The price is right with renewables

A few decades ago, the idea of ditching hydrocarbons for renewables might have seemed laughable, purely due to cost concerns.

While our economy is apparently saturated in hydrocarbons, there’s only so much efficiency to be squeezed out of them. By contrast, technology in the renewables sector has been improving to such an extent that significant production savings have been made, making them considerably cheaper than ever before.

It’s a win-win situation for all – cheaper renewables mean that the economic case for going carbon-neutral is becoming increasingly compelling, helping bring us that bit closer to net-zero carbon emissions by mid-century.

Teaching old dogs new tricks

As the old saying goes, you can’t teach an old dog new tricks. The same applies to sources of power, such as hydrocarbons. According to Our World in Data, coal, one of the world’s primary sources of energy, became just two per cent cheaper to use for electricity generation over the last decade.

Coal used to enjoy a privileged position as one of the cheapest sources of electricity for decades, but as we’ve explored previously, that came at a price for the planet. That’s because burning coal releases tonnes of carbon into the atmosphere in a single burst, having spent millions of years stored underground. Not only that, but it produces large quantities of particulates, which poison the air and produce corrosive chemicals.

By contrast, solar PV technology hints at a bright, sunny future for electricity generation. The sector has taken such great strides that solar electricity is 89 per cent cheaper than it was in 2010. The International Energy Agency (IEA) was so impressed by the efficiencies made by solar power that it remarked that it was providing some of the cheapest electricity in history, in its World Energy Report for 2020.

If governments and investors step up their clean energy efforts in line with our Sustainable Development Scenario, the growth of both solar and wind would be even more spectacular – and hugely encouraging for overcoming the world’s climate challenge

– Dr Fatih Birol, Executive Director, IEA

As a result, we now have the opportunity to transition towards sources of power that are not only better for the planet – they are also costing us fewer pennies over time.

Renewables follow a clear learning curve

Our World in Data remarked that renewables displayed a clear ‘learning curve’ when it came to cost savings over time. The reason for solar PV electricity generation becoming cheaper is credited to the fact that the PV modules used became cheaper, as the supply of them increased over time.

With each doubling of solar capacity, Our World in Data estimated that solar module costs dropped 20 per cent, while solar electricity prices fell by 36 per cent.

The wind sector also shows signs of trickle-down learning curves, despite remaining a bit more expensive than solar power. Larger turbine sizes and consistently strong winds out at sea mean offshore wind could become far cheaper over time, while also benefiting from borrowing innovations first used in the onshore wind industry.

In the meantime, coal and oil are more like relics harking back to a bygone era. As the supply of fossil fuels diminishes, it becomes increasingly likely that both sources would become much more expensive ways to generate power.

Their impact on the environment is another driver for moving away from them – why waste excessive amounts of money on energy sources that just pollute the environment, when we can enjoy cleaner power at a lower price?

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