Friday, October 28, 2016

Have We Already Won the Renewables Revolution?

Have we already won? Could we have already reached a point where current trajectories for renewable energy, energy efficiency and alternative transportation are clear enough that we can reasonably suggest that a revolution has occurred? Yes. For the most part, the game is indeed won. We are on the path to renewable energy ubiquity — and it’s unlikely to be derailed even if policy support falters for these technologies. There are still some uncertainties, but let’s start by examining the clearer trajectories.

Renewable energy is trending rapidly toward ubiquity

America Has Seen 11 Consecutive Quarters With More Than 1 Gigawatt of Solar PV InstalledExcluding large hydro, renewable electricity is still at less than 2 percent globally. It’s quite a bit higher in the U.S., at about 7 percent . Even at 2 percent globally, however, we can see the future fairly clearly because of the long-established relationship between installations and the falling price of renewable energy. Swanson’s law describes this relationship with respect to solar power, the renewable energy technology with the most promise. This “law” suggests, based on the last few decades of evidence, that the cost of solar power drops by about 20 percent with every doubling of installations.

I’ve addressed this in detail in this article . And it’s described in this podcast by Dick Swanson himself. If history is any guide — and we have some very solid historical data in this case — then we can be fairly sure that this cost-reduction trend will persist as installations continue to increase, in a tight virtuous cycle of ever-decreasing prices that trend asymptotically to zero. According to GTM Research, global installations are on track to hit 73 gigawatts in 2016, up from 55 gigawatts in 2015. By 2021, the yearly global installations are expected to hit 105 gigawatts. The price of solar has indeed continued to fall as solar installations have ramped up dramatically in recent years. I’ve discussed this trend in previous articles, describing it as the “ solar singularity ,” which I define as the point where a majority of countries begin installing solar power as the default power source. We are currently facing a glut of solar panel production, primarily from China, so we can expect even more robust cost declines in the next year or so than would normally be expected. Given this multi-decade trend in solar power — and similar cost declines in wind and other renewables — we can reasonably expect that solar power and other renewables will trend toward ubiquity in the next two to three decades (80 percent penetration is my rough threshold for ubiquity, since we’ll very likely maintain some fossil plants for a few decades to come as backup power sources). When it comes to electricity, then, we have valid reasons to think that, yes, the revolution has indeed already been won.

The world is inevitably becoming more energy-efficient

We see similarly encouraging trends toward increased energy efficiency, both here in the U.S. and globally. There is no named “law” for energy efficiency to improve as economies develop technologically, but there is a clear trend here too: as nations develop economically, they become more energy-efficient. The usual trend for nations climbing the ladder of economic development is to see less energy required for each unit of economic activity. The result of this trend is, of course, that energy becomes less costly (in absolute terms; in unit terms it can become more costly, but because greater efficiency means less is used, the net result is lower cost for energy), and this is another virtuous cycle for economic development: The more developed an economy becomes, the cheaper energy becomes, and so on. The U.S. has become far more efficient in recent decades, and the Energy Information Administration projects a 2 percent annual improvement in energy intensity (energy per dollar of GDP) through 2040, allowing us to achieve a massive 50 percent improvement in overall efficiency by 2040. FIGURE 2: EIA’s Energy Intensity Projections Source: EIA AEO 2014 As economies develop into more trade-based and technology-based economic sectors, less energy is required. Additionally, as nations develop they upgrade older equipment and we see a very steady trend toward steadily improving energy efficiency in electronics and other power-using devices. The International Energy Agency recently estimated that improving energy efficiency saves developed countries $540 billion each year. That’s real money. Interestingly, the total energy consumed by developed nations appears to have peaked in 2007, and ongoing efficiency and conservation improvements may continue the […]

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