We live in times of uncertainty. In the not so distant past, the question was whether we would be able to deal with climate change, given that governments are acting so slowly. Of late, that question has been compounded several times.
With the prices of oil and gas going down while Saudi Arabia and Russia engaged in a price war, some people were afraid that renewable energy would not be able to compete. Then the Covid-19 pandemic came along, and the price of oil fell to negative $40 per barrel, which meant that customers were actually being paid to take the oil off the hands of the companies that owned it. (https://bit.ly/3fd20jr) Some people despaired of how solar and wind power could compete with negative costs of oil.
However, the low cost of oil, even the negative cost of oil, did not perk things up for that industry. With Covid-19, people were driving less, flying less, and running factories less. The spot price of electricity suffered, and that meant for solar and wind as well as for fossil fuels. And many people wondered how that would affect the energy industries.
Questions have been raised about capitalization. Where are those who put up the money needed to develop new infrastructure going invest in these times? Will they build up renewable capacity? Or maybe, will it be used to snap up fossil fuel stocks that have extraordinarily low prices and might appear to be good values? These questions have been big worries.
The reduction in demand for energy is the greatest it has been in decades, down 17% from last year at some points and projected to be down 7% for the year as a whole, according to NBC News. (https://nbcnews.to/2Ytf0uK) A good side has been often noted as the air cleared, pollution dropped, and carbon emissions fell. We find it very interesting to note that certain kinds of respiratory conditions were alleviated by our response to another respiratory disease.
But the awful truth about this is that as the economy recovers, fossil fuel use is expected to rise again, and with it pollution and emissions. That is actually worse than many people understand.
To deal with climate change, we need to reduce worldwide carbon emissions by as much as the coronavirus response did. And we need to do that every year.
Now comes the good news.
While some analysts expect things to return to “normal,” with natural gas and oil going back to usage levels where they had been, it seems many more are seeing the Covid-19 recession as a potential inflection point with the recovery favoring renewable energy. Fortunately, it is that second group that can back their views with facts. I will give a few examples.
Southern California Edison is installing 770 MW of batteries. It will use them to replace plants that burn natural gas. The amount of capacity this one utility is installing is more than was installed in the entire country last year. (https://lat.ms/30w9DgO) solar
The Hawaiian Electric Company (HECO) just ordered sixteen battery storage systems, thirteen of them with solar arrays. The combined capacity of the solar arrays is 460 megawatts (MW). The batteries will store a total of 2,892 megawatt-hours (MWh) of electric energy, with delivery dates of 2022 and 2023. (https://bit.ly/2BXQ8nj) This will put HECO far ahead of the scheduled dates for moving away from fossil fuels. We might imagine that the lower costs of solar+storage might have informed their reasoning.
While it is in bankruptcy, Pacific Gas & Electric is adding five battery storage systems for a total capacity of 423 MW, and 1,692 MWh. (https://bit.ly/2XOgMqU)
Why is this happening? It does follow legal requirements by states to reduce fossil fuel use, but it is ahead of schedule. An explanation of the timing is that solar or wind energy backed up by massive batteries is cheaper than the natural gas plants of the old energy paradigm. One article at Utility Dive says that New York City ratepayers are paying $450 million each year to keep the gas plants going. (https://bit.ly/2B1GXkX) Now, the utilities are working on eliminating the natural gas plants and replacing them with batteries that will back up solar arrays and offshore wind farms.
One thing everyone should understand is that the prices of solar, wind, and batteries are falling so fast that costs only a year old are already obsolete. They have fallen so far that a 2,000-MW solar farm is being built in Abu Dhabi that will sell its power, without state support, for $13.50 per MWh. That is 1.35¢ per kilowatt-hour (kWh). (https://bit.ly/3fdzpus) That is only about 20% of the 6.5¢ per kWh the Vermont Yankee nuclear power plant offered to the state of Vermont, saying it was a deal Vermont couldn’t refuse.
As to the hackneyed idea, “the sun doesn’t always shine and the wind doesn’t always blow,” we can assign that to history. A recent auction of 400 MW of “round-the-clock” renewable power backed up by batteries was won by the Solar Energy Corporation of India at a price of 3.8¢ per kWh, a price outside the range of what natural gas can compete with. (https://bit.ly/30raBuR)
Solar power in sunny Arabia or India is admittedly a bit more productive than it is in Vermont, or in much of the United States, but not enough to make natural gas, oil, or coal attractive here.
Finally, a return to the bad news. Reducing CO₂ emissions will not stop the rise of CO₂ levels in the atmosphere. To do that, we have to eliminate CO₂ emissions altogether. That means we burn no coal, no oil, and no natural gas at all. (https://www.co2.earth)