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Why clean energy is now expanding even when fossil fuels are cheap

Solar panels are seen in the Palm Springs area, California, in this April 13, 2015 photo. Reuters/Lucy Nicholson
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This story has been updated.

The latest evidence that 2015 was a breakout year for clean energy is in, and it’s particularly telling.

In a new analysis, Bloomberg New Energy Finance finds that 2015 was a record year for global investment in the clean energy space, with $ 329 billion invested in wind, solar panels, biomass plants and more around the world. (The number does not include investments in large hydroelectric facilities).

That’s 3 percent higher than the prior 2011 global investment record of $ 318 billion — and most striking is that it happened in a year in which key fossil fuels — oil, coal and natural gas — were quite cheap.

When it comes to fossil fuels, “prices have been low, continue to stay low, and yet we continue to see strong growth of wind and solar, and it speaks to the fact that again, these technologies are becoming more cost competitive,” says Ethan Zindler, an analyst with Bloomberg New Energy Finance.

Wind, solar power soar in spite of bargain prices for fossil fuels

As BNEF notes, the price of oil — which is burned to generate a fair amount of electricity around the world, though this is rare in the U.S. — tanked in 2015. Coal prices and U.S. natural gas prices also got considerably cheaper over the second half of 2014 and the 12 months of 2015. Nonetheless, China and the UK invested in massive multibillion-dollar offshore wind farms, even as other nations, from the U.S. to Brazil, saw near billion-dollar expenditures on new solar farms and biomass plants.

Fully one-third of the 2015 clean energy investment occurred in China — a punchline we’ve come to expect by now. That country saw investments of $ 110.5 billion last year. The United States was second with $ 56 billion.

Notably, India — perhaps the most watched energy nation in the world at the moment, due to expectations of major demand growth — invested $ 10.9 billion, a total that Bloomberg New Energy Finance calls “a far cry for the figures needed to implement the Modi government’s ambitious plans” in the clean energy space. India plans to install 175 gigawatts of clean energy generating capacity by 2022.

Why India is about to move to the ‘center stage’ of world energy

Measured in terms of electricity generating capacity, the world saw an additional 64 gigawatts of wind capacity added and 57 gigawatts of solar capacity, BNEF estimates. The most striking figure here is that while 2015 only saw about 4 percent more clean energy investment than 2014 (when $ 316 billion was invested), the growth in renewable energy generating capacity was much higher at 30 percent. This, again, signals declining cost, says Zindler.

In his final State of the Union address, U.S. President Barack Obama said the U.S. must stop subsidizing fuels of the past. (Video: Reuters)

“The technologies have reached an important tipping point in a number of markets in the world,” he says. “They are now, in a growing number of locations, becoming cost competitive.” It doesn’t hurt, of course, that government policy also favors them in many regions, a trend that will surely only continue in the wake of the late 2015 Paris climate agreement.

Overall, the addition of 121 gigawatts of solar and wind globally (also a record) means that roughly half of new electricity generating capacity installed last year was in these two technologies. In the U.S., solar appears to have seen a record year for installed capacity, at over 7 gigawatts.

From an industry perspective, too, the clean energy space seems to be thriving in lately. For instance, and as our own Joby Warrick reported recently, leading wind turbine maker Vestas saw its stock price double in 2015.

The solar business is also strong, says Tom Werner, the CEO of SunPower, which is one of the largest U.S. based solar companies with a recent market capitalization of $ 3.24 billion — and which is active in both the U.S. and China, where Werner says “we’re seeing very large projects.”

“We’re past the threshold point, now we’re to the point where it’s mainstream, and I think ’16 will be bigger than ’15, globally,” Werner says. He points to three recent developments to back that conclusion — the Paris climate agreement (which gives a market signal in favor of solar), the extension of solar investment tax credits in the U.S., and recent positive developments for solar net metering in California.

At the same time, clean energy jobs are also booming. The Solar Foundation recently released a report finding that the U.S. solar industry added some 35,000 jobs in 2015 alone, for nearly 209,000 overall now in the U.S. That total is expected to approach 240,000 by the end of this year.

Indeed, by all signs, 2016 will see more of the same in the clean energy arena. Already, it has held some pretty bad news for coal.

New York governor Andrew Cuomo announced, in his latest state of the state address Wednesday, plans to “eliminate all use of coal in New York State by 2020.” That came one day after President Obama, in his State of the Union speech, suggested plans to “change the way we manage our oil and coal resources so that they better reflect the costs they impose on taxpayers and our planet,” suggesting possible policy moves to limit coal leasing on public lands in the U.S.

Looking out still further, the International Energy Agency said last year that between now and 2020, renewable energy will be the largest area for growth, and predicts 700 gigawatts of added generating capacity.

In other words, while half of new generating capacity in 2015 was in the clean energy space, in coming years we may see that percentage grow even higher. Granted, there is still a ways to go before wind, solar, and other renewable energy sources are dominant in generating our electricity. Wind and solar provide about 5 percent of U.S. electricity right now, for instance. Here as across much of the world, electricity generation is still largely dominated by fossil fuels.

Adding it all up, the takeaway is that the race to switch off of fossil fuels — before too much carbon accumulates in the atmosphere and the planet warms by more than 2 degrees Celsius — is really starting to, um, heat up.

More at Energy & Environment:

Scientists say human greenhouse gas emissions have canceled the next ice age

Here’s how scientific misinformation, such as climate change doubt, spreads through social media

The surprising way that huge icebergs slow down climate change

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