For decades, scientists have made the case for a clean energy transition to prevent the worst impact of the climate crisis, but concerns over the costs of such a transition have held back progress. However, it seems to be the other way around: an ambitious transition to green energy such as solar and wind sources will likely save the world a lot of money.
The study shows a win-win scenario in which a transition to almost 100% clean energy by mid-century leads to lower energy system costs than a fossil fuel system while expanding energy access and providing more energy to the global economy. This is based on the economics of different energy systems, not even accounting for climate costs — so the real savings will actually be even higher.
Russia’s invasion of Ukraine has caused the costs of fossil fuels to skyrocket, triggering inflation and economic problems around the world. This new study, carried out before the crisis, considers such fluctuations by using a century’s worth of fossil fuel price data. The current energy crisis underscores the findings and shows the risks of continuing to rely on fossil fuels.
“There is a pervasive misconception that switching to clean, green energy will be painful, costly and mean sacrifices for us all – but that’s just wrong,” Doyne Farmer, one of the study’s authors, said in a statement. “Renewable costs have been trending down for decades. They are already cheaper than fossil fuels in many situations.”
The way forward
The researchers went through thousands of transition cost scenarios done by energy models and found that the cost of solar energy dropped twice as fast as the most ambitious projections in these models. Over 20 years all of these models largely overestimated the future costs of key clean energy technologies versus reality.
For their study, the team developed a probabilistic model to estimate the costs of possible future energy systems more accurately based on past data. These models are used in industry and research to estimate the likelihood of future events. The betting industry, for example, uses probabilistic models to make forecasts and make profits.
The data used in the study includes 45 years of solar energy costs, 37 years of wind energy costs, and 25 years of battery storage costs. Using probabilistic models, the researchers showed that the probability of further cost reductions in green technology is currently so high that our best bet is to do an energy transition as fast as possible.
A usual argument against a rapid transition to net-zero emissions is the need for big amounts of energy storage to manage intermittent renewables. However, the study shows that the costs of storage technologies are likely to decrease dramatically in the near future. The costs of nuclear have also increased, making it unlikely to compete with renewables.
The study’s “fast transition” scenario shows a future fossil-free energy system in 2050, providing 55% more energy services globally than today, with big amounts of solar, wind, EVs, and green hydrogen. Such a net-zero emissions future is technically feasible and would cost the world $12 trillion less than keeping the fossil fuel-based system.
“Our research shows that scaling up key green technologies is likely to drive their costs down so far that overall they generate net cost savings, and the faster we go, the more we will save. Accelerating the transition to renewable energy is now the best bet not just for the planet, but for energy costs too,” lead author Rupert Way said in a statement.
The study was published in the journal Joule.