Based purely on economics, renewable energy is becoming cost competitive with conventional fossil fuels much faster then originally anticipated.
In a new research report published by the investment bank Citibank, analysis shows that investment in wind and solar power is now making financial sense as renewables become more efficient and cheaper. They also insulate consumers from price fluctuations associated with fossil fuels.
This truth is becoming apparent to those in the power industry as they grapple with securing low-cost power, fuel diversity and stable cash flows.
Contrary to natural gas's reputation as steady and cheap, due to the fracking boom, Citi’s report points to the current rising cost and volatility of natural gas. As a result, energy companies are seeking sources that aren't subject to fuel price volatility.
Costs for solar and wind energy continue to fall because of streamlining and standardization of installation processes, price declines in materials and longer module lifespans. While the report shows a continued trend downward, the rates of declines will vary among residential, commercial and utility-scale projects.
In some countries today, the clean energy industry is already expanding rapidly and meeting large chunks of national energy demand. In Germany last year, renewable energy in took a 22 percent share of generation while natural gas fell to 11 percent from 14 percent.
A report from Australia’s Climate Commission also highlighted the increasing potential for solar energy, with more than 10 percent of Australians – 2.5 million people – now using solar panels to heat and power homes.
Renewable Energy Growing Faster Than Expected: Citibank Analysis