When are we going to sober up and realize fossil fuels have met their end?
The answer is when we understand the financial consequences and recognize renewable energy as the best financial decision. But there are some barriers to this realization.
The cost of repayment or return on investment (ROI) for renewable energy projects remains mostly untied from the cost of fossil fuel. Even if grid parity occurs, that doesn’t mean investors receive a return on their investment more quickly.
The drop in the cost of solar technology and projects doesn’t mean investors will see ROI sooner, either. The decline in costs means only that an initial renewable energy investment is lower, but the investment must still come from somewhere.
Investors Know Fossil Fuel Supplies Will Eventually Dwindle
Investors invest because they know fossil fuel supplies will eventually dwindle and fossil fuel costs will soar. Then, they will see quicker returns on renewable energy.
But when this will happen is another question. The rate of return on renewable energy primarily depends on the rate of energy consumption and how either our governments or we ourselves subsidize each other. Renewable energy is still seen as a separate technology from electricity generation, even though it is addressing the same energy needs.
To move away from fossil fuel subsidies and the counterproductive institutionalization of fossil fuel electricity generation, we need to consider who has the capital. We also must think about how capital is raised, how energy is generated and whether those energy generators are centralized or decentralized.
Tesla Is Making Major Investments in Renewable Energy
There are companies that understand this situation just as Tesla does. Regardless of the disconnect between pollution and fossil fuels or fluctuating OPEC prices, Tesla continues to make major capital investments not only in energy storage, but also in renewable energy projects.
Tesla seems less concerned than most about how federal subsidies might change in the future. Even with the coming Trump administration, the growth in renewable energy will not suddenly disappear or even plummet.
Both sides supported most federal subsides relating to energy efficiency and renewable energy, so reversing federal subsidies will be an arduous process. Additionally, most renewable energy incentives and subsidies come at the state level.
Critical land use decisions on energy projects still reside at the local governmental level where more of us have access to influence decisions about our energy future.
Local Government Involvement Increases Awareness of Renewable Energy Benefits
Engaging in public comment, requesting accountability and data, and participating in decision making at the local government level will make us more aware of the financial benefits of renewable energy. In turn, such engagement teaches us how we can pool resources to cooperatively finance community-based, renewable energy projects.
Some of the most effective and wide-reaching energy projects worldwide have been hybrid energy projects that are co-operative or collaborative in nature:
- American Samoa partnership — Tesla, Solar City, the U.S. Environmental Protection Agency, the U.S. Department of the Interior and the American Samoa Economic Development Authority partnered in Ta’u, a small (17 square mile) island in American Samoa.
60 Tesla Powerpacks produce 1.4 megawatts of solar capacity and 6 megawatt hours in commercial battery storage. A microgrid provides three days of power for 600 residents and recharges fully in seven hours.
- Asian supergrid – The State Grid Corporation of China, South Korea’s main utility KEPCO, Russia’s grid operator PJSC ROSSETI and Softbank, a mobile provider that has become one of Japan’s largest renewable energy developers, have signed a memorandum of understanding (MOU).
These organizations have undertaken feasibility studies for a super-grid that could transmit electricity from renewable energy sources across that part of northeast Asia. Japan recently opened its electricity market to more than 250 electricity providers. Even before this MOU was signed, Japan was already overproducing renewable energy from 10 regional utility grid operators.
- Middle East and North Africa solar projects – Regional countries are developing utility-scale solar power sources to save domestically produced oil and gas for higher yields as exports.
According to a September 2015 Scientific American article, more than 30 solar projects have been approved since 2013, including the Middle East’s largest solar PV (photovoltaic) project growing from 13 megawatts (MW) to 3,000 MW (15% of UAE’s demand) over the next 15 years for the Dubai Electricity and Water Authority. The world’s largest concentrated solar power (CSP) complex is being built in Ouarzazate province, Morocco, a famous backdrop for films such as “Gladiator” and the hit TV series “Game of Thrones.”
A number of solar PV and CSP hybrid pilot projects are under construction. These projects are designed to alleviate the scarcity of water and the high energy costs of desalination and wastewater recycling.
Morocco leads the way in the Middle East and North African countries out of necessity. This country is the most dependent on energy imports (91 percent) and energy resources from other countries. Morocco’s annual energy costs are approximately $3 billion.
In 2009, Morocco committed to install 6,000 MW of renewable energy (42 percent of its installed capacity from renewable energy resources by 2020).
- Kenya Powerhive project – Powerhive is creating solar microgrids which combine PV and battery storage, mobile telecommunications and the popularity of mobile payment systems in Kenya.
Powerhive’s microgrid management platform combines a range of technologies. These technologies include including lithium-ion batteries, smart metering, data analytics and mobile money, a web-based management app.
This automation and information management system keeps solar power quantities productive and affordable. This system also addresses some of the challenges other solar companies have created by selling rural areas PV systems that do not perform or are unsafe.
Powerhive has embedded remote asset tracking and monitoring capabilities into PV microgrid platform equipment, so buyers can better understand how the company’s technology works. Powerhive also addresses the affordability of renewable energy by offering a pay-as-you-go model through cell phone use in Kenya, where 80% of the population has access to the mobile app.
Are We Ready to Switch to Renewable Energy?
What does the future hold? Will the majority of us continue to bear the full and fluctuating costs of fossil fuels? The answer is no, not for long if we consider that the main oil and gas producers prefer to generate clean energy in their own territory while gaining higher revenue from foreign energy consumption.
Even if governments do consider the cost of fossil fuels when subsidies are removed, we still need to think of two more questions ahead:
1) How can we keep infrastructure costs down during this transition?
2) Where will the initial capital come from for renewable energy investments?
Our water, electricity and public transportation must become sustainable and efficient. Our personal consumption choices might have to change too as government incentives now lean toward sustainability. We also can reduce the costs of a renewable energy transition by using public transportation, participating in a sharing economy and developing cooperatives.
But how ready are we to do this? That has yet to be determined.
About the Author
Dr. Ariana Marshall is a faculty member with the School of Science, Technology, Engineering and Math, American Public University. She is the Director for the Caribbean Sustainability Collective and focuses on culturally relevant sustainability and climate change adaptation. Ariana completed her doctorate in environmental science at FAMU.