A couple of decades ago, renewable energy was almost an outlier: the new kid on the block. But now, solar and wind are not just mainstream: in both developed and emerging economies, they are the preferred option when it comes to power generation.
A powerful synergy of enabling factors and demand-side attributes is propelling solar and wind to compete against, and win, in competition with even the most cost-effective and flexible hydrocarbon-fuelled sources of power. Renewable energy is now the preferred choice when it comes to reliable, affordable, and environmentally responsible energy.
A new report on global renewable energy trends from Deloitte Insights charts the astonishingly rapid disruption of traditional energy systems and markets that renewables are causing as the cost of photovoltaic and windfarm power plants continues to fall.
Clearing the way
Longstanding barriers to the greater deployment of renewables have faded thanks to three strong attributes: rapidly approaching grid parity, cost-effective and reliable grid integration, and technological innovation. Solar and wind can now beat conventional sources on price while increasingly matching their performance. Moreover, the integration of renewables is actually solving grid problems rather than exacerbating them. Wind and solar are now competitive across global markets even without subsidies.
Onshore wind has become the world’s lowest-cost energy sources for power generation, with an unsubsidized levelized cost of US$ 30 -60/MWh, which falls below the range of the cheapest fossil fuel , natural gas—which weighs in at around US$ 42 – 78/MWh. Except for combined-cycle gas plants, the levelized costs of all conventional sources and nonintermittent renewables have either remained flat (biomass and coal) or increased (geothermal, hydropower, and nuclear) over the past eight years, while the cost of onshore wind and utility-scale photovoltaic (PV) plants have dropped by 67 and 86 percent respectively as the cost of components has plummeted and efficiency has increased—trends that are expected to continue.
Wind is on a roll. By the end of 2017, onshore capacity across the globe had reached almost 500 gigawatts (GW)—led by China. In the US, the lowest costs are in strong wind regions such as the great plains and Texas. Upgrading or “repowering” wind turbines by installing more efficient blades and upgraded control systems is raising capacity factors and driving down costs.
Utility-scale PV is not far behind. The high end of PV’s cost range (US$ 43 – 53/MWh) is lower than any other generation source except wind. A record 93.7 GW was added globally in 2017 once again led by China. As wind and PV capacities grow, many conventional power technologies will operate at lower capacity factors, causing the levelized costs of both existing and newly built conventional plants to increase. Eventually the cost of new solar and wind plants could be lower than the cost of continuing to run existing plants globally. This has already been demonstrated in Chile: where a proposed combination of wind, solar and geothermal systems will generate power at a cost lower that the cost of fuel for existing coal and gas plants.
When energy storage is coupled up, solar and wind become more dispatchable, eliminating a substantial advantage that conventional energy once held over renewables. Wind and solar are increasingly part of the solution—not the problem, helping to balance the grid and demonstrating an ability to strengthen grid resilience and reliability and provide essential grid services.
While the cost of solar and wind combined with storage is higher, they can provide capacity and ancillary grid services that make them more valuable. Moreover, renewables plus storage are also reaching price parity as lithium-ion battery costs continue to fall–having dropped nearly 80% since 2010. In the US, solar-plus-storage is already so competitive that some developers have announced that all its bids in the western US will include storage.
In several major markets solar installers are increasingly combining battery storage with residential solar. Residential solar-plus-storage is currently cheaper than utility retail rates in 19 US states, as well as several regions of Australia and Germany. These two countries have more residential and commercial rooftop solar capacity than utility-scale plants. Resilience is a significant co-benefit: there is no grid to crash during the next bout of extreme weather. For instance, wind broke generation records when the UK faced a natural gas shortage during a winter storm in 2018 and beat generation expectations in the US when coal piles froze during the 2014 polar vortex or flooded during Hurricane Harvey in 2017.
Too cheap to meter?
Because solar and wind have zero marginal generation costs, they displace more expensive generators and reduce electricity prices. The deployment of solar tends to reduce midday price peaks, while wind has lowered nighttime prices. Three-quarters of the top 20 US solar and wind states have electricity prices below the US national average, and a quarter are among the nation’s 10 states with the cheapest electricity–including the wind leader, Texas. Wholesale prices in Germany have more than halved over the past decade. In Denmark, which has the world’s highest share of intermittent renewables, electricity prices exclusive of taxes are among the lowest in Europe.
Lawrence Berkeley Labs in the US reportedly estimated that when the US reaches Denmark’s level of renewable penetration of 40-50 percent, some states will see the beginning of energy ”too cheap to meter”.
Clean and green
Cities, communities, emerging markets, businesses and corporations are driving the demand for renewables as they start to insist on reliable, affordable, and clean sources of energy. Solar and wind are now positioned to deliver on all three of these goals. More and more cities have committed to 100 percent renewable electricity and are planning for that transition well before 2050. Smart renewable cities envision renewables as an integral part of their smart city strategies as they work towards the electrification of the transport and building sectors. But for electrification to advance rapidly, electricity has to be cheap. Only renewables offer that possibility.
The table lists cities with over a million people and their share of power generation from wind and solar. San Diego is the global leader. Solar and wind account for over a third of its electricity mix and the city has a 100% renewables target by 2035. The city has a more ambitious target than California’s state-wide target.
In areas with power grid systems, community energy provides shared ownership and access to wind and solar resources. Germany leads the field with over 40% of renewable energy systems installed in 2018 owned by cooperatives, and that country recently brought in new rules to allow cooperatives to participate in power auctions. Denmark also strongly supports energy cooperatives: requiring a 20 percent local community share in all wind projects. Once again resilience is a significant co-benefit. Many communities that have experienced blackouts in the aftermath of natural disasters or extreme weather are turning to community renewable microgrids to protect critical infrastructure and keep the lights on.
In spite of these rapid and positive developments, the deployment of renewable energy solutions, particularly in buildings and industry, is still well below the levels needed to peak and draw down global emissions of greenhouse gases. Energy efficiency improvements, another key to a clean energy future, have also stalled in the last few years.
We have the resources, the technologies, and the expertise to curtail and reverse the emissions of greenhouse gases. The transition to renewable sources of energy also creates more jobs, more widespread access to energy, and improvements in human health and overall welfare.
The recent reports on global warming have strongly emphasized the magnitude and urgency of the global threat that the changing climate is fast becoming. It’s way past time for governments at all levels, including local government, cities and municipalities, to take much more forceful action.
 See the Deloitte Insight article at: //www2.deloitte.com/insights/us/en/industry/power-and-utilities/global-renewable-energy-trends.html? All the numbers quoted in this post are from the Deloitte article. The header graphic is also from the Deloitte Insight article.
 See the latest report from IRENA: Global Energy Transformation: A roadmap to 2050. Available here : //www.irena.org/publications/2019/Apr/Global-energy-transformation-A-roadmap-to-2050-2019Edition