Solar energy: do we have a lift-off?

Solar energy: do we have a lift-off?

20-09-2016 | リサーチ

The role of renewable energy, such as sun and wind energy, is expected to increase rapidly over the next years. At this stage it is hard to pinpoint exactly which companies will benefit the most, but it is already clear that a lot of damage will be caused in the energy sector, utilities and car manufacturers.

  • Henk Grootveld
    Henk
    Grootveld
    Portfolio Manager/ Head Trends Investing

Speed read

  • Declining prices and better efficiency have set off exponential growth in solar and wind energy
  • COP21 is an important political tailwind
  • Key will be the combination of much cheaper batteries and new stationary storage technologies

Less than 5% of our energy is produced by sun and wind. But this is changing rapidly. Since 2000, solar energy’s weight in the energy mix has doubled seven times. For wind power there have been four doublings, increasing the wind contribution to 3% of the energy mix in 2015. This exponential growth can be fully explained by the continuous price declines and the improved efficiency of solar panels and wind turbines.

We have left the first phase of renewable subsidies and goodwill behind us. We have already reached the next phase in which plain economics take over, as in windy or sunny areas it is already cheaper to produce unsubsidized solar or wind energy than burning coal or gas. Solar panel costs declined from roughly USD 100 in the 1970s to USD 0.60 today for a single-watt solar panel. Since 2005, the decline in solar panel prices has coincided with stellar growth in installed capacity.

サステナビリティに関する最新の「インサイト」を読む
サステナビリティに関する最新の「インサイト」を読む
配信登録

Plummeting prices

Wind power prices have also declined on a remarkably steep path in the last decades, albeit less steep than solar power. Contrary to solar, wind power is an ancient old mechanical technology. Due to major efficiency enhancements in wind turbines, such as size and new locations at sea, the price of wind power still declined. In fact, offshore wind mills are able to generate 100X more power versus 30 years ago. This has made wind power prices decline by roughly 40% over the last five years. In comparison, solar power has declined by roughly 75% over the same period.

Most experts predict a continuation of the price declines in both solar and wind power, although at slower rates than in the recent past. Bloomberg New Energy Finance predicts that these two technologies will become the cheapest ways of producing electricity in many countries during the 2020s and in most of the world in the 2030s. They see onshore wind costs falling by 41% and solar photovoltaic (PV) costs falling by 60% by 2040. Also Deutsche Bank, CLSA and Tony Sheba from Stanford University predict the price decline in solar to continue. Goldman Sachs expect that between 2015 and 2020 wind and solar will add more energy supply than US shale did between 2010 and 2015.

Deutsche Bank expects that in 2016 it will be cheaper to produce solar energy than fossil based electricity in 47 states of the US. In 2017 this will be the case in 80% of the world. Bloomberg New Energy Finance sees 2025 as the turning point. From 2025 onwards Bloomberg expects all of the growth in the energy market to come from solar and wind energy. From here onwards they see solar power growing sixfold to become the cheapest energy resource. UBS Investment bank is even more optimistic and expects wind and solar to be the cheapest power generation technologies across the world by 2020.

Political tailwind

The 2015 United Nations Climate Change Conference, COP 21 or CMP 11, was the first climate conference after Kyoto 1997 where an agreement was reached between all participating 196 countries. According to COP21, all countries need to pursue all possible efforts to limit global warming to less than 2 °C compared with pre-industrial levels. The agreement calls for zero net greenhouse gas emissions to be reached during the second half of this century. Although the positive mindset is there, COP21 still needs be ratified by local parliaments. Although this seems trivial, this is something where the Kyoto agreement went wrong as the US simply never ratified and Canada withdrew from the protocol. However, hopes are high as in September 2016 both China and the US officially ratified

It is clear that the fight against emissions has become a global one after COP21. The number of national laws or regulations to reduce emissions and stimulate renewables has increased steadily over the last decade. It is expected that this will continue thanks to COP21.

Another advantage of solar energy is that it is truly abundant and only a limited amount of the surface of the earth is required to fully supply our world with solar energy. Both solar and wind energy have almost zero marginal costs and this changes the game for power production. It just takes more sunlight and or more wind to produce an additional unit of power. Due to these zero marginal costs, the total costs of electricity will go down the more renewable energy is used in the energy mix. Interestingly enough, the lower the cost of electricity the lower the costs of solar panels, as one of the biggest input costs for producing solar panels is electricity.

Zero marginal costs are changing the game

These zero marginal costs change the game on the energy markets in many ways. The German grid, for instance, has a hard time handling zero marginal costs as shown by all those sunny days where German electricity had negative wholesale prices. Negative pricing makes cheap energy storage the holy grail of renewable energy. The grail will soon be found in the combination of much cheaper batteries and new stationary storage technologies.

These cheaper and better batteries will also lead to the breakthrough of electric vehicles (EVs). Next to cheaper driving, EVs might as well become the ultimate storage for the cheap solar and wind energy we are going to harvest in the next decade.

Cheap solar energy combined with cheap batteries could cause a lot of damage among companies in the energy sector, utilities and car manufacturers. Spotting future winners is much harder in such a highly deflationary environment. The most obvious winners are of course mankind and our planet Earth.

重要事項

当資料は情報提供を目的として、Robeco Institutional Asset Management B.V.が作成した英文資料、もしくはその英文資料をロベコ・ジャパン株式会社が翻訳したものです。資料中の個別の金融商品の売買の勧誘や推奨等を目的とするものではありません。記載された情報は十分信頼できるものであると考えておりますが、その正確性、完全性を保証するものではありません。意見や見通しはあくまで作成日における弊社の判断に基づくものであり、今後予告なしに変更されることがあります。運用状況、市場動向、意見等は、過去の一時点あるいは過去の一定期間についてのものであり、過去の実績は将来の運用成果を保証または示唆するものではありません。また、記載された投資方針・戦略等は全ての投資家の皆様に適合するとは限りません。当資料は法律、税務、会計面での助言の提供を意図するものではありません。

ご契約に際しては、必要に応じ専門家にご相談の上、最終的なご判断はお客様ご自身でなさるようお願い致します。

運用を行う資産の評価額は、組入有価証券等の価格、金融市場の相場や金利等の変動、及び組入有価証券の発行体の財務状況による信用力等の影響を受けて変動します。また、外貨建資産に投資する場合は為替変動の影響も受けます。運用によって生じた損益は、全て投資家の皆様に帰属します。したがって投資元本や一定の運用成果が保証されているものではなく、投資元本を上回る損失を被ることがあります。弊社が行う金融商品取引業に係る手数料または報酬は、締結される契約の種類や契約資産額により異なるため、当資料において記載せず別途ご提示させて頂く場合があります。具体的な手数料または報酬の金額・計算方法につきましては弊社担当者へお問合せください。

当資料及び記載されている情報、商品に関する権利は弊社に帰属します。したがって、弊社の書面による同意なくしてその全部もしくは一部を複製またはその他の方法で配布することはご遠慮ください。

商号等: ロベコ・ジャパン株式会社  金融商品取引業者 関東財務局長(金商)第2780号

加入協会: 一般社団法人 日本投資顧問業協会