Renewable Energy Hits Global Tipping Point
Read the entire article at Forbes.
Beyond global accords and national policies, market forces are now making clean, renewable power a competitive lower-cost reality. “Numerous key markets have reached an inflection point where renewables will have become the cheapest form of new power generation by 2020, a dynamic we see spreading to nearly every country we cover,” says Stephen Byrd, who leads coverage of North American power and utilities and clean energy industries, and has been watching developments in this sector for the past several decades.
Thanks to years of heavy investment in new and more efficient technology and manufacturing capacities at greater scale and less cost, wind and solar power are winning over perhaps the most significant constituent in the global energy market: the large-scale utilities that generate, store and distribute power across vast energy grids to industrial, business and residential consumers. Globally, the rise of renewables is set have a dramatic effect on utilities, presenting investors and consumers with unique opportunities—as well as some potential pitfalls.
And thanks to utilities’ rising adoption of renewable sources of energy, the U.S. now appears to be on track to meet its original Paris accord carbon-reduction targets, even if the country pulls out of the pact, says Sustainability Analyst Eva Zlotnicka.
How did this happen? First, solar panel manufacturers have spent the past few years in a race to ramp up production, finding cheaper and more efficient ways to make panels in the process. The result: An oversupply of solar panels that pushed down panel prices by 30% in 2016, with another 20% decline expected this year, according to the Morgan Stanley report. With panels often accounting for up to 40% of utilities’ cost when building large-scale solar energy plants, falling prices mean more affordable solar development.
When it comes to wind production, the savings are all about physics. Manufacturers have been increasing the length of wind turbine blades over the past several years, while engineers are adding more height to wind turbine towers. Both factors have resulted in big changes to power production and efficiency, ultimately reducing the cost of wind energy, Byrd notes. For instance, in central regions of the U.S., wind is now the least expensive type of power, at about $30 per megawatt hour, compared to $40-$60/MWh for natural-gas-fired power generation, the next cheapest form of fuel.
This seismic shift toward renewable power will have significant effects on the performance and profit of the global power industry. “Utilities with deregulated power plants, which must compete to sell power, generally will experience greater upside if they are leaders in renewable energy development, and additional downside if they own large fleets of fossil and nuclear power plants in competitive markets with cheap renewable energy,” Byrd says.