The world's demand for energy has been increasing steadily for over 200 years and it has increased by around 60% since 1970 -- with no signs of any slowing down (figure 2). Steady development of the Third World, the rise in population growth and growth in economic activity are all contributing to push demand up. What is more, an increasing proportion of the world's energy demand needs to be met in the form of electricity.
According to forecasts, annual growth in world electricity demand in the decade starting in 2000 is expected to equal current yearly consumption in Germany. With its environmental and cost advantages, wind is well placed to play an important role in meeting this expansion.
That there will be growth in electricity demand seems to be a foregone conclusion. What is also inevitable is that conventional fuels will eventually rise in price. Although supplies are currently plentiful, the rate of consumption is around 200,000 times greater than the rate at which they are being laid down. Prices will rise as resources become more difficult to extract. With alternative energy supplies such as wind now available at competitive prices, the market share of conventional fuels will decline. This trend is already evident -- as revealed in data produced by Shell in studies covering the period up to 2060 and discussed with experts around the world. Coal's contribution to energy market share peaked around 1920 and the corresponding peak for oil and gas was around 1980 (Figure 1).
Although the decline of coal, oil and gas has been matched by a rise in nuclear electricity production, there are doubts as to whether nuclear's market share can be sustained. Data from the Energy Information Administration (EIA) in the United States shows that it, too, may already have peaked (Figure 3). In Britain, further hard evidence of this trend has just been provided by the nuclear industry itself. It has scrapped plans for 3000 MW of nuclear plant. The soon-to-be-privatised British Energy admits that the proposed stations at Sizewell and Hinkely Point would simply not be economic. Given the long lead times for nuclear construction the short and medium term projections of the EIA should be reasonably accurate, but advances in technology could bring about another phase of nuclear construction early in the next century. The Shell study indicates a slightly more optimistic future for nuclear with it peaking around 2040 and a market share of 13% in a sustained growth scenario.
Energy EfficiencyThe key issue, however, is not the precise share which each energy source will take, but how the massive increases in demand are to be met. As well as increasing the amount of power generated, other solutions advocated are energy saving and energy efficiency. The significance of their impact will eventually be a major determining factor on the amount of new capacity required and thus on the size of the market for wind turbines.
It is often argued that more efficiency -- in energy production and use (energy saving) -- can defer the need for new sources. What this argument overlooks is that the efficiency of energy usage, transmission and production has been steadily increasing over the last 100 years or more. Although the pace of change can be "forced," to a small degree, by subsidies (encouraging efficient processes) or taxes (penalising inefficient ones), it is very unlikely that such measures will eliminate growth in demand. The Shell study paid particular attention to developments in efficient energy use, examining present and future trends in industrial processes, most of which have steadily become more energy efficient over the years. Domestic electricity needs, too, can be cut by 75% through the use of better appliances and building insulation. On the production side, the efficiency of electricity generation from thermal plant has been rising steadily although it will eventually meet a plateau, set by considerations of thermodynamic efficiency (Figure 4).
The net result of these trends is that the economic output per unit of energy input -- often referred to as energy intensity -- has been steadily increasing. Electricity demand growth in the United States has now been reduced from 2.3% to 1.4%. A new German report also predicts a slowing down in the growth of electricity demand to 0.7% annually in Germany between 1992-2020, while demand for primary energy will stagnate at 1995 levels.
This trend has been seized upon by the German utilities who are making much of it in public relations campaigns aimed at encouraging consumers to use electricity efficiently. "Save Energy -- Use Electricity" is the (somewhat schizophrenic) slogan for encouraging purchase of domestic devices for efficient control of lighting and heating. A second riddle currently being inflicted on Germans by their utilities champions the use of ever more electrical devices, which individually use ever less electricity because of their increasing efficiency. But whether the modest savings from more use of energy efficient devices can outweigh purchases of new consumer products, such as colour televisions, freezers, dishwashers and bottled water, remains to be seen. Devious and imaginative as the utility slogans are there is no escaping the fact they encourage more and not less use of electricity. None of the reputable authorities whose scenarios have been examined foresee the growth in demand being eliminated; the steepness of the growth curve may be attenuated -- particularly in the developed world -- but not flattened.
Against this backdrop of steadily increasing demand Shell, the World Energy Council (WEC), the International Energy Agency (IEA) and the US Energy Information Administration (EIA) all predict that the market share of renewables will grow (Figure 5). It is generally assumed by all these authorities that renewables will be standing fair and square on their own two feet without subsidies, albeit with the external costs of conventional sources possibly acknowledged in some way.
The strong position of the renewables is because their production costs are not only falling steadily (Figure 6), but also faster than production costs from the conventional sources. Eventually a cross-over point will be reached, the precise point varying between the technologies and dependent on regional factors. Although there is competition between the renewables, the precise mix of the renewable sources will depend on their geographical availability and on local market conditions.
The Role of the Renewables
Most of the projections predict a bright future for wind, biomass, solar and geothermal. Each of these has its specific region: most islands and coastal zones have good wind resources; geothermal prospects are best in the vicinity of faults in the earth's crust; hydro prospects are best in hilly regions intersected by rivers, but sparsely populated; and solar potential clearly improves with proximity to the equator. As well as specific regions, each renewable technology also has "niche" applications which are spread more widely -- with their principal strengths, weaknesses and costs summarised in the table on page 29.
If international spending on research and development is taken as a guide, then it is photovoltaics (PV) which is set to become the renewable energy of the future. US spending in fiscal year 1994 was $74 million, compared with $30.3 million for wind. However, installation costs for PV are currently at least double those for wind and energy yield per kilowatt installed about half. Despite having maintenance costs close to zero, PV electricity generation costs -- even in favourable locations -- are currently at least four times those of wind energy.
This does not imply there are no markets for PV, but in the short term, this role will probably be confined to off-grid applications in regions where alternative electricity supplies would be too expensive. This trend is already evident in sunny parts of the world. Tens of thousands of homes benefit from electricity generated from clusters of PV cells. In Kenya, more households now get their electricity from PV modules than from the national grid.
Interestingly this was not the future foreseen for PV a decade ago when wind was seriously coming to the fore. At that time solar energy was regarded as the large scale renewable, with visions of huge banks of solar panels spread across the world's deserts, while wind was regarded more as a technology for piecemeal development and decentralised supply. Sadly for wind, government spending on renewables research and development has consistently reflected this distorted perception, with far more going to solar -- even though PV has consistently failed to live up to its expectations on cost and market penetration while wind is now cheaper than predicted and increasingly developed as large scale wind power stations. Even in a 1990 US report on the potential of renewable energy, wind consistently came out cheaper and achieved a higher market share right through to 2030 -- yet solar energy continues to dazzle the holders of government purse strings.
Fortunately for PV, its best resource (close to the equator) is found in regions where mains electricity is scarce. One estimate puts the population in these regions at 1.7 billion and the potential PV capacity at 120 GW -- although some of this potential capacity could be exploited by wind. But these are very much long term prospects, even though some US utilities are apparently using PV for grid support and seem to feel it is viable at $3/W.
The solar industry argues that PV is research-driven, more than any other renewable technology and thus will be more responsive to enhanced R&D. This is a sophisticated argument, but one which the wind industry has perhaps shown to be flawed. When support programmes were directed at stimulation of a market for wind energy in countries such as the United States, Germany and Britain, technology development accelerated far more rapidly than under R&D programmes. It also seems likely that a cost benefit analysis would show that R&D spending in the wind sector has been far more effective, possible than in any of the other renewable technologies.
If PV is to emerge as a "mainstream" source of electricity there have to be major changes in its economics. Expectations hinge partly on significant reductions of cost and partly on equally impressive increases in efficiency. So far there has been steady progress in each area (figures 4 and 6) and a comparison with thermal plant efficiencies indicates that the expectations may not be unrealistic. Shell's analysis implicitly reflects this change of fortunes for PV -- it shows the market penetration of wind building up more rapidly in the short term, only being overhauled by PV around the year 2040 (figure 5).
wind on the ladder
Meanwhile in the short term -- and possibly even into the long term if PV continues to fall short of its promise -- wind is substituting for thermal generation as well as supplying "niche" markets such as water pumping. Now one of the more mature and cheapest renewables, cost reductions in wind energy will continue to be steady, but only modest performance improvements are foreseen. Recent market analyses indicate that capacity could reach about 15 GW by 2000, putting wind ahead of geothermal and second only to hydro amongst the renewables.
All this can be achieved even before going offshore. In view of the huge potential in offshore wind energy sources -- and not forgetting the technology is now proved onshore -- the continued treatment of wind as a poor cousin of PV when it comes to allocating R&D spending seems more than a little misguided at least. With wind a far better bet for at least the foreseeable future it should be receiving at least as much as PV, given the more modest expectations for the latter.
Wind's other main competitor is so called new biomass, or the gasification of energy crops either to produce heat or, if the gas is fed into a turbine, to produce electricity. Although not yet commercially established, the future of this energy form seems assured, with most authorities predicting the development of appropriate technology before the turn of the century. Once it has penetrated the market, new biomass will be strongly placed to contribute towards world energy needs in regions where land can be used for energy crops and the logistic problems of bringing the crops to the gasification plant can be surmounted. This implies, perhaps, that exploitation may be through many small-scale plants rather than large biomass power stations. Clearly regional factors, again, have a part to play, but wind once again shines in comparison as the renewable for large scale power supply.
What must not be forgotten is that in a time frame extending up to 2060 "surprise" technologies may emerge. This category could include nuclear fusion although there are other possibilities, many currently appearing far-fetched. Advances in drilling techniques, for example, could improve the position of geothermal energy in regions where the resource is currently reckoned to be poor simply because high temperatures are not encountered before six to seven kilometres below the surface.
By definition, other technologies in this category cannot be specified and Shell compares their possible emergence to the discovery of radioactivity.
Renewables have drawbacks, too, though many of the alleged disadvantages turn out to be perceived rather than real. The intermittent nature of wind, solar and, to a lesser extent, tidal, only needs to be considered when these sources provide a substantial fraction of the electricity needs of a power system (Windpower Monthly, September 1993 -- survey on integration) Even then, high fractions can be supported in conjunction with storage and other power sources. Biomass and wind, for example may be linked. It is sometimes difficult to organise continuous supplies of energy crops, but bioenergy plant, using stored fuel, can be operated when winds are light. Other storage technologies, especially the long-awaited "hydrogen economy" based on hydrogen fuel cells, could also emerge to aid the assimilation of the intermittent renewables.
Land usage is another contentious issue, but the actual land needs of wind power plant are about the same as gas-fired power stations, certainly less than coal, and much less than solar, hydro or biomass. Admittedly wind turbines must be spread over an area greater than is actually taken out of use and must be sensitively sited, but other uses of the land are not precluded, as in the case of biomass and solar; indeed wind can co-exist with both of these. In the longer term offshore wind presents no problems at all in this respect
Political or pragmatic?
Although a trend towards the renewables has been identified by the IEA, the EIA, WEC and Shell, amongst others, this does not mean it is inevitable. The Shell study, in particular, attracted a cynical response in some quarters, with claims that it was simply an exercise to stave off the imposition of "external costs" on the conventional sources of fuel by suggesting that renewables were doing so well they needed no help. If this were the case, though, there would seem little point sending the author of the study around the world to gather feedback. It must be remembered that a company of Shell's size manoeuvres with all the dexterity of one of its own supertankers -- it takes a long time to change direction and needs plenty of advance warning to do so.
Shell happily accepts that the pace of renewable development may differ from its scenarios. The key issues will be: whether the downward trend in renewable energy prices can be sustained, especially if the support they currently enjoy is withdrawn; the length of time it takes for the prices of conventional fuels to start their upward spiral; and whether nuclear will make a comeback. The underlying message its clear, though. Optimism for renewables is no longer confined to those engaged in their development. The long term future has never seemed brighter.