$11 Trillion in Capital for Renewables
In a recently-published report, BloombergNEF projects that wind and solar energy will grow to represent 56% of global electricity production by 2050, and that $11 trillion in investment capital will be deployed in order to create this worldwide renewable energy infrastructure.
These are big numbers, but we’d argue that the most noteworthy element is what underpins this shift in the way most people are going to get the energy they need.
While politicians (and the press) tend to portray the move to renewables as a function that depends on government action, the underlying truth is that right now policy, as it relates to the adoption of green energy, is significantly less important than the objective truth of the underlying economics: solar energy is a cheaper source of electricity than fossil fuels.
In the International Energy Agency’s flagship World Energy Report for 2020 (published in October) under key findings, solar is identified as “the new king of electricity” and not because of a legislative or regulatory activity: “With sharp cost reductions over the past decade, solar PV is consistently cheaper than new coal- or gas-fired power plants in most countries, and solar projects now offer some of the lowest cost electricity ever seen.”
The IEA is not alone in holding this view: the BloombergNEF report similarly argues that “wind and solar power are the cheapest form of new electricity in the world today… in five years it will be more expensive to operate an existing coal or natural gas power plant than to build new solar or wind farms.”
The shift to renewables will provoke the $11 trillion in infrastructure spend projected by Bloomberg, which - for those of us in the business of investing in and developing renewable energy projects - represents a welcome, long-term tailwind.
However, the global number of dollars spent won’t change the underlying complexity of properly designing and developing renewable infrastructure. Which is to say, even if it appears that capital isn’t in short supply, we’d argue that genuine expertise is.
Candela’s founders have spent over a decade in the solar industry identifying and assembling an industry leading team with unique skills and exceptional experience. We have a shared understanding of how to approach and execute against a future where solar generated electricity and storage are increasingly the best option for companies and communities seeking a low cost, environmentally responsible, electricity supply.
A welcome effect of this situation is one that we can all celebrate: emissions from electricity generation will peak over the next decade, and are projected to fall on an annual basis thereafter. There are still long and complex conversations to be had about whether emissions will fall quickly enough.
At Candela we have believed, for a long time, that there is inherent value to solar energy: a zero emission source of renewable energy is crucial to the future of our planet.
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