How Simple Economics Will Drive Renewable Energy Uptake
According to a new report by Bloomberg New Energy Finance (BNEF), it is the economics – and not just the advances in technology – that will drive the uptake of renewable energy in the years ahead.
The report states that by 2020, given its continually falling costs, solar energy projects will dominate new capacity additions, and that by 2030, solar will have become the cheapest energy resource (preceded by wind energy by 2025).
Additionally, clean energy research firm GreenTech Media believes that the year 2018 will be the “tipping point” for solar energy in terms of grid parity, and that from then on, it will be unsubsidized solar electricity that will be competitive against conventional energy in a number of international markets.
For India, that might actually happen a year earlier. While none of its 29 states can yet claim grid parity for all of the three energy segments, i.e. industrial, commercial and residential, the central government is bullish on solar. The Indian solar market is also one of the most attractive solar markets in the world, attracting billions of dollars of investments into project development and finance.
Renewable Energy Trends Positive
BNEF’s report further goes on to say that by 2040, the average cost of solar project development will have fallen by nearly 50%. This would only further accelerate the already impressive growth rate being achieved by the sector. In fact, BNEF estimates that solar (along with wind energy) will command nearly 30% of the share of global energy generation within the next two decades.
However, does this mean we’re winning the fight against global warming? Not quite. Carbon heavy energy resources will continue to dominate global energy production for at least 40 – 50 years. BNEF says that carbon emissions from the electricity sector could actually rise between now and 2040, especially as developing countries in Africa and Asia add more capacity.
Fortunately, the trend towards reducing energy consumption is largely positive. Energy efficiency targets are being earnestly implemented across some of the biggest energy consuming states (such as USA and China), with the result that their overall energy demands are projected to be lower in 2040 than they were in 2014.
Therefore, going forward, one of the most important goals will be to assist the developing nations in leapfrogging to a renewables and energy efficiency based power economy. Achieving this will ensure that their conventional energy resources are not exploited, and it will have the added benefits of energy security and independence.