Small Is Beautiful in Energy, Too
In the first 75 days of 2015m Costa Rica produced 100% of its electricity from renewable sources. On average, this small country is generating 95% of its power from renewables, and intends to reach 100% by 2021.
The interesting thing, which signals a major change in energy strategies, is that the case of Costa Rica is not unique and not even the most striking: Denmark is also striving to satisfy 100% of its total energy needs (electricity, heating, transportation!) with renewables by 2050, Norway has set the target of 67.5% of total energy demand from renewables by 2020, Germany wants 80% of its electricity coming from wind, solar, and biomass by 2050; in 2013, the corresponding figure was 25%. In Italy, too, the evolution has been surprising: the proportion of the demand for electricity covered by renewable energy sources went from 17% in 2000 to 38% in 2014.
A veritable technological revolution is taking place, inducing major changes in the energy industry: investors, organizational models, financing, relations between producers and consumers are no longer those of the recent past. These developments in energy technology have surprised many, including energy companies, which are having a hard time dealing with competition from small-scale producers: their huge investments in power capacity are no longer profitable, due to a generalized reduction in energy demand because of the crisis.
The new element is that also emerging economies are shifting their preferences towards renewables, thanks to their growing competitiveness in economic terms. To understand the magnitude of this change, consider that in the Brazilian auctions of 2014, the winners for photovoltaic (890 Mw of installed power capacity) have offered to produce energy for 20 years at 87 $/Mwh, and those for wind power (770 Mw) at 57.4 $/Mwh, well below Italy's average wholesale price for electricity in recent years.
So, for a few years now, annual world investment in clean energy (about $300 billion, according to BNEF data) is higher than investment in power generation from fossil fuels. If in the first decade of the new century it was Europe leading the trend toward installing renewable power capacity, in recent years it's been Asia, South America, and, lately, also African countries, attracting the most investments, due to growth in energy demand there.
The efforts made by Europe have permanently changed the technological paradigm for those countries that have yet to develop their own electrical grid, by orienting them toward energy systems that are more local and based on the use of renewables. China has also joined the fray: it intends to cover 20% of its demand with renewables by 2020 and is launching very ambitious projects immediately.
A radical rethinking of the systems for energy production is unfolding. The idea is to abandon the pursuit of elusive economies of scale and shift to smaller, distributed energy plants that are integrated by digital technology, which thus no longer suffer from lower returns with respect to big plants. The renewable energy industry is thriving in the new setting, since it's able to find funding and local support for its power plants, something that it is no longer possible for giant power stations fueled by coal, oil, and gas.