Transitioning to clean energy is the single most important thing we can do to avoid the catastrophic effects of climate change.
Luckily for us, clean energy keeps getting cheaper.
This week saw the lowest-ever bid for electricity from a proposed solar plant, worldwide. A proposed development in Abu Dhabi will sell its electricity for 2.42 cents a kilowatt-hour (kWh).
The bid answered a request for proposals from the state electric company for a 350-megawatt (MW) solar plant.
For context, the average price per kWh for residential electricity in the United States — from all sources — is 12.73 cents. Wholesale prices for electricity can vary dramatically, but a set of record-low bids last summer for solar in Austin were around 4 cents per kWh. A 350 MW plant provides enough electricity to power about 57,000 average U.S. homes.
For years, solar prices have been falling and solar projects have been growing. It’s a fairly straightforward relationship: As the industry grows — streamlining production, training more workers, and generally benefitting from the economies of scale — prices come down.
But the deal also calls attention to how important financing is to energy development.
“One of the main enablers of low bids around the world over the past months is cheap financing,” Pietro Radoia, an industry analyst at Bloomberg New Energy Finance, told Bloomberg News.
When cheap financing goes to solar, that is a great thing. When it goes to fossil fuels, that’s not so great.
Think of this as the flip side to the fossil fuel divestment push, which grew 50-fold from 2014 to 2o15.
“Mainstream financial views of fossil fuels will never be the same,” Ellen Dorsey, executive director of the Wallace Daniel Fund, said last year. “It is increasingly clear that it is neither OK nor smart to be invested in fossil fuels.”
Solar, though, is a whole other story.