Our Energy Transformation in 2015

2015 a series of events combined to drive what may well to be profound shifts—even turning points—in the history of the energy sector.

The ongoing decline in oil prices, which began as early as 2012, accelerated noticeably in 2015.  The benchmark West Texas Intermediate oil price fell to $34.53 a barrel on December 18, lower than it’s been since before the financial crash of 2008, with no floor in sight. Goldman Sachs has predicted that oil could fall as low as $20 a barrel, a development that would cripple most oil-producing economies and have geopolitical ripple effects for years to come.  At the same time, the price of natural gas remains near historic lows.  Cheap oil and natural gas are conventionally thought to be negative influences on the adoption of renewable energy, lessening the incentives of businesses and consumers to give up fossil fuels.  But that doesn’t seem to have slowed the shift away from fossil fuels in 2015.

Electricity generation from fossil fuels through the first nine months of 2015 barely climbed from the same period in 2014, while power from solar PV increased 48 percent.  And oil consumption in the United States, the world’s largest oil market, is on a long-term downward trend: between now and 2040, according to the International Energy Agency’s World Energy Outlook, U.S. oil consumption will fall by nearly four million barrels per day, returning to the levels of the 1960s.

Indeed, the adoption of clean energy hit record rates in 2015.  Analysts at GTM Research, in their report “The Future of U.S. Solar,” noted that total solar power installations to date in the United States reached 26 gigawatts at the end of 2015—and forecast that they’ll reach nearly 10 times that by 2030. Presidential candidate Hillary Clinton called for 140 gigawatts of installed solar capacity by 2020, a goal that would entail adding as much capacity each year for the next five years as had been installed, in history, in the U.S. up until the end of 2014. Because solar power is intermittent, its capacity factor—the percentage of generation capacity that is actually used—is low compared to, for instance, coal or nuclear plants. And solar will remain in the low single digits as a source of electricity. But it is by any measure the fastest growing segment of the electricity industry. As the International Energy Agency put it, “An energy sector transition is underway in many parts of the world.”

Read more at Our Energy Transformation in 2015