Renewable energy sources unprofitable?

, News

The report of the renowned Norwegian energy analysis firm Rystad Energy (which was also hired by the Government of Serbia to analyze the domestic power sector), showed a low return on investment in renewable energy sources, on a global level.

The report also revealed that capital investments in renewable energy sources reached 494 billion USD in 2022, compared to 446 billion USD in oil and gas in the same period, according to the latest Bulletin of the Energy Agency of the Republic of Serbia (AERS).

A statement from Rystad Energy stated that until now, returns on renewable energy projects (such as solar PV and wind) have been low and have primarily relied on subsidies to bring projects over the breakeven line.

The analysis showed that current spot prices in Germany, France, Italy and Britain provide a return on investment in 12 months or less.

$3.8 trillion for a 1% shift

The bulletin quotes the British portal oilprice.com, the largest energy news analysis site in the world, which reminds us that the last person to make it known that renewable energy sources are a “misconception” was Jeffrey Currie from Goldman Sachs. 

He recently told CNBC that about $3.8 trillion has been invested in renewables over the past decade, and this massive investment has only moved fossil fuels’ share of the global energy mix from 82% to 81%.

He also pointed out that investments are being made in RES capacities, but that the capacity utilization factor is quite low.

Oilprice therefore calls the power of RES the “third fallacy” of the International Energy Agency (IEA), which, as reported by AERS, states in the World Energy Outlook 2022 that the global energy crisis could accelerate the abandonment of fossil fuels and that the demand for them, above all for gas , reach its maximum in the next decade. In the same document, the IEA predicts that “Russian exports of fossil fuels will never return – in any of the scenarios – to the level of 2021”.

– Within 10 years, Russia’s share in international oil and gas trade should be halved – the Paris-based Agency believes.

However, according to Oilprices, this latest World Energy Review could go down in history as the latest addition to the IEA’s wishes, rather than as a reflection of any remotely plausible reality.

“Normal” means 40% of gas from Russia

Referring to the position of “almost all important analysts”, who said that the demand for coal will never grow again on a global level, and that gas will be a bridge fuel to renewable energy, and that now coal demand has increased due to gas shortages in Europe, oilprice.com writes:

– Politicians, along with the IEA, seem to believe that this short-term increase in demand will stop the moment gas markets return to normal. The problem with this view is that the gas markets will not return to normal for a week or even a month. In fact, it is unlikely that gas markets in Europe will ever return to normal, because normal means getting 40% of the EU’s gas from Russia.

Oilprice, which calls the view of an imminent end to coal demand growth the IEA’s “first fallacy,” notes that, “as new liquefied natural gas (LNG) shipments from the U.S. are slow to replace lost Russian pipeline flows, we could see a strong demand for coal for a few more years. And then China and India will continue to use coal, because it will remain cheaper than gas, especially LNG, whose price has been skyrocketed by European buyers.”

Electric vehicles as ‘another fallacy’

As for oil demand, the IEA seems to believe that electric vehicles will kill it starting in the mid-2030s. However, this would require the production, sale and use of many millions of electric vehicles, which is far from certain due to certain shortages of copper and minerals, according to Oilprice.

– According to the IEA, the transition (to RES) is a matter of energy security, and the war in Ukraine has emphasized this and will probably act as a catalyst for a faster transition. Indeed, the more locally produced energy a country has, the safer it is. The problem is that the forms of renewable energy chosen to initiate the transition are not very good at ensuring energy security – the portal concludes, eKapija writes.