Renewables Won: Cheaper, Bigger, Better, and One Day, Near Free

Why should we use more renewable energy—from small businesses to corporations to economies, beyond an environmental perspective?

In the UN Climate Action Team’s recent report: “Supercharging the new energy era of renewables, efficiency, and electrification”, it outlines the financial, social and environmental benefits of a clean energy transition. Most of the new wind and solar PV developments in 2024 were 41% cheaper, with onshore wind sitting at 53% cheaper than the lowest-costing new fossil fuel plants. In other words, the cost-effectiveness stance for natural gas and oil is no longer valid, as innovation in the clean energy sector drives demand for renewable integration.

Why It Matters

• If media publications can link lower supply chain costs to renewable energy implementation, our economy will begin to internalize clean energy initiatives for financial and environmental gain.

• If companies fail to switch from non-renewables to renewables, they will leave opportunities for profit and energy capacity development up on the table.

• If our economy ignores the potential of renewable energy via non-adoption, our environment will continue to suffer from excessive use of fossil fuels. This mindset also discourages neighboring economies from renewable energy integration, allowing for sustainable financial growth to be slowed on a global scale.

• Scenario: A heating and cooling services company may experience extreme price volatility due to reliance on fossil fuels, as oil prices have reached record peaks since 2008.

Key Findings from the Report

• Global annual energy investments have exceeded USD 2 trillion in 2024 for the first time.

• China, along with other developed countries, have been the forefront of renewable energy deployment technology. In global terms, out of the total 4,448 GW renewable energy integrated, China is responsible for 41%.

• Systematic adoption of renewable energy, coupled with policy support, can equate to rises in GDP, net gain in jobs, and localized benefits. However, these advantages are currently restricted to advanced economies, as emerging economies face institutional barriers and clean energy misinformation.

  • For instance, emerging economies pay over twice as high capital cost for utility-scale solar projects, compared to advanced economies.

Source: IRENA

What this Means for Sustainability and International Markets

In a broader sense, economies are shaped by fluctuations in supply and demand, often determined by consumer interests or regulatory shifts. Interloped with each other on an international level, it’s clear that mass market adaptation of renewable energy across nations has decreased costs and increased overall capacity for this sector.

On a smaller level, for any singular firms, businesses or corporations, overreliance on nonrenewable fuel may be detrimental to supply chain costs. As shown above, solar PV, CSP, onshore wind and offshore wind are more cost-effective than ever globally speaking. Thus, intensive utilization of fossil fuels may be hurtful to profits, as prices for renewables continue to decrease and capacity development continues to grow. As worldwide sentiment towards solar and wind energy becomes increasingly bullish, institutions should join the ESG integration bandwagon, switching energy sources from non-renewable to renewable.

Making this transition is not only necessary to minimize future financial risk, but it is also a crucial step we must take to protect the integrity of our environment. Sustainable and economic-driven investments co-exist, as demonstrated by the rise in renewable energy finance and its implementation on a massive scale. This also normalizes clean energy’s place in society, encouraging emerging countries to utilize renewable energy, to move away from a fossil fuel-centered economy.

Summary: Action Items

-        Companies: Conduct energy efficiency audits to understand room for improvement or instances of overspending per wattage produced.

-        Companies: Assess opportunities for renewables integration, considering the pros and cons of the varying types of clean energy.

-        Portfolio Managers: Stress test companies that rely on fossil fuels for potential transition risks.