David Roberts, a seasoned climate journalist at Vox, said that Chait’s hope on the technological front was plausible. “The big picture on climate change remains overwhelming and fairly depressing,” he wrote. But he added, “for the first time in my lifetime, it looks like it might be a real fight.”
Everywhere I looked, it seemed, people cited the plunging cost of renewables as reason for optimism in the planetary struggle. So, I wondered, how did we get here?
The answer is, of course, complicated. Both Chait and Roberts cite the considerable public investment in green energy that came from the U.S., Germany, and China during the Great Recession, in addition to recent American and European regulations that have de-incentivized coal power plants. But there were other factors at work. When I talked to energy-industry experts, they said that competition among manufacturers, and compounding technological know-how also contributed to the recent plunge in prices.
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According to Amy Grace, the head of wind insights at Bloomberg New Energy Finance, wind and solar markets work quite differently.* The wind market is analogous to a car market, she said, where companies building power plants must care about the reliability and quality of turbines over the long term. Solar, on the other hand, has become more of a commodity industry.
Let’s start with wind. Two main forces have driven the price of wind in the past five years, Grace said. First, she said, it’s cheaper to produce wind turbines than ever before. Second, wind turbines are much more efficient than they used to be.
Those cost reductions are largely due to competition. Grace traced some broad eras in the history of wind’s price. There was a large plunge between 1980 and 1996, as manufacturers figured out how to better build the technology. Then, from 2000 to 2008, “there was actually a plateau period. From 2004 to 2008, prices even start to increase. That was really driven by a shortage of turbines in the market,” she said.
Between 2008 and 2012, the demand for turbines turned into a supply glut. “People produced a ton of turbines, there was too much capacity, and the market didn’t grow as fast as people were expecting,” she told me. Since then, the price of building turbines has been brought down by a “learning curve”—that is, manufacturers have gotten better at building turbines better, cheaper, and faster.
“For wind, we’ve seen a 9 percent drop in the cost of an actual turbine, for every doubling of installed capacity,” Grace said.
But the falling cost of turbines is not the only factor driving down the price of wind. Manufacturers have also gotten better at making individual turbines produce more energy. Wind turbines can now be mounted higher, so they reach more powerful breezes; and their rotors can be bigger, so they capture more air. Utilities have also gotten better at deciding where to place turbines, and they’re more reliable, so they don’t break down as often.