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War accelerates global renewable energy transition

Russia-Ukraine war, global renewable energy transition accelerates

The start of this round of Russia-Ukraine local war will have a positive impact on the acceleration of new energy alternatives to traditional energy sources. Throughout the day today, new energy stocks showed big gains. Zhongli Group, Sunshine Power, Trina Solar, Orient Sunrise, Foster, JinkoSolar, JA Tech, Longi, Goodway, Chint Electric, Zhonghuan, and Zhonglai all closed higher. The PV 50 ETF was up 1.53%.

Natural gas prices have skyrocketed recently. This is not good news for the European region where natural gas prices have risen nearly fourfold in the past year. Natural gas is now the source of one-third of the European region’s natural gas, and geopolitics is magnifying the supply problem again. As of 4 p.m. today, the Dutch TTF benchmark natural gas futures price rose for the fourth straight session, a one-day gain of 41 percent. U.S. President Joe Biden has also said that further punitive measures will be taken against Russia. Any sanctions that restrict Russia’s access to foreign currency would upend the commodity markets for oil, natural gas and metals, crops and other commodities.

Europe has a very high local gas dependency of 90%, so at this point in time when gas prices are soaring, more industrial, power and heating users accustomed to gas will be looking for safer ways to meet their needs, and the substitution of new energy sources such as solar will be accelerated.

Wood Mackenzie has pointed out that with the surge in variable power output, Europe has four options for balancing grid operations: pumped storage facilities, natural gas-fired peaker plants. Rory McCarthy, the agency’s principal analyst, said, “For modern power systems, natural gas-fired plants can achieve full power output in less than two minutes and can be more efficient when running partial load situations, capable of supplying power for an infinite duration of generation, which is predicated on an uninterrupted supply of natural gas.”

But by 2030, battery storage systems will surpass peak natural gas-fired power plants as the least expensive option for balancing the European grid.

 Installed capacity for energy storage projects in all sectors in Europe is expected to grow from 3GW today (excluding pumped storage facilities) to 26GW by 2030 and 89GW by 2040. mccarthy notes that by 2040, Europe could have 320GWh of energy storage capacity available for balancing the power system. Most of that will come from customer-side battery storage systems. “The cost of fuel and coal-fired generation will also rise, and net-zero emissions policies will ultimately target decarbonization of all electricity market services,” McCarthy said.

Analyst Bloomberg New Energy Finance has issued a survey that notes that the growing popularity of solar power facilities in the U.S. has eaten into the operating hours of natural gas-fired power plants, requiring them to restart and shut down more frequently, thus increasing their operating costs due to fuel demand and wear and tear.

Currently, when natural gas prices are too high, investors are making more prudent decisions about the need to switch to new generation methods to avoid the problem of this high priced raw material.

Of course, the exporters of natural gas do not want to see this situation continue. They will also try to find ways to keep gas prices more than ridiculously high, otherwise exporting gas will become difficult once a situation of abandonment of use on the industrial and power side develops.

Looking at the first phase of the Russia-Ukraine conflict in 2014 (January 19, 2014 to March 20, 2014), the performance of broad asset classes saw a significant upswing in commodity prices, as much as 7.6%. While crude oil prices rose by 4.2% and gold prices rose by 6.1% (from Haitong Securities.) The continued high price of crude oil will also bring renewed attention to the use of electric vehicles and clean cars.

In terms of the future development of new energy, especially the photovoltaic industry, this year will continue to improve.

23 February, the relevant parties predicted that the scale of new photovoltaic installations in 2022 may increase to more than 75GW, about 75-90GW. The value compared to the National Energy Board data – 2021 national PV new installations of about 55GW, an increase of 36%-64%. At the same time is expected to 2022-2025, China’s annual average new PV installation will reach 83-99GW. 2021, according to the Ministry of Industry and Information Technology data, China’s PV polysilicon, wafer, cell, module production reached 505,000 tons, 227GW, 198GW, 182GW, an increase of 27.5%, 40.6%, 46.9%, 46.1%. The annual export of PV products exceeded US$28.4 billion.

According to the latest research report of CITIC Capital, the domestic PV installation in January 2022 exceeded expectations, the national new PV installation of more than 7GW, an increase of 200% year-on-year. Among them, distributed PV new installed 4.5GW, up 250% year-on-year; centralized PV new installed 2.5GW, up 150% year-on-year. Upstream silicon, wafers, downstream batteries, modules, and inverters, auxiliary materials, all parts of the industry chain is generally full of orders, the start rate is not down but up. This year, the traditional off-season may not be “light”.

At this point, we expect the people of Ukraine to protect themselves and their families, to spend this special moment peacefully, and to return or find a peaceful home as soon as possible.