I last discussed the slowdown in world investment in clean energy in this blog post from January 2014. This article discusses the drop in clean energy investment so far this year (2015) compared to last year (2014) based on data from a recent Bloomberg report. This shows the slowdown continues. The graph above shows total world investment in clean energy, mostly wind and solar from 2004 to 2015 (estimated)and clearly illustrates this slowdown in investment.
Numbers are numbing and hard to put in context. This graph shows two big things. Firstly clean energy investment has been relatively flat for five years since 2011. There are no indications that it will rise from this level. To put things in perspective, $250B/y to $300B/y is a lot of money and exceeds all other investment in electricity generation. That includes investment in coal, gas and nuclear power plants. It should also be remembered that about half of this investment is various government subsidies Secondly, when we look at the generating nameplate capacity this $250B buys, it is about 100GW of wind and solar, with an average generation of about 20GW/y. To reduce CO2 emissions in a timely manner we need to add at least 500GW of clean new average generation capacity every year. 20GW is a factor of 25 too small. The rapid drop in solar costs since 2011 have created an illusion that solar costs will continue to fall at rapid rates and enable exponential growth. The reality is that PV panel prices stabilized years ago. Other system costs have reduced rapidly, but the bulk of the rapid cost reductions are over. There is no way that current wind and solar will ever provide sufficient capacity within the current budget based on their projected costs. A change in strategy is needed. StratoSolar at current costs would provide over 100GW/y of average generation for $250B and as a complete lowest cost solution could competitively replace other new generation to provide over 200GW within the current world spending on generation. Eventually, at less than the current investment level in energy of $1.5T/y, StratoSolar could provide all energy without the world spending any more on energy than it currently does. This is a strategy that could succeed. By Edmund Kelly
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Bill Gates is perhaps the most influential public advocate for a "technology led" approach to reducing Green House Gas (GHG) emissions. This article, and this site are strong advocates of the "Policy led" approach. Unfortunately, as this article shows, Bill, by advocating that the funds currently used to support the "Policy led" approach be used instead to fund R&D and the "Technology led" approach is adding to the extreme polarization that marks this debate. Those who agree on the urgent need to reduce GHG emissions don't need to waste their time fighting each other. They need to talk to each other and not at each other.
A reasonable analysis would say that both approaches are necessary. It is clear that on the current path, the technologies supported by the policy led approach are not succeeding in reducing overall CO2 emissions and are unlikely to ever have a sufficiently large impact. At a global level, the developing world, which accounts for almost all growth in world energy consumption, has resisted policies to reduce GHG emissions since the 90's and continue to do so, based largely on economic concerns. When viewed at a global level, alternative energy has gone through a series of local boom and bust cycles as policy support has waxed and waned. Currently, Europe which used to be the leader has slipped back as policy has waned and China and Japan have come forward as policy has waxed. The US has gone up and down as policy has oscillated but has not been a significant player at the global level for decades. Because of declining PV prices driven by China, the Investment Tax Credit (ITC) and low interest rates have made PV investable in the US. The ITC and the US PV boom will probably end next year, a reminder of the fickle "boom and bust" nature of the "policy driven" approach. The subsidy level for alternative energy investment worldwide is about $100B/year, about half of the $200B/year world investment in alternative energy electricity generation, which in turn is about half of the $400B/year investment in electricity generation. It is going to have a hard time increasing significantly from this already significant level. We need better clean energy technologies, but as Bill Gates points out, the investment level in energy R&D is pitifully low. The "policy led" advocates have to accept this reality. "Policy led" has to accept a change to include significant R&D in a wider range of speculative technologies, not just subsidizing an entrenched status quo. By Edmund Kelly |
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