The bottom line is driving some big new bets on renewables. As technologies improve and scale up, electricity generated from solar and wind power is becoming less costly than that produced from traditional fossil fuel sources. New wind and solar plants being planned now offer the cheapest power available, and costs are projected to continue to fall. It could very well be that the energy of the future is coming online very soon.
In the U.S., Xcel Energy is betting on new—and very big—power plants that use wind and solar for their energy sources. Xcel, Colorado’s largest utility, has millions of customers across eight Midwestern states, from Texas to Michigan, so any decision it makes has a big impact on the country’s energy strategy. The company says its move to renewables is a bottom line decision; it “expects to save tens of millions of dollars” in replacing two large coal-burning units with facilities fueled by renewable energy, reports the NY Times. Bids to build and operate the proposed power plants are so low that Xcel believes it can build and run them for less than it costs to keep the old, coal-burning power plants going. Projections are that Xcel will source over half its electricity from renewable sources by 2020, making it one of the cleanest large utility companies in the country.
In Saudi Arabia, the government of the world’s largest oil exporter has commissioned a solar farm that would generate enough electricity to power up to 200,000 homes. Again, the bottom line was a big factor, according to the NY Times. Bids to build the new solar farm included wholesale pricing that set the rates for solar power below the cost of fossil-fuel generated electricity.
It’s part of the country’s big shift to renewable energy. By the end of this year, $7 billion will have been invested in seven solar plants and a large wind farm. The goal is for renewables to provide as much a 10 percent of Saudi Arabia’s power generation by the end of 2023.
The strategic economic aim is to diversity the Saudi economy, now heavily dependent on oil; to create new jobs; and for the country to remain a global force in energy—but in clean power, not fossil fuels. Ironically, Saudi Arabia’s historic topographic advantage as a country with huge oil resources is equaled by its advantages in location and climate that favor the production of solar and wind farms.
These two examples of big bets on renewables don’t seem to be much of a gamble as investments go. Expect more utilities and governments to follow their lead in the search for profitable—and cleaner—energy business.
Photo: Xcel Energy