If you want to pay more, then choose gas, that was the clear message from Francesco Starace, the head of ENEL. Francesco leads one of the biggest utility companies in the world & knows that the time of fossil fuels in energy generation is coming to an end. I want to pay less, what about you?
Renewables are cheaper and they influence the market to lower costs, a real win win. Francesco said “What happens when you have progressively higher percentages of renewables at zero marginal cost in the energy mix, two things happen; the energy costs at a wholesale level go down and the energy costs at a wholesale level become less sensitive to commodity variations.”
Welcome to a greener and cheaper world
Renewables benefit from experience curves, costs come down as the installed capacity increases. There’s even a name for it now, “Swansons Law”. The International Renewable Energy Agency (IRENA) agrees: solar PV has fallen 80% in the last 9 years while wind has fallen about 40% in the same period and all the signals are that the trend will continue in the years to come. What we have to realise is that in 10 years the cost of Solar will have dropped another 80%. So, you do the maths.
But, hey we all know renewables are intermittent and so can’t be relied on, right?
The reality is: energy storage (particularly batteries) cost fall at about 20% every year making this the secret ingredient that will unlock the full potential of renewables. Add to that grid Flexibility and Demand-Side-Response and you will get the disruptive mix of green, reliable and affordable energy. You might hear people say things like batteries are not economic; I remember hearing the same about electric cars and look how wrong they were about them. I believe batteries will continue to fall in price for a long time to come.
Energy independence here we come
Renewables are an energy resource available to all, sure some countries might have less wind or sun than others but they all have enough renewables resources to make themselves energy independent. This ensures anyone can secure their own energy supply simply by installing renewables. No more being held to ransom by some gas exporting countries, maybe even, no more wars over oil.
Dirty generation – I though gas was cleaner?!
In the meantime the wholesale price of gas continues to rise and in the UK. Making gas so expensive that we are using coal to generate electricity again. So thanks to gas, energy prices are rising and so is the grid carbon intensity, what a coincidence, just as winter sets in! 😠
A virtuous cycle of greener and cheaper energy has begun!
Ok, so we have a group of technologies that fall in price year on year, and we now have a new technology (storage) that increases the usefulness of these technologies, so what’s going to happen?
That’s right, more people will install more renewables with more storage, dropping costs faster meaning more people install more and so on... The virtuous circle of clean and affordable energy has begun. Watch out old technologies, the transition to renewables will happen a lot faster than people think!
Animted gif: courtesy of giphy.com
Swansons Law: wikipedia
Cost of electricity graph: IRENA