Oxford Study: Rapid Green Transition will Save Trillions
September 21, 2021
Above, early solar panel and battery. In the 1950s, this would have been the most expensive form of electricity available. After a thousand-fold price drop, it is now the cheapest.
The price of renewable energy is now falling nearly as fast as heat and rainfall records, and in the process perhaps offering us one possible way out. The public debate hasn’t caught up to the new reality—Bill Gates, in his recent bestseller on energy and climate, laments the “green premium” that must be paid for clean energy. But he (and virtually every other mainstream energy observer) is already wrong—and they’re all about to be spectacularly wrong, if the latest evidence turns out to be right.
Last Wednesday, a team at Oxford University released a fascinating paper that I haven’t seen covered anywhere. Stirringly titled “Empirically grounded technology forecasts and the energy transition,” it makes the following argument: “compared to continuing with a fossil-fuel-based system, a rapid green energy transition will likely result in overall net savings of many trillions of dollars–even without accounting for climate damages or co-benefits of climate policy.” Short and muscular, the paper begins by pointing out that at the moment most energy technologies, from gas to solar, have converged on a price point of about $100 per megawatt hour. In the case of coal, gas, and oil, however, “after adjusting for inflation, prices now are very similar to what they were 140 years ago, and there is no obvious long-range trend.” Sun, wind, and batteries, however, have dropped exponentially at roughly ten percent a year for three decades. Solar power didn’t exist until the late 1950s; since that time it has dropped in price about three orders of magnitude.
Empirically Grounded Technology Forecasts and the Energy Transition:
The long term trends provide a clue as to how this competition may be resolved: The prices of fossil fuels such as coal, oil and gas are volatile, but after adjusting for inflation, prices now are very similar to what they were 140 years ago, and there is no obvious long range trend. In contrast, for several decades the costs of solar photovoltaics (PV), wind, and batteries have dropped (roughly) exponentially at a rate near 10% per year. The cost of solar PV has decreased by more than three orders of magnitude since its first commercial use in 1958.
Back to the Oxford paper:
But perhaps the most remarkable feature is the dramatic exponential rise in the deployment of solar PV, wind, batteries and electrolyzers over the last decades as they transitioned from niche applications to mass markets. Their rate of increase is similar to that of nuclear energy in the 70’s, but unlike nuclear energy, they have all consistently experienced exponentially decreasing costs. The combination of exponentially decreasing costs and rapid exponentially increasing deployment is di↵erent to anything observed in any other energy technologies in the past, and positions renewables to challenge the dominance of fossil fuels within a decade.
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..the Fast Transition is likely to be substantially cheaper at all reasonable discount rates. Using the 1.4% social discount rate recommended in the Stern Review56, for example, the expected net present saving is roughly $14 trillion. The me- dian value, which gives a better indication of the net present saving likely to be realized in practice, is roughly $26 trillion. (The distribution of costs is roughly log-normal, so means and medians are substantially di↵erent.) Note that there is some evidence that technological progress does not slow when technologies reach their saturation phase57. If this is true, then costs continue to drop at their current pace according to Moore’s law, and the Fast Transition saves substantially more relative to the other scenarios.
Climate Denial Crock of the Week 
September 22, 2021 at 2:19 am
‘…early solar panel and battery. In the 1950s, this would have been the most expensive form of electricity available. After a thousand-fold price drop, it is now the cheapest.’
According to Lazard’s Levelised Cost of Energy, domestic roof-mounted solar is still the most expensive power source, at 150 to 227 $/MWh – and that’s without factoring the cost of a battery. Solar only gets down to the level of combined cycle gas ( $28) or established nuclear ($29) when it’s thin film utility scale, with 2-axis tracking, at 29-38 $/MWh. ( Local gas prices, insolation levels, and nuclear financing and management models, would give very different results.) https://www.lazard.com/media/451419/lazards-levelized-cost-of-energy-version-140.pdf
September 22, 2021 at 8:48 am
agree roof mounted solar is expensive, that’s clear.
Utility scale solar (and wind) have been outcompeting gas for several years now.
September 23, 2021 at 9:48 pm
Consumer’s Energy, Michigan, state that their energy mix is 36% gas, 22% coal, 10% oil peaking, 9% nuclear, 12% pumped storage and 11% renewables. Don’t know how well they look after their customers, but they’ve got some way to go looking after our planet. https://www.consumersenergy.com/community/sustainability/energy-mix
September 22, 2021 at 6:56 pm
“According to Lazard’s Levelised Cost of Energy, domestic roof-mounted solar is still the most expensive power source, at 150 to 227 $/MWh”
I installed solar 7.5 years ago. $40K (before all tax breaks and rebates) for a system that has produced 93MWh in 7.5 years. That is $430/MWh, but if the life span is around 20 some years, it would be $140/MWh.
Prices have come down in those 7 years, so how did Lazard get 150-227 $/MWh? Am I looking at it wrong? I’m outside of Boston, so my prices are high to begin with and I’m not in what is considered a fantastic solar part of the country. The only advantage was a solar south facing roof at a 45 degree angle.
September 22, 2021 at 7:39 pm
I’m not sure how Lazard calculate it – they allow nuclear reactors a forty year life, when they’re quite capable of doing double that, but whether they allow 20 years for a PV panel I don’t know. According to recent stories, you should still be getting ~ 80% at twenty years, but you might have had to replace the inverter by then. A 45 degree roof sounds a bit scary too – watch your step when you’re cleaning it. Boston gets quite a lot more sun than Wellington in New Zealand (about the opposite latitude), though the winters are far harsher.
A better metric than LCOE is value of replacement – whether you’re selling much to the grid, or importing much from it at night or in winter. That could change considerably between early adopters and mass uptake – if everybody wants to dump power at noon, then buy it back after sunset, they’ll be competing with each other.
September 22, 2021 at 8:17 pm
I don’t do any more work on that roof, so there is no cleaning of the solar panels. 30 years ago I did crawl out the roof window onto the peak to cut a hole in the roof for the boiler’s chimney. Even then, the roof racks that I used for staging were left on the roof for 2 years until I had a subcontractor willing to remove them.
I have microinverters. 3 have been replaced in 7 years. More will need replacing as time goes by, but with all the tax incentives, rebates, an early adopter SREC pricing, it won’t hurt financially. Only problem, my electric company keeps a running balance on the power I deliver to the grid. It is now at $1500 and they don’t give it back. I have to use more electricity than the panels produce.
September 24, 2021 at 5:56 am
Damn, and I thought my indulgence in PV was expensive!
September 24, 2021 at 8:31 pm
It took me over a year to actually do it. The first year I was convinced that all the salesmen were lying to me about payback and efficiencies. The next year I started again with quotes, but every company did their quote different. So I wrote a simple program to compare each type of install using the same criteria (utility electric prices over time, SREC prices, performance degradation based on each manufacturer,…). When I narrowed t down, I used NREL’s SAM program to calculate the performance of the install that I narrowed it down to. I also decided to just fill the entire back roof, the money I had to do it was a one shot windfall. I felt that it wasn’t going to happen again (the cash windfall) and I had a chance to get into the first phase of Massachusetts SREC program. That investment paid for itself years ago and now between the electrical savings and SREC sales it is around $6000 a year into my bank account.
September 26, 2021 at 12:36 am
Roof-mounted solar + battery shouldn’t be compared to grid prices but to grid reliability (or to fueling and running home generators after every tree-felling storm).
People calculate the cost of home solar (purchased or leased) based on long-term payback against utility bills, but they don’t think in those terms for home water filters or fancy cars or nicely-maintained yards or streaming services.
September 22, 2021 at 3:13 pm
September 22, 2021 – Cornell University
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“In terms of averting the worst of climate change, our work confirms that accelerating wind-energy technology deployment is a logical and a cost-effective part of the required strategy. Waiting longer will mean more drastic action will be needed.”
https://news.cornell.edu/stories/2021/09/wind-energy-can-help-earth-blow-back-climate-calamity
September 26, 2021 at 12:45 am
With all due respect to Bill McKibben, a lot more can be explained in terms of potential for profit for replacing FF with wind/solar/storage/EVs than just thinking of cost to consumers. I don’t think wind/solar/storage/EVs have quite the profit* margin.
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*Note that a lot of the FF profit comes from externalizing costs via spoiled environments and polluted air.