By Beth Kindig
Global warming has been a contentious political argument for more than 15 years with little resolution.
Yet nothing unites corporations, politicians and investors quite like a return on investment. And now solar, after roiling fits and starts, has achieved industry-leading ROI.
The cost of solar systems has fallen quarter over quarter for about 10 years, according to Steve Comello, director of the Energy Business Innovations focus area at the Stanford Graduate School of Business. He said in a podcast that the cost to produce 1 kilowatt of solar electricity is competitive with wind, and is the cheapest form of electricity available when taking into account utility-scale systems installed in locations that receive full sun.
He estimates the so-called levelized cost of energy (LCOE) for utility-scale solar photovoltaic (PV) has plummeted as much as 400% in the past five years, beating coal and gas.
Companies including credit-card issuer Visa and investment firm Blackstone have taken notice of the cost savings and lower carbon footprint offered by renewable energy.
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In 2018, Visa /zigman2/quotes/203660239/composite V +0.50% set a goal of becoming 100% renewable energy-powered by this year. The company, which has 131 offices in 76 countries and four processing centers, recently said it met that goal. Operational emissions have been reduced by 90% compared with the baseline in 2014.
Last month, Blackstone announced a $850 million solar recapitalization investment in Altus Power. Altus has both public and private customers for its solar-array products, plus battery storage, which enables customers to resell power to the grid. The refinance will allow Altus to grow its portfolio to more than $1 billion in commercial and industrial solar assets.
Brookfield Renewable Partners is one of the world’s largest investors in renewable energy, with 76% of its allocation in hydro power. In a recent earnings call, the company estimated that over the next 10 years, $5 trillion to $10 trillion overall will be invested into renewable energy worldwide. China is on its road map with a 50/50 partnership to install 300 megawatts of rooftop solar projects over the next three years, with a broader 1-gigawatt development pipeline. That equates to 750,000 households. Notably, Brookfield is highly leveraged with $11 billion in long-term debt on the balance sheet.
Those commitments from large corporations and investment firms come at a time when renewable stocks are rallying. Plug Power /zigman2/quotes/205453512/composite PLUG -0.82% has almost tripled over the past 12 months, while SolarEdge /zigman2/quotes/207754270/composite SEDG +4.89% has more than tripled.
Meanwhile, U.S. oil stocks are hitting rock bottom. The graph, in a tweet below, shows U.S. energy stocks at the lowest price relative to S&P 500 Index /zigman2/quotes/210599714/realtime SPX +0.48% since the Pearl Harbor attack in 1941.
Solar’s biggest endorsement comes from China, a heavily populated country with little access to oil. Currently, China is the world’s biggest emitter of carbon dioxide from fossil fuels. (When adjusted for population, the United States ranks even higher.)
China has been the biggest manufacturer of solar photovoltaics for some time. However, most recently the country has become the largest producer of solar-generated electricity. Across 344 Chinese cities, solar was found to produce energy at lower prices than the grid. Notably, this is an apples-to-apples comparison, as this did not include subsidies, providing a convincing argument for solar power.