Almost 150 years after photovoltaic cells and wind turbines were invented; they still generate only 7% of the world’s electricity. But they are now growing faster than any other energy source and their falling costs are making them competitive with fossil fuels. Predictions point that renewables will account for half of the growth in global energy supply over the next 20 years. Another promising fact is that the world will enter into an era of clean, unlimited and cheap power very soon.
Normally investors are happy to invest their money in electricity generation as it offers reliable returns. But green energy has a dirty secret. The more it is deployed, the more it lowers the price of power from any source. This makes it hard to manage the transition to a carbon-free future, during which many generating technologies, clean and dirty, need to remain profitable if the lights are to stay on. Policymakers are already seeing this inconvenient truth as a reason to put the brakes on renewable energy. In many parts of Europe and China, investment in renewables is slowing as subsidies are cut back. However, the solution is not less wind and solar. The need of the hour is our correct thought process for a rational pricing of clean energy in order to make better use of it.