As more countries shift to renewable procurement through auctions and shift from reliance on subsidies, renewables will continue to transition from being a marginal supplement to a central focus of national energy policies, said Moody’s Investor Service, a global credit rating agency.

Moody's has published two new reports, in advance of Climate Week NYC, on global renewable energy generation, focusing on cost declines driven primarily by low capital costs and improved operating efficiencies.

Falling costs of renewable energy also reduce risks for top carbon-emitting nations as they move toward compliance with the Paris Agreement. Along with declining capital costs, wind and solar power have benefitted from higher efficiencies, making both technologies more competitive with fossil fuels in many parts of the world.

Wind and solar are expected to see strong growth globally over the next few years as many countries move away from subsidies to incentivize new renewables.

"Emerging markets are a key market for growth in renewables, with countries such as China and India leading the charge as new renewables become competitive with other sources of power even in developing nations," said Swami Venkataraman, a senior vice president at Moody's and the lead author of one of the reports.

Moody's views a lower reliance on subsidies as positive for renewable energy generators, as over time it alleviates the cost on end consumers and relieves the political pressure on governments to address affordability concerns.

Additionally, auctions enable governments to respond more quickly to market developments, help push down costs for end consumers and provide a clear signpost for the future project pipeline.

"The number of countries procuring renewables capacity by competitive auctions has been increasing, as governments seek to limit the burden on consumers and respond more rapidly to evolving industry dynamics," says Christopher Bredholt, a vice president and senior analyst at Moody's and the lead author of one of the reports.

There are greater uncertainties in US emission trends beyond 2022, when the Clean Power Plan (the US plan to meet its NDC before withdrawal from the Paris Agreement) was supposed to go into effect.

However, Moody’s expects that US greenhouse gas (GHG) emissions will continue to decline despite the US government’s stated intention to withdraw from the Paris Agreement.

This will be driven by trends in the economics of renewable energy and gas-fired power generation, as well as efforts by private and sub-national entities to step in to compensate for any lack of federal carbon regulations.

Moody’s doesn’t expect the global pathway to lower emissions, as implied by the Paris NDCs, to be materially derailed through 2030 on account of a lack of federal carbon regulation in the US. – TradeArabia News Service