Variable Renewable Energy Market: Introduction
- Variable renewable energy (VRE) is a renewable energy source that is non-dispatchable, as it is of fluctuating nature. VRE sources include wind power and solar power.
- Incorporation of variable renewable energy into electricity systems has become a prominent issue as well as focus of research for most utilities, private companies, and international organizations. However, for several countries across the world, the possibility of achieving high levels of VRE penetration is presently achievable. Several of them have set ambitious renewable energy targets and have enacted policies or measures to increase the use of variable renewable energy in their overall energy generation mix.
- Variable renewable energy (VRE) largely rely on renewable fuel sources. However, in numerous aspects, VRE source is different from conventional sources, such as natural gas, coal, and nuclear power.
- Variable renewable energy (VRE) is one of the major sources of complexity in national-scale capacity expansion models (CEMs), due to its physical attributes, which differ from conventional sources of power generation, and also due to the need to more accurately represent physical attributes
- VRE technologies are usually connected to the power grid through power electronics-based inverters, which are carefully designed to supply necessary grid stability
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Key Drivers of Global Variable Renewable Energy Market
- Growing concerns about the environment and rising usage of clean energy substitutes are likely to be key factors driving the global variable renewable energy market during the forecast period
- Electricity rates are inherently volatile. They fluctuate monthly, annually, and depending on season. Over the last decade, electricity prices have risen greatly and they are poised to increase even more during the forecast period. This, in turn, is projected to augment the demand for use of variable renewable energy in the near future.
- Ambitious national targets, rapid technological advancements, and international agreements have prompted countries across the world to turn toward the renewable energy sector and expand their power infrastructure. This, in turn, is expected to augment the global variable renewable energy market between 2019 and 2027.
Restraints of Global Variable Renewable Energy Market
- Development of required transmission infrastructure is the key issue faced with variable renewable energy. Wind and solar sources are often not located near load centers or the existing transmission systems. Unlike conventional power generators, VRE plant siting is less flexible and more location constrained. Thus, new transmission infrastructure is often required in order to connect the VRE source to the load.
- On the other hand, due to their spatial and temporal diversity, variable renewable energy technologies typically require significant volumes of data to be included in capacity expansion models (CEMs). This diversity poses challenges to measuring of the VRE generation volume in capacity expansion and dispatch models.
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- The Council for Scientific and Industrial Research (CSIR) Energy Center and Eskom are developing a power system operator model for short-term variable renewable energy (VRE) forecasting, which is expected to be incorporated in the near future
- In December 2018, Orsted, a large player in the energy sector in Denmark, added a new ancillary energy storage facility to its Liverpool (the U.K.) site. It was a 2-MWh storage facility connection and was incorporated with a 90-MW Burbo Bank offshore wind farm. The additional storage capabilities would allow Orsted to offer frequency-response services.
- Germany has developed an ancillary market and modified intraday electricity sector, with an objective to incentivize companies to provide additional power in different time frames and to cope up with the issue of imbalance in power generation demand and supply
- In the U.S., independent system operators such as Caiso and Ercot are continuously trying to engage large industrial and commercial consumers to participate in the demand response program. As per the demand response program, variability is induced on the demand side to manage uncontrollable variability on the supply side, or as a response to market price and other factors.
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Asia Pacific to Hold a Major Share of Global Variable Renewable Energy Market
- Based on region, the global variable renewable energy market can be classified into North America, Asia Pacific, Europe, Latin America, and Middle East & Africa
- Asia Pacific is expected to be the key market for variable renewable energy from 2019 to 2027. High investments in renewable energy generation, especially in developing countries such as China and India, and government subsidies are likely to drive the market in the region between 2019 and 2027.
- Several auctions for winning of contracts have been made for developing the capacity for renewable power generation in India, which have helped work out the world’s minimum prices for the solar technology. Thus, India is expected to hold a prominent share of the variable renewable energy market in Asia Pacific in the near future.
- The variable renewable energy market in Middle East & Africa is estimated to expand at a significant rate during the forecast period, owing to extensive agricultural land and attempts to reduce the use of fossil fuel energy. Government initiatives for pollution-free and clean energy are also expected to drive the variable renewable energy market in the region during the forecast period.
- On the other hand, the size of the U.S. variable renewable energy market is expected to get doubled by the end of the forecast period. Renewable energy projects in the U.S. are likely to get benefitted from multi-year federal tax incentives and several, state-level, favorable policies for solar energy in the next few years.
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Key Players Operating in Global Market
Some of the major players operating in the global variable renewable energy market are:
- Honeywell International Inc.
- GENERAL ELECTRIC
- Pacific Gas and Electric Company
- EDF Renewables
- Third Equation Ltd.
- Enel Green Power
Global Variable Renewable Energy Market, by Source
Global Variable Renewable Energy Market, by End-user