By Jules Kortenhorst, CEO, Rocky Mountain Institute
We live in an exciting time. Though fossil fuels still dominate global energy supply, there are encouraging signs we are in the midst of a clean-energy revolution that is sure to transform our climate, our economy, and our lives for the better.
Three trends offer strong evidence:
- The rapid and accelerating pace of renewable technology development.
- The continued declining costs for those technologies, which makes them ever more economically competitive.
- The way that solutions are combining to more fully leverage their potential.
Accelerating Renewable Technology Development
Renewable energy patents are on the rise. In the U.S., they increased from fewer than 200 annually prior to 2000 to more than 1,000 by 2009. Fossil-fuel patents, meanwhile, increased from ~100 per year to 300 over the same period. Since 2004, solar and wind patent growth has been especially fierce, reaching respective 13 percent and 19 percent annual growth rates that match or exceed those of technologies such as semiconductors and digital communications. And though global investment in clean energy fell for the second straight year, from a record high of $318 billion in 2011 to $254 billion in 2013, renewable-energy costs fell even more, so global capacity additions actually rose over the same two years.
Declining costs
The cost for renewable technologies, meanwhile, is falling rapidly. The unsubsidized levelized cost of energy for the most cost-effective new wind projects beats all forms of generation, fossil-fueled or otherwise, except efficiency. Solar PV module prices have dropped ~80 percent since 2008, while total installed system cost fell ~40 percent over that same period. The cost of LED lights has fallen by more than 85 percent over the past five years, and battery storage costs have dropped by more than 40 percent.
Those cost declines are spurring greater adoption, driving costs even lower through scale and competition. In the decade from 2004 through 2013, global electricity generation from wind and solar PV grew 853 percent. Electric vehicle sales are scaling twice as fast as hybrid cars did at the same point in their respective histories since market introduction. And corporations such as IKEA, Google, Apple, Facebook, Salesforce, and Walmart are investing heavily in renewables.
Synergistic solutions
Even more exciting is the way myriad technologies and trends are converging. For example, electric vehicles and their battery technology are for the first time truly bridging the divide between the electricity and transportation sectors. Lithium-ion battery developments and price declines driven by the automotive sector are crossing over into stationary residential applications, and vehicle-to-grid technologies are offering firming capacity for variable renewables and ancillary grid services such as frequency regulation.
This synergistic effect is most prominent with the combination of rooftop solar and battery storage. RMI’s February 2014 Economics of Grid Defection report highlighted this disruptive opportunity resulting from the effectiveness of combining these two technologies. Earlier this summer, Barclays—in part citing RMI’s analysis—downgraded the entire U.S. electricity sector, noting these burgeoning renewable technologies’ combined risks for traditional utility business models.
While challenges still exist—the need to rapidly scale financing for renewables, the need for new utility business models to facilitate more renewables onto the grid, the speed at which we need to address climate change—we are making great progress. People say that an energy revolution is coming, but that revolution is here.
Jules Kortenhorst is CEO of Rocky Mountain Institute. He is a recognized leader on global energy issues and climate change. His background spans business, government, entrepreneurial, and nonprofit leadership.