Putting aside the politics of the Climate Change, renewable
power will soon become the cheapest energy source in the world. Market forces
are now, more than ever before, driving clean and renewable energy towards a
competitive and cost-effective reality. It is estimated that by 2020, low-cost renewable
energy would be the cheapest source for generating power.
Due to improved efficiency and latest technologies making it
possible to increase manufacturing capacities at reduced costs, solar power and
wind power are gradually taking over the global energy market. This rise in
renewable energy sources is set to have a significant impact on the utilities,
offering investors and consumers alike some unique opportunities.
New Tech And Cheaper
Supply
So how did we get here? In the first place, manufacturers of
solar panel spent several years to improve and increase production, discovering
more efficient and cheaper ways to produce panels in the process. This resulted
in a ramped up production that drove down prices by as much as 30% in 2016. A
further 20% drop in prices is expected this year, according to a report by
Morgan Stanley. Since panels account for about 40% of the cost of utilities
when building large–scale solar energy plants, this fall in price implies more
affordable solar development.
In wind production, however, the fall in price will depend
mainly on physics. Engineers are steadily increasing the height of the wind
turbine towers and manufacturers are increasing the length of the wind turbine
blades; these combined factors have resulted in significant changes to power
generation and efficiency, eventually leading to a drop in the cost of wind
energy.
This massive shift in the direction of renewables will have
drastic effects on the profits and performance of the global power sector.
Utility firms with deregulated power plants which compete to be able to sell
power will generally have an advantage if they become top players in the
renewable energy industry.
Global Jolt
India’s energy industry will be impacted the most. This is
because solar power is increasingly becoming cheaper and more accessible than
coal here. While this is a piece of good news in terms of cutting down carbon
emissions, India been the third largest source of carbon emission in the world,
this could disrupt the coal power generators in India. According to Girish
Achhipalia who is in charge of Indian utilities, renewable energy has attained
grid parity, and the first stage of disruption in the market is ongoing.
In the United States, low-cost renewable energy will
significantly change the carbon constitution of several utilities. This would
help the US exceed its initial targets of reducing greenhouse gas emissions
under the Paris Climate Accord agreement, according to Zlotnicka.
On the foreign scene, countries like Mexico, which is currently
enjoying the benefits of solar power technology, would benefit from the shift
to renewable energy. The effect of clean power economics will be lesser on
European economies as most of them have already made the transition to
renewable energy earlier on.
And the ultimate Winners
Are —
It may be too premature to call this a win for our planet
Earth, but the benefits of renewable energy are all inclusive – from the
consumers of all stripes, forward-thinking utility companies and smart
shareholders – all stand to gain from joining the renewable energy revolution.
Low-cost renewable energy would lead to reduced consumer energy
bills, which would translate to increased spending and economic growth and
subsequently result in increased investment in renewables.
Also, with industries focusing on substituting carbon fuels
with clean energy, their regulatory environment would also improve, which
translates to a reduced risk in their operating environment, which is
favourable to bottom-line results, leading to increased investments in projects
that would modernise the power sector, so says Zlotnick.
On the other hand, industries that fail to tap into the
affordability of these renewable energy options but rather choose to stick with
fossil fuels would inevitably experience a drop in their profit margins. This
is the current trend and is visibly evident in several countries such as the
U.S and large parts of the Europen Union. It is now spreading to China, South
America and India. In most cases, the resultant effect is more severe than
generally appreciated.
As it is now, low-cost renewable energy options are the way to
go. They are cheaper, more efficient and eco-friendly. Investment in renewable
energy would boost economic growth, increase consumer spending and it offers a
better and more sustainable option than the present energy options available.
