A new report from the International Renewable Energy Agency (IRENA) predicts that by 2020, all renewable energy will be cheaper than fossil fuels.
Improvements in renewable technologies have already seen a huge drop in the cost of renewable technology (and consequently green heating and energy) already, to the extent that some are already competing with fossil fuel prices. In one such instance, the report states: “The levelized cost of electricity (LCOE) from solar photovoltaics (PV) decreased by 69% between 2010 and 2016 – coming well into the cost range of fossil fuels.”
The LCOE is a method of comparing the cost of electricity from different sources:
LCOE (pence/kWh) = Total cost of ownership (£) / System production over its lifetime (kWh)
Based on the current prices of renewable power auctions with falling LCOEs (which serve as a good indicator of future energy prices), the report predicts that the trend of cheaper energy prices will continue to such an extent that by 2020, “all renewable energy generators will compete or even undercut fossil fuels”.
Green heating investment in the UK
However, while the world is rapidly improving renewable power across the board, falling investment in the UK may well leave us behind.
2017 was a ground-breaking year for green heating and energy in the UK, with 13 different records broken, earning it the title of the UK’s ‘greenest year ever’ by the National Grid. Nevertheless, 2017 was also the second consecutive year that investment has fallen – by a whopping 56%.
Due to Feed-in Tariff subsidies being slashed by 65%, domestic solar panel installations have plummeted. Onshore wind farms have seen a similar drop in installs following the government’s ban on wind farm subsidies.
Rather troublingly, the UK’s slump in green heating and energy investment was the largest in the world. To put this into perspective, China, Spain and Canada saw substantial growth in the renewable sector by 24%, 45% and 36% respectively.
The Chancellor confirmed that funding for any new green projects won’t be levied through electricity bills until 2025. This may reduce the rate of inflation on energy bills for a while, but long-term, the UK runs the risk of falling behind other countries in renewable technology, not to mention missing its own carbon reduction targets.
The future of green heating
Should large-scale renewable offshore and onshore wind and solar farms continue to play a more prominent role in generating the UK’s electricity, green electric home heating systems like a heat pump would be a worthwhile investment – especially considering the heat pump’s eligibility for the RHI. However, there are still many questions around whether electricity prices will rise or fall at this stage. One thing’s for certain – solar panels for the home have never been such a worthwhile investment. Irrelevant of future electricity prices, they offer cut reliance from the grid, which can only be a good thing really.
To quote Eddie O’Connor of Ireland’s Mainstream Renewable Power company, “Fossil fuels have lost…the rest of the world just doesn’t know it yet.”