The Energy Secretary for the United States, Ernest Moniz, thinks that the costs of producing solar and wind energy have fallen so low that they would be competitive with oil and gas even without the subsidies they currently receive from the government.
Moniz, who was trained as a nuclear physicist, explained to reporters that while the Obama administration is still in favor of the current push to extend renewable energy tax credits in Congress, there really is no need for them anymore.
Moniz’s belief comes from very real statistics that show the solar and wind market gaining momentum. At the National Clean Energy Summit in Las Vegas, he backed up his ideas by citing rooftop solar panels, which could become as cheap as 6 cents per kilowatt hour in the near future. Wind energy is also falling in price, and electricity from wind farms is now cost-competitive with oil and gas.
The Wind Technologies Market Report from August 10 also demonstrates that wind energy is becoming extremely cheap, dropping nearly 5 cents per kilowatt hour in 2014. The report attributes this drop to “lower wind turbine price and installed project costs, along with improvements in expected [production capacity]”.
Of course, the oil and gas industry continued to receive subsidies from the government long after fossil fuel extraction became cheap, easy and nearly risk-free. Therefore, it is reasonable to expect solar and wind to get the same chance by way of federal assistance.
Image (c) US Government
You want to speed up the transition to renewable energy; easy, drop all subsidies, wind, solar and hydrocarbons, and let the market find the price points. Gasoline and diesel would be priced right out of the market and the development of traction batteries would proceed at warp speed. ‘Necessity is the Mother of Invention.’
I agree with you in theory. However, with the amount of political power the hydrocarbon industry could still wield even without subsidies, I think it is a fair bet that they would unfairly game the system to their advantage. Eventually, though, maybe in a couple decades or less, we’ll have reached the point where that will be exactly what the market needs. And hey, with oil prices as low as they are, maybe we’ll reach that point more quickly than I think!