A complex range of factors is shaping how and why cities adopt renewable energy, from costs to the need for stable power supplies

As renewable energy projects are rolled out in cities around the world, we spoke to companies and organisations working in the sector to find out what’s happening and what to expect. Here’s what they said.

‘It’s cheaper than the alternatives’ – Sarah Chapman, CEO, Faro Energy

In an increasing number of cities around the world, businesses are switching to rooftop solar. The trend started in rich countries, where solar has been subsidised, but as the cost of solar has come down it has become cost-competitive in sunny cities from Rio de Janeiro to Delhi to Nairobi.

Companies with large energy demand and available roof space are making the switch not just because it’s greener but also because it’s cheaper than the alternatives. Where the grid is unreliable, it also reduces reliance on expensive diesel generators.

In countries like the US, Germany and the UK, the roll-out of solar has been fuelled by third-party ownership, which means the company doesn’t have to pay for the system upfront and instead pays monthly, as it would its normal electricity bill. This model is now starting to be adopted in some emerging markets and is making solar a viable choice for a much wider range of companies.

Faro Energy funds distributed solar projects in Latin America such as one on the roof of the new aquarium in Rio de Janeiro.

‘New opportunities for entrepreneurs’ – Amit Ronen, director, GW Solar Institute

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A US Department of Energy report (pdf) issued last year analysed the solar energy-generating potential of 128 American cities and concluded that rooftop solar could technically meet 39% of total US electricity demand.

However, while technically possible, the majority of Americans are unable to enjoy the benefits of solar ownership because, among other reasons, their rooftops are unsuitable, they are renters, or they can’t afford upfront installation costs. These factors are particularly prevalent in city environments and within lower-income communities, which make up 40% of US households but account for less than 5% of solar installations.

An emerging new business model, community solar, promises to break through those barriers by letting consumers buy or lease a portion of an off-site solar array – usually a project of tens or hundreds of kilowatts connected to the consumer’s local distribution grid – or its output with little or no money down and at prices below prevailing electricity rates.

Community solar faces a range of legal, regulatory and financial barriers, largely stemming from the attempt to fit this new model into a century-old system designed for utilities operating large centralised facilities. But a number of enterprising businesses are taking up the challenge and the prospects look good. While only 6 MW (paywall) of community solar were installed in 2013, today there are nearly 3 GW of projects in development. That means lots of new opportunities for entrepreneurs and options for urban residents to support renewable energy.

GW Solar Institute is a research facility focused on the economic, technical and public policy issues associated with the development and deployment of solar energy.

‘Commercial financing can assist’ – Justin Wimbush, associate director and head of renewables, Arup



In parts of the world where cities have a role in the purchase and selling on of electricity, they can require some or all of it to be sourced from local renewable energy generators. However, even with the recent significant reductions in the cost of technologies such as wind and PV, such arrangements may only work if adequate Power Purchase Agreements can be negotiated.

Other barriers to the development of renewable installations include matters such as the evolution of local legislation to allow the use of embedded generation – in other words, the generation of energy within the urban environment. Cities with weak or poorly maintained electricity networks are often reluctant to allow electricity to be exported from a building into the city’s electricity distribution grid, or will provide little or no financial return for such electricity, which may significantly reduce the viability of the installation.

This is particularly the case where the available renewable resource, such as sunshine, does not occur when energy is required, such as with many residential applications. Where energy storage can be made a part of the solution, this problem can be overcome.

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Where financial barriers are hindering the development of renewable energy projects, commercial financing can assist. The London Energy Efficiency Fund, for example, funds renewable energy projects as well as energy efficiency projects. Innovative funding models such as the use of pay-as-you-go mobile phone type funding is now being used by some private sector developers to install renewables in previously un-electrified parts of the world, providing the local population with lower cost electricity compared to the alternatives, namely electricity from diesel generators.

Arup is an independent firm of designers, planners, engineers, consultants and technical specialists.

‘The main challenge is system stability’ – Morten Dyrholm, group senior vice president, Vestas

The main challenge for renewable energy adoption is no longer costs but system stability. How do we ensure that people, businesses and cities have the power they need when they need it?

Obviously we need the capacity to fulfil demand, but equally importantly we need markets that can provide the necessary electricity when the wind is not blowing or the sun is not shining. This means solutions that can help variable generation to interact more fluently with the energy system, such as storing electricity, managing demand and giving stability to the grid.

A good example is Denmark, which had a wind penetration rate of more than 40% in 2015. The recipe there includes strong transmission grids and effective and transparent power markets. Combining renewables with other generation technologies that easily can be ramped up and down, and the use of specialised wind-forecasting tools are also key factors.

Vestas designs, manufactures, installs and services wind turbines around the world.

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