Renewable-Energy Growth Explodes

There is no shortage of bad green-energy news. Automakers are fretting about electricvehicle growth, higher interest rates are smashing financial plans, permitting for big projects still takes forever and offshore wind is a mess. But for every setback, there is a Sun Streams. This cluster of solar farms will cover more than 13 square miles of desert west of Phoenix. By 2025, it will provide enough electricity for roughly 300,000 homes, bringing Arizona’s largest utility closer to its goal of a zerocarbon grid. The scale of the development, mostly owned by renewables company Longroad Energy, is part of a staggering surge in renewable energy. Driven by falling costs and better technology, growth in renewables has consistently exceeded expectations. The annual United Nations climate summit starts later this week in Dubai. What has become clear after years of talking is that few countries, businesses or people are willing to sacrifice much to limit climate change. The explosion of clean energy offers hope for cutting fossil-fuel use. “We are coming short on many dimensions, and we have an enormous amount of work to do,” said Rich Lesser, global chair of Boston Consulting Group. “But, equally important, our ability to make progress on the technology side has dramatically exceeded our expectations.” In 2009, the International Energy Agency predicted that solar power would remain too expensive to compete on the  grid. It continued to underestimate the growth of renewable energy and EVs. Last year, more than four-fifths of the world’s new power capacity was renewables, according to the International Renewable Energy Agency. Subsidies drove early growth in wind and solar, then technology refinements and large-scale manufacturing made them cheap. Lithium-ion batteries, which power cars and store electricity on the grid, plunged in price, too. Sun Streams will have enough batteries to power about 40,000 Teslas. Money is continuing to flow into these projects despite green energy’s headwinds. Longroad, the developer, said it raised $600 million of debt finance to expand its portfolio in a deal led by Apterra Infrastructure Capital, an affiliate of Apollo Global Management. Research firm Rystad Energy estimates that we are on course to burn enough oil, gas and coal to heat the planet by between 1.6 degrees and 1.9 degrees Celsius above prein dustrial levels, depending on how urgently governments act to speed up the transition. That is rosier than many other forecasts, though it exceeds the international target of 1.5 degrees that is seen as a comparatively safe limit. Rystad’s bullishness comes from the sun. Chief Executive Jarand Rystad said the spread of solar panels is compensating for lagging sectors such as offshore wind, which has been hobbled by cost overruns and snarled supply chains. BloombergNEF expects solar panels installed this year to add nearly 400 gigawatts of generating capacity. That is 4.5% of the generating capacity of the world’s power plants in 2022. On the current trajectory, transition bulls argue, it is a matter of when renewables erode fossil-fuel use, not if. The IEA expects demand for coal, gas and oil to peak this decade. Many fossil-fuelproducing companies and countries are betting on a long future for their products, and peak-oil talk has been wrong before. But it is also easy to underestimate the pace of change. Projections by the U.S. Energy Information Administration didn’t see how quickly renewable energy and natural gas would erode U.S. coal consumption. Much depends on China, where the growth of wind and solar coincides with new coal projects. Optimists say coal plants will act as backup in a system increasingly dominated by renewables. China leads the world in long-duration battery projects, according to BloombergNEF. Jarand Rystad said fossilfuel power generation in China is close to a peak. “The tipping point is very soon,” he said. The average cost of solar power fell nearly 90% between 2009 and 2023, with onshore wind declining by two-thirds, according to BloombergNEF. Similar declines are starting to reshape transportation. EV costs are falling, and infrastructure is improving. The total cost of ownership of small and midsize EVs is cheaper than gasoline-powered vehicles in China and Europe and could hit that point in the U.S. next year, according to the Economics of Energy Innovation and System Transition project led by the University of Exeter. In this view, renewables, batteries and EVs will become more popular as they get cheaper and better. Emerging green-energy technologies such as hydrogen, which is benefiting from government support and a surge in private investment, could follow the same path. Investors including Singapore state investment company Temasek put up €1.5 billion, or about $1.64 billion, for a low-carbon steel plant in Sweden in September as more money flows into decarbonizing industrial processes. Thorny emissions problems now have competing possible solutions. Startup Boston Metal recently raised $262 million to make green steel via a method that uses electricity rather than hydrogen. Two others, Rondo Energy and Antora Energy, are manufacturing thermal batteries that store electricity as heat—a way to power high-temperature processes while using up surplus renewable power. “The fact that solar and wind costs have come down so dramatically has opened up a whole new set of options,” said Dolf Gielen, an energy economist at the World Bank.