I like free stuff. Free delivery, free wireless, free breakfast… you name it.
I think most people share this view, and I know that companies and countries around the world are definitely on board. That’s what makes solar and wind power so interesting.
The basic resources are free. Yes, there’s the bit about environmental concerns, which are very important. But if environmental notions came first, we wouldn’t talk about renewable energy versus fossil fuel. We’d simply convert to green energy and be done with it.
But we don’t. Cost still matters. And while we can stand outside to enjoy sunshine and a nice breeze, harnessing those energy sources takes a bit of cash.
But the cost of capturing wind and solar has fallen dramatically over the past decade, and now the cost of storage is dropping as well. As batteries get better and cheaper, wind and solar will crowd out traditional power generation, driving deflation around the world while increasing our standard of living.
Last year, Crystalline Utility-Scale Solar Photovoltaic energy, one of the cleanest and environmentally friendly methods of generating electricity, cost roughly five cents per kilowatt hour (kWh). This is not the kind of thing you see on your neighbor’s house; it’s a large solar array set up by a power company.
Meanwhile, wind power cost between three cents and six cents per kWh in 2017. Both energy sources fell below the cost of energy from a natural gas combined cycle plant, which operated in a range of 4.2 cents to 7.8 cents per kWh.
This means that it’s cheaper for utilities to build solar and wind facilities than to build natural gas plants, and way cheaper than coal or nuclear.
The Problem is Storage
The problem is storage. Natural gas plants store their energy before the generation process in the gas itself, only using what is needed to run the plant and saving the rest. Because we can’t determine when the wind blows or the sun shines, those plants must operate when the conditions are right and then try to store electricity after it has been generated.
But now storage costs are dropping, which is finally making renewable energy competitive with fossil fuels.
By the end of last year, adding storage to solar energy drove the cost to 8.2 cents per kWh. That’s just above the cost for natural gas, but the number is falling.
With the automotive world and countries around the globe focused on electric vehicles as a way to solve pollution issues, battery technology has become one of the hottest fields in research. I have no doubt that battery capacity will increase dramatically in the next five years.
And when it does, it will bring a wave of deflation, because sunshine and wind will always be free.
Natural gas fired plants still need raw energy, which requires pipelines and massive infrastructure. Wind and solar plants have no such needs. The generation sources must be maintained (wind turbines and solar panel arrays), but you don’t have to figure out where you will get your next shipment of energy.
The sun comes up, the wind blows. Over time, renewable power generation and storage costs will drop, and sunshine and will still be free. Energy costs should be on a long, steady slide lower.
As energy prices fall, the cost of power should take a smaller chunk out of our daily budgets, as well as the cost of producing goods and providing services. Much of the world will be able to devote funding to other needs, and some of the world will get reliable energy for the first time.
Renewable energy makes up about 15% of U.S. electrical generation, so the transition to renewable will take many years as we develop better storage and work through the useful life of existing power sources.
But the change will come, and we’ll be the better for it. We’ll spend less on energy, and create less pollution. Best of all, we’ll get something for free. Who wouldn’t like that?