The Energy Technology Revolution Will Drive Renewable Energy Prices Even Lower
A new report from RMI, formerly known as the Rocky Mountain Institute, claims that renewable energy — wind and solar — is on track for exponential growth that will lead to a disruption of the electricity sector worldwide this decade.
The report, written by Kingsmill Bond, Sam Butler-Sloss, Amory Lovins, Laurens Speelman, and Nigel Topping, says that solar, wind, and storage batteries have been following a typical path for new technology. Learning curves lead to falling prices, which lead to rapid growth in new capacity. “New solar and battery capacity, policy targets, the momentum of change, and the logic of S-curves all point to continued exponential growth in solar and wind generation for the rest of this decade at 15%–20% a year,” they write. In particular, they suggest the cost of solar power will be cut in half and the cost of wind energy by a quarter by the end of this decade..
“Despite those who say insurmountable barriers to the energy transition are everywhere, growth keeps happening. While barriers are specific and local, solutions are generic and global and will continue to overwhelm resistance to change. As a result, fast growth will lead to a tripling in solar and wind generation by 2030 while faster growth will mean a quadrupling in generation, to produce more than 14,000 terawatt hours (TWh) and overtake fossil fuel supply,” the report claims.
Renewable Energy Rules!
As prices continue to fall, renewable energy has become so attractive that it now garners more new investments than fossil fuels. 62% of global energy investments are expected to flow to clean energy technologies this year.
According to estimates from the International Energy Agency, global clean energy capacity is expected to add 107 gigawatts of electricity this year for a worldwide total of 440 gigawatts this year — the largest annual increase ever.
What we’re living in “is an energy technology revolution,” said report co-author Kingsmill Bond, an energy strategist at RMI. It’s obvious from the data, yet the point is often lost in “a consistent drumbeat of counter-narratives” about how difficult it is, and will be, to leave fossil fuels behind, he added. “U.S. fossil fuel demand peaked 15 years ago,” Bond said. “This is happening. People have just missed it.”
Renewable energy costs have fallen, and are projected to keep falling, because these technologies are riding “learning curves.” For every cumulative doubling of the deployed tech, its cost declines by a quantifiable percentage that varies by technology. Over the past 40 years, the average learning rate has been 20% for solar and 13% for wind.
The Power Of Learning & Renewable Energy
That’s the underappreciated power of learning by doing, the report says. The more solar panels and turbines people make, the more they discover how to make them better, faster and cheaper. The RMI report’s range of forecasted cost declines is based on both these long-term average learning rates and the higher rates observed in more recent years (30% for solar and 25% for wind).
Fossil fuels, by contrast, have not been able to take advantage of learning curves because they are not technologies but rather commodities extracted from the ground, said Sam Butler-Sloss, co-author of the report and an energy analyst at RMI. “The tech used to extract and refine them undergoes far fewer iterations than solar panels and wind turbine blades, which are mass produced — a characteristic of technologies with fast learning rates.”
Butler-Sloss identified some of the non-monetary aspects of renewable energy, among them greater energy security, less price volatility, lower health risks from displaced fossil fuel pollution, and avoidance of the climate disasters that come with a much warmer world. All those concerns point toward investing in a renewable energy future, he added.
Hard Work Remains
Despite the good news the authors have to share, there are many challenges ahead. “We have to work hard” to stay on this trajectory. “We need to build out grids, change permitting laws, scale up flexibility solutions, improve regulatory and market systems, and speed up deployment in the Global South,” Butler-Sloss wrote.
He added that those actions will only become easier the cheaper renewable energy gets. “There is an inexorable economic logic to this transition.” Although the transition needs to go faster, “it provides massive momentum to have the economics on our side.”
The cost of renewable energy has plummeted over the past 10 years, overcoming a key barrier to widespread deployment. Solar and battery costs have declined 80% between 2012 and 2022, while offshore wind costs are down 73% and onshore wind costs are 57% down, BNEF data shows.
“Exponential growth of clean energy is an unstoppable force that will put more spending power in the pockets of consumers. The benefit of rapid renewable deployment is greater energy security and independence, plus long-term energy price deflation because this is a manufactured technology – the more you install the cheaper it gets,” said co-author Kingsmill Bond.
“This is a clear signal to policy makers, businesses and investors to seize the opportunity of accelerating the energy transition. The call to triple renewable electricity investment and capacity by 2030 are deliverable. But only by removing barriers to faster renewable deployment, from streamlining permitting to redirecting subsidies for polluting energy.”
“Otherwise, the exponential growth we are seeing and the benefits that come with it could be derailed unnecessarily,” said Christiana Figueres, the former executive secretary of the United Nations Framework Convention on Climate Change. She was one of the principal architects of the 2015 Paris climate accords. Her latest book is entitled The Future We Choose — Surviving The Climate Crisis.
Thermal Generation Declines In Europe
The 27 member states of the European Union burned 17% less fossil fuel to make electricity between January and June 2023 than over the same period the year before, according to Ember, a clean energy policy group. The EU generated 410 TWh of electricity from burning fossil fuels during that period — the lowest level since 2015, the first year for which monthly data is available.
There is good news and some not so good news here. The decrease was driven by a fall in demand for electricity as well as some growth in clean power, the study found. “We’re glad to see fossil fuels down, but in the long-term it is not going to be sustainable to rely on the fall in demand to do this,” said Matt Ewen, a data analyst at Ember and author of the report. “We have to be replacing this energy rather than just expecting it to go away and not be used.”
The report found that fossil generation in the first half of 2023 fell more than 20% in 11 EU countries and more than 30% in five of them. Fourteen countries saw their lowest total fossil generation on record for the period. In seven countries — Austria, the Czech Republic, Denmark, Finland, Italy, Poland and Slovenia — fossil fuel burning hit its lowest levels this century.
Much of the decrease in demand is a result of higher energy prices as Europe tries to wean itself off its reliance on cheap methane gas from Russia. The continuing fall in renewable energy prices should play a critical role in convincing corporations and policy makers in the EU to look to renewables rather than fossil fuels when and if demand for electricity rises again in Europe.
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The Takeaway
RMI talks about how the lessons learned from the growth of renewable energy technologies will further lower the cost of renewables, but there is another lesson here as well. Cost trumps policy, disinformation, the need to save the world, and concerns about human health from breathing the crud that spews out of the smokestacks at coal- and gas-powered thermal generating stations.
If solar power is booming today, imagine what it will be a few years from now when it costs half of what it does today. We can talk till we are blue in the face about why humans need to stop burning fossil fuels, but it will change very few minds. But show people how to save on their utility bills and there will be no way to stop the renewable energy revolution. No force on Earth — not MAGA, not the American Petroleum Institute, not Faux News — can long resist the power of simple economics.
Cheaperer is betterer. That’s the bottom line.
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