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A report from Citigroup is yet another dose of bad medicine for the fossil fuel industry, which is simultaneously facing divestment campaigns, shareholder challenges, cost increases and roadblocks to infrastructure development.
According to the Citigroup report, “The Age of Renewables is Beginning,” significant annual decreases in the cost of wind and solar will continue over the coming years, making renewables increasingly competitive with natural gas generation and far more attractive than coal-fired generation.
“Our outlook is for (solar) module costs to decline approximately 11 per cent per year over the next five years driven primarily by lower cost of production,” the report says. Standardization and streamlining will lower installation costs as well. “We apply an annual discount of 6 per cent to residential-scale balance of system costs, and an annual reduction of 8 per cent to utility-scale balance of system costs.”
Citgroup called those projections “very conservative” given rapid cost reductions. Wind energy, meanwhile, will come in the form of larger and more efficient turbines that are 11 per cent cheaper. The wind industry will also get a boost from cheaper financing options.
This will all happen as natural gas prices rise and as the cost of operating coal and nuclear plants grows prohibitive, according to Citigroup.
For this reason, the report ends on a bullish note for publicly traded utilities that are better positioned for this “age of renewables,” including Duke Energy, Pacific Gas and Electric, Edison International and DTE Energy.