Taking Inspiration From The Renewables Revolution

But where Germany had the will, there are other countries that have also played a significant role in the transformation of renewables from niche to mainstream. China, for example, has demonstrated remarkable drive. In the early days China quickly took over from Germany in manufacturing solar panels turning them into a mass market product and driving prices down, which had a dramatic effect on adoption rates. In fact, this focus on manufacturing was so successful it took China to the forefront of production. This was not as a result of cheap labour as assumed by most - the process was heavily automated - but as a result of the cheap cost of financing and the support for winning global orders. Alongside driving the global production of renewables infrastructure, China also became a significant client and today accounts for a third of the global total in clear energy production and is the world’s top clean energy investor. This year, in its goal to reach the Paris agreement targets, China announced the world’s largest solar farm sitting high on the Tibetan plateau and with a capacity to produce 850MW of power able to supply 200,000 households. So whilst China is still the largest polluter in the world, it is now also the largest provider of green energy and the balance will only shift one way. What I find particularly interesting is whilst Germany built its renewable strategy on a culture of sustainability which led to ‘need’ to develop renewable energy, China in reverse has built on the need for more cheap power. Indeed China is now well on its way to developing a culture of sustainability, which is emerging strongly and from which there is no return. The questions remains will China make the same impact as Germany and achieve good for the individual, good for the community, the country and the world?

The third country to make a significant impact globally on renewables is the US that has to date provided the size and scale required to start to make a difference. 2016 data from the US Department of Energy shows that US solar will have tripled by 2017 and is growing by almost 40% a year. We wait and see how Trump’s withdrawal from the Paris climate agreement will affect this commitment. Some would say however, that the momentum is barrelling forwards, with or without his buy in. Even the shale gas revolution that has provided cheap energy over the last decade has not stopped the rapid growth in renewables in the US. It seems that US industry has recognised that shale isn’t a long-term solution and it won’t allow it to become its Achilles heel.

The actions of these three countries have paved the way for developing countries to turn towards renewable energy as the first option. Indeed renewables have enabled technologies to leapfrog the status quo - that is, by bypassing rather than following the historical precedent. Take Off-Grid Electric in Africa, a company that uses mobile technology to be able to install and manage solar panels in countries such as Rwanda and Tanzania. The whole process, which uses mobile to enable the billing systems, allows consumers to take their power needs into their own hands. Bangladesh, Kenya, Nepal and Ivory Coast likewise have all seen huge increases in home solar and small-scale renewable systems and mini-grids. This ‘leapfrog’ process allows countries to use technology, today far less restricted by cost, to entirely circumvent the traditional power plant and instead take full advantage of the potential and cost savings within renewables.

The next revolution in renewables is the growth of battery storage, which is going hand in hand with developments in electric vehicles. Certainly, the transformational effect of renewable energy is strongly evident when the explosive growth in electric vehicles is taken into account. Concerns about CO2 and particle emissions are driving regulatory change on a global scale, leading to fast-tracked development of electric vehicles and an intense focus on improving battery performance. As a comparison, since 1990, the cost per watt for solar panels has dropped more than 95%, as a result of more investment to create better technology, cheaper production, and an ever-increasing market. We are seeing these same dynamics in the development of better batteries for electric vehicles and grid storage, which are expected to lower costs and increase demand over the coming decades.

A recent report by Morgan Stanley predicts that battery powered electric vehicles on the road have the potential to reach a billion by 2050 reaching parity with vehicles powered by the internal combustion engine. Today, whilst only 1% of cars sold globally are electric, it is the explosive growth rates that are important - UK sales, for example, are up a huge 51% this year compared to 2016. The expansion in rapid charging stations to support these numbers is underway with companies such as InstaVolt in the UK working with local councils and businesses to provide the necessary infrastructure. However it is the huge potential in the world’s developing countries that will really have an impact. India’s automotive industry for example is trying to leapfrog into full EV by 2030, and China has similar goals. Take a step further and imagine a world running on electric vehicles, powered by renewable energy. The increasing acceptance by car manufacturers and investors that this is the future, more than proves that a revolution is underway, and who knows, may go all the way.

Alongside batteries in cars, batteries are also set to power our homes. Take Tesla’s Powerwall innovation, already today storing solar power to generate electricity for household use. There is no doubt we will see significantly more developments in this space with regard to both batteries for the home as well as those for the grid. Grid batteries are also taking on many forms and are driven by the necessity to stabilise the grid from the unpredictability of renewable energy. Projects range from big batteries with huge storage capacity to more unusual ones such as Green Hedge’s Energy Barn, an opportunity for farmers and landowners to generate additional income by housing batteries in barns on their land.

It is not only our energy and transportation industries have been changed forever, but I believe a more sustainable approach to every part of life is becoming a deep rooted cultural shift for companies, people and investors. We can see that there has been a cultural change, once we are doing ‘good’, doing ‘well’ is one of the lessons combining financial, economic and impact. This power of culture becomes even more effective when overlaid with better economics and the multiplier effect means it not only makes better sense environmentally, but also economically. I would go as far as to say that this move towards sustainable living is now becoming part of our global culture, even starting to become the norm.

So what have we learnt? We have learnt that a small, niche industry, believed at the outset to be peripheral to the future of global energy can bring about a monumental turnaround to the global system. Renewables make absolute sense and they are not a zero sum game. Their success has taught us it that isn’t fruitless to dream of a massive transformation in an industry and the lessons we have learnt from renewables can be applied and transferred to other industries, for the good of everyone. We have also seen that the drive to do good is not niche and once an industry has found a better, cleaner, more economically attractive way to do something, then there is no return to old ways. Let’s be clear, if the world is to support a population, which is increasing by at least 1bn every 12 years, then we are going to need principles that we can build on. We have to ask ourselves the question as to whether the lessons we have learnt from renewables - combining big dreams with doing well, financially and sustainably and ultimately doing good for the individual, community, country and the world - will help us to establish those parameters to address the enormous challenges ahead. I’m certain they will.

This article appeared in Environmental Finance in October 2017.