Reaching Net Zero Is Getting Cheaper

How is this possible when all things seem to be getting more and more expensive?

Marginal Cost.

Let’s talk about marginal cost.

To bring power (electricity) to an area that does not have it, we have to create a system that generates electricity and delivers it when needed. There is a cost to build the system.

When we use our old fossil fuel model, we build a plant that uses a fuel to make steam to turn a turbine to generate electricity. That turbine will only spin when it has a steady supply of fuel. It can be oil, gas, coal, wood, bio gas. The fuel has to be purchased and delivered to the plant. This means each unit of electricity has a cost. A fuel cost per unit.

If we build a system to create electricity using renewables, we have to build a system. Let’s take solar energy for example. We have to invest in building the solar array and energy storage (batteries or pumped hydro). Once this system is built, it’s fuel cost is zero because it’s source is free — sunlight. There is no cost for each unit of energy once we have built the infrastructure. We aren’t charged by the sun.

This system produces energy with Zero Marginal Cost. The cost of this electricity does not vary with the cost of fossil fuels.

Where we have built some renewable energy infrastructure, we are receiving cheaper energy. This is making it more affordable for us to continue to pursue our net-zero carbon emissions goals.

I’m sharing this article in today’s Bloomberg Green Daily By Akshat Rathi and Olivia Rudgard.

This is the Good News…

“In a report published on Wednesday, it said the UK can reach net-zero emissions by 2050 while spending as little as 0.2% of the country’s gross domestic product or about £4.3 billion ($5.4 billion) each year on average. That’s a 75% reduction from the committee’s previous estimate in 2020 of net costs of £16.1 billion each year between 2025 and 2050.”

Why?

The cost of renewable technologies like solar and wind have fallen faster than projected!

Read the article.