The exponential growth of renewable energy is driving down global electricity prices and helping to remove so much carbon from power systems that fossil fuels are no longer cheap and their use has peaked, according to a report.
From China to Europe, solar, battery and wind power capacities are increasing, the Rocky Mountain Institute said in an analysis released Thursday jointly with the Bezos Earth Fund. This means demand for gas, oil and coal linked to electricity generation falls sharply, a critical step in curbing emissions linked to climate change.
“Fossil fuel demand on the electricity system, specifically, has peaked in 2022,” RMI senior director Kingsmill Bond told reporters. Going forward, it is “actually very difficult for fossil fuel demand to grow from these levels just because of the speed at which these alternative technologies are growing.”
The change comes as governments and industries rebuild their energy infrastructure after supply shortages and soaring prices following Russia’s invasion of Ukraine. High deployment rates are also driving down the prices of renewables, making higher-cost hydrocarbons uncompetitive.
Solar panels and wind turbines will supply more than a third of the world’s electricity by 2030, up from about 12% today, RMI forecasts. These sources should produce up to 14,000 terawatt-hours, surpassing fossil fuels.
While China and Europe lead the growth of clean energy, deployment is reaching other parts of the world. Namibia, the Netherlands, Palestine, Jordan and Chile have increased solar and wind generation at a sufficient rate for five years, the report said.
According to BloombergNEF, renewables are already considered a cheaper form of electricity, with costs falling over the past decade. The data shows that solar and battery costs fell by 80% between 2012 and 2022, offshore wind fell by 73% and onshore wind fell by 57%.
The growing adoption of clean technology will halve its prices by 2030, down to $20 per megawatt-hour for solar power from more than $40 now, RMI said. Capital’s shift away from fossil fuels will also increase investment in low-carbon forms of energy.
“Change is happening faster than we think,” said Christiana Figueres, architect of the Paris Climate Agreement, during a panel discussion. “Tripling renewables by 2030 is not guaranteed, but it is more possible today than ever because of the exponential trends we are seeing.”
