Ten years ago, coal supplied half of America’s power and was growing more than 1.5 times faster than oil, natural gas, nuclear and renewables combined.
Back then, in 2009, two climate scientists – Mark Jacobson and Mark Delucchi – published a groundbreaking article in Scientific American outlining a road map for becoming 100% reliant on energy generated by water, wind and sun by 2030. This was something that needed to be done “if the world has any hope of slowing climate change,” the researchers warned at the time.
Jacobson recalls that, “Nobody believed it when we put out that paper. It was a very pie-in-the-sky thought. There was a lot of criticism of it, and the negativity around the response was enough to make anybody depressed.”
At the time, CEO of Peabody Energy Corp Gregory Boyce said that, “It is unrealistic to suggest that renewables could replace conventional baseload fuels.”
Yet ten years later, here we are. Not only has the demand for clean energy never been higher, but coal – long the king of the power sector – continues to rapidly decline. Its share of total power generation went down from 45% in 2010 to just 28% in 2018, and is expected to drop further to 24% in 2020.
According to data from the Electric Reliability Council of Texas, wind and solar generation topped coal’s output in the first quarter of 2019 – something that has never happened before in the US.
Referring to this, Dennis Wamsted, a research analyst at IEEFA, highlighted that, “Five years ago, this never would have been close to happening. The transition that’s going on in the electric sector in the US has been phenomenal.”
“Coal is just an expensive technology that can no longer compete,” agreed Kingsmill Bond, a new energy strategist at Carbon Tracker – a think tank that examines the relationship between energy and financial markets.Today, the renewable energy industry is certainly booming.
According to a new report from the UN Environment Programme, renewable energy capacity quadrupled worldwide over the past ten years with an estimated $2.6 trillion invested in its growth.China has been by far the biggest investor in renewables capacity over this period, having committed $758 billion between 2010 and the first half of 2019, with the US second at $356 billion and Japan third with $202 billion.Europe as a whole invested $698 billion in renewables capacity over the same period, with Germany contributing the most at $179 billion, and the UK $122 billion.
Overall, the global renewable energy market was valued at $928 billion in 2017 and is expected to reach $1,512 billion by 2025, registering a compound annual growth rate (CAGR) of 6.1% from 2018 to 2025.
According to BP’s 2018 Energy Outlook, over the next 20 years it is expected that renewable energy will be the fastest-growing primary energy source globally, capturing around two-thirds of global investments in power plants by 2040.More and more companies are becoming active in the renewables sector, with the likes of Budweiser, Gap Inc., Starbucks, AT&T and MGM Resort International all committing to greener processes.
“It is good business to be green,” Cindy Ortega, MGM Resort International’s chief sustainability officer told the WSJ, “That’s a real shift in thinking.”
Even the billionaire investor Warren Buffett has taken steps towards going green, with MidAmerican Energy – one of the subsidiaries of his holding company Berkshire Hathaway –aiming to obtain 100% of its electricity from wind power by 2020.
Furthermore, major oil companies often referred to as “the Big Oil“ – think Enel, BP, Total, Statoil, Royal Dutch Shell and others – spent 1.3% of their budgets, or $260 billion, investing in low carbon energy in 2018.
As BloombergNEF analyst David Doherty noted, “Shareholder pressure, evolving new technologies and rapidly changing consumer preferences have forced oil and gas companies to re-evaluate their long-term strategies and explore new business streams.”
Increased awareness about climate change had made us understand that renewable energy is one of the most important solutions to global warming, and should be pursued as quickly, and completely, as possible if we want to have any hope of stopping the catastrophic damage already affecting our planet.
Countries, cities and communities across the world have set ambitious 100% clean energy goals, and more than 200 influential corporates worldwide have already joined RE100, a global initiative committed to 100% renewable electricity targets.In April 2019, more than 300 US companies, including such mega-corporations like Google, Facebook, General Motors and Walmart have also joined forces to create the Renewable Energy Buyers Alliance (REBA).
The group claims to represent the largest group of corporate-level renewable energy buyers, developers, and providers in the US and has set a 2025 target to install 60GW of renewable capacity. It is hoped that the initiative will achieve its vision to create a resilient carbon-free energy system, where purchasing renewables is an affordable and convenient option for commercial customers.
Michael Terrell, head of energy market strategy at Google explained that, “Every enterprise – whether it’s a bakery, a big-box retailer or a data centre – should have an easy and direct path to buy clean energy. Ultimately, sourcing clean energy should be as simple as clicking a button.”The good news is that total investment in renewable energy worldwide, including early stage and corporate-level funding as well as the financing of new capacity, was $288.3 billion in 2018.
What’s more, venture capital and private equity investment in renewables businesses jumped 35% to $2 billion last year. The wave of investment – first into wind, and then solar – has made new technologies affordable to mass adoption: solar panels have become smaller, cheaper to manufacture and more efficient, and today, government funding and continuous technological advancements are considered among the major trends for the renewable energy market.
More and more energy companies are also investing heavily in the digital infrastructure and software such as the Internet of Things (IoT), Big Data, AI, advanced analytics, etc.
According to the Renewable Energy World, the possibilities of IoT and Big Data-analytics have revolutionised the future of the energy sector with the benefits of collecting enormous sets of essential data, analysing it, assisting companies in making smart decisions, recognising consumer needs and monitoring real-time energy consumption to optimise energy transmission.
Furthermore, this move towards digitalisation and automation is expected to help investors achieve the highest possible returns on investment capital in clean energy.
Looking to the future, digitalisation of the renewables sector seems to be the only way to help the fight against climate change and develop a sustainable future. The International Energy Agency (IEA) has been spreading this key message for many years, stating that, “Digitalisation holds great promise to help improve the safety, productivity, efficiency and sustainability of energy systems worldwide.”
And with further developments on the horizon, investing in renewable energy projects has never been such an attractive proposition.