A game changer in the climate change battle
Renewable energy prices have fallen far more quickly than the industry anticipated, says a new report. And they are fast becoming cheaper than fossil fuels. A rapid transition to emissions-free ‘green’ energy could save many trillions of dollars in energy costs – and help combat climate change. According to a new report, the global energy sector has an impressive track record of scaling up renewables like wind and solar, but it isn’t so good at forecasting future price changes of the clean energy these renewables produce.
Early pricing prediction models, according to researchers at the University of Oxford’s Institute of New Economic Thinking, have consistently underestimated both the cost of renewable energy sources and the benefits of a faster transition to clean energy. A good example of renewable energy is solar power. The World Energy Outlook reports of the International Energy Agency (IEA) consistently underestimate the real-world fall in solar energy prices.
For example, annual solar energy prices were predicted to reduce 2.6 percent on average in the decade after 2010, with all estimates anticipating a price reduction of less than 6%. However, throughout this time, solar prices plummeted 15% – more than five times the expected yearly rate – which might have major repercussions for investment and policy decisions based on these inaccurate forecasts.
Forecasting a renewable future
The study used historical and current data from industry organizations such as the International Renewable Energy Agency (IRENA) and the International Energy Agency (IEA), as well as current technological developments in renewables, to forecast future price trends for more than 50 clean energy technologies. The findings reveal that, compared to staying with today’s carbon-intensive, fossil-fuel-based systems, a quick transition to emissions-free “green” energy might result in massive net savings. That’s without taking into account the consequences of climate change or the good side effects of climate policy.
According to Matthew Ives, a senior researcher at the Oxford Martin Post-Carbon Transition Programme, technological innovation has continued to assist drive down the cost of some renewables, a point that earlier price prediction models underestimated. He told Ars Technica, “They’ve been getting these projections incorrect for quite some time.” “As you can see, we’ve regularly outperformed those expectations.”
The cost of sustainability
Solar energy was initially employed to provide power to space spacecraft. Since their arrival on Earth, design and manufacturing advancements, supply chain advancements, and widespread use of sustainable energy have driven down the costs of this and many other renewable technologies. The energy shift has raised demand for renewable energy sources such as solar, offshore, and onshore wind, as well as their application. When these technologies are scaled up, they might produce a cycle in which higher deployment leads to lower pricing, which in turn leads to increased demand.
When solar panels and wind turbines are manufactured at scale, the cost of the power they produce falls as well – but this hasn’t happened as much with fossil fuels like coal. The cost of solar energy per megawatt hour (MWh) – a weighted average cost of electricity – was $378 in 2010, but has now dropped to $68/MWh in 2019 — a more than five-fold decrease. Offshore and onshore wind experienced significant price decreases as well. Despite being the world’s greatest source of electricity, the worldwide price of new coal power declined from $111 to barely $109 during the same time.
While the cost of solar power has dropped by 89 percent and the cost of wind power has dropped by 70 percent, the cost of coal-fired energy has dropped by only 2%. So, will the cost of renewable energy keep dropping?
While no one can foresee the future with certainty, the cost of many renewable technology continues to drop year after year. While the rate of decline may moderate in the future years, renewable energy is rapidly becoming less expensive than fossil fuels, according to a recent analysis. Which is good news for the economy and for global efforts to achieve net zero emissions by 2050 while staying inside the 1.5°C climate target set by the Paris Agreement. Renewable energy is becoming the most cost-effective source of energy. Renewables provide coal-dependent nations with a cost-effective phase-out strategy that assures they meet rising energy demand while saving money, creating employment, promoting GDP, and fulfilling climate goals.