By 2050, Utilities Will No Longer Charge For Electricity

PARIS—Just around the corner a future awaits when electricity consumers will no longer have to suffer the vagaries of fuel costs, according to a United Nations under-secretary general, whether the fuel is natural gas, coal, or enriched uranium.
Achim Steiner, executive director of the UN Environment Program, anticipates a future dominated by energy sources that have no fuel cost—solar, wind, and geothermal. Once you build the plant, the electricity is free.
"By the year 2050, electricity generating industries will no longer be charging for electricity," predicted Achim Steiner, executive director of the UN Environment Program. "They will simply be trying to recover the return on capital expenditure."
And the capital cost has been falling precipitously.
"The power generating costs for wind and solar have already in many countries reached parity with fossil fuels and soon they will simply be a kilowatt-hour charge that will disrupt the entire energy industry," Steiner said at the Sustainable Innovation Forum, a side event to the Paris Climate Conference.
Even before 196 countries signed The Paris Agreement and threw unprecedented political weight and financial capital at renewable energy, Deutsche Bank had predicted solar would achieve grid parity in 80 percent of the world by 2017. DB predicted grid parity in all 50 U.S. states by the end of 2016.
Wind became cheaper than coal or gas in Germany and the UK this year. The U.S. revived a tax credit that will boost renewables already already as cheap and in some places cheaper than gas and coal.
Geothermal has enjoyed less attention in the United States of late, but it powers Iceland, and Iceland's effort to export the technology has helped geothermal compete in the developing world, including China, where it now powers the city of Xianyang, and Kenya, where it provides more than half the country's power.
"This is literally an energy revolution that is unfolding," Steiner said.
"Many think this is still theory in the sense of the scalability. But as many of you know, in less than 10 years we have moved from renewable energy technologies being very marginal in the center stage of the economy to last year accounting for almost 50 percent of new electricity generating infrastructure worldwide. Almost half. It took less than a decade for solar, wind and geothermal to literally arrive in the center stage not only of developed economies but actually of developing economies."
The developing economies represent unique opportunities, because unlike the developing world, they're not trying to graft renewables onto an existing grid.
In Kenya, for example, a startup called M-Kopa allows people to use a mobile payment system to make daily micro-payments for off-grid solar installations at home. M-Kopa has begun to export its model to Tanzania and Ghana—on a continent with one billion potential customers, up to 700 million of whom lack access to electricity.
"Suddenly renewable energy technology is not only a renewable energy breakthrough," Steiner said, "it is actually creating for a country like Africa an access to energy pathway that was simply not there up to now."
M-Kopa systems come with batteries to keep the lights on at night. Where grids are in place, UNEP expects battery storage technology to allow renewables to supply baseload power "so that grids can be run entirely on renewables."
To deploy across these markets, renewable energy technologies will need financing, and Steiner predicts financing will come from equally innovative channels.
"I predict that over the next 10 years, the world financial system will be significantly changed, not by the traditional centers of financial transaction, New York and London, stock exchanges, et cetera, but actually by a rethinking of how financial systems will work happening in China."
The People's Bank of China has predicted it will cost China $330 billion per year to green its industry and infrastructure and halt the pollution that has been choking its populace. But the Chinese government only intends to contribute 15 percent of that amount from public funds.
The Chinese are developing guidelines for the private sector to fund the rest, guidelines that may include a green credit rating system, penalties not just for polluters but for financiers who fail to assess climate risk, mandatory environmental disclosure for companies and mandatory environmental liability insurance for both polluters and their lenders. China may establish green banks, a green stock index, a green development fund, and tax-exempt green bonds to encourage private investment.
As China took over the presidency of the G-20 nations this year, it launched a G20 Study Group on Green Finance, putting China in position to lead the international expansion of green finance.
"We are not simply projecting some theoretical trends or developments into the future," Steiner said, "we are actually looking at a global economy that is shifting so quickly."

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