By all accounts the renewables sector has long been heavily subsidised by governments on a global scale. However, with the changing political climate in the US and Europe comes the news; incentives may be cut, or removed completely, in the near future.
So, is there life beyond tax credits? Given the decreasing costs within the renewables sector the answer is most definitely yes.
Saying farewell to tax credits
“Experts have also expressed concern about the roll-back of the 30% Investment Tax Credit (ITC), which is decreasing to 10% by 2022.”
Potential new US energy policies have received criticism because they propose removing existing regulations, effectively evaporating our current climate change policies, in order to reprioritize energy sources such as coal and nuclear.
It’s thought that the first major change will be the scrapping of the Clean Power Plan (CPP). Experts have also expressed concern about the roll-back of the 30% Investment Tax Credit (ITC), which is decreasing to 10% by 2022.
But how will these potential cutbacks affect the industry?
Leading industry figures have forecast that the renewables industry will still thrive independently of traditional subsidies and tax breaks. Robert Bellemare, Chief Financial Officer at US solar tracking system supplier, Array Technologies, has commented that he does not believe political changes will affect the trajectory of the PV market.
Similarly, Mauricio Gutierrez, Chief Executive at US energy giant NRG, believes the renewable sector to be the fastest growing area of the energy industry, commenting: “Renewables provide not just an opportunity to execute on low-cost growth, but also a way to enhance our value proposition by contributing to our stable base of earnings and providing visibility into future cash flows.”
Despite the uncertainty of the renewable energy sector, currently, many believe that the renewables industry is now agile enough to compete in the market without external assistance.
In the US, for example, the cost of energy from renewable sources is now comparable to the cost of natural gas, coal or oil, meaning that the renewable energy industry is at the stage where it can not only survive, but also thrive, without subsidies.
“The cost of solar has decreased by as much as 70% since 2009.”
Renewables is increasingly becoming a technology-driven market. As the associated technology develops, costs continue to decrease, making prices comparable with traditional power generation.
The cost of solar, for example, has dropped dramatically; a report by SolarCity at the end of 2015 identified that the cost of solar has decreased by as much as 70% since 2009.
The cost of constructing offshore wind farms is also lower than ever, and there is a trend for renewables gaining the edge in tender situations. For example, Swedish renewables provider Vattenfall recently won contracts for just €60 (£51) per megawatt-hour (MWh).
Doug Parr, chief scientist at Greenpeace, told The Telegraph: “We can expect more and more offshore wind bids to break records with falling prices in the coming years.”
The future’s bright, the future’s renewable
It’s speculated that demand for oil will peak within the next 30 years, with alternative energy types emerging to take its place. Without the crutches of government grants and tax breaks, the hope is that renewables will start to be viewed as cost-effective energy sources in their own right.
Last year alone, solar created 31,000 jobs, 2% of all the jobs created in the US. Across the broad spectrum of the renewable sector there is an equally wide-ranging selection of opportunities. Though, as knowledge and experience are key in an industry going through a significant growth phase, those with 5+ or more years’ of industry experience have a distinct advantage.
Moreover, candidates with specialist skills or additional professional qualifications are also in high demand as the technology side of renewables continues to accelerate. For example, engineers with a professional engineering (PE) license; especially those with experience as electrical engineers, are highly sought after in the US solar industry.
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