Baseload, Bioenergy, Energy Efficiency, Geothermal, Project Development, Solar, Storage, Wind Power

Mid-Year Celebrations: Fireworks, A World Cup, And Clean Energy Momentum

This month alone, we Americans celebrated our nation’s birthday, capped off perfectly by the USA women’s soccer team’s sensational 5-2 victory in the World Cup final. As we hit the halfway point of 2015, the clean-energy industry also has much to celebrate, much of it in the month of June alone and much of it financial.

Consider all of these developments in the past month:

  • The White House announced $4 billion in clean-energy funding commitments, including $1.1 billion from five large institutional investors such as the University of California ($91 billion in assets) and TIAA-CREF ($611 billion), with the balance from major foundations and nonprofits.
  • Bill Gates quite literally doubled down on financing innovative renewables technologies. The software mogul-turned-clean energy investor told the Financial Times he would add an additional $1 billion over the next five years to his $1 billion already invested in clean-tech companies and the venture capital firms that back them.
  • Another tech mogul, Masayoshi Son of Japanese telecom giant Softbank, went even further. Already a major funder of large solar energy projects in Japan, Softbank committed $20 billion for solar in India — aiming to help grow that market to 100 GW in 2022 from 3 GW today. (As the saying goes: a billion here, a billion there, pretty soon you’re talking real money.)
  • Sixty percent of large investment firms plan to invest in solar power projects for the first time in the next five years (including 32 percent in the next year), according to a survey released in June by solar PPA market maker Wiser Capital. Eighty percent said they want to “support a clean-energy future” and more than 60 percent are confident in the chances of high ROI.
  • At the very end of June, China upped its commitment to reduce greenhouse gas emissions by 60-65 percent from 2005 levels by 2030 (up from its 40-45 percent pledge made in 2009), including a goal to receive 20 percent of its primary energy from non-fossil fuels by 2030. The announcement was part of a slew of new GHG cut commitments from the U.S., Brazil, and South Korea, in advance of the United Nations climate talks in Paris later this year.

A great driver of all of this recent momentum is the rapidly changing economics of clean energy. Headlines The daily headlines about record-low prices for solar and wind power in a myriad of regions appear almost daily. To cite just two examples, Michigan utility DTE Electricity has asked regulators to approve a rate cut because of falling wind prices in the state, while Austin Energy, seeking to procure 600 MW of solar in Texas, received developer bids at less than 4 cents per kilowatt-hour.

Those are just two examples of a broad-based global trend that shows no signs of slowing down. A June report from Bloomberg New Energy Finance predicts that wind power will become “the least-cost option almost universally” within 10 years, with prices falling 32 percent (from today’s already competitive levels) by 2040. And solar will join wind as cheaper than fossil fuel-fired energy by 2030, with prices dropping 48 percent by 2040.

Talk about a tipping point. These new economic dynamics, along with other technology and cost advances particularly in energy storage, are why states, cities, corporations, and nations can now set once-unthinkable targets for generation from renewables without breaking the bank. In more news from the month of June, Hawaii (100 percent by 2045) and Vermont (75 percent by 2032) both signed unprecedented renewable portfolio standards (RPS) into law. And in California, which is 19 times larger than Hawaii and Vermont combined, the state senate passed Gov. Jerry Brown’s goal (announced in January) of 50 percent renewables generation by 2030. It now awaits expected approval by the state assembly to become law for the world’s seventh-largest economy; California’s current RPS mandate is 33 percent by 2020.

Policy drivers like these will continue to be critical to drive the growth of renewables, as they are for all forms of energy. In one piece of bad news on the policy front at the end of June, the U.S. Supreme Court issued a key ruling against EPA regulation of mercury emissions from coal-fired power plants. It’s certainly not a good development for the environment, but unlike what I’ve read in various media accounts, it does not directly affect CO2 regulation such as the EPA’s Clean Power Plan.  It serves clear notice, however, that the transition from fossil fuels to clean energy is a long-term battle, with fierce opposition and many obstacles lying ahead.

But the court’s ruling does not change the fundamental economics of energy: coal is simply no longer a cost-effective choice for new generation in the U.S. and increasingly, overseas as well. Compared to the much larger trends in finance and policy that are driving the momentum of renewables, many of which came to the fore in June, I predict that this SCOTUS decision will be a blip on the radar. Although a long road awaits, the clean-energy industry had a very positive month — and a little celebrating is in order.