Renewable Energy Sources

The gas engine had long been the bread and butter for major car manufacturers who, in order to stay relevant and competitive, could not afford to ignore the advent of electric vehicles. The same holds true in the energy business, where the growth of renewable energy sources has made traditional business owners and investors in Oil & Gas take notice.

And for good reason.

According to the U.S. Energy Information Administration, wind, solar and battery storage technologies will comprise 82% of the new, utility-scale generating capacity that developers plan to bring online in the United States this year.

That forecast is part of an ongoing trend as momentum builds for investing in low-carbon technologies driven by government policy initiatives. The winds are clearly blowing in the direction of Renewables.  

"In the long run, the world is still headed towards net zero and so is Big Oil. By the next decade, energy security will be much more aligned with sustainability goals, shifting away from fossil fuels to domestically produced low-carbon energy and the supporting supply chains," write industry analysts at the research firm Wood Mackenzie.

Sounds like now is a good time to get reacquainted with Renewables.

There are five leading sources of renewable energy right now: solar, wind, geothermal, biomass, and hydropower.  There are also ways to generate energy from tidal waves in the ocean as well as from producing hydrogen, but the impact and role of these renewable sources has yet to be seen and more research is needed to make them cost effective. 

The term "renewable" refers to any energy source that renews itself naturally. Biomass (plant matter) has long been used for generating heat (burning wood) and still is in some parts of the world, though fossil fuels began to replace biomass in the early 1900s. Renewables started to become part of the energy landscape in the mid-1980s and have played an ever-important role in generating electricity since.

Much of the growth in Renewables has largely been in solar and wind.

Even as supply chain constraints slowed the market, solar energy accounted for 50% of all new electric-generating capacity additions in 2022, according to the U.S. Solar Market Insight 2022 Year in Review report released by the Solar Energy Industries Association (SEIA). Today, solar accounts for nearly 5% of U.S. electricity generation.

Wood Mackenzie (WM) says the future looks even brighter for the wind energy market, which has doubled in size over the past ten years. WM forecasts an average growth rate of 6.4% and 139 gigawatts (GW) of installations each year from 2023-2031.

Every Renewable has its strengths as well as limitations. Here's a quick overview:

Solar

As an energy source, sunlight is free and generally available, although converting sunshine into electricity takes a little magic involving solar cell or "photovoltaic" (PV) devices. Large solar farms or PV power plants are created by grouping solar cells into PV panels which are then connected in arrays. Unlike fossil fuels, there's nothing to mine or burn. As an energy source, solar is favored because these systems do not emit carbon dioxide and therefore generate minimal greenhouse gases. The drawback, though, is that on cloudy days you won't be generating a robust amount of electricity. So, even though the cost of solar installations has been declining, it is still difficult to quickly recoup that cost. 

Wind

Like solar, the amount of energy a wind turbine can generate depends heavily on Mother Nature. But unlike solar, if it's a cloudy day you'll be still generating power.

Wind turbines, which can be found onshore as well as offshore, produce electricity as wind flows over the turbine blades, causing them to turn. The spinning blades are connected to a drive shaft in the "nacelle," or head, of the turbine that turns an electric generator, which produces electricity. 

Wind is among the cleanest ways to generate electricity. While wind turbines can be quite tall, they have a relatively small footprint and are often located in open areas like farms or offshore in lakes or oceans.

Claims that their rotating blades are noisy and known to kill birds and bats has made wind turbine placement a "Not In My Backyard" issue for some communities. Though rare, some have leaked fluids and caught fire. 

Geothermal

While solar and wind are both above-ground sources of renewable energy, you'll have to dig a bit deeper to harness the heat that's constantly being generated inside the Earth. Wells ranging from a few feet to several miles deep can be drilled into underground reservoirs to tap steam and very hot water, where heat pumps then extract that steam or hot water to the surface. 

There are three types of geothermal power stations: Dry steam plants, flash steam plants and binary cycle plants. Currently, there are geothermal power plants in seven U.S. states. In 2021, these plants produced approximately 16 billion kilowatt hours (kWh) of electricity equal to about 0.4% of total U.S. utility-scale electricity generation.  

Geothermal is a highly reliable source of energy available 24/7 regardless of weather. It's a low- or no-emission way to generate power, making it an extremely clean method for producing energy. Geothermal power plants are relatively compact compared to wind, solar or coal-fired plants. 

Geothermal power plants can operate at maximum capacity nearly all the time. And since the heat from the earth's interior is continuously being replenished by the decay of naturally occurring radioactive elements, there's theoretically an unlimited supply.

The disadvantage of geothermal energy is that plants can be costly to construct, and you can't just tap into the Earth anywhere, as certain areas of the world (especially those that experience frequent earthquakes) would not be suitable locations.

Biomass

While you might not live near a biomass plant, it's possible you may have seen wood pellets for sale at a hardware or building supplies store. Wood pellets are an example of biomass, one of the oldest and largest renewable sources that takes many forms from wood to animal and agricultural waste.

Here's how it works: Plants produce biomass through photosynthesis. Biomass contains stored chemical energy from the sun. Biomass can be burned directly for heat or converted to renewable liquid and gaseous fuels through various processes.

Because the source of biomass is essentially plants, and plant life consumes carbon dioxide, when compared to fossil fuels the net amount of greenhouse gas emissions is theoretically lower in the case of biomass. Generating energy from biomass, which can even include methane fumes from landfills, can reduce our country's dependence on foreign oil because biofuels (like ethanol, made from corn, or biodiesel, sourced from soybeans) are the only renewable liquid transportation fuels available. In 2021, the U.S. produced about 17.5 billion gallons of biofuels.

However, unlike geothermal, sustaining biomass energy requires replacing its sources (like trees and plants) at the same rate at which they’re being harvested. 

Hydro

Hydroelectricity is produced by harnessing the gravitational force of flowing water. Water flows through a pipe, then pushes against and turns blades in a turbine to spin a generator, thus producing electricity. The volume of the water flow and the change in elevation determines the amount of available energy in moving water. In general, the greater the water flow and the higher the drop or fall, the more electricity a hydropower plant can produce. Hydropower plants emit fewer greenhouse gases compared to fossil plants, but they can also be dam expensive (pun intended).

When it comes to hydro, the good news is that a hydro plant can generate electricity as long as the water flow is constant. On the other hand, since it requires moving water to work, hydroelectric plants are restricted to rivers. This means that, like wind, power lines have to be built to transfer the electricity to populated areas. In addition, changing the water level and blocking migration paths of fish and other animals can adversely impact wildlife.

Other options

Rivers are a common source of water to fuel hydro power, but let's not forget the ocean. Tidal energy can be generated from converting energy from the force of tides into power. It's not widely used at the moment but may be a major source of renewable energy in the future.

And let's not forget hydrogen.

When renewable electricity is produced, the excess can be used to run through tanks of water. This causes a process known as hydrolysis to occur, in which water molecules are split into hydrogen and oxygen. The hydrogen can then be captured and used in a variety of applications.

Hydrogen burns clean and can be stored in fuel cells that work like batteries to create electricity. In fact, in some cities you may have noticed public buses running on hydrogen. However, since the process to produce hydrogen requires electricity, the only way it qualifies as a source of renewable energy is if the electricity also comes from renewable sources, such as solar or wind.

DealStream offers a wealth of opportunities in the Renewables space — find what fuels your next business venture here.