Photo by Federico Beccari on Unsplash
For those of you interested in frugal living, we have some interesting news: energy is about to get a lot cheaper. Over the coming decades, new technologies and business models are going to transform the market so that your energy bills are going to come crashing down.
A Bit Of Background
In the past, by far the cheapest way to generate energy was to get it from burning fossil fuels. Power plants would stoke coal and then use the heat to boil water producing steam to drive turbines. Putting it all together is expensive. But on a per unit basis, the price was much lower than alternative methods available at the turn of the 20th century.
For the next one hundred years, fossil fuels dominated because they were the least expensive way to generate electricity. Renewables existed, but their prices were often prohibitively high.
But starting around 2010, things began to change fast. The cost of both solar and wind began to compete in price with regular fossil fuel electrical generation, with prices in some parts of the world reaching par in around 2017. Over the last four years, this process has continued. And now, in many parts of the world, community solar is actually less expensive than mains supply.
What Does It All Mean For Your Bills?
All this is good news for people like you who don’t want to spend their hard-earned money on energy. But it all makes sense when you think about it. After all, once you install a solar panel or a wind turbine, the energy that it creates is totally free. You don’t have to keep shoveling coal into a furnace.
Economists like to call services like these “zero marginal cost” services. It means that you don’t pay anything for additional units of the thing you want – in this case energy – once you set up the equipment that you need to make it. Usually, it doesn’t happen. With most other products, the cost of production goes up the more you make. But not with solar or wind.
Things could actually get substantially cheaper if the capital costs of setting up these facilities starts to go down. The last ten years saw massive price declines in the cost of solar panels. But there seems to be no technical reason why that process couldn’t continue for the foreseeable future. Add a few new technologies to the mix, and the era of solar energy could become as cheap and ubiquitous as plastic bags.
Other Technologies On The Horizon
Besides solar, there are some other technologies on the horizon that should get people interested. Thorium reactors, for example, promise safe and affordable nuclear power plants. And companies like Lockheed-Martin say that they might be able to make truck-sized nuclear fusion reactors a reality within the next ten years.
It’s important to note that energy isn’t scarce. It’s actually all around us. It’s just that harvesting it is a challenge. But we’re getting better at it, and that means that the average person’s bills are going to go down.
