Another year has come in gone in our burgeoning industry; and what a year it has been. 2016 started off strong from the momentum of COP21 and the ITC/PTC extension. However, mid year we witnessed the fall of SunEdison which further stressed the need for greater compliance and responsible project financing. A wave of populist movements throughout Europe, most notably Brexit, stands to threaten the progress of European emissions targets. And to cap off the year, the election of climate skeptic, Donald Trump, stands to thwart the progress of U.S. climate progress as we know it.

So while 2016 was full of ups and downs, there’s plenty to look forward to in 2017. Let’s have a look at some of the renewable industry highlights of 2016, then make a few predictions for the new year:

2016 Highlights 

1) Record Low PPA prices – In 2016, we saw a surge in analysts making an apples-to-apples economic argument for renewables over conventional. For wind and solar, it has become a perfectly reasonable argument. Lower PPA prices were achieved in two ways. First, the levelized cost of energy (LCOE) was reduced through economy of scale and more efficient technology, such as single access tracking systems. The second, and perhaps more dubious, was through the global trend of reverse auctions. With many analysts contending that auctions may be too good to be true, we will have to keep an eye on how they evolve in the new year.

2) Global Offtake Rates Hit Historical Lows – Especially in Europe, where renewable penetration is high, IPP’s saw increased difficulty in selling renewable energy. While frustrating, this is arguably an indicator of a maturing industry — there is simply no more low-hanging fruit on the grid, and IPPs are needing (and starting) to evolve. Next, comes the awkward phase: updating the grid.  

3) New Sources of Renewable Financing – As renewable energy emerges from the fringes, we are seeing new players in renewable financing. Funding is coming from more conventional investment funds, corporate investors and, yes, even fossil fuels. Also, groups like Bill Gates’ Breakthrough Energy Ventures are beginning to offer longer term financing on emerging technologies that may help push renewables through the aforementioned awkward phase.     

2017 Predictions

1) Continued decreases in Renewable LCOE — most analysts agree that technological innovations will further drive down LCOE. Although renewable efficiency made major progress in 2016, there is still a long way to go. Solar and wind are still nowhere near the energy conversion efficiency of coal. It’s mind boggling to consider that, even now, they are price competitive — let’s see where we are in another year.

2) Increased EV Penetration – Electric vehicles don’t get a lot of coverage on the IGNITE blog but, in the coming year, they may become much more relevant. Tesla’s Model 3 production ramp-up, combined with other major manufacturers throwing significant resources into their own EV models, means EVs will go from novelty to normal. Our interest is especially peaked when analyzing what this will mean for utilities and the grid — current thought has proposed that, if utilities are proactive, EV penetration can help counter many of the problems posed by distributed generation.       

3) Objects in Motion Stay in Motion, despite Policy – 2016 was full of political shockers, from Brexit to Trump’s election win. These events have made many global industries, renewables included, nervous for their future. Rumors of rolling back renewable-friendly policies have been heard on both sides of the pond. However, 2016’s progress in renewable economics will make renewables more immune to policy in 2017. With renewable markets in full force, the new year will show that it is too late to shove those electrons back in the bottle.

Despite the impending challenges our global industry faces, these predictions, and more, certainly have the potential to thrive in the years to come. As a matter of fact, these predictions must become a reality if we are going to meet our larger emissions goals. 2017 can be a transformative year for our industry, but only if we become smarter, nimbler and more agile. Businesses that will thrive in 2017 will embrace the competitive advantage that digitization gives them, enabling them to take renewable and efficiency investments to the next level.