Global investment in wind and solar power is overtaking fossil fuels

Global renewable energy spending is catching up with electricity investment
in coal, gas and nuclear power plants, driven by falling costs for wind and solar power.
According to the International Energy Agency IEA, more than half of the global power generation capacity added in recent years has come from renewable sources
such as wind and solar.

According to the International Energy Agency, 2016 was the latest year for which data was available, with about $297 billion spent on renewables, more than
double the $143 billion spent on new nuclear, coal, natural gas and fuel oil power plants.
The IEA expects renewable energy projects to account for 56%
of net electricity generation by 2025.

Cost reduction

Once supported by cashback incentives, tax credits and other government incentives, the cost of wind and solar power fell for a decade in a row, making renewable energy investments more competitive
.
Francis O'Sullivan, director of research at MIT's Energy Initiative, said the cost of renewable energy has come down over the past few years, so "wind and solar are the lowest-cost options for power generation.
"

This is also starting to disrupt the business
of manufacturing electricity and manufacturing power generation equipment.
Both General Electric and Siemens are working to reduce demand for large gas turbines and have announced layoffs
.
Meanwhile, most of the Asia-Pacific solar panel manufacturers are booming
.

In many places, choosing renewable energy is "purely an economic choice," says Danielle Merfeld, chief technology officer of GE's renewable energy division.

”

Continued government support in Europe and other advanced economies has spurred the development of
renewable energy.
But the cost decline is due to other reasons
.
For example, China has invested heavily in domestic solar manufacturing, creating a surplus
of cheap solar panels.
Innovation helps manufacturers make longer wind turbine blades, creating machines
that can generate more power at lower costs.

At the same time, renewable power plants face fewer
challenges than conventional power plants.
Technical delays have plagued most nuclear power plants due to concerns about climate change, while plants that burn fossil fuels face regulatory uncertainty
.
Pension funds seeking long-term stable returns have invested heavily in wind farms and solar parks, allowing developers to access cheaper financing
.

Continued investment is reshaping the power mix
of homes and industries around the world.
According to a joint report by the Frankfurt School of Finance and Management and the United Nations Environment Programme, the share of renewable energy generation reached 12.
1 percent last year, more than
double the amount a decade ago.
It is important to note that these figures do not include electricity
from large hydroelectric dams.

developed country

The rise of renewable energy generation has raised concerns and sparked a political response in the United States
.
The Trump administration is pushing for actions to subsidize coal and nuclear power plant operations, arguing that these resources are necessary for
the reliable operation of the grid.

The proposal, which calls for relief from First Energy, the owner of Ohio's coal and nuclear plants, is bound to hurt renewable and natural gas-fueled power plants as fuel becomes cheaper
in recent years.

In the United States, more than two decades of government tax credits have boosted renewable energy, but uncertainty about its future has also affected the industry
.
About 17 percent of the country's electricity last year came from renewable sources, including wind, solar and hydroelectric dams
, according to federal data.
The government says more than half of the large generation that was added last year is renewable
.

Last week, Xcel Energy announced a $2.
5 billion plan to add 1,800 megawatts of wind and solar power, plus plenty of batteries to store power
.
Xcel said the plan needs approval from state regulators to phase out 660 megawatts of coal-fired power generation and generate savings
for consumers.

In many places, renewable energy prices now compete with
fossil fuel power generation.
According to the International Renewable Energy Agency, in 2017, the global average cost of electricity for onshore wind was $60 per megawatt, $100 for solar power, and prices for new fossil fuel facilities in developed countries ranged
from $50 to $170.

developing countries

The combination of falling costs and large amounts of available capital has also stimulated renewable energy growth
in developing countries.

Last November, Italy's global energy company Enel SpA won a bid to build a power plant in Chile, opening it
up to renewable energy and fossil-fuel generator sets.
Enel will build wind, solar and geothermal facilities and sell electricity at about $32.
50 per megawatt hour, an unsubsidized rate lower than the cost of
burning coal at natural gas or existing plants.

Recent electricity auctions indicate a further decline
in renewable energy prices.
Earlier this year, an auction in Saudi Arabia awarded a contract
to build a 300-megawatt solar facility for $17.
9/MWh.
Very low labor costs in the Middle East and India have led to record low solar bids
.

Last year's Mexican auction submitted bids from international power companies at unsubsidized prices of less than $21 per megawatt hour
.
Veronica Irastorza, deputy director of economic consultancy NERA and former deputy head of Mexico's energy planning department, said this is significantly lower than spot market electricity prices, averaging about $
70 per megawatt-hour last year.

Tom Heggarty, an analyst at energy consultant Wood Mackenzie, said: "In most markets around the world, we can see a positive pace
of renewable energy build-up in the coming years.
”