Forecasting the Future of Renewables

The global electric power consumption has increased for decades and the growth seems to continue in the foreseen future. At the same time the known conventional fossil energy resources will be decreasing and, evidently, we will be short of them. On top of that we are facing serious problems of climate change due to CO2 emission. These kind of giant problems ahead of us have finally raised a genuine interest on the utilization of alternative energy sources. First we will face the shortage of oil and gas, which can be substituted for some time with energy sources like coal and beat, if environment and climatic issues are ignored. However, climatic change is a major driver in energy sector at the moment, and only renewable energy sources provide a sustainable outlook. Renewable energy sources cover only a fraction of the present energy consumption, because most of them are not competitive on the market. Only hydropower is clearly competitive. In special cases also other renewable energy sources can be competitive, for example, biomass as a source of combined heat and power. Major technology development is still needed for most of the renewable energy sources to achieve market penetration. Both on public finance and private business decision point of view it is essential to know, when these evolving electric power production technologies are competitive on the market and what is their foreseen market volume, i.e., electric energy production potential. Market penetration depends on the development of the evolving energy production technology in question and on the forthcoming cost of electric energy production using conventional primary energy sources. To forecast the market diffusion of new evolving electric energy production technologies, the dependence of the market diffusion on technology and energy market variables need to be analysed. Market diffusion can be analysed with various qualitative or quantitative methods, which all involve a considerable amount of uncertainty. If a reasonable amount of historical data of the evolution of the technology is available, quantitative methods can be applied to forecast the market penetration. Due to numerous uncertainties related to the input parameters it has turned out that a simple and straightforward method is usually as good as a more sophisticated method. At the end on long term market mechanics will rule out the development and the analyses can be based on the production cost of electrical energy. Production cost depends basically on environmental variables, such as the availability of the energy source used, and on variables related to the production technology in question, like the investment cost. Production costs of electrical energy for most renewable energy sources are mainly due to investment costs and to some extend on production and maintenance costs, but the energy