Solar Power Set to Shake Up Energy Sector – 7/7/16

The most exciting renewable energy source for consumers and investors looking for a shake up in the energy sector should be solar power.

Few people wouldn’t get excited if you told them they could get electricity without relying on a costly and insecure power grid, and no one would deny wanting cheaper, cleaner electricity. Put those together and you’d have an idea worth billions that would improve the quality of life of most if not everyone in the world. Fortunately, solar power has the first part of that equation squared away and is fast approaching the second.

Though wind is currently cheaper than solar in most regions, planned investments have $3.4 trillion for solar and $3.1 trillion for wind through 2040 because the cost of solar power is expected to decline faster and further than even wind power. Wind power for reference sports an impressive 19% price decline for every doubling of capacity. Those declines for both resources are permanent since they’re technological improvements instead of the unexpected, temporary price shocks that tend to send fossil fuel companies and/or their consumers reeling.

solar power

At current rates, Bloomberg New Energy Finance forecasts that wind and solar will be the cheapest forms of producing electricity in most of the world by the 2030s. This estimate is more or less consistent with the projections put forth by the Energy Information Agency that have wind beating all forms of coal generation and solar closing in rapidly by 2020.

Screenshot 2016-05-17 at 1.06.14 PM

According to David Crane, former CEO of NRG Energy, solar and other renewables will find their biggest challenge in convincing utilities to abandon the status quo. Currently, utilities base their business models on fossil fuels that require an extensive and centralized power grid. Since consumers have no viable substitute for the electricity the utilities provide, utilities have had predictable revenue streams that have sustained them for decades. The uncertainty associated with disruptive technologies like wind and solar is understandably met with skepticism, especially when rooftop solar is already starting to eat into revenues.

That’s not to say that utilities aren’t interested in renewable power. The writing is clearly on the wall for fossil fuels and some companies are ready to start looking to the future. The new Renewable Energy Buyers Alliance (REBA), for example, is a coalition of more than 60 major companies looking to buy large amounts of affordable, renewable power from local grids. So long as green power brings the other kind of green, utilities are going to learn to adapt like any other good businesses faced with new technology; they’ll learn to live differently or lose out to those who do.

Print Friendly, PDF & Email

Comments are closed.