The price of renewable energy throughout the international economy should give heart to those who hope renewable energies and technologies might be the key to saving the world’s environment. John Dyer reports.
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Renewable energy likely generated more electricity in the United States than coal in April, the Institute for Energy Economics and Financial Analysis found in a report. Natural gas had already supplanted coal in 2016. Now solar and wind power were doing the same, though it would take several years before they routinely exceeded coal.
The milestone was important because the showed the extent to which renewable energy was growing more popular as it became more affordable in an industrialized country where climate change denial is widespread.
Other factors came into play. Coal-fired plants often close in the spring for maintenance, for example.
Transition in electric sector is ‘phenomenal’
But the findings were a momentous development in efforts to improve energy systems. “Five years ago this never would have been close to happening,” analyst Dennis Wamstead told CNN. “The transition that’s going on in the electric sector in the United States has been phenomenal.”
President Donald Trump pledged to increase American coal production. But coal consumption fell 4 per cent last year, according to the US Energy Information Administration. “America has officially entered the ‘coal cost crossover’ – where existing coal is increasingly more expensive than cleaner alternatives,” wrote Energy Innovation, a nonpartisan think tank, in another report.
The group found that 74 per cent of U.S. coal plants might be targeted for closure as renewable energy grows cheaper. Some energy utilities in the US have announced plans to provide customers with zero-carbon electricity in the next 20 years.
“The tipping point for renewable energy actually may already have been reached in Texas, where natural gas, wind and, increasingly, solar, are steadily pushing coal out of the system,” said Wamstead.
The shift in the US comes as renewable energy prices throughout the world have dropped precipitously.
Better batteries playing a key role
The cost of lithium-ion batteries decreased by 35 per cent in the first six months of 2018, according to BloombergNEF. The development of better batteries is critical to phasing out coal and natural gas-fired power plants that currently fill the gaps when the sun and wind don’t generate sufficient energy.
Independent of battery storage, the price of generating power via offshore wind dropped 24 per cent. Onshore wind decreased 10 per cent. The benchmark cost of generating solar power fell 18 per cent compared to last year.
“Looking back over this decade, there have been staggering improvements in the cost-competitiveness of these low-carbon options, thanks to technology innovation, economies of scale, stiff price competition and manufacturing experience,” said BloombergNEF Head of Energy Economics Elena Giannakopoulou in a statement.
Offshore wind was due for a precipitous drop in price as companies are deploying much larger turbines that have halved capital costs.
“The low prices promised by offshore wind tenders throughout Europe are now materializing, with several high-profile projects reaching financial close in recent months,” said Giannakopoulou. “Its cost decline in the last six months is the sharpest we have seen for any technology.”
Coal-fired plants being built in emerging economies
Ironically, countries where renewable energy is increasingly affordable and widespread are also home to the companies now building the latest generations of coal-fired plants in Bangladesh, Indonesia, South Africa and Vietnam.
“The Chinese, Japanese and Koreans have a lot of coal-fired power equipment that will not have a great deal of international value in another three to five years,” said Melissa Brown, another researcher at the Institute for Energy Economics and Financial Analysis, in an interview with the Los Angeles Times. “So they’re looking to partner with countries that can move forward quickly to put new coal-fired power capacity in place.”
Those emerging economies in Southeast Asia and Africa are seeking to pay as little as possible for energy to fuel growth. If current trends continue, renewable prices might soon be more attractive to them.
