A new report published by the Rocky Mountain Institute (RMI) in partnership with the Bezos Earth Fund reveals that renewable energy is on track to meet ambitious net-zero targets by 2050. Titled “X-Change: Electricity – On Track for Net Zero,” the report states that the demand for fossil fuels in the energy sector has already reached its peak and is expected to decline rapidly, with a projected freefall by 2030.
The report highlights the exponential growth of renewable energy, particularly in solar and wind power. Currently, only 12% of global electricity generation comes from renewable sources. However, the report predicts that solar and wind alone will account for one-third of global generation capacity by 2030. Consequently, the demand for fossil fuels in the electricity sector is estimated to decrease by 16-30% by the end of the decade.
The authors of the report argue that previous models, including those by the International Energy Agency (IEA), have underestimated the shift to renewables by assuming a linear progression rather than the exponential growth witnessed in the wind and solar sectors over the past two decades. This miscalculation has resulted in overestimated demands for fossil fuels in the energy sector.
Several factors contribute to the rapid acceleration of renewable energy adoption. Governments worldwide have embraced the goal of achieving net-zero emissions by 2050, with 90% of the global economy committing to this target by 2022. Subsidies, targets, and regulations have played a significant role in driving the initial growth of renewables and now focus on streamlining grid regulations, permitting processes, and deployment strategies.
Furthermore, the recent conflict in Ukraine has prompted Europe to prioritize reducing its dependence on Russian fossil fuel exports due to security concerns, leading to heightened actions towards sustainable energy solutions.
Technological advancements, particularly in large-scale energy storage projects, have also played a crucial role in facilitating the transition to renewable energy. These advancements have addressed the intermittent nature of renewable energy sources, allowing them to generate power when needed rather than when available, thus expanding their potential applications.
Most notably, the costs of renewable energy have plummeted, tipping the scales in favor of clean energy adoption. Between 2012 and 2022, solar and onshore wind costs have dropped by 80% and 57%, respectively. In the first half of 2023, the levelized cost of energy (LCoE) for solar and wind stood at just over $40 per megawatt-hour, approximately half the price of coal or gas-fired energy.
At present, renewable energy is already the most cost-effective option for electricity generation in 82% of the world. As renewable energy costs continue to decline, this figure is expected to rise further. Conservative estimates project a solar price range of $25-28 per megawatt-hour by 2030. However, the report challenges these estimates, suggesting that actual market trends point to prices as low as $15 per megawatt-hour for solar and $20 per megawatt-hour for wind.
The report also highlights China’s significant contributions to the energy transition. Since China does not have substantial domestic oil or gas supplies, its government has been able to drive rapid change and innovation without facing opposition from powerful fossil fuel lobbies that have hindered progress in other regions.
Interestingly, the report emphasizes that wealthier countries may not lead this transition. It showcases a range of countries, including Denmark, the Netherlands, Uruguay, Palestine, and Namibia, which have achieved impressive and sustained rates of renewable energy growth. These countries’ achievements demonstrate that the shift towards renewable energy is feasible and can be achieved regardless of their GDP per capita, which ranges from $4 to $67,000 per year.
Kingsmill Bond, Senior Principal at RMI, highlights the unstoppable force of clean energy’s exponential growth. He states that this renewable energy transition will not only benefit the environment but also result in greater energy security, lower energy prices, and increased spending power for consumers. As renewable energy installations increase, prices are expected to decline further due to economies of scale and technological advancements.
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- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
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