A dozen years ago, New Energy Finance founder and CEO Michael Liebreich asked a room full of California electricity sector executives and regulators what their strategy would be when a grid flooded with solar power pushed their power prices below zero. Replies ranged from “that’s ridiculous” to “that will never happen” to “what are you talking about?” Now it’s the sort of thing that happens frequently. The wild churning of oil markets over the last few weeks, pushing U.S. oil futures and physical oil markets into negative territory, has brought memories of that conversation back into sharp relief.
The market gyrations from the impact of the coronavirus (and an earlier oil price war) ought to unsettle any energy watchers. Even ardent believers in the inevitability of a zero-carbon world recognize that the pandemic could strain renewable energy markets, depressing investments by legacy energy companies in renewables, sandbagging purchases of carbon allowances, and reducing corporate commitments to clean energy more broadly. In these topsy-turvy times, executives could be forgiven for seeing “sustainability” as more about keeping a business going than examining its electricity mix.
That’s especially true in the developing world, where fossil fuel-fired power still accounts for most of the asset base and power generation. Since these countries will also account for most of the energy demand growth through 2050, their choices will have a decisive impact on global health and wealth, from climate change to the quality of our air and water. But how should places that are just entering the contemporary energy economy plan for tomorrow when today is unprecedented?
I have some suggestions, and they begin with some numbers. China and other emerging markets already represent a big share of global clean energy investment. The scale of this market — more than a third of a trillion dollars invested in each of the past five years — makes clear that clean energy is hardly a niche thing, nor is it only in rich countries.