The Real Reason Renewables Are Beating Fossil Fuels

Renewables might account for only a fraction of the overall electricity production in most markets, but clearly they command the future.

As Bloomberg New Energy Finance pointed out in a recent report, investment in clean energy came to $328.9 billion worldwide in 2014, despite the fact that over the last 18 months the price of Brent crude dropped 67%, international steam coal dropped 35% and natural gas dropped 48%. If fossil is down, renewables should be up, yes?

Why the discrepancy?

Some people have theorized that it is because most of the intellectual property around solar is now public. But since companies like First Solar , Enphase Flex and SunPower keep a somewhat tight rein on their innovations the answer doesn’t fully suffice. (Similarly, PCs and mobile phones took off despite the fact that Microsoft, ARM and others have relentlessly protected their IP.)

Subsidies? The International Energy Agency noted that in 2014 fossil subsidies came to $490 billion worldwide compared to $112 billion for renewables, so that can’t be the answer. (Coal leases aren’t exactly a money spinner for the federal government either.)

The answer is actually quite simple and, if you are reading this on a phone, it’s the palm of your hand.

Renewables are distributed.

Distributed, modular technologies invariably beat technologies that must rely on centralized projects. Just as it became easier to deploy desktop PCs in offices instead of mainframes, it’s far easier to put multiple, easily repeatable solar arrays on rooftops or landfills than it is to get the permits, manage the construction, and engineer the grid connections necessary for a large natural gas plant or a multi-gigawatt nuclear plant.

IHS predicts that new U.S. solar installations will come to 15GW in 2016 with the global deployment coming to 67GW. By contrast, Vogtle 3 and 4, the next nuclear plants to come on in the U.S., will add around 14GW of baseline capacity by 2019 and 2020. Even if you take into consideration the baseline nature of nuclear and the added cost and complexity of solar storage, it is clear that distributed has advantages.

Solar can be erected more rapidly and competition among equipment vendors and installers relentlessly drives prices down. Solar installers like Vivint and SolarCity compete continually on how fast they can finalize a rooftop installation: how many nuclear developers do the same?

Plus, it's popular with people seeking jobs. Solar employs 208,859 in the U.S. up 20% since 2014.

Renewables aren’t winning because they can’t compete. They are winning because they compete all the time.