Investing in the Industrial Development of Electricity Generation from Renewable Energy Sources

Tomas Kåberger, Chair of Executive Board, Renewable Energy Institute

29 March 2019

in Japanese

Ambitious countries and companies are showing the way with a strategy that could help eliminate the risk of unmanageable climate change

The strategy is based on ideas to achieve far-reaching and economically sustainable results. By investing in the industrial development of electricity production from renewable energy sources, electricity could be generated at lower cost than from fossil fuels. Renewable electricity could then reach costs low enough to replace fossil fuels in the transport sector, for industrial processes and partly for heating. This would allow fossil fuels to be completely replaced by renewable energy, including low-cost solar and wind power, together with hydropower, geothermal energy and bioenergy in waste and by-products from agriculture and forestry. Stable electricity supply would then become economically sustainable without any policy support.
This strategy is used in German energy policyi  and in the US SunShot initiativeii, launched to reduce the cost of solar electricity. A similar strategy was later used in China, and is now pursued with global ambitions by GEIDCO, based in Beijingiiiiv . More recently, similar ideas have been proposed as a solution by the global Energy Transition Commissionv .
The clear economic logic and growing global support make it likely that this strategy will be realized. Bloomberg New Energy Finance, in its New Energy Outlook 2018, predicts that the cost of producing electricity from wind will drop to less than half by 2050 and solar electricity will cost less than a quarter of the current cost by 2050 vi. But without more support and attention, it will happen too slowly to avoid the risk of dramatic climate change. 
Nevertheless, the goal of the SunShot initiative for 2020 was achieved in 2017, well ahead of targetii . Solar and wind power are already providing cheaper electricity than any other new power plants in most parts of the world according to Bloomberg New Energy Financevii. According to Lazard’s annual cost studyviii , solar and wind power have begun to outcompete existing coal and nuclear power plants in the US. More importantly, renewable electricity has become cheaper than oil and liquid natural gas per energy unit in large parts of the world ix.
This trend is confirmed by the fact that more than 12 GW of coal-fired power stations were closed in the US in 2018 x. In China, no nuclear reactor construction project has been started since December 2016xi , while solar and wind power are being expanded faster than anywhere else in the world. 
Old professors and nuclear power engineers – those who do not see the entire strategy – usually assert that solar and wind power cannot be expanded because they compete with each other by creating overproduction in relation to current demand in the electricity system.
It is true that it is difficult to achieve profitability from a large proportion of solar and wind power if you only see it as a way of replacing coal power plants. But if you start using electricity to charge batteries when the electricity is cheap, during the day, and use longer periods of good access to solar and wind electricity to produce heat, hydrogen or liquid fuels, then it is possible to expand solar capacity and wind power far beyond the traditional electricity demand and at the same time always meet the immediate demand for electricity.
Thus, it can be more profitable to replace all fossil fuels than to do so solely in the electricity sector.
In Sweden, we see this strategy in action in the Hybrit project xii, whose goal is to produce hydrogen from renewable electricity, to replace coal in the steel industry’s reduction processes. We can also see this strategy in a project to produce hydrogen from electricity as biomass feedstock for producing biofuels at Preemxiii . We see it in the Liquid Wind project to produce electro-methanol for the shipping industryxiv. But most of all, we can see how electricity is taking over from fossil fuels in cars.
Key developments that support this strategy include major cost reductions in battery manufacturing, information technology for controlling electricity consumption over time, as well as high-voltage electricity transmission with low losses.
Batteries are not just used by vehicles, they also make it possible to supply households with local solar power in large parts of the world that do not have well-developed electricity networks. Batteries can also provide a cheap way of ensuring that electricity networks are even more stable than today.
While expensive electricity distribution networks can be out-competed by batteries, cheaper electricity transmission can ensure that large cities and energy-intensive industries can be supplied with renewable electricity even if the electricity cannot be produced locally.
There are no technical or economic barriers to eliminating the threat of rapid climate change. But other obstacles do exist: Many large energy companies will lose large asset values as fossil energy resources and power plants become worthless. These companies will mobilise governments and reactionary individuals who do not want to see new technical solutions. Individuals who oppose this development may have very different viewpoints, from being attached to the old centralised energy technology, to those driven by a desire to see society collapse.
But there are many more who can and want to help solve both their own and the world’s problems by building solar and wind power plants and provide an efficient modern energy supply to everyone in the world. Those who go for the solution will win. Let us make it fast enough!

External Links

  • JCI 気候変動イニシアティブ
  • 自然エネルギー協議会
  • 指定都市 自然エネルギー協議会
  • irelp
  • 全球能源互联网发展合作组织

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