Renewables compete with oil—decimates oil prices

Renewables are reaching the point where they are outcompeting fossil fuels on price — setting the stage for their predicted dominance of the energy sector by midcentury.

When it comes to the surging demand for new electric generation, wind and solar prices are now the cheapest options almost everywhere, according to the International Energy Agency (IEA).

Building new wind and solar projects is also cheaper than running existing coal plants, according to a report from Energy Innovation, a nonpartisan climate policy think tank.

The fall in price has led to a global rush to install new wind and solar — which the IEA noted expanded by nearly 25 percent in 2023, powered by record installations.

And the IEA added that prices are falling further — particularly in the U.S., where the tax credits from the Democrats’ 2022 clean energy stimulus will begin to take full effect in 2024.

In 2021 — before the passage of the sweeping subsidies for clean energy included in that stimulus — the U.S. government estimated that no matter what, solar power was likely to make up half of U.S. electric generation by midcentury.

The country is passing a “tipping point” beyond which renewables are the status quo option, said Timothy Lenton, chair of the climate department at the University of Exeter.

Lenton said that by midcentury, even if climate policies remain no more generous than they are now, renewables will make up three-quarters of U.S. electricity production.

This level of renewable adoption, he argued, is becoming the floor of global ambition, not the ceiling. At the United Nations climate conference (COP28) in Dubai last week, the U.S. joined 110 other nations in agreeing to triple renewable energy production.

“And if you add more climate policies, it will only go faster,” Lenton said, noting this level of growth was becoming both exponential and “hard to stop.”

“There’s a self-propelling, ever stronger feedback loop behind the transformation,” he said. The question now, he said, isn’t whether the change is going to happen. “Now it’s more about how fast or slow to go, and how hard are the incumbents going to fight to hold the status quo.”

The incumbents are currently fighting hard. The global fossil fuel industry has sent more than 2,400 lobbyists to COP28, marking a rate of increase that outpaces the rising attendance of lobbyists and business groups at the conference as a whole.

At COP28, “Republicans are going to be talking more about how fossil fuels are not a transition field that should be phased out,” Heather Reams, president of Citizens for Responsible Energy Solutions and co-chair of the Conservative Climate Foundation’s (CCF) board of directors. The CCF is convening Republican delegates at COP28.

Like Woods, Reams argued renewable technology was not yet prepared to support the grid and that overreliance on it risked leaving the U.S. “in the dark,” as well as that the “clean fossil fuels” represented a key element of the future of U.S. energy production.

Such a vision has substantial political and financial obstacles. The Biden administration estimates that capturing meaningful levels of the nation’s carbon dioxide will require 96,000 miles of new pipelines — a proposal that is politically contentious among U.S. farmers.

And installing technologies to capture greenhouse gasses on fossil fuel power plants would further raise prices for a sector already struggling to compete with renewables, as Gregory Nemet, a professor at the University of Wisconsin who studies the public policy of technology change, told The Hill.

As Reuters noted, 68 gas plants were canceled or put on hold in the first half of 2023 — thanks to a boom in new large-scale battery storage plants

“It’s just kind of incomprehensible that you would add 50 or 100 percent, to the cost of a fossil power plant that’s already more expensive than building renewables — even if you have to buy batteries too,” Nemet said.

Investment in carbon capture technology reflects this financial reality. According to the IEA, the fossil fuel industry has invested less than 0.1 percent of the funds in such technology that would be needed to meaningfully capture their waste streams. By comparison, the IEA has estimated that renewables investment needs to roughly triple by 2030 to meet global climate goals.

The declining financials of gas plants are a problem in one sense: They are still the only widespread form of “dispatchable” power, or that — like a backup generator in a home — which can produce power on demand.

That is a concern as rising electrification — driven by the embrace of heat pumps and electric vehicles (EVs) and the surging power demands of the push toward artificial intelligence — begins driving up U.S. electrical demand for the first time in decades.

Much of that demand can be met by new technologies that allow homes — and even individual devices and chargers — to “talk” to the grid, avoiding rolling blackouts.

In the current grid, the production of electricity has to exactly match its consumption to avoid dangerous spikes in power — particularly because there historically was no way to store electricity when it is plentiful and no way to reduce demand when it is not.

But new smart-grid technology allows homes and devices to communicate their specific electric demands to the collective grid — which in turn enables managers to reduce that demand by, say, turning smart thermostats in a given area down by a degree, or postponing EV charging until demand levels fall.

Such technologies also open the possibility for “virtual power plants” that buy back power from EVs and home-scale battery storage.

But they aren’t yet sufficient to close the gap between rising electricity demand and current renewable levels, said Arshad Mansoor, CEO of the Electric Power Research Institute (EPRI), a public interest research and development firm.