Renewable energy: Back the renewables boom

MIT's Jessika Trancik: Low-carbon technologies are getting better and cheaper each year, but continued public-policy support is needed to sustain progress.

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June 20, 2016Read more

Jessika E. Trancik, Assistant Professor, MIT's Engineering Systems Division

A new battery is rarely greeted with as much excitement as the latest smartphone or a new drug. The energy industry is widely perceived as sluggish, a provider of basic services and lacking creativity. In fact, a brighter reality is emerging — government support for energy-technology development is paying off.

Public policies to encourage the development and adoption of renewable-energy technologies are essential, because low-carbon performance is not visible to most consumers and carbon is not priced in the global market. Yet there is a widespread lack of confidence in public-sector efforts to spur innovation, as a result of the mixed record of governments in picking winners and losers among technologies1.

Some governments are considering reducing their support for renewable-energy projects. The future of the US tax credit for new wind energy is uncertain; the United Kingdom is debating scaling down subsidies for some renewables and relaxing its targets for carbon-emissions reductions, and Spain has abandoned its incentives programme and electricity-price commitments for renewable-energy power plants. The countries of the European Union disagree on a common binding target for the adoption of renewable energy by 2030.

But now is not the time to cut government support for renewables. Each day that we delay implementing low-carbon energy technologies we increase the likelihood of damage from climate change — from storms and floods to forest fires.

The response of the global energy industry to even modest policy interventions has been remarkable. Led by China, Europe, the United States and Japan, the alternative-energy sector is booming worldwide2–4. Solar and wind technologies have improved most rapidly in the past three decades, with photovoltaics a hundred times cheaper today than in 1975.

Governments should help to maintain this progress. Research funds and policies to boost markets will mature new energy industries and promote the next generation of low-carbon technologies.

Rapid innovation

The speed of energy-technology innovation is only just coming to light as long-term data sets become available. My analyses of 30 or more years of data2–4 show that the costs of renewable-energy technologies have fallen steeply. Photovoltaic module costs have plunged by about 10% per year over the past 30 years and the costs of wind turbines have fallen by roughly 5% per year. Production levels for both technologies have risen by about 30% per year on average.

The technical advances responsible have been driven by public policies and industry's responses to them. Governments spend a relatively modest amount on renewable-energy research, roughly US$5 billion per year globally, which is less than one-tenth the amount allocated to health research. But government incentives are essential for market growth; they drive private-sector investments in clean-energy technologies of about $250 billion per year globally.

Despite this success, lawmakers in many countries are questioning public support for clean energy. Some in the United States are urging that such support should be limited to funding basic research and development in universities and government labs. They cite the recent failure of a few prominent energy companies, such as Solyndra, which received government grants or loans in their early days. Critics forget that game-changing technologies are high-risk ventures; some failures are inevitable.

Some technologies are more open to improvement than others2–7. Compact, modular systems, such as photovoltaics and electronics, are easily experimented on5, 7. And processes that may be achieved through alternative designs or materials offer more avenues for advancement. The diversity of semiconductors, for example, is behind the recent development of high-efficiency perovskite solar cells. Other technologies are harder to improve. Those with high commodity costs, such as coal-fired electricity6, soon hit cost floors in the marketplace.

Photovoltaic systems and wind turbines are therefore better candidates for sustained cost reduction than large nuclear or coal plants7. The lower price of solar cells today is due to increasing the efficiency with which sunlight is converted to electricity within modules, less manufacturing waste and greater economies of scale.

Wind turbines have seen similar progress, reaching higher wind speeds at greater heights to deliver more energy per cost of installed unit. Indeed, wind energy now competes economically with fossil-fuelled thermal power plants in several places, including Texas, and in Denmark it supplies 30% of electricity consumption.

Knowledge about how to design, build and integrate these technologies into the energy infrastructure has also grown. For example, it takes roughly half the time to install a solar system in Germany compared with the United States, thanks to a more experienced workforce and streamlined permit processes8.


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