Volatility in fossil fuel costs to drive renewable energy market

DALLAS, USA: Despite recent economic turbulence around the globe, electricity demand continues to grow, particularly in China, India, and other developing countries. Cumulative installed electricity capacity topped 5,000 GW worldwide in 2010. That figure is forecast to exceed 6,400 GW in 2016 with a 4 percent CAGR over the next five years.

Lucintel, a leading global management consulting and market research firm, analyzed cost competitiveness of various energy sources and presents its findings in the report, “Quarterly Competitive Analysis of Conventional and Renewable Energy Sources in US Market 2011-2012.”

Volatile fossil fuel costs, and the environmental problems associated with burning such fuels, could drive increased acceptance of alternative technologies, especially for eco-friendly technologies such as wind and solar. Although renewable energy sources face certain challenges, such as high costs and variability complications, technological innovations are expected to reduce the cost of electricity, providing renewable energy with a boost.

Lucintel’s research indicates that the levelized cost of energy (LCOE) for natural gas is the lowest while solar PV is highest. LCOE for wind energy is high because the price of wind turbines is increasing. A substantial decrease is expected in the cost of solar PV because of solar module costs declining, largely driven by decreases in the price of the polysilicon raw material and increased competition among polysilicon suppliers. It is expected that the LCOE for solar PV would be $223/MWh in Q4 2012.

Although conventional energy sources are the biggest and by far the largest source of energy today, conventional sources are making way for non-conventional energy sources because of their finite existence and their increasing footprint.

Lucintel’s research report provides trend scenarios and forecast statistics for quarterly cost for different energy sources for 2005–2012; details the industry’s drivers and challenges; production; consumption; and demand and supply scenarios of the different energy industry. The report also examines emerging trends and status of conventional and non-conventional energy sources in US.