Clean Energy Is Now Good Business

Clean energy, particularly solar power, has now literarily taken the world by storm. Barriers to entry into renewable energy, and solar energy in particular, are crumbling around the world.

Solar, in particular, is getting cheaper globally!

In Chili, a solar energy auction in August for a solar power farm saw solar prices reach the lowest ever till date…to almosthalf the price of coal (which is the cheapest fuel out there) with $29.10 per megawatt hour (MWh), or $0.029 per kWh. This was a 40% drop in solar price from just last year.

Bid prices for solar power around the world are getting lower as well. According to IRENA, prices range from $0.030 per kWh in UAE to $0.045 per kWh in Mexico, $0.075 per kWh in South Africa and $0.93 per kWh in United Kingdom.

Prices for solar power are also reducing in Nigeria; the Nigerian Minister of Power shared in July 2016 that prices could be as low as $0.11 per kWh (about N35 per kWh with current official exchange rates), a marked reduction locally, but still quite high compared to global prices. We should note that sadly, this is still more than you would pay retail for energy from the fossil-fueled grid (which is N24 per kWh).

Even coal plant owners are recognizing the signs and beginning to jump ship. A study on a major coal plant in Cleveland US in June 2016 showed that energy demands have flat-lined and the revenues from supplying wholesale customers with electricity from the coal plant cannot justify the running costs of the plant. These costs have been increased due to significant environmental compliance costs, aging infrastructure, and increasingly competitive prices for wholesale & retail energy. Due to all these, the plant owners are looking at transitioning sooner from coal! Even Shenhua Group, the largest coal producing company in the largest coal producing country, China, is now building a giant solar plant

Power Purchasing Agreements are becoming normal!

Now although the costs of solar power is reducing, up-front installation costs for companies is still a massive hurdle to cross. But long-term Power Purchasing Agreements (PPA) are significantly reducing this hurdle and has become the preferred model for companies such as Apple, Google, Microsoft, Walmart, IKEA, and more recently, heavy manufacturers like Dow.

Back home in Nigeria, we've also caught the storm of solar! Despite a relatively low amount in the 2016 budget allocated by the Federal Government to renewable energy as a whole, federal energy agencies and State Governments have been signing clean energy plant agreements with both local and foreign companies. For example, Jigawa state and Nigerian Bulk Electricity Trading Plc signed a 20-year Power Purchase Agreement with independent solar power producer Scatec Solar to develop a 100MW solar plant.

What's more, about 14 different companies have recently signed Power Purchasing Agreements for solar projects (capacities of 50MW to 100MW plants) in nine Nigerian states in 2016 so far! This is great progress considering there were at least 12 projects in the whole of 2015, 20 in 2014, 11 in 2013, 13 in 2012, 1 in 2011, 4 in 2010, with solar projects markedly more than other forms of clean energy from 2015 (See the list here). There has obviously been good improvement in the growth of clean energy projects since 2010.

There's more and more money in clean energy!

It's also interesting how well clean energy companies are performing globally! A study co-authored by Corporate Knights shows that the Carbon Clean 200 (companies dealing with more than 50% of their energy mix products being clean energy) almost triples the performance of their fossil fuel-heavy counterparts (Carbon Underground 200).

Investors also, are refusing to be left behind! In the World Economic Forum held in January 2016, over 400 investors (representing $24 trillion in combined assets) mobilized themselves pledged to proactively seek out and scale up investments in low-carbon and carbon-resilient investments. That's a huge win for clean energy because the people with the money are backing it! In 2015, global clean energy investment hit US$285.9 billion. I certainly can't wait to see what coming figures will be with this new pledge by investors. 

Nigeria is seeing some of this investment come its way too! This August, the Minister of Power & Housing declared that a loan of about $300 million has been secured for solar energy projects of up to 1.15GW (impressive given that Nigeria has only succeeded in producing about 4.5GW in a long time).

Proof of concepts are working!

Essentially, these past couple of years have been extremely optimistic for clean energy, both locally and globally! For one, the sustainability community has been so excited about Costa Rica running completely on clean energy for 113 days in a row as at 23rd August! This has become a Proof of Concept for cities and countries the world over that clean energy alone can sustain communities (although situations are different in each so this needs to be taken into account when replicating in other countries).

Furthermore, a global 2015 survey by International Energy Agency revealed that carbon dioxide emissions from the energy sector has levelled off even though global economy grew over 3%. This implies that our energy needs must have increased. But since a whooping 90% of new electricity generation in 2015 was from clean energy (half of which was from wind btw), it shows that clean energy is perfectly capable of facilitating economic growth - something that has been debatable until recently.

With these new proofs coming to light, and businesses, communities, cities and nations continue to focus on clean energy, it is becoming more and more mainstream. This is what the sustainability community is looking forward to, and it's closer than ever before.