Renewable energy is flourishing around the world. Countries and businesses are aggressively expanding wind, solar, and hydroelectric generation capacity to reduce carbon output, please customers, and lower costs.
Many businesses around the globe are working to become “greener” as part of their focus on Environment, Social and Governance (ESG) strategies. They are driven by the threat of global climate change, changing customer preferences, and the goal of improving their triple bottom line (profits, people, and planet).
There is a lot more to creating a sustainable business than reducing your organization’s energy consumption and carbon footprint, but it’s a great place to start. Unfortunately, depending on where your business operates, decarbonizing your energy consumption can be difficult. The electricity grids of Scotland, Costa Rica, and Uruguay are almost 100% renewable, whereas the grids of many countries in northern Africa and the Middle East exclusively burn oil and gas to generate electricity.
Climbing the S-Curve
Fossil fuels still account for around 80% of global energy consumption and 87% of the world’s CO2 emissions. But over the last 20 years, many areas of the globe have seen incredible growth in all types of renewable energy generation. Since 2000, the share of electricity production from renewables has grown by more than 50% globally, and greater than 100% in the United States.
|Renewable Energy Type||2000 (TWh)||2010 (TWh)||2019 (TWh)|
|Other Renewables (Geothermal, Biofuels)||186||380||651|
Companies aren’t installing renewable energy solutions just to be “green;” it also makes good business sense. Over the last 10 years, the costs of utility-scale solar and wind generation have dropped by 90% and 71% respectively. Renewable sources already operate at cost parity with coal and natural gas, and over the next couple of decades, their costs should plummet even lower as solar and wind technology accelerate up the technology s-curve. Renewable energy technology adoption provides an excellent example of Wright’s Law (a “law” that aims to provide a reliable framework for forecasting cost declines as a function of cumulative production).
Wind Power Shows Steady Growth
Wind as a source of power is not new. It has been harnessed as power for sailing vessels for thousands of years and there are windmills in Iran that have been operating for over 1,000 years. But it wasn’t until the 1980s that wind turbines were put up in California to generate electricity and ameliorate the rising costs of fossil fuels.
Now in 2021, the United States has deployed over 67,000 wind turbines (onshore and offshore) generating approximately 8.4% of the country’s electricity generation annually . The 2020 extension of the U.S. Renewable Electricity Production Tax Credit (PTC) supports continued development of wind power across the country. Elsewhere, China and Europe have almost double the wind power generation of the United States and they continue to add new capacity at an aggressive rate.
As the number of turbines and generation capacity increases, the cost of electricity generated from onshore wind continues to decrease, with the global average falling from $53/MWh in 2019 to $44/MWh by 2025. More turbines equal more electricity at steadily cheaper rates.
Solar Power Growth Is Logarithmic
Solar power is an amazing technology success story. The modern photovoltaic (PV) cell was invented in 1954 and early applications were specialized, expensive, and mostly space-based. These days, more and more solar power is being deployed due to the decrease in costs and the increase in efficiency. Since 1956, the cost of solar panels has decreased from around $300 per watt, to today’s $0.50 per watt. At the same time, the efficiency of PV cells has steadily increased from around 1% in 1956 to almost 20%.
As impressive as these numbers seem, that still only corresponds to 1% of the world’s annual energy production. Fortunately, the United States Congress approved a two-year extension to the Solar Investment Tax Credit (ITC). Federal incentives – along with cheaper, more efficient PV cells – could drive new solar installations over the next 10 years to become the dominant type of energy generation in the United States.
Other Renewable Energy Types
Hydroelectric power is the oldest and most common type of renewable energy. The first water turbines were invented in the mid-1800s and the first hydropower plants installed in the late 1800s. More dams and more hydroelectric plants with better turbine technology were built throughout the 20th and early 21st century and by the year 2000, the world had over 2,600 TWh of hydropower generation capacity installed. This has almost doubled to 4,355 TWh by 2020.
In addition to hydropower, many countries have been researching and testing tidal and wave generation of electric power. Like hydroelectric, the advantage of tidal and wave power is they are a consistent source of energy regardless of the time of day. Wave power is still in the early, experimental stages, but there are a few successful tidal power stations generating electricity around the world, including:
- Sihwa Lake Tidal Power Station in South Korea (254 MW)
- La Rance Tidal Power Station in France (240 MW)
- Annapolis Royal Power Station in Nova Scotia, Canada (20 MW)
Storage Is the Key to Renewable Power Success
A key – maybe the key – to renewable energies at-scale viability is storage. Many sources of renewable energy are inconsistent and variable. Solar power generation plunges at night while wind power varies from day to day, or even minute to minute. These sources rely on energy storage systems to smooth their peaks and deliver reliable energy to customers even when generation is at its lowest.
Over the last five years, battery storage projects have increased to the point where over 1 GW of storage was installed in 2020, approximately 80% at grid-scale. Decreasing costs for lithium-ion batteries together with high-profile power failures in California and Texas in 2020, are accelerating grid-scale battery storage deployments even faster. The industry is hoping to reach 7.5 GW of new battery storage deployments by 2025.
There Are Many Paths to Renewable Energy Success
Renewable energy capacity is growing around the world, and there are many options to choose from based on geographic location, government incentives, and green energy legislation. Utilities are deploying wind power in windy areas, solar power in sunny regions, and hydroelectric power where rivers and running water are available. Large companies are also getting into the renewable energy game to decarbonize their own energy needs. Over the last five years, Amazon has deployed over 120 renewable energy projects generating over 6.5 GW and Apple has completed green projects that produce over 1.2 GW of electricity, including two massive wind turbines in Denmark, a wind farm outside of Chicago, and solar projects in Nevada and Virginia.
Renewable energy is not the only path to a sustainable business, but it is a good one. Companies that invest in renewable energy save money, delight their customers, and please investors while avoiding fines and/or carbon taxes. Renewable energy helps build a sustainable business, which in turn helps your company reach its ESG goals.
Intelex can help you with your business achieve its sustainability goals. Learn more about Intelex ESG management solutions and how to boost your business in the decade ahead.