CMS Renewables Guide: A Sector in Transition

CMS’s Energy group recently published a major new guide on the renewables sector. The comparative study compares and contrasts the current state of renewables projects in 25 jurisdictions spread across Asia, Europe, the Middle East and Latin America. It also outlines the expectations for the future of the sector in each of those jurisdictions.

The guide is timely as the renewables industry is in a period of major transition. It provides a snapshot to industry, government and investors in each country and also draws out some of the themes such as changes in support systems, the technologies that are likely to dominate in the short term, the landscape for emerging technologies and the different approaches to achieving stable long-term revenue streams to mitigate the development risks.

The guide includes contributions from some of the most active lawyers in the sector. What it shows is that the renewables industry is in a period of major transition. The industry has long looked to governments to help structure power sectors to give renewables preferential access to the system, to provide a strategic vision toward decarbonisation and to provide direct economic benefits to subsidise renewables.

The industry is now in the middle of a shift to a new mentality. In the future, the industry will be expected to develop fully merchant plants. The transition is at different stages in different countries and for different technologies. Over the short term, the industry is likely to require governments to continue to smooth the path, particularly in ensuring avenues exist to stabilise long term revenue streams to mitigate the risks. This is particularly important for renewables given the proportionately higher upfront costs of developing projects.


Excerpt from the report

The memory of the retroactive rule changes and wobbling of political support for renewables after the financial crisis a decade ago will mean that the industry will keep an eye on governmental ambitions in the sector. However, the economics and rationale for onshore wind and solar, and possibly offshore wind in the near term, have shifted significantly and so these segments of the industry will look to the future with greater optimism. And with the price falls for commercial scale batteries co-locating with renewables projects, the criticisms of renewables as unreliably intermittent are also fading fast.

Of course, solar PV and wind are not the only renewables technologies that exist. The scale of wider shifts in energy usage could see a sky-rocketing of demand for power, particularly green power. For example, the electrification of the transport sector through electric vehicles and charge points could be a further boost for new renewables developments. However, the extent of political will in the different jurisdictions to catalyse less mature renewables technologies remains an open question at this time.

On 12 December 2015, the language of the Paris Agreement was adopted by consensus, requiring its signatories to hold global average temperatures to well below 2°C above pre-industrial levels. The message of the Paris Agreement was clear: it is the shared responsibility of the global community to mitigate the impact of climate change, and those with the broadest shoulders should take on the largest burden. The development of renewable sources of energy remains crucial to achieving that goal, and the potential transformative impact of technology was recorded in Article 10 of the agreement.

You can download the Guide here


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