Wind and Solar: First to Launch

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I 4Perhaps you’ve driven through the midwest and seen those giants on the horizon: wind turbines, spinning in the distance, visibly generating usable energy. You’ve seen the first signs of the renewable revolution, just like the first time someone saw a Model T pass them on the road. This makes sense: wind and solar are the first renewable fossil fuel replacements at competitive prices that are ready to use on a utility scale.

Restoring the climate first requires that we switch to carbon-neutral energy sources by 2030-2050, as described by Stanford’s Prof. Mark Z. Jacobson, and wind and solar are an important part of that. In fact, new wind and solar electricity generation has doubled every two years since 2000 and the reasons behind that growth indicate it will continue. Cheap and accessible wind and solar are clearly important stages in our Roadmap to 2035.

newg1Wind only provides 4% of our country’s electricity today, but has been growing at over 25% per year for the last six years. If we maintain that growth rate, it will provide 50% in 2025. This would be around 2,000 modern 5-megawatt turbines per state.

Solar provides 1% of our electricity now, but is growing at over 50% per year. If we keep up that pace, it will produce the other 50% of our electricity by 2025. Efficiency improvements will provide at least a 30% reduction in our national energy requirements. For example, cars are slated to double their mileage by 2025 and LED lights are now six to ten times more efficient than old incandescent bulbs.

1051953-13649193321115432-zjkiss[1]A common argument asks: “How can wind and solar keep doubling?” Without leadership the market is already trending toward renewable generation equipment while crude oil prices fall with demand. Not only are wind and solar technologies improving rapidly and are now readily deployable, prices continue to fall as fossil fuel energy production costs rise. (Figure courtesy of Seeking Alpha). Later in this discussion we will show how we can establish the leadership to make sure this trend continues. In the end it is the market, tasked with satisfying the need for energy sources without climate changing side effects, that will decide which technologies make the most economic sense in which places.

Like any new technology, renewables will only gain market share when it makes economic sense for investors and consumers. With prices for wind and solar dropping between 5% and 15% per year, more and more of these opportunities are available. Austin Energy in Texas signed an agreement in early 2014 to purchase solar PV electricity from a new Sun Edison Solar PV plant for less than 5 cents per Kw/h. This outcompetes locally available natural gas, coal and nuclear prices at 7, 10 and 13 cents per Kw/h respectively.

bigpret2How far can the price of solar panels drop? The theoretical bottom would be a price that is very close to the cost of the anti-reflective coated glass used in the manufacture of the panels, and we are on the way to get there. In addition to falling costs to suppliers and consumers, the transition to renewables will stabilize energy prices because the sun and wind are consistent and free, in contrast to fossil fuels that require the inevitable (and varying) expenses of exploration, extraction, processing and distribution. Add in the uncertainty associated with political changes and subsidies, and we see that fossil fuels are a less reliable and more volatile energy source both to investors and consumers.

5-thebeastsm2Distributed wind and solar installations have been shown to improve network reliability; with thousands of distributed solar panels and wind turbines the loss of a few has little effect on the grid. Additionally, wind and solar projects are subject to far fewer cost overruns than other power projects. This makes for good business. As the graph below shows, clean energy stocks and indexes are outperforming benchmark indexes by as much as 60%. For these reasons, and more, investors are diving into the renewable energy sector with the same confidence of investors in early automobile companies.

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When examining our existing routes, opportunities, available technologies and economics, we see a simple route:

+ Continue expanding clean energy as we have been for ten years; doubling new capacity every two years.

+ Produce enough new clean energy each year so that we no longer need the energy that oil companies have been providing us with new wells.

+ After new oil and gas capacity building ceases, the existing wells will decay at 5% per year, giving companies in every industry plenty of time to change their investments to match our new clean energy future.

3-climatehistory

From an endpoint of 80% replacement by 2035, looking towards the present, we see that new oil and gas wells will be no longer developed. Instead, existing oil and gas wells are more or less exhausted; yielding high profits to oil companies in the near term. Oil and gas well outputs decrease about 5% per year, which is 600 Gigawatts (GW) / year (that’s 17 Terawatts X 80% fossil fuel X 5%= 600 GW). Therefore wind and solar capacity for electricity, heat and transportation need to expand at that 600 GW / year rate to replace decreasing oil and gas well output and thereby the need for new wells.

New wind and solar capacity have been doubling every 2 years for 10 years; that is five doublings. Three more doublings takes the 80 GW (solar + wind) in 2014 up to the needed 600 GW / year by 2021. The preceding US Energy Sources Assuming 5% / year shift graph shows how this looks for the US. The 100 GW/ year for the US and 600 GW / year globally includes electricity, transportation and heat.

Modern industrialist and futurist Elon Musk, when he announced Solar City’s (a solar PV manufacturing company owned by Musk) investment in a new PV factory in NY State in September 2014, said that the forward-looking global goal is 400 GW / year of new solar capacity. In tandem with 200 GW / year or more of wind power, this is the amount of annual capacity required to achieve the 20 year transition described.

Objection:

How can we not need much oil in the near future? What about transportation?

Answer:

This roadmap advocates for a complete switch to electricity-based transportation. Existing electric vehicle (EV) technology provides up to 260 real world driving miles per charge, which costs around $5 in California. Emerging technologies promise greater energy storage capacity at rapidly falling prices; which will make EVs competitive with gasoline and diesel vehicles before 2020. Oil will still be used in the manufacture of plastics and other goods and will be more slowly phased-out in the freight industry.

4-FOSSFUEL-INV

The cost of building 600 GW / year of utility-scale wind and solar would be about $1 trillion at the current <$2/watt. This is about the same amount that Oil companies now invest annually to develop new capacity.

Note: These rough estimates are probably off by a factor of two, due to sun and wind variability, so that would require another two years of growth at the start, and 80% more annual investment. Those costs, $1.8 trillion, are still less than half the amount now spent on oil and gas consumption, about $4 trillion per year. Meanwhile our gas and oil consumption will be dropping steadily.

After halting the $1 trillion per year of new fossil fuel production costs by 2021 and reducing fossil fuel consumption, we would be saving money by 2025, before even considering the health benefits. The health benefits are estimated to be worth $1 trillion per year in the US alone.

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