Renewable Energy Big Pic: Part 1 (Including 34 Charts & Graphs)

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As I mentioned in my article covering the latest US Solar Market Insight report (which I just published a few hours ago), I was “out of the office” today giving a presentation on solar power growth. But the presentation was actually on much, much more than that, as you’ll see in the article below and in the one to follow tomorrow.

It’s a Small World

Unbeknownst to me until a few months ago, there’s a renewable energy graduate program at a university here in Wrocław (the city where I live). Turns out that at least one of the students currently in the program is a CleanTechnica reader. He noticed that I was living in Wrocław, and decided to reach out to me. We met up at a coffee shop one day to talk solar energy (for several hours), and not long after that I was invited to give a guest lecture to his class.

Knowing that the students were more focused on the science and engineering side of things, I decided to focus my presentation on the solar and wind energy markets and key policy topics. I gave the presentation earlier today, and figured it would also be worth sharing it with you all (with plenty of text added in place of my vocal commentary, and with some chart switcharoos and additions, including a few from the new US Solar Market Insight report, which was released less than an hour after my presentation ended).

So, anyway, that’s the story; let’s get rolling….

Notably, the info below doesn’t even take into account the tremendous health costs of coal and natural gas, which would make them much more expensive “at the register” if actually included in the price.

Solar Power Price Drops

1.5 years ago, GE projected that solar power would be cheaper than fossil fuels (on average) within 5 years. With 3.5 years left, GE’s prediction definitely seems within reach. In fact, GE was putting big money into a solar cell manufacturing plant in Colorado, but in January it pulled the plug on that due to the fast-falling prices of competing solar cells. In other words, solar prices are falling even faster than GE had thought they would (and faster than most analysts and renewable energy followers thought they would).

I’ve shared the following two graphics a few times in the past couple years. They make a rather important point that doesn’t seem to get enough attention: solar power projects go up relatively fast, while nuclear and coal power plants require many more years to get designed, planned, permitted, and built. With nuclear and coal costs rising while solar costs are quickly falling, by the time a new nuclear or coal power plant would be built, its electricity would already be more expensive than electricity from solar (or wind, for that matter):

In fact, one report from 2010 found that the solar–nuclear crossover occurred a few years ago.

Now, an assumption in all of these projections mentioned above is that solar prices will consistently drop at a good rate. And that’s exactly what’s been happening. As I just shared a couple weeks ago, here are a few nice graphs of solar PV price drops in Germany:

Lest you think it’s only Germany seeing such price drops, below are similar graphs from the US.

This first one shows that the installed price of residential and commercial solar dropped from an average of about $12/W in 1998 to about $6/W in 2011 (~50%).

Similarly, this next one shows the drop in the price of solar modules from 1985 to 2011 (from over $6.5/Wp to about $1/Wp):

Here’s a look at the drop simply from 2009 to 2011:

And here’s one graph published just a few hours ago for the drop from Q4 2011 to Q3 2012 (for solar modules and specific module components):

Wind Power Price Drops

So far, of course, we’ve just been looking at solar, but the other big renewable energy player these days is wind energy. It has followed a very similar path, just a bit earlier than solar energy. It actually hit a big grid parity point last decade… before natural gas prices fell off a cliff:

Without taking too long of a side tour here, it is worth noting that natural gas prices fell off cliff as certain fracking practices became commonplace, and those only became commonplace once Dick Cheney got a ridiculous policy enacted for the fracking industry on his way out of office (and yep, Cheney was previously CEO of Halliburton, the company probably benefiting the most from this policy). What is the policy? Known as “The Halliburton Loophole,” it’s essentially that fracking fluids are exempt from the Clean Water Act (for no clear reason) and companies engaged in the process don’t even have to disclose what chemicals they are using. Needless to say, countless health externalities from the fracking process are not being accounted for in the price of natural gas, and can’t even be calculated by anyone outside the industry. (And, of course, no one inside the industry is going to do that.)

Long story short: natural gas fracking as it is happening today is artificially legal (i.e. should be illegal).

Furthermore, even with things as they are today, many are projecting that the price of natural gas will rise again in the coming years, making wind the cheaper option by far… yet again:

And, even today, wind energy is the cheapest option for new electricity in many, many places.

But, that’s not the end of the story — the price of wind power, like solar, is on a downward trend. Numerous technological improvements are bringing the price of wind down to an absurdly (in a good way) low number:

As we just reported about a month ago, a recent report by Bloomberg New Energy Finance has documented some important technological and other wind power cost reductions over the past four years. Two of the key findings were that:

• O&M costs have been 38% lower in 2012 than 2008.
• The price per megawatt of wind power is down to €19,200 from the €30,906 it was at in 2008.

The report also noted technological improvements and price reductions. Also worth noting is the birth and growth of Chinese wind turbine manufacturing firms, which is driving down prices and increasing competitiveness.

Solar Power Boom

A rapid price drop and an installation boom are naturally going to go hand in hand. As the price falls, more solar gets installed. And as more solar gets installed, the price falls. This is the kind of feedback loop we like. 😀

Here’s annual solar power growth from 2000 (almost no solar power installed) through 2010 (about 17 GW installed):

Here’s a similar chart for US solar power growth:

Here’s a look at installation data from 2010 & 2011 and installation projections through 2016 (chart just released earlier today):

And here’s a broader look:

Here’s solar PV, wind, and biomass growth in Germany through 2011 (and I know 2012 has added a ton onto that):

Wind Power Boom

Of course, it’s a similar story for wind, with projections that the growth will continue at a fast clip for decades to come:

Some key stats regarding global wind power are that 1) it had a compound annual growth rate (CAGR) of 25% from 2005 through 2010; 2) by the end of 2011, 200,000 MW were installed; and 3) by 2030, 1,750,000 MW are projected to be installed.

Europe Leading The Way

As a sign of things to come in Europe and many other places, the EU’s new power installation split in 2011 was quite uplifting — as I reported in February, 70% of new EU power was from renewable energy sources in 2011:

Why have I just been focusing on solar and wind energy in this article/presentation? Because solar and wind energy are the dominant renewable energy options these days. You can see in this chart that 96% of 2011 renewable capacity additions were from solar and wind:

And here’s a look at all net capacity changes in the EU in 2011:

You can see in the next chart that wind and solar have come to dominate new power installations in the EU in just the past 5 or so years (note that solar PV is green not yellow in this chart):

Perceptions, Oy…

Despite all of the above, there are big misconceptions about energy. Perhaps it’s because people heard things 10 years ago that they still keep in their heads and think are true today. Perhaps it’s because people hear things that are simply false (from pseudoscience fossil fuel think tanks, utility companies, and misguided media). But the bottom line is that many (or the large majority of) people don’t realize how cheap solar and wind have gotten.

Here’s one look at the difference between perceptions of the levelized costs of wind and perceptions of the levelized cost of coal:

We also have a post coming soon showing that UK residents don’t realize how cheap solar has become, and how much money they can save by going solar. I’m sure the same is true for the US and other countries/markets.

Rooftop Solar PV Competes With Retail Electricity

Something that doesn’t get emphasized nearly enough is that rooftop solar PV essentially competes with the retail price of electricity, not the wholesale price.

If you’re an average Joe considering whether or not to go solar, you don’t compare the price of solar with the wholesale price of a coal or natural gas power plant — you compare it with what you would pay for electricity from your utility. In many places, solar is already cheaper. And in many, many more places, that will soon be the case. (In other words, utilities have something to be worried about).

With the increasing use of “time of use” (TOU) pricing, and the fact that peak power demand (when prices are highest) often coincides with peak solar PV output, this clean technology gets even that much more attractive (i.e. cheap relative to electricity from the grid).

Leading Countries

You can’t give a big picture summary of clean energy without noting which countries are leading the way.

In absolute terms, you can see the world’s current solar and wind power leaders here:

I love rankings and top 10 lists as much as the next guy, but these absolute installation rankings always irk me a bit. Isn’t relativity important these days?

Without finding good rankings based on relative solar and wind leadership on the interwebs, I decided to create such rankings myself.

You can find a lot more rankings and info at the links below, but for a quick snapshot, here are a few key “relative leadership” rankings:

Top solar power countries per capita:

Top solar power countries per GDP:

Top solar power countries per TWh of electricity production:

Top wind power countries per capita:

Top wind power countries per GDP:

Top wind power countries per TWh of electricity production:

Tomorrow…

So, what are the leading countries doing to lead in the energy sector? What about energy subsidies and incentives? What about technology improvements? What about merit order pricing? What about energy storage?

These are all topics I got into in the second half of my presentation (update December 12: Renewable Energy Big Pic: Part 2 is now published).