The Free Market will replace coal and oil with solar, wind, and nuclear by 2030, providing for global prosperity and climate stabilization
Most scientists and policy makers agree that to avoid irreversible climate change we must prevent global temperatures from increasing more than 2°C. While this target may seem arbitrary, it is an agreed upon number that allows for solutions and strategies to be discussed. Most scientists, including the Intergovernmental Panel on Climate Change (IPCC), think this threshold will be breached by the end of the century if substantial global efforts to curb CO2 emissions are not made; however, other scientists believe that given the current status quo, this threshold could occur much sooner, as early as 2036.
To avoid breaching the 2°C mark and the negative impacts climate change will have on society, the planet, and the global economy, policy makers and governments have attempted to implement regulations on CO2. Unfortunately, these efforts have been slow and will likely be implemented too late. Luckily, vast technological improvements, decreasing costs, and increased investment in diversified portfolios of zero emission energy technologies (including solar, wind, hydro, and nuclear) can steer industry and the free market towards carbon free sources by 2030. North America’s decreased consumption of coal in light of the decreasing cost of natural gas is one example of the market choosing the cheapest energy source. When it comes to the bottom line, the market isn’t driven by political relationships, but rather economics and profitability.
The International Energy Agency (IEA), an historically conservative intergovernmental organization, projects that the global levelized cost of energy (LCOE) for new-built utility scale and rooftop photovoltaic (PV) systems could drop to as low as 4c/kWh and 4.5c/kWh respectively by 2050. Even by 2030, the IEA projects costs could be at a minimum 5.6c/kWh and 6.3c/kWh. Lower costs will likely be realized sooner, particularly as cost projections continue to be cheaper than estimated. In the United States for example, the U.S. Department of Energy SunShot program reported that PV system installations completed in 2013 were 4.7c/kWh for residential and small commercial (≤10 kW), 3.9c/kWh for large commercial (>100kW), and 3c/kWh for utility-scale (≥5 MW). These prices are already competitive with conventional coal-fired power plants. According to a 2013 report published by Fraunhofer Institute for Solar Energy Systems ISE, the LCOE for conventional brown coal-fired power plants was 4c/kWh to 6c/kWh and 7c/kWh to 9c/kWh for hard coal. The IEA estimated that the cost of coal and gas fired power plants is even lower, ranging between 2.5c/kWh and 4.5c/kWh. As technologies improve and energy costs decrease, renewable energies, particularly solar, will drop below that of coal. Furthermore, renewable energies will become even more competitive if carbon tax programs are implemented, further increasing the cost of non-renewable sources.
In the future, coal and other fossil fuels l will continue to make up a portion of the global energy portfolio (particularly in emerging economies); however, as coal-fired power plants are shut down and increasingly unprofitable to build in countries like the United States, new sources of energy generation will need to be brought online. By 2030, according to Bloomberg New Energy Finance, renewables will command over 60% of the 5,579GW of new capacity and 65% of the $7.7 trillion of global power investments. These investments will likely push the cost of renewable energies even lower than today’s prices, further influencing the free markets uptake of renewables.
While renewables will continue to play a bigger role in the global energy mix, non-intermittent electricity sources will still be needed to stabilize energy demand and response. Improvements in battery storage technology will play a part in reducing the intermittency of renewables; however, storage alone cannot replace non-renewable power plants that respond to daily increased electricity demands or periods of low power generation. Nuclear energy is the only existing carbon free energy source that can provide rapid response on a large scale equal to that of non-renewable technologies. Furthermore, as countries like the United States continue to consume more energy (by 2040 the EIA estimates the US will increase consumption by 29%), renewables alone may not be able to meet the increased demand. Combined, nuclear and renewables are projected to be the fastest growing energy sources globally from 2010-2040, increasing 2.5% annually. While upfront capital and carbon costs for first and second generation nuclear plants are often high (and arguably not economical), advanced nuclear reactors that are cheaper, safer, and scalable are being designed today, which will further validate the role nuclear power can play in a diversified carbon free energy supply.