It's an honor to be with you here today. And the message I have to deliver is a simple one, which is that clean energy will win on cost, definitively, but only if we get out of the way and allow it to be built.
Let's focus on that first point. Let's look at the cost of clean energy technology. In 1975, if you were buying a solar panel per watt of power that it produced, it would cost you 100 US dollars. By 2020, that cost had declined to 20 cents per watt of power. That's a 500-fold decline. This is unlike anything else ever seen in energy. It is unlike anything else ever seen in physical infrastructure, and it continues today, and it is likely to continue for decades to come.
Now, this has surprised the leading experts on clean energy and even the biggest optimists on the future of clean energy. I should know because I am one of those leading optimists. In 2010, the International Energy Agency, the world's foremost and official experts on energy, forecasted that the cost of solar power would drop like this. Now, I came from technology. I was a computer scientist, and so I looked at the cost of solar through the lens of Moore’s law, exponential decline in cost as technology scales. And so I forecast that the cost of solar would drop at around five times the rate that the IEA believed it would.
Unfortunately or fortunately, I was wrong. The cost of solar actually dropped 10 times as fast as the IEA expected and twice as fast as I expected. Clean energy is a technology. This deception in understanding the pace of cost decline has led to a massive underestimation of the pace of growth.
Every year, the IEA puts out a forecast for how much new solar will we install per year. And you see these colored lines show you the pace at which the IEA believes new solar will be deployed annually, versus the black line, which shows how fast it's actually been deployed. So you see the colored lines going off to the right, those are successive years of forecasts of annual installations. And on the left you have what amounts to a 30 to 40 percent annual growth in installations. Note this has happened through the COVID years, note that 2022 will see another 38 to 40 percent growth in this market.
This trend is not limited to just solar. It applies to a wide variety of clean-energy technologies. We've seen the price of solar drop by a factor of 40 over the last few decades. We've seen the cost of wind drop almost as much, and now an accelerating cost decline in floating offshore wind and offshore wind. We've seen the cost of batteries that power our electric vehicles and grid energy storage drop at the same pace or faster than the pace of solar. And we are just at the very beginning of an exponential cost decline in the cost of using clean electricity to make hydrogen and other fuels that we can use to power industry, to provide weeks or months of storage on the grid and to provide fuels we can use for aviation, for shipping and so on.
What’s happening here -- and I won't claim this is happening quickly enough to stay below 1.5 degrees Celsius -- but what's happening here is that clean energy technologies are technologies and they drop in cost like technology. As they are scaled, they come down in price. Meanwhile, fossil fuels are commodities and fossil fuel prices fluctuate over time. This is data from Oxford's Institute of New Economic Studies, which shows the cost of oil, gas and coal across the bottom there, fluctuating over time, largely remaining flat. Whereas here is the cost of clean energy technologies: solar, wind, batteries, power to fuels, all of them dropping exponentially.
In 2010, there was no place on earth where clean energy was cheaper than fossil energy. In 2015, we started to see the first instances of clean energy without subsidies being cost-competitive. Now we see in more and more parts of the world that it is cheaper to build solar and wind than it is to put fuel into an already built and operating coal or gas plant. And behind that is the continued cost decline of batteries and hydrogen, which are still expensive but will get cheap enough to solve many of our intermittency issues.
Now, does that mean we are done and the problem is solved? Not at all. We need to go faster. And we have a number of barriers. Some of these we’ve talked about. Critical minerals need to be built out. We need a just transition. But there's two barriers I want to talk about in particular, which are the reluctance to build -- not in my backyard -- and the challenges with permitting.
Because we look at renewables and a common complaint is they take up too much land. All of us want clean energy infrastructure, but many of us don't want it in our backyard. Now, solar power is fairly compact. Wind power takes more space, but that space is co-located with agriculture. Animals graze up to wind turbines, fields of crops can be grown. And yet, despite this, in modern nations, in Europe and North America, roughly half of the land in the UK, in Germany or the US, is devoted to agriculture. Yet, Germany allows now two percent of land in Germany to be used for wind power. The US allows local communities to block wind power even if it's nowhere near them.
If we want to deploy clean energy, we must allow it to actually be built.
But the even larger problem is this: We need to build out the grid. We have a perception that clean energy technologies don't need the grid. Solar and wind mean you can be off-grid. While that’s easier, largely the opposite is true. Because solar and wind are weather-dependent, they benefit much more from continent-sized grid than do fossil fuels. And yet the same NIMBY issues and the same permitting issues plague energy transmission. Electricity transmission is ugly, and why do we need it, if we can just go off-grid and local with these energy technologies?
Well, here's why we need it. This is the sunshine, the solar resources of Europe. The most sun is in the south. Of course, the most wind is in the north, by the way. And this is averaged across the year. In winter, it is much more dramatic. In winter you have one seventh the solar resource in the UK that you have in summer. You have one sixth the solar resource in Germany that you have in summer. So every model, every simulation of weather and energy demand shows this. It shows that if you want to have the highest-reliability grid at the lowest cost, with the least carbon emissions and the most clean energy deployment, you want to build a continent-sized grid.
In Europe, it would bring wind from the north, primarily the North Sea, but also on land, hydro from the Nordics and solar from the south. And these would be countercyclical. More sun in the summer, more wind in the winter. This is slightly oversimplified, but this is the sort of system that would allow Europe to decarbonize its electricity sector with some degree of storage and hydrogen and so on, nearly completely, at a lower cost than the system today. That same Oxford study I showed you says that a rapid transition to clean energy, because the more you deploy, the cheaper it gets, would save us 12 trillion dollars on the energy system, not even counting climate damages.
Now, could we build such a grid? Of course, we have the technology and the economics. In China, the bulk of energy demand is on the East Coast, yet, the greatest solar resources and wind resources are in the interior. And China is building literally scores of high-voltage power lines that transmit power from where the sun and wind are to the coasts, where the energy demand is. And the longest of these lines right now, the Ürümqi to Shanghai line, is 3,400 kilometers long. It is 90 percent efficient, very low losses, and it adds maybe a penny or two to the cost of electricity. That's what's technically feasible with current technology, let alone advances.
In Europe that would allow us to transmit electricity from Seville to Copenhagen, to bring power from the North Sea to anywhere in the continent that needs it. In my home country, the United States, we could bring power from the sunny, wide open areas of New Mexico to population and land-dense New York, which doesn't get so much sun. And we could take wind power from the Great Plains, that are largely devoid of population, and bring it to the coasts in winter. That is what a modern grid looks like.
And yet we are not building this. Now, let me give you two pieces of data that will back up my assertions about how powerful these issues of permitting and grid build-out are, and one more, which is open competition on cost. What state in the United States do you believe has the most combined solar and wind power today and has deployed the most solar over the last year?
Audience: Texas.
RN: You are a very smart audience. It is the great state of Texas. Now, Texas has no climate policies to speak of. It has no incentives for solar or wind to speak of. It does have abundant land and abundant sun and wind. We can't all duplicate that. But it has three other things we should think about.
One, it has an open market for electricity where the cheapest provider wins, and that should give us confidence of what is actually winning. Two, permitting in Texas is relatively easy. It's easy to build things, easy to build fossil infrastructure. I don't love that, but it's easy to build clean infrastructure and that's what's winning out. And three, Texas is the easiest state in the United States to build electricity transmission. Not as easy as I'd like, but it makes it easy. Those last three factors are factors we can replicate in every nation, every state, every geography on planet Earth. And they would accelerate this transition.
Now, in August of 2022, we passed the largest US climate bill ever, Inflation Reduction Act. In Europe, we have a massive push on clean energy as part of the energy crisis driven by the war on Ukraine. Now I want to reveal at the same time that we failed at something. In late September 2022, we had a permitting bill in the United States that would have made it tremendously easier to build the continent-sized grid that we need in the US. It also made it easier to build fossil fuels. Yet every analysis showed that fundamentally this bill accelerated the clean energy transition. But it was opposed by some people because of it making it a bit easier to build fossil fuels as well.
The consequence of this is potentially dire. The Princeton REPEAT project, led by my friend Dr. Jesse Jenkins, has analyzed this and said that up to 80 percent of the benefits of the Inflation Reduction Act may not manifest if we can't accelerate the pace of building transmission. That that could amount to as much as 800 million tons a year of carbon emissions in the United States that would have been eliminated, but that won't be because we don't have the transmission capability to bring the cheapest power to where it's needed and boost resilience and reliability along the way.
So I believe that a deal that makes it easier to build, even if, to get that bill passed, we need to make it a bit easier to build some fossil infrastructure, will win for clean energy because clean energy simply wins on cost. On a level playing field, it will dominate the future. And so if you have confidence in this decades-long trend that clean energy will economically disrupt fossil fuels, then the logical conclusion is that we must get out of the way, make permitting easier, and allow it to be built. It is time for us to build.
Thank you very much.
(Applause)
