Chart: Renewables are on track to keep getting cheaper and cheaper

Alison F. Takemura

Canary Media
Fri, September 1, 2023

Canary Media’s chart of the week translates crucial data about the clean energy transition into a visual format.

Renewable energy already beats fossil fuels on cost globally — and according to analysts, the gap is only going to grow.

By 2030, technology improvements could slash today’s prices by a quarter for wind and by half for solar, according to the authors of a recent report from clean energy think tank RMI. (Canary Media is an independent affiliate of RMI.)

These remarkable and ongoing cost declines have made clean energy so attractive that it now outcompetes fossil fuels for new investment: 62 percent of global energy investment is expected to flow to clean energy technologies this year.

That cash is helping push renewables to new heights. According to estimates from the International Energy Agency, global clean energy capacity is expected to jump a jaw-dropping 107 gigawatts to more than 440 gigawatts this year — its largest increase ever.

What we’re living in “is an energy technology revolution,” said report co-author Kingsmill Bond, an energy strategist at RMI. It’s obvious from the data, yet the point is often lost in “a consistent drumbeat of counternarratives” about how difficult it is, and will be, to leave fossil fuels behind, he added.

“U.S. fossil-fuel demand peaked 15 years ago,” Bond said. “This is happening; people have just missed it.”

Renewable energy costs have fallen, and are projected to keep falling, because these technologies are riding “learning curves”: For every cumulative doubling of the deployed tech, its cost declines by a quantifiable percentage that varies by technology. Learning curves are a robust phenomenon that’s been observed for over 50 kinds of tech. Over the past 40 years, the average learning rate has been 20% for solar and 13% for wind.

That’s the underappreciated power of learning by doing; the more solar panels and turbines people make, the more they discover how to make them better, faster and cheaper. The RMI report's range of forecasted cost declines is based on both these long-term average learning rates and the higher rates observed in more recent years (30% for solar and 25% for wind).

Fossil fuels, by contrast, have not gotten on empirical learning curves. For more than a century, fossil fuel prices have swung wildly without trending consistently downward.

Fossil fuels aren’t getting cheaper because they’re not technologies, but rather commodities dug up from the ground, said Sam Butler-Sloss, co-author of the report and an energy analyst at RMI. The tech used to extract and refine them undergoes far fewer iterations than solar panels and wind turbine blades, which are mass-produced, a characteristic of technologies with fast learning rates.

Lower costs are just one reason to pursue clean energy among many others that are much harder to assign a dollar value to, Butler-Sloss said: greater energy security, less price volatility, lives saved from displaced fossil fuel pollution, and avoidance of the climate disasters that come with a much warmer world. All those concerns point toward investing in a renewable energy future, he added.

That’s not to say the energy revolution will happen on its own. As the report states, “We have to work hard” to stay on this trajectory. “We need to build out grids, change permitting laws, scale up flexibility solutions, improve regulatory and market systems, and speed up deployment in the Global South.”

But those actions will only become easier the cheaper renewable energy gets, according to Butler-Sloss. “There is an inexorable economic logic to this transition,” he said. And although the transition needs to go faster, “it provides massive momentum to have the economics on our side.”