Lux Research: Renewable energy supply chain will take decades to establish, but can be cost-effective

Lux Research says that a renewable energy supply chain will take decades to establish.  However, it is likely to be cost-effective and necessary, instead of relying on domestic wind and solar energy in places like Northern Europe, Southeast Asia, Japan, and Korea.

They published their findings in a press release on Thursday.

Lux Research is a leading provider of tech-enabled research and advisory services, helping clients drive growth through technological innovation.

In the modern global economy, many countries are moving to decarbonize and adopt renewable energy. However, some are finding it difficult to do so cost-effectively because of fundamental limitations in solar and wind resources. These countries need to produce affordable solutions by developing innovative renewable energy carriers and building new zero-carbon energy supply chains.

“Places like Singapore, Japan, and the Netherlands are great examples of countries that cannot meet their energy demands solely through domestic renewable sources like wind and solar energy,” said Tim Grejtak, an analyst at Lux Research and the lead author of the report.

“In fact, countries representing $9 trillion of global GDP cannot meet their energy demands solely through domestic renewable energy production and will require the import of renewable energy from more [renewable or green energy] resource-rich countries,” he explained.

“Our analysis shows the expanded buildout of AC and DC power lines will be the most cost-effective way of importing low-cost solar energy from distant regions, though only up to roughly 1,000 km. At farther distances, other renewable energy carriers like synthetic fuels are less expensive. It’s important to note that imported energy costs can be competitive against other zero-carbon technologies, but no current energy carrier can offer costs low enough to completely replace liquid natural gas (LNG) or oil,” added Grejtak.

Lux’s analysis found that across all renewable energy carriers, low-cost solar energy can be delivered to [solar] resource-constrained regions at 50% to 80% lower cost than generating that solar energy locally under less favorable conditions. This value proposition will motivate the build-out of billions of dollars of new infrastructure in countries committed to reducing their carbon intensity.

They predicted 2030 to be the first tipping point for deploying renewable energy import infrastructure, and 2040 as the point when imported liquid hydrogen becomes cheaper than low-carbon steam methane reformation.

These predictions give companies just 10 years to develop the partnerships and pilot projects necessary to demonstrate such a transformative energy paradigm.