A new report out from Morgan Stanley anticipated that renewable energy will be the least expensive form of new energy by 2020 across the globe. Moreover, the low-costs of renewable energy will drive renewable energy growth and carbon reduction—not government policies, the bank found.
“Numerous key markets recently reached an inflection point where renewables have become the cheapest form of new power generation,” Morgan Stanley’s analysts reported in Renewable Energy: What Cheap, Clean Energy Means for Global Utilities. “A dynamic we see spreading to nearly every country we cover by 2020. The price of solar panels has fallen 50 percent in less than two years (2016-17),” analysts observed.
“We project that by 2020, renewables will be the cheapest form of new-power generation across the globe,” Morgan Stanley said. “By our forecasts, in most cases favorable renewables economics rather than government policy will be the primary driver of changes to utilities’ carbon emissions levels,” its analysts wrote. The bank already has made numerous investments in renewable energy projects in the US.
That’s going to have some interesting consequences. “For example, notwithstanding president Trump’s stated intention to withdraw the US from the Paris climate accord, we expect the US to exceed the Paris commitment of a 26 percent to 28 percent reduction in its 2005-level carbon emissions by 2020,” the bank’s analysts stated in the report.
Wind also is leading the change. “[Wind power] can be as low as one-half to one-third that of coal- or natural gas-fired power plants,” Morgan Stanley said.
Meanwhile solar is still facing an oversupply problem. Morgan Stanley said that solar installations grew 50 percent last year compared to the previous year, but the capacity is still 28 percent above the amount of installations going on currently.
“The ability to lower customer bills from utilizing low-cost renewables can improve utilities' regulatory environment and provide related investment opportunities in grid modernization initiatives,” Morgan Stanley said. It added: “For utilities with large, competitive renewable development businesses, investment in renewable energy projects can generate attractive risk-adjusted returns.”Tweet