Fossil fuel, renewable energy and the future

In developed countries, wind and solar energy are crushing fossil fuel at a frenetic pace while the developing countries are still making revenue projections on fossil fuel gradually going into extinction! The implication of this for developing economies is the reason DrillBytes’ put together a

Bloomberg report by Tom Randall in April of the year.
While two years of crashing oil prices, natural gas and coal triggered expected downsizing in those industries and concerned countries, renewable have been thriving. Clean energy investment broke new records last year and is now seeing twice as much global funding as fossil fuels. One reason is that renewable energy is becoming ever cheaper to produce. Recent solar and wind auctions in Mexico and Morocco ended with winning bids from companies that promised to produce electricity at the cheapest rate, from any source, anywhere in the world, said Michael Liebreich, chairman of the advisory board of Bloomberg New Energy Finance, BNEF. “We’re in a low-cost-of-oil environment for the foreseeable future,” Liebreich said during his keynote address at the BNEF summit in New York last week Tuesday.

Government subsidies have helped wind and solar get a foothold in global power markets but economics of scale are the true driver of falling prices. The cost of solar power has fallen 1/150th of its level in the 1970s while the total amount of installed solar has soared by 115,000 fold. The reason solar-power generation will increasingly dominate is technology.

At such, efficiency increases and prices fall as time goes on. What’s more, the batteries to store solar power when the sun  isn’t shining is falling in a similar stunning arc. Just since 2000, the amount of global electricity produced by solar power has doubled seven times over. Even wind power which was already established  doubled four times over the same period. For the first time, the two forms of renewable energy are beginning to compete head-to-head on price and annual investment.

Meanwhile, fossil fuel has been getting killed by falling prices and more recently, declining investment. It started with coal. It used to be that lower prices increased the demand for fossil fuels but coal prices apparently can’t fall fast enough.

Richer Organization for Economic Co-operation and Development, OECD countries have been reducing demand for almost a decade. In China, coal power has also flattened. Only developing countries with rapidly expanding energy demands are still adding coal, though at a slowing rate. The world’s first coal superpower, the United Kingdom, now produces less power from coal than it has since at least 1850. More recently, it’s the oil and gas industry that’s been under attack. Prices have tumbled and investments have started drying up. The number of oil rigs active in the United States fell last June to the lowest since records began in the 1940s. Producers from tiny frontier drillers to massive petrol-producing nation states are creeping ever closer to insolvency. “We’re talking about a business model that is predicated on never ending growth, a business model that is predicated on being able to find unlimited supplies of capital.”

Oil and gas woes are driven less by renewable than by a mismatch of too much supply and too little demand. But with renewable energy expanding at record rates and with more efficient cars including all electric vehicles siphoning off oil profits at the margins, the fossil fuel insolvency zone is only going to get more crowded, according to BNEF. Natural gas will still be needed for when the sun isn’t shining and the wind isn’t blowing, but even that will change as utilities-scale batteries grow cheaper. The best minds in energy keep underestimating what solar and wind can do. Since 2000, the International Energy Agency has raised its long-term solar forecast 14 times and its wind forecast five times. Every time global wind power doubles, there’s a 19 percent drop in cost, according to BNEF and every time solar power doubles, costs fall 24 percent.

While BNEF says the shift to renewable energy isn’t happening fast enough to avoid the catastrophic legacy of fossil-fuel dependence on climate change, it is definitely happening.

Nigeria, one of the developing economies of the world has got fossil fuel in abundance but the will to translate that into electricity at the moment appears to be lacking yet, the country, considering the serious financial bashing it has received from the crash in crude oil price as well as threats from vandals who make their point(s) with gunshots, it is time to embrace the future! These vandals should know by now that owning an oil company will be less lucrative than owning a palm kernel farm in a few years from now.

Therefore, grounding the country’s economy will benefit nobody least of all, those they claim to represent. Good a thing the British government recently agreed on an aid package of about 16 million pounds sterling to help Nigeria in the area of the development of solar power but better, if the government can maximize the moment by making utmost revenue from its fossil fuel that is gradually but inexorably headed to oblivion. If we do nothing about the emerging realities now, it is certain emerging realities will do something about us in the foreseeable future!

Kayode Adeoye is an energy expert in Lagos.