Deutsche Bank: solar has already won

For the past year, it’s been clear that the world’s major investment banks–or at least their analysts–already have decided that our energy future is renewable, and that nuclear power and fossil fuels are on their way out. 

Some are putting their money where their mouths are. Citibank, for example, recently announced a new $100 million fund to invest in clean energy projects (which, in their view, do not include nuclear). That rankled the editors of the Wall Street Journal, who remain steadfastly supportive of the dirty 20th century energy technologies. Last week, they ran an editorial accusing Citibank of political correctness or something, implying the bank is taking their marching orders from evil EPA employees, or maybe President Obama, or perhaps the Green Hornet–it really wasn’t clear. To its credit, Citibank replied with a letter to the editor standing their ground, saying that actually they see clean energy as a great business opportunity and intend to do very well with this fund. The clear implication was that the Journal editorial board doesn’t have a clue. You’ll have to trust me on this–WSJ seems to have scrubbed both from its website (or maybe my WSJ search skills just aren’t what they used to be).

Anyway, probably the most bullish major investment bank on solar power has always been Deutsche Bank. Perhaps that’s just because they’re caught up in German enthusiasm for the Energiewende or perhaps their analysts are just ahead of the time.

On Tuesday, Deutsche Bank released a new 175-page report “that suggests solar will become the dominant electricity source around the world as it beats conventional fuels, generates $5 trillion in revenue over the next 15 years, and displaces large amounts of fossil fuels.”

The bank is equally high on both rooftop and utility-scale solar and predicts massive growth for both. And the bank projects “that energy storage–the “missing link of solar adoption”–will be cheap enough–and technologically ready–to be deployed on a large-scale within the next five years.”

Even with all that, the bank’s predictions may turn out to be conservative. Globally, solar power is now at only 1% of the electricity market. Deutsche Bank says that should increase to 10% by 2030 and 30% by 2030. Coupled with other renewables, especially wind; and increased energy efficiency and smart grids, that would bring us close to a fully nuclear-free, carbon-free energy system. After all, solar alone is never going to provide 100% of the world’s power. 30% isn’t a bad guess, but there is perhaps some possibility–especially with electricity storage–for a somewhat higher proportion for solar.

One place solar can play a major role is the sunny Middle East (Saudi Arabia is the Saudi Arabia of solar, as they say). And despite a current fascination with nuclear power in the region–a fascination unlikely to be realized–another major report released this week could help turn that tide more quickly. The National Bank of Abu Dhabi released a study showing that solar power is cheaper than oil even at $10/barrel. Given that oil is, at this point, the region’s major energy resource, that’s an astounding statement, and indeed the Bank believes renewables will comprise “the vast bulk of the $US48 trillion needed to meet global power demand over the next two decades.”

Moving to solar power could also help with some of the seemingly intractable nuclear power and weapons issues that plague the region. A proposal for the U.S. to invest in solar partnerships in the region is one hopeful idea.  Some might argue that would smack of hypocrisy as long as the U.S. continues to use nuclear power and solar remains a too-small part of our own electricity generation. And that’s probably a good point (maybe Germany should take the lead on the idea?). On the other hand, it would be both a smart energy and diplomatic move, and perhaps its benefits could help turn the U.S. itself further away from nuclear and toward a renewable energy system.

Perhaps the biggest challenge facing the renewables revolution is integrating the variable nature of renewable generation into the existing electric grid (a challenge that will be considerably helped by cheap large-scale storage). Another new report this week finds that Europe’s grid will be able to handle 60% renewables by 2030–a pretty high number.

Still, Europe better hurry, since some countries have threatened to reach that level at times in recent years. The Anholt offshore wind farm, located between Denmark and Sweden, for example, ran at 50% capacity last year. And that was a year with unusually low wind speeds. A more normal year–perhaps this year–would see that capacity factor jump to about 75%. At that point, offshore wind can compete with just about any power source on a capacity level.

Despite the major pushback against renewableS by the nuclear and fossil fuel industries in the U.S.–a pushback in which they may well win some battles–the renewables revolution remains inevitable. The only question is how quickly we, especially those of us in the U.S., can get there. And that’s primarily an issue of our political might, our ability to continue growing (by, for example, sharing the video NIRS and others released today and by setting up your own fundraising pages on NIRS’ legacy fund page to enable you to reach out to your friends and colleagues and help us expand our base–every bit of organizing and outreach is critical at this point) and our willingness to take every action possible to take on the 20th century dinosaur utilities.

Correction: The Citibank renewable energy fund referred to in the second paragraph is a $100 Billion fund, not $100 million. Citibank is putting its money where its mouth is.

Michael Mariotte

March 4, 2015

Permalink: https://www.nirs.org/2015/03/04/deutsche-bank-solar-has-already-won/

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