Earth Day has come and gone through its 45th consecutive year in the United States.
And though the movement has been around long enough to have an established career and maybe some grown kids, a big part of the environmental movement seems to be just starting to mature.
Just recently, we can say that the renewable energy sector is making some real, tangible progress.
According to the Energy Information Administration, in 2015, electricity-generating companies will add 20 gigawatts (GW) of capacity to the grid. Of that amount, about 68% will come from renewable energy sources.
And this good news is just the tip of the iceberg when it comes to renewable energy around the world.
Global Renewable Energy Investment on the Rise
Worldwide investment in renewable energy jumped in 2014, for the first time in three years to $270 billion. A March 2015 report from the United Nations Environment Program stated that this was a 17% rise from 2013.
What stood out in the UN report was the fact that, for the first time ever, new installations of carbon-free renewable power plants exceeded 100,000 megawatts of capacity. That’s equal to the total installed nuclear generating capacity here in the United States.
China and Japan also invested a significant amount in renewable energy last year.
China led the way with $83.3 billion in investments, the United States came in second with $38.3 billion, and Japan is in third with a country record of $35.3 billion.
What is perhaps most encouraging is that renewable energy spending in the developing world almost caught up to outlays in the developed world – $131.3 billion versus $138.9 billion.
Solar and Wind Lead the Way
Ninety-two percent of expenditures around the world were dominated by investments in solar and wind power. A massive $75 billion went into solar power in China and Japan alone.
And China is still accelerating its solar push. In the first quarter of 2015, it added more than five GW of solar power capacity. That’s more than was added in the first half of 2014.
It’s also an 18% increase of its solar capacity, bringing total solar capacity tied into China’s grid to 33 GW. That makes the country’s goal of 100 GW seem very attainable, and puts it well ahead of the United States’ 20 GW.
Around the world, more than 95 GW of solar and wind generating capacity were installed in 2014. That’s well above the 70 GW added during the record spend of $279 billion in 2011.
The fact that a lot more generating capacity was added for roughly the same amount of money tells us that costs are falling rapidly for renewable energy, particularly for solar.
The Cost of Conservation
Back when the first Earth Day occurred in 1970, the cost of solar panels in the United States was $150 per watt. Today, that cost has fallen to only $0.60 per watt. The cost of solar power installations has fallen, as well. Here in the United States, the cost is down about 50% just since 2007.
The same is true globally, according to the International Renewable Energy Agency (IRENA).
IRENA says solar panel prices have dropped 75% since 2009. And the total installed costs of utility-scale solar plants fell as much as 65% between 2010 and 2014.
That has made solar power more and more competitive when compared with fossil fuels.
In the United States, the average cost of generating energy from the sun is about $130 per megawatt hour (MWh). That compares favorably to coal-fired power at $147 per MWh.
Even in energy-rich Dubai, solar power is competitive. A new solar power plant built there by the Saudis will sell electricity at $0.0585 per kilowatt hour over a 25-year contract. That’s $0.02 to $0.03 below the cost of generating electricity from natural gas there!
Or, to put it another way, it’s the equivalent of generating power using oil at $20 per barrel.
The Future Looks Sunny
The outlook for renewable energy going forward is, well, sunny.
In its 2030 market outlook, Bloomberg’s New Energy Finance forecasts that the total capacity of all renewable energy installations could outpace new fossil-fuel-generated installations by three-fold over the next 15 years.
Neil Auerbach, CEO of private equity firm Hudson Clean Energy Partners, shared perhaps the best perspective with the Financial Times.
Auerbach said that when the renewable energy industry’s history is written, the current chapter will be called “Renewable Energy Reaches Adulthood.”
That is, when the industry is less reliant on “help from the parents” in the form of subsidies and other government aid.