Miracles take work: Day 2 of BNEF’s Future of Energy summit

While it is the style of BNEF’s Future of Energy Summit to host a wide range of views, there are no sacred cows here, nor figures who are above critique. Among those to get skewered on the second day of the 2016 summit was Bill Gates.

Gates is famous for declaring that an “energy miracle” is needed in order to effectively combat climate change. And in his keynote address, BNEF Founder and Advisory Board Chair Michael Liebreich played on this theme, suggesting that Gates has perhaps overlooked a miracle that is already going on.

“How much more miracle-y do you need your miracles to be?” asked Liebreich, against a background of a slide that showed a 150-fold fall in the cost of solar over 40 years, accompanied by a 115,000x increase in installations.

Cost was again presented as the most essential feature of the clean energy revolution. Liebreich noted an unsubsidized US$30 per megawatt-hour (MWh) power purchase agreement for wind in Morocco as well as Enel’s recent bid to build utility-scale solar in Mexico at around $36/MWh.

But Liebreich also noted that miracles take work, and that we still have a long way to go to enable a full transition to renewable energy.

The rise of renewable energy comes as conventional energy is mired in crisis. In 2015 investments in clean energy outpaced oil and gas for the first time. This has been counter-intuitive to many investors, as oil prices are at a record low, however these low prices are part of the crisis. Liebreich noted that more than 50 independent oil and gas producers have gone bankrupt in recent years, while output of shale gas remains at an all-time high.

This ironic situation of an industry struggling with overabundance is further exacerbated by demand. 2015 was the second year that energy demand and emissions have remained flat globally, the first time that this has happened in the absence of an economic downturn, which indicates that energy use and economic productivity are decoupling.

Following Liebreich’s presentation of these cold facts was a more activist vision by U.S. Secretary of State John Kerry. Kerry has long been an advocate for U.S. action on climate, and during his speech he noted that he had been present at the global climate summit in Rio di Janeiro in 1992 – a depressing footnote to the slow rate of political action.

For Kerry, action of climate means renewable energy, and he called for world to transition to mostly renewable energy in electricity by mid-century. He also repeatedly listed the economic advantages of this move, in terms of job creation and costs saved by averting the worst effects of climate change.

How we will get there is another matter. Kerry cited U.S. participation in the Paris Agreement, however this agreement is ultimately about voluntary national goals, with no real penalty for inaction. Likewise, at the U.S. federal level the Obama Administration has been hamstrung by an uncooperative congress, and an opposition Republican Party which has managed to stay his Clean Power Plan in court.

The view from Latin America is significantly more optimistic. The region has become a key theme of Future of Energy, with at least three separate sessions focused on action in various nations. Latin America has also seen some of the lowest prices for renewables to date, with an unsubsidized $48/MWh contract for solar in Peru possibly beaten by recent auction results in Mexico which include clean energy credits.

Here there are also difficulties. In a lunch session on Brazil the government mentioned a new goal to deploy 11 GW of solar PV, but the nation has only installed around 50 MW of solar to date despite multiple GW being awarded in auctions. Brazil is clearly hoping to transfer its success in wind to the solar sector, and despite successful policy tweaks the nation’s renewable energy sector is striving to overcome the international bad press of larger economic and political problems.

In Latin America and other parts of the developing world Secretary Kerry’s State Department is achieving some of what Kerry’s Democratic Party cannot in the United States, with the Overseas Private Investment Corporation (OPIC) funding the largest wind farm in Africa, and the state department providing technical assistance to renewables in Central America.

But with a significant need for grid upgrades and other technical matters that need to be addressed in both the United States and Latin America, completing these miracles will still take work.