Adoption of green energy will only grow, as technology makes renewables increasingly cost competitive
Opponents of renewable energy—a broad church that can stretch from economists lamenting subsidies’ distortion of competitive markets to climate-change-science deniers, and from hydrocarbons industry incumbents to uncompromising single-issue environmental lobbies—have a problem.
Their inconvenient truth is that these technologies are well on their way to making the most compelling argument for their future expansion, that of making rational and unsubsidised economic sense.
The ongoing recovery in hydrocarbons prices, and, in Europe, by renewed EU emissions trading system carbon market buoyancy, after years of cheap emissions permits, are partial contributors to this greater economic viability. But technological improvement and lower costs within each renewables sector is the most sustainable driver for continuing and accelerating growth.
Wind power costs are clearly on a downward trajectory. In 2017, the UK awarded electricity supply contracts to offshore wind at a guaranteed price of £57.50 per megawatt-hour, almost half the price of previous deals and also significantly lower than the £92/MWh “strike price” agreed for a much more controversial zero-carbon generation project, the Hinkley C nuclear plant.
Barnaby Wharton, head of policy at trade association Renewables UK, says onshore wind could bid even lower, but the current UK government has put its expansion on hold. Offshore wind’s improving economics still mean UK installed capacity will rise to 30 gigawatts by 2030, from 8GW currently, Wharton says.
In more equatorial climes, solar is king. Proposed solar farms have been outbidding alternatives including coal in new Mexican generation capacity auctions at prices down to $17.70/MWh. The US, Saudi Arabia, India, Chile and world leader China have also seen low-priced solar winning bids. Globally, solar capacity is forecast to expand by almost 600GW to 1TW by 2023—more than all other renewable energy technologies combined—according to the recent International Energy Agency’s (IEA) Renewables 2018 report.
Read more: Petroleum Economist