCPu.
The EIA reported that gas prices in 2015 were the lowest since 2009 with lower crude oil prices as the main cause in six of the 10 cities for which the EIA collects data. The EIA’s short term outlook, published in December, forecasts Brent crude oil prices will average $56/bbl in 2016. West Texas Intermediate (WTI) crude oil prices should cost $5/bbl less. Futures and options contracts for March 2016 delivery from the Market Prices and Uncertainty Report projects WTI prices to range from $30/bbl to $63/bbl (at the 95% confidence interval). Crude oil production is forecast to fall through the third quarter of 2016 before growth resumes in the final months of the year. U.S. oil production is expected to fall 5.7% to 8.8 million bbl/d in 2016 from 2015’s 9.3 million bbl/d. Natural gas working inventories were a record 4,009 billion cubic feet (Bcf) on Nov. 20, 2015. On Nov. 27, 2015 inventories were 16% higher than during the same week a year earlier and 7% higher than the previous five-year average (2010-2014) for that week. EIA expects the Henry Hub natural gas spot price to average $2.47/million British thermal units (MMBtu) this winter (October 2015-March 2016) compared with $3.35/MMBtu last winter. EnergyZT’s executive director Tanya Bodell further explains theories of why the oil and gas market has downturned and how it will rebound on page 20.
Asia to win at wind
Wind employment crossed the 1 million mark in 2014, with China accounting for half of these jobs according to the IRENA in 2014. The United States, Brazil, and the European Union also saw gains. Asia will continue to dominate the wind industry according to the Global Wind Energy Council (GWEC) matching Germany’s outstanding performance. The United Kingdom has the potential to stall in 2016 due to election outcomes, but the offshore segment seems to be in a much healthier place than it was at this time last year, with more realistic targets and a stronger financial base. A greater diversity of suppliers of the next generation of >5MW machines will be rolled out in the next few years, and GWEC expects Europe to continue its march towards its 2020 targets, installing about 70GW during the next five years.
The council predicts a big year for Latin America with its numbers increasingly making a difference to global totals. Continued growth in Africa and the Middle East is expected with Morocco, Ethiopia, Kenya, Tanzania, and Ghana as emerging markets to watch. Though difficult to predict due to policy changes and a looming presidential election in the U.S., GWEC expects to see about 44GW installed in North America in the next five years. Though the Australian government is no longer promoting the renewable industry, the country’s tremendous wind and solar resources suggest an eventual strong market for the Pacific region, contributing about 4GW in this region during the next five years.
Frost and Sullivan reports that the wind turbine blade material makers had revenues of $1.94 billion in 2014 and are estimated to bring in $3.78 billion in 2021 due to escalating energy demand and improving wind turbine technologies. This is boosting the consumption of high-performance and lightweight blade materials, such as fiber, resins, and core foam materials. Navigant Research predicts longer blades and new materials to continue to affect wind turbine manufacturing. These shifts are especially notable in the offshore market, according to the report “Supply Chain Assessment 2014 – Wind Energy.” Innovation in design and materials science has led to the development of high-tech blades more than 80m long. The resulting wind turbine upscaling is leading to multi-megawatt offshore turbines, each of which can provide enough electricity for more than 7,000 average European households. Canadian Wind Energy Association’s President Robert Horning agrees with this wind turbine design innovation and speaks about industry prospects in Canada and globally on page 28.
“This is a time of high creative ferment in the wind power industry,” says Jesse Broehl, senior research analyst with Navigant Research. “Long dominant blade designs and manufacturing processes are evolving, with repercussions all along the value chain from the materials (such as resins, fiberglass, and carbon fiber) to the blade suppliers and the turbine manufacturers themselves.”
Soaring solar employment
Solar PV is the largest renewable energy employer, accounting for 2.5 million jobs according to IRENA’s 2015 Renewable Energy and Jobs Annual Review. The global production of solar panels keeps increasing and further concentrating in Asia. Lower costs are accelerating growth in installations, particularly in China, which leads the solar manufacturing market, and Japan, which experienced job growth of 210,000 in 2013.
Solar Energy Industries Association officials believe solar power is more affordable, accessible, and prevalent in the U.S. than ever before. Since 2008, U.S. installations have grown seventeen-fold from 1.2GW to an estimated 20GW in 2015. Since 2010, the average cost of solar PV panels has dropped more than 60%, and the cost of a solar electric system has dropped by about 50%. Frost and Sullivan’s Industry Director of Energy & Power Harald Thaler delves deeper into the solar industry on page 16.
With the right energy policies, the oil and natural gas industry could support as many as 1 million additional American jobs in 2025 and 2.3 million by 2035 Source: American Petroleum Institute’s State of American Energy Report
Additional market growth
Navigant Research expects revenue from electricity generated at ports to exceed $334 million in 2024 with California, the European Union, and parts of Asia Pacific to represent the largest market opportunities. The report, “Energy-Efficient Port Operations” shows port operations, ocean-going ships, yard trucks, forklifts, cranes, drayage trucks, and rail cars all have significant impacts on the surrounding environment, mainly through the burning of diesel fuel. However, incentives and new shore power technologies – energy generated to power ships and other vehicles in ports – are expected to drive improvements in energy efficiency during the next decade.
“The energy-efficient port operations market is developing quickly, particularly in the area of shore power, but the use of natural gas drayage trucks has not taken off as quickly in regions outside of North America, mostly because of a lack of infrastructure and high purchase prices,” says Ryan Citron, research analyst with Navigant Research. “The growing trends of using electric rubber-tire gantry cranes (eRTGs) and electric forklifts to replace their diesel-powered counterparts, however, are expected to steadily expand throughout global port operations.”
Frost and Sullivan predicts that the energy harvesting (EH) market will be propelled by need for sustainable devices. Analysis from “Energy Harvesting Innovations Disrupting Key Applications” shows EH has tremendous market potential as a key enabling technology for low-power, maintenance-free electronic devices. In the low-power application space, EH technologies based on solar, thermal, and mechanical energies are the most promising. Since elimination of batteries is the primary benefit of EH, these technologies are an inclusive part of the trend toward greater energy efficiency. Application sectors that will benefit from EH include automotive, utility, industrial, military and aerospace, building automation, environment, and healthcare.
In the following pages, experts from Frost & Sullivan, EnergyZT, and the Canadian Wind Energy Association provide a closer look at the different entities that make up the energy industry and forecast what is to come in the years ahead. Though it is a tough market to predict with complete certainty, these institutions point to extensive research and past data to support their conclusions.
American Petroleum Institute
Energy Information Administration
Global Wind Energy Council
Frost & Sullivan
Solar Energy Industries Association
International Renewable Energy Agency
About the author: Arielle Campanalie is the associate editor of Today’s Energy Solutions and she can be reached at 216.393.0420 or firstname.lastname@example.org.