Global investment in wind, solar energy outpaces fossil fuels
Summary: Global spending on renewable energy is outpacing investment in electricity from coal, natural gas and nuclear power plants, driven by falling costs of producing wind and solar power.....
More than half of the power-generating capacity added around the world in recent years has been in renewable sources such as wind and solar, according to the International Energy Agency.
In 2016, the latest year for which data is available, about $US297 billion ($390bn) was spent on renewables — more than twice the $US143bn spent on new nuclear, coal, gas and fuel oil power plants, according to the IEA. The Paris-based IEA projects renewables will make up 56 per cent of net generating capacity added through 2025.
Once supported overwhelmingly by cashback incentives, tax credits and other government incentives, wind and solar generation costs have fallen consistently for a decade, making investment in renewable power investment more competitive.
Renewable costs have fallen so far in the past few years that “wind and solar now represent the lowest-cost option for generating electricity”, said Francis O’Sullivan, research director of the Massachusetts Institute of Technology’s Energy Initiative.
This is beginning to disrupt the business of making electricity and manufacturing generating equipment. Both GE and Siemens are grappling with diminished demand for large gas-burning turbines and have announced lay-offs. Meanwhile, mostly Asian-based manufacturers of solar panels are flourishing.
In many places, opting for renewables “is a purely economic choice,” said Danielle Merfeld, the chief technology officer of GE’s renewable energy unit.
“In most places, it is cheaper and other technologies have become more expensive.”
Sustained government support in Europe and other economies spurred the development of renewable energy. But costs have fallen for other reasons. China invested heavily in a domestic solar manufacturing industry, creating a glut of inexpensive solar panels. Innovation helped manufacturers build longer wind-turbine blades to generate substantially more power at a lower cost.
Renewable energy plants also face fewer challenges than traditional power plants. Nuclear power plants have been troubled by mostly technical delays, while plants burning fossil fuels face regulatory uncertainties due to concerns about climate change. And pension funds, seeking long-term stable returns, have invested heavily in wind farms and solar parks, allowing developers to get cheaper financing.
“It is just easier to get renewables built,” said Tony Clark, a former member of the Federal Energy Regulatory Commission. “There is that much less opposition to it.”
However, the rise of renewable power generation is raising concerns and sparking a political backlash in the US. The Trump administration is weighing actions to subsidise the operation of coal and nuclear plants, arguing that these units are needed for the reliable operation of the grid.