Renewables: The Unstoppable Economics of Our Clean Energy Future

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What makes the renewable transition even more compelling is that we're finally accounting for the true costs of our fossil fuel dependence. The health impacts alone are staggering. In 2024, renewables helped the U.S. avoid an estimated $21.5 billion in health damages from air pollution, on top of $24 billion in direct fossil fuel cost savings.

Meanwhile, fossil fuels still receive subsidies at a nine-to-one advantage over renewables in many markets, artificially propping up an increasingly uneconomical energy source. Remove those distortions, and the renewable advantage becomes even more pronounced.

Sources: RENEWABLE POWER GENERATION COSTS IN 2024

Secretary-General's remarks on Climate Action "A Moment of Opportunity: Supercharging the Clean Energy Age"

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Transcript

0:25

This is Heliox, where evidence meets empathy. Independent, moderated, timely, deep, gentle, clinical, global, and community conversations about things that matter. Breathe easy. We go deep and lightly surface the big ideas. Welcome to the Deep Dive. We're here to cut through all that noise, the information overload, and really zero in on what matters. We take the sources, the research, your notes, and we pull out those vital insights, helping you get informed fast, our goal. To give you those surprising facts, those practical takeaways, but without all the overwhelm. Today, we are diving deep into something that's, well, rewriting our global future. The economics of renewable energy. It's unstoppable. We're looking at the costs, how they've just cratered the sheer scale of deployment and what this huge shift means for, well, everything. Global stability, even your own energy bill. Yeah. And for this deep dive, we've really leaned on two incredibly powerful sources. We've synthesized a really detailed report from the International Renewable Energy Agency, that's IRENA, focusing on the actual generation costs in 2024. And we've paired that with some pretty impactful remarks from the U.N. Secretary General on what he terms supercharging clean energy. He's quite direct. Right. So our mission for you today is to really get why clean energy isn't just an environmental thing. I mean, it is, obviously, but why it's now fundamentally this massive economic engine and a key to global stability, security, too. Get ready for some facts that might, well, might just flip how you think about where our energy future is headed. OK, so let's kick things off. Let's unpack this cost story. It seems to be the absolute game changer right now. What is the fundamental shift happening there? Well, the main finding from that IRENA report, it's really transformative. Basically, in 2024, 91 percent. Yeah. 91 percent of new utility scale renewable power capacity. It delivered electricity cheaper than the absolute cheapest new fossil fuel alternative. Rewindy 1 percent. Yeah. I mean, think about that. If you're building a new power plant today, more than nine times out of 10, the cheapest way to do it is renewable. We're not talking, you know, a little bit cheaper. It's a fundamental economic shift. Green is, well, it's the smart money now. That is an incredible statistic. So, OK, when we talk specifics, what are the actual numbers like the cost per kilowatt hour for these new projects? How big is that competitive edge? Sure. So for new utility scale projects, the global average cost, they call it the levelized cost of electricity or LCOE. For onshore wind, it was just 3.4 U.S. cents per kilowatt hour. Solar PV, so solar panels, came in at 4.3 cents. Even hydropower, which is more established, was around 5.7 cents. Yeah. These numbers put them solidly below new fossil fuel options. It's the default economic choice now. 3.4 cents for wind. That's remarkable. It is. And what's really fascinating here is the journey to get to this point. The long-term cost declines are just dramatic. Think about this. Between 2010 and 2024, the total installed cost for solar PV fell by 87 percent. 87. Down to just $691 per kilowatt. 87 percent. Onshore wind fell 55 percent. Even offshore wind, which is more complex, dropped 48 percent. These weren't small changes. They were huge economic shifts that slashed the actual electricity cost, the LCOE. Solar PV LCOE dropped 90 percent. Onshore wind, 70 percent. It's a cost curve, unlike almost anything else. Okay. Those long-term drops are massive. But the report also mentions some slight increases or fluctuations just in last year, 2023. Do those change the big picture at all? Not really, no. They're more like minor ripples. It's true. While some like concentrated solar power kept falling, a few others saw tiny bumps in 2023. Solar PV went up, what, 0.6 percent? Onshore wind 3 percent, offshore 4 percent. But compared to those huge decade-long drops of, you know, 70, 90 percent, these small shifts don't change the fundamental story. The underlying economics pushing costs down are still incredibly strong. Got it. So context matters. Exactly. And it's interesting to see the regional differences, too. China and Brazil, for instance, their onshore wind costs were actually below the global average. Same for solar PV. China and India came in really low. And offshore wind, Asia's average cost was a bit lower than Europe's and quite a bit cheaper than in the U.S. The U.S. has specific market hurdles, logistical things that push their costs up a bit more. It shows local factors still play a role. So given this incredible trend, are costs expected to keep falling? What's the outlook say for the next five years? Yes, the projections are definitely optimistic on that front. Global installed costs are expected to keep declining. Solar PV, for example, might get down to around $388 per kilowatt. Onshore wind, maybe $861 per kilowatt. And offshore wind, around $2,316. So yeah, innovation, economies of scale, they're still very much pushing those prices down further. We've nailed down the cost advantage, which is huge. But honestly, the thing that really jumped out at me from these sources was the sheer scale of deployment happening now. This accelerating shift in 2024, it's mind-boggling. Can you walk us through those numbers? Just how big was the surge? It was unprecedented. In 2024, the world added 582 gigawatts GW of new renewable power capacity. 582 gigawatts in one year. In one year. To give you a sense of scale, that's like adding the entire generating capacity of, say, Germany or the UK, just from renewables. In 12 months, it was nearly a 20% increase over 2023. A new record. It brings the total global renewable capacity now to over 4,400 Jbp. Massive numbers. That's almost hard to picture. Which technologies were really driving that? Was it spread out or was it mainly one or two sources? It was largely driven by two main players. Solar PV was the giant, accounting for 452 gigawatts. That's nearly 78% of the total surge. Wow. Yeah, solar is just so fast and flexible to deploy. Wind power was next, adding a significant 114 gigawatts. So mostly solar and wind leading the charge. And regionally, Asia is just dominating. They added over 413 gigawatts. China, by itself, put in over 61% of all the world's new solar PV. 61%, just China. And almost 70% of the new wind installations. Their scale is just unmatched. But it's not only China. The U.S., India, Brazil, Germany, they all made significant contributions too. So it is a global push. But Asia and China in particular are way out front. This incredible growth really lines up with what the Secretary General was saying about this transition being unstoppable. What signs are we seeing that this is already, you know, fundamentally changing our electricity grids, how we actually get our power? Oh, it's definitely reshaping things. If you connect this growth to the bigger picture, look at the European Union. For the first time ever in 2024, solar generation actually produced more electricity than coal. And clean sources overall now make up over two thirds of their total generation. More than coal. That's a milestone. It is. And in the U.S., solar and wind generation grew on average over 12 percent per year between 2018 and 2023. Meanwhile, coal and peat generation declined by over 10 percent annually in that same period. So the shift is absolutely happening on the grid. You can see it in the data. And here's a striking fact. In the last year, almost all the new power capacity built globally. It came from renewables. Every single continent added more renewables than fossil fuels. Every continent. Every continent. But, and this is a really important, but despite this amazing speed, we're still not on track for that COPY28 goal, the one to triple renewable capacity by 2030. That needs over 1,000 JLW added each year, later this decade. We're at 582 JLW now. So we're moving fast, but we need to move even faster. Right. So the momentum's there, but the required pace is even higher. Okay, it's clear, building all this isn't just about the panels and turbines, it's also about managing the energy, integrating it. What are the key enabling technologies making this massive shift possible? Battery storage is absolutely critical. Utility-scale batteries, BESS, they call them the costs, have just collapsed. Down 93% between 2010 and 2024. 93% from over $2,500 per kilowatt hour down to just $192. Wow, that's like Moore's Law for batteries or something. It's pretty close. It's driven by manufacturing scale-up, better materials. China is huge here. They produce over 75% of the world's batteries now, which really help drive down global costs. Okay, so batteries are way cheaper. How are they actually being used with renewables to make the grid work better, more reliably? They're essential for these hybrid systems. You pair solar or wind directly with battery storage. This gives you a much firmer, more predictable power output. It smooths out the ups and downs of when the sun shines or the wind blows, enhances grid reliability big time. And are these hybrid systems cost effective? Yeah, they really are becoming so. In the U.S., for example, there were 17 operational hybrid projects studied, and their average LCOE was about 7.9 cents per kilowatt hour. That puts them right in line with efficient gas plants and actually cheaper than coal. In Australia, some projects were even lower, around 5.1 cents. So definitely competitive and adding flexibility. And beyond the physical batteries, what about digital tools, AI, smart grids, that sort of thing? Huge role there, too. Digitalization is boosting efficiency everywhere. Things like predictive maintenance for wind turbines, real-time monitoring of solar farms, AI managing assets. It all lowers operating costs and makes the equipment last longer. And at the whole system level, smart meters, dynamic pricing, AI algorithms, optimizing grid flow and demand response, they make the grid much smarter and more flexible to handle all these renewables. This all sounds incredibly advanced and positive, but it does raise a big question. You've got cheaper renewables, cheaper batteries, smarter grids. What are the actual roadblocks? What's stopping us from just plugging all this in even faster? Are the grids ready? Ah, that's the bottleneck. Increasingly, yes, it's not always simple. While the cost of building the solar or wind farm itself keeps falling, getting it connected to the grid is becoming a major constraint. We're seeing projects delayed because the grid connection points are clogged up. Clunked up, like literally no space on the wires. Sort of, yeah. Or needing major upgrades that take time, plus getting key components like large transformers. Long waiting times for those now. All this adds what they call integration costs. In Australia, for instance, they estimated these grid-related costs can add maybe $0.03 per kilowatt hour at high levels of renewables. So the grid itself needs massive investment. Exactly. But it's important to remember, those grid investments, they don't just benefit renewables. They make the entire power system more robust, more flexible for everyone. It's a system-wide upgrade. Okay, shifting gears slightly. Beyond the tech and the grid wires, what about bigger structural things? What global factors are really driving this and maybe holding it back in some places? Well, one major factor driving costs down, especially for solar and batteries, is China's vertically integrated supply chain. They control large parts of the process, from raw materials to finished panels or turbines. That integration cuts, delays, allows massive scaling. It's a huge structural cost advantage. Though there is a concern, as the report notes, that a lot of their PV manufacturing still uses coal power. So, you know, it's complex. Decarbonizing the supply chain itself is another layer. That makes sense. Now, the secretary general used a really punchy phrase for the economic argument. Just follow the money. What was he getting out there? His point was stark. Last year, $2 trillion went into clean energy globally.$2 trillion. That's $800 billion more than went into fossil fuels. And that clean energy investment is up almost 70% in just 10 years. Wow. $800 billion more. Exactly. So his message was, the investment world, the smart money, it's clearly betting on clean energy. This isn't niche anymore. It's where the big capital is flowing. Yet he also flagged a big distortion still happening in the market, didn't he? Something that's kind of working against that money flow. Yes. Despite renewables winning on costs for new build, fossil fuels still get way more subsidies globally, like a nine to one advantage in consumption subsidies. Nine to one. Still. Still. It's a massive market distortion. It artificially props up fossil fuels and it doesn't even account for the huge hidden costs of climate damage and air pollution they cause. So the real societal cost of fossil fuels is even higher. Okay, so if renewables are cheaper and attracting trillions, why is getting financing still such a big hurdle in some parts of the world, especially, say, developing countries? It comes down to the upfront cost and perceived risk. Renewable projects need a lot of capital at the start. Build the wind farm, then the fuel wind is free. This makes their final electricity cost, the LCOE, really sensitive to how much it costs to borrow money. And in 2024, in-market scene is higher risk. Like many in Africa, the financing costs were a huge chunk of the LCOE. Their assumed cost of capital of the WACC could be as high as 12 percent. Compare that to Europe, maybe 3.8 percent. 12 percent versus under 4. That's a huge difference. Massive. So even if the physical cost to build a wind farm was similar, the projects in Africa could end up with a much higher LCOE simply because borrowing money was so much more expensive. It's a major barrier to deployment there. That really highlights the finance challenge. What about government policies? How critical are they in smoothing the path? Absolutely critical. Stable policies are key. Things like long-term contracts, power purchase agreements or PPAs, contracts for difference. They give investors certainty about future revenues. That lowers the risk, makes it much easier to attract investment at lower costs. And presumably unpredictable policies hurt. Exactly. If governments suddenly change the rules retroactively, that kills investor confidence overnight. On the flip side, proactive industrial policies like the Inflation Reduction Act in the U.S. or the EU's Green Deal Industrial Plan, they've clearly spurred domestic investment, manufacturing, jobs. Policies really matter, and the overall economic impact is becoming undeniable. In 2023 alone, these clean energy sectors, they drove 10% of global GDP growth. 10% of growth. Yeah. It was even higher in some places, 33% in the EU, 20% in China, 6% in the U.S., and jobs. Globally, the clean energy sector now employs more people than the fossil fuel sector. Almost 35 million people worldwide, even Texas, you know, the heart of U.S. oil and gas. It now leads the country in renewables. Just sound economics now, creating real jobs. Okay, let's zoom out a bit. Beyond the direct costs and the GDP figures, what are the wider benefits of this huge shift towards renewables? What does it mean for, you know, our world, our lives? Well, a big one is energy security. As you get more renewables, you rely less on fossil fuels, especially for your baseline power. This means you're less vulnerable to volatile global fuel prices, supply disruptions, geopolitical games. It makes a country's energy supply more stable, more resilient, less dependence on imported fuels. And what about the really direct impacts? like on people's health, the environment right where they live. Oh, those are substantial. Yeah. And very tangible. When you generate electricity with wind or solar instead of burning coal or gas, you avoid emitting harmful air pollutants. Things like sulfur dioxide, nitrogen oxides, tiny particles, stuff that causes respiratory problems, heart disease, especially in cities. Can we quantify that? Yes. The report gives some striking examples. In 2024, just in the U.S., renewables helped avoid about $24 billion in direct fossil fuel costs. But on top of that, they avoided an estimated $21.5 billion in health damages from air pollution. Wow. So over $45 billion in benefits in one year just in the U.S. Exactly. Both saving money and saving lives, essentially. And the numbers are even bigger elsewhere. China, estimated $440 billion in benefits. Germany, $22 billion. Brazil, $32 billion. Australia, nearly $7 billion. These aren't abstract environmental points. They're real savings in health care costs and improved quality of life. Secretary General was really emphatic that there's no going back on renewables. He gave three main reasons. Market economics, energy security, and easy access. We've covered the economics pretty thoroughly. Let's dig into energy security and this easy access idea. How do renewables change the game there? He was very direct. He basically said fossil fuels are now the biggest threat to energy security. Look at the Russia-Ukraine war. Average household energy costs globally jumped 20% in 2022. Price shocks, supply cuts, geopolitical leverage. That's the fossil fuel reality. Renewables, they offer stable, predictable costs. The price of sunshine doesn't spike. You can't put an embargo on the wind. It allows nearly every country the potential for energy self-sufficiency. That fundamentally changes global power dynamics, moving away from dependence on a few fossil fuel rich states. And then the easy access point. This is huge for development. You deploy solar panels, small wind turbines, almost anywhere. They're faster to install, cheaper for smaller scales, much more flexible. This is potentially life-changing for the hundreds of millions still without electricity, especially in Africa. Africa has 60% of the world's best solar resources. 60%. Yet incredibly, it received only 1.5% of global renewable capacity installed last year and only 2% of clean energy investment. That disparity is shocking. It is. But the potential is immense. By 2040, Africa could generate 10 times more electricity than it needs, all from renewables. Driven by small-scale off-grid solutions, too, fossil fuels just can't offer that kind of equitable access. You often hear so much doom and gloom around climate change, understandably, perhaps. But what's the message of hope coming through these sources, despite the urgency? Well, the sources definitely acknowledge the gravity. The 1.5 degree target is in serious trouble. Climate change is fueling instability. The Secretary General mentioned the Sahel, terrorism links. That's real. But the overwhelming message, particularly from the Secretary General, is actually one of hope and opportunity. He stresses, we have the tools, we have the science. And crucially, as we've discussed, we now have the economics on our side. The main challenge isn't technology anymore. It's political will. It's about accelerating implementation. The focus needs to shift from just the disaster narrative to the immense opportunity this transition represents. We can change course and the data shows it's the smartest economic move anyway. Okay, so the transition is unstoppable. The economics work. The tools are there. But it's not happening fast enough or fairly enough everywhere. So what needs to be done? What are the concrete actions needed to really grab this moment of opportunity, as the Secretary General put it? He laid out six key action areas. First, national climate plans, the NDCs. They need to be much stronger. Governments need to submit new plans that cover all emissions, align clearly with 1.5 degrees link energy climate development goals, and crucially, commit to doubling energy efficiency and tripling renewables by 2030. Tripling by 2030. That's the big target. That's the target. And phasing out fossil fuels. These plans also need policies behind them that make clean energy truly investable, removing barriers for capital. Second area, building the energy systems for the 21st century. The grids, the storage investment, there is lagging way behind the renewables build out. We talked about those bottlenecks. Exactly. Yeah. Right now, for every dollar spent on renewable generation, only about 60 cents goes to grids and storage. That needs to one-to-one. There's apparently three times more renewable energy waiting in queues to connect to grids than was actually added last year. Three times. So massive investment needed in modern, flexible digital grids, huge amounts of energy storage, and EV charging networks. Third, meeting new energy demand sustainably. All the growth in electricity demand, especially from things like AI, must be met by renewables. The AI energy use is getting a lot of attention. Yeah, rightly so. A typical data center uses as much power as 100,000 homes, the biggest one soon, maybe 20 times that. The whole sector could use as much electricity as Japan by 2030. So the call is for big tech firms to commit to 100% renewable power for all data centers by 2030 and to use water responsibly too. Fourth area, ensuring a just energy transition. This is crucial. The shift has to be fair. It means real support, education, training for workers in fossil fuel industries, for young people, women, indigenous communities, making sure they have opportunities in the new economy. It also means tackling exploitation in the critical mineral supply chains, the cobalt, lithium, etc. Ensuring human rights, fair labor practices, equitable sharing of the value. That's often overlooked. It can be, but it's vital for social acceptance and true sustainability. Fifth, trade and investment policies need to align with climate goals. We need diverse, secure supply chains, cut tariffs on clean energy goods, unlock more investment in trade, especially South cooperation. And importantly, modernize old investment treaties that sometimes let fossil fuel companies sue governments and delay climate action. And finally, the sixth area, unleashing finance. This loops back to what we discussed earlier. Developing countries are being left behind. Despite having huge potential, like Africa's solar resources. Exactly. Clean energy investment in developing countries, excluding China, needs to increase more than five times by 2030. Five times. This requires serious reform of the global financial system. Multilateral development banks need more lending power. We need real action on debt relief, things like debt for climate swanx, and credit rating agencies, investors. They need to update their risk models, recognize the huge potential of clean energy, and the massive cost of climate inaction. What a comprehensive deep deck. Thank you. I think the core takeaway for everyone listening is just so clear now. Renewable energy. It's not just the green choice anymore. It's not some future dream. It's here. It's cheaper. It's more secure. It's more accessible. It's simply the smart path forward economically and strategically. That sums it up perfectly. The science lines up. The economics line up. The path is genuinely clear. It really boils down to collective political will now and decisive action to speed things up. So a final thought for you, the listener, to ponder. Now that you know this clean energy future isn't just inevitable, but it's investable, it's cheaper, it's within reach. How does that change your view of energy, of progress? What really stands out to you about this incredible transformation we're living through? Thanks for listening today. Four recurring narratives underlie every episode. boundary dissolution, adaptive complexity, embodied knowledge, and quantum-like uncertainty. These aren't just philosophical musings, but frameworks for understanding our modern world. We hope you continue exploring our other podcasts, responding to the content, and checking out our related articles at heliocspodcast.substack.com. Music Music Music