Take the World Economic Forum’s recent report The Future of Electricity(PDF) as a fitting example. Charting the European Union’s transforming grid and return on investment in renewable energy over the last decade, WEF’s interactive widget posits that the EU would have saved $140 billion had it more accurately coordinated and maximized solar and wind buildout. Specifically, solar needed more of a foothold in sunnier Spain, which boasts 65 percent more solar irradiation than EU leader Germany, while wind needed greater penetration in windier northern nations like France and Britain.
Despite these stumbles, investment in power generation grew 11 percent annually between 2001 and 2012, 54 percent of which was in non-hydro renewables like solar, wind, biomass and geothermal, although close to $8 trillion more is needed to meet policy objectives between now and 2040. To do this, the WEF recommends that OECD countries “exploit the most efficient and renewable resources across borders,” provide stable market signals “on carbon pricing to incentivize decarbonization” and “remove unnecessary regulatory barriers between incumbent utilities and new entrants.”
With residential electricity prices predicted to increase in both America and the EU over the next two decades, now is the time for investors and homeowners alike to rethink and rebuild the 20th century’s obsolete models with more resilient, flexible systems that reflect the growing demand for clean energy. A clear price on carbon would go a long way to stabilizing this transition, the WEF argued, as will adapting to the increasing participation of customers, who are no longer “merely consumers at the receiving end of long lines of transmission and distribution wires.”
The WEF specifically noted that solar has “spurred a whole set of new businesses in which companies work with individual consumers to create an end-to-end proposition: providing low cost solar energy and coordinating all the investment flows on behalf of the customer.”
While the WEF’s relatively short 25-page report is overstuffed with economic and political jargon, its primary thesis is clear: The electricity sector is being overhauled before our eyes, with customers having an even greater stake than before in how it is capitalized, utilized and disrupted. Harmonizing investment and innovation is going to make this process much easier, as is building out renewable energy everywhere but especially where it can be optimized. With trillions left to invest in time for a climate change deadline, the time is past to get that process well underway.