The cost of electricity from renewables and batteries to store the energy they produce have come down so dramatically in last five years that they are out-competing fossil fuels in most places on the planet, the Intergovernmental Panel on Climate Change (IPCC) concludes in its climate mitigation report released yesterday.
This gives governments the means to get methane and carbon dioxide emissions from energy production to net-zero by mid-century, in a bid to keep global temperatures down to 1.5°C above pre-industrial levels.
However, the problem is that the consumption of coal, oil, and natural gas continued to grow between 2015 and 2019, the report says, and as a result so did the emissions of greenhouse gases. Methane from fossil fuel production continues to be a major source of global warming.
The report warns that this must change, but the result will be considerable economic upheaval. Fossil fuels must be phased out and many jobs will be lost, even though many more will be created in renewables. Banks and businesses will be facing stranded assets in viable coal and gas plants that have to be closed, and coal and oil left in the ground. Coal will go in the next decade and oil and gas in the 2030s, stranding trillions of dollars in assets, according to the report.
The demise of fossil fuels has been made possible by the massive reduction in the cost of producing electricity from solar panels in the last two decades, giving real hope that the days of fossil fuels are over. The 85% reduction in price between 2010 and 2019 means solar is now cheaper that both coal and gas.
Onshore wind power, which was already competing with the more expensive fossil fuels 20 years ago, has fallen another 45% since 2010 and also outcompetes the three fossil fuels.
The report data only reaches until October, 2020, and the costs of both wind and solar have gone down further since. So it would be hard to find anywhere on the planet where it is economic to build new coal or gas stations, although for political reasons they are still being considered.
Equally interesting is the way that offshore wind, a comparatively new but potentially vast contributor to electricity production, has plunged in price. Although costs have fallen further since the 2020 cut-off for this report, offshore wind was already competitive two years ago. It is no accident that it is a massively growing industry in China and Europe. Its adoption is expected to accelerate, too, because floating wind turbines are seen as having great potential, something that makes them a good bet for the eastern coast of the United States.
A fourth and little-discussed technology, concentrated solar power, where mirrors are used to concentrate the sun’s rays on a liquid to super-heat it to produce electricity, has also entered the mainstream. It is particularly attractive in hot countries with plenty of sunshine, where solar panels perform less well because of the heat. Concentrated solar power heats molten salt reservoirs which stay hot overnight, producing power until the sun comes up the next day and begins the heating cycle again. The cost of this technology has halved to competitive levels against coal, gas, and oil in the last 10 years, making it an attractive option in the deserts of North Africa and the Middle East.
There is very encouraging news, too, on the battery front. The cost of electric vehicle batteries has seen as dramatic a fall as solar panels, at 85% over the 2010s. In many circumstances, this makes using it for transport competitive with petrol and diesel-driven vehicles, the IPCC says, although infrastructure to serve a network of electric vehicles is lacking in many countries. More recent reporting shows electric vehicles less expensive to own and operate than internal combustion.
Large scale batteries are also competitive for stationary energy storage, on the strength of a 90% price drop in a decade.
Yet all this is still not enough on its own to take the world down to 1.5°C, the IPCC says. Other established energy producers like hydropower, bioenergy, and plant efficiencies are needed, as well as managing demands for heating and cooling.
Newer technologies—next-generation biofuels, “green” hydrogen produced from electrolysis, synthetic fuels, and carbon-neutral ammonia—would substantially improve the economics of net-zero energy systems by balancing out supply, the IPCC concludes. Carbon capture and storage is still in its infancy in the electricity system, with only two systems fitted to fossil fuel power stations.
The report is largely neutral on nuclear power, much favoured by some politicians, but as the report outlines not liked much by the public. It says nuclear generation can deliver low-carbon energy at scale, but doing so will require improvements in managing construction of reactor designs that claim potential for lower costs and wider use. Nuclear continues to be affected by cost overuns, high up-front investment needs, challenges with final disposal of radioactive waste, and varying public acceptance and political support.
Scientists are also skeptical about the new nuclear kid on the block, the small modular reactors much favoured by the United States, Canada, the United Kingdom, and France. The report says they are expected to have lower total investment costs, but costs per unit of the generation might be higher than conventional large reactors—and therefore far higher than more affordable solar and wind.