Renewable Energy News Update – February 2022

Renewable energy is a major focus for national governments and big businesses alike, especially amidst an increasing emphasis on combating global climate change. This news update brought to you by Ideal Power offers a round-up of just some of the most eye-catching headlines around renewable energy and the market opportunities associated with them. 

Big developments in the renewable energy space this month include a breakthrough in fusion energy as a record-setting test turns heads, a report on tech giants heavily investing in renewables, and the impact of rising oil prices, supply chain difficulties, and inflation on the renewable energy sector.

Fusion energy breakthrough in record-setting test

A major breakthrough in efforts to develop sustained fusion energy occurred on February 9 when scientists and engineers working at the Joint European Torus (JET) in Culham, UK announced they were successful in producing 59 megajoules of fusion energy. This record-breaking feat more than doubled the previous record, which was 21.7 megajoules, set back in 1997. 

“These milestone results are testament to the UK’s role as a global leader in fusion energy research. They are evidence that the ground-breaking research and innovation being done here in the UK, and via collaboration with our partners across Europe, is making fusion power a reality,” George Freeman MP, Minister for Science, Research and Innovation, said in a statement.

The accomplishment is part of efforts by the European Consortium for Development of Fusion Energy (EUROfusion), a consortium developed with the singular mission to harness fusion energy for future usage. EUROfusion consists of 4,800 engineers, scientists, students, and advisors from the broader European community, including Switzerland, Ukraine, and the UK.

Corporate tech spending on renewables up 24% in 2021

Corporate tech giants have increased their spending on renewable energy, according to a report by BloombergNEF. Spending by corporate tech organizations like Meta, Amazon, Microsoft, and others ratcheted up their renewable energy expenses by 24%, helping to drive more widespread adoption of renewables. 

In 2021, these organizations purchased 31.1GW of renewable energy through power purchase agreements (PPAs), 65% of that expense coming from U.S.-based companies. The largest renewable energy buyer in 2021 was Amazon, which announced PPAs in nine different countries amounting to 6.2GW of energy. In second was Microsoft, purchasing PPAs worth 8.9GW, followed by Meta with deals amounting to 8GW of energy.

The increase comes as more multinational companies sign corporate sustainability pledges. In 2021, there were 67 companies who agreed to offset 100% of their electricity demand with the purchase of renewable energy as part of the RE100 target. A total of 355 companies in 25 countries have committed to the RE100 campaign, offsetting 363 terawatt-hours of energy each year, which surpasses the amount of energy consumed by nation-states like the UK.

Rising oil prices emphasize the need for renewables

The International Energy Agency (IEA) announced February 11 that oil prices had risen due to reduced global inventories of crude oil and unrealized production capacity by OPEC+ producers like Saudi Arabia and the United Arab Emirates. The increase came amidst the first time oil prices were set to decline week over week in eight weeks – despite the weekly decline, oil prices remain near $100 per barrel.

As COVID-19 related slowdowns in travel and business wane, expectations abound that demand for oil will continue to rise, underscoring the need for a shift toward renewable energy sources like wind, solar, hydro, and fusion.

There is some optimism regarding the mid-term price of oil given U.S. and Iranian negotiations over the Iran nuclear program. If the two parties can reach a deal, the U.S. and European Union (EU) may reduce or lift sanctions on the Iranian oil industry, allowing the oil producer to supplement global inventory and drive down prices even as demand rises.

Supply chain challenges and inflation hinder renewable energy growth

The renewable energy space may be rapidly growing but it isn’t without its challenges. Like all industries, renewables have been hit hard by supply chain issues and inflation. That has led to delayed rollouts in new infrastructure and repairs, as well as higher costs in raw materials. The result has been falling share prices for some of the leading renewable energy companies, such as Siemens Gamesa, Vestas, and First Solar.

Although rising oil prices underscore the importance of a transition to solar, they have economically bolstered oil and gas competitors of the renewable industry. As leading renewable share prices have fallen, oil and gas companies like Exxon, Shell, BP, and others have surged – even in a down market.

The long-term outlook of the renewables market remains bright, however. Analysis performed by Allied Market Research estimates that the space will grow in market value from $881.7 billion in 2020 to $1.997 trillion by 2030, an 8.4% compound annual growth rate (CAGR). Deloitte anticipates the major driving factors of this growth include increased innovation in technology, improved infrastructure development, declining costs in renewable energy technology.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.