Disruptive Technology: Renewable Energy

By: The FHE Team

With an expanding global population, energy requirements are burgeoning worldwide, placing inexorable demand on existing fossil fuel reserves. Quite apart from the sustainability issue of relying on a nonrenewable source of energy, the pursuit of coal, oil and gas by nations is a significant factor in political and economic discord. More importantly, fossil fuel consumption also exacts a heavy price on the environment. A study in China, for example, has estimated the annual cost of environmental damage at $230 billion, which is over 3 percent of China’s GDP.1 The cumulative concern raised by these issues has been driving the development of renewable energy technology over the past few decades. In fact, in a bid to limit the global temperature rise by 2050 to 2 degrees Celsius, several leading economies have already drafted plans to increase the use of renewable energy sources in the future.2 The USA is aiming to double its use of renewable energies by 2020, while China has plans to provide 20 percent of the country’s energy through renewable sources.3

renewable-energy-wind-and-oceanRenewal energy sources come in diverse forms and are all similar in that they cannot be depleted. Solar and wind power hold the greatest potential for accelerated adoption in the near term, but there are several other renewable energy technologies to watch out for in the future. Biofuels, for instance, are already responsible for 2 percent of the global energy supply, and are expected to make further progress with the application of advanced genomics. Geothermal power utilizes the difference in temperature between the earth’s core and its surface to drive turbines to produce electricity. Limited by suitable geographic locations, the technology currently supplies less than 1 percent of the global electric power. Ocean thermal energy conversion, an immature technology, harnesses the temperature difference between deep and surface ocean water to generate electric power. Nuclear energy power is responsible for around 15 percent of the world’s electricity, but development has suffered a global setback following the 2011 nuclear disasters in Japan. Nevertheless, with next-generation nuclear technology reusing radioactive waste to generate power, nuclear energy could see another surge in popularity in the future.

Solar and wind power technologies are well-established, and have the greatest potential for environmental and economic impact within the next decade. Solar power technology includes artificial photosynthesis, concentrated solar power, and photovoltaics. Currently, solar energy is largely harnessed using photovoltaic technology. This involves the use of solar panels made of photovoltaic materials, such as crystalline silicon and cadmium, which release electrically charged particles when exposed to sunlight. Solar panels can be arranged in small arrays to power single buildings, or they can be part of an enormous solar farm that produces electricity to be fed into the grid. While solar cells are still too expensive to make them cost-competitive with fossil fuels globally, some regions have already achieved grid parity. This means that photovoltaic energy production is now equal or even lower than conventional energy in these places.

Continued advancements in solar technology could have important implications for distributed generation. Solar panels could be used to augment the power supply of individual buildings and households, greatly decreasing the need for expensive investments in grid infrastructure or new generating capacity.  Rooftop solar energy production is already commonplace in the UK and the Netherlands, and more than 50 percent of it is found in residential areas. In the future, large scale adoption of solar-based distributed electricity could greatly reduce the load on conventional power plants, simultaneously mitigating the deterioration of the environment. In addition to this, on-site electricity generation would enable the development of housing or industries in remote areas that do not have access to transmission grids.

Wind power technology has been evolving for a longer time, and is therefore less expensive than solar power. We now have modern wind turbines that are able to covert kinetic energy into electricity with an efficiency of 45 percent. These wind turbines can be positioned onshore, on hills and in rivers, or offshore in the ocean. The technology has advanced to the point where the LCOE (levelized cost of electricity) of onshore wind power is close to parity with coal and gas. With further advances, onshore and offshore wind power generation could supply as much as 10 percent of the global electricity by 2025.4 Wind power could also be used for distributed energy, just as solar power. Moreover, since solar power peaks in the morning, and wind energy is generally stronger during the night, the two technologies could be combined to maintain a more or less constant supply of renewable energy-based electricity.

If renewable energy technologies continue to evolve at the current rate, wind and solar power have the potential to generate an economic value of up to $275 billion annually by 2025.4 Most of this impact would be directly attributable to the value added to the economy from an increase in power generating capacity.  The rest would be realized from the societal benefits of decreased C02 emissions.

The future adoption rate of renewable energy sources will be affected by advances in other technologies. Improvements in energy storage, for instance, would allow integration of the periodic flows of wind and solar-based energy into the grid. Advanced storage capacities would also make distributed generation more practical. In contrast, further progress in the development of unconventional oil and gas reserves would result in a decline in fossil prices, possible negating the development of renewable energy technology.

In the next decade, aspirations for green, inexhaustible energy will drive the widespread adoption of wind and solar power. As fossil fuel prices fluctuate, governments will be responsible for providing subsidies that maintain the cost-effectiveness of renewable energy sources. At the same time, citizens will play a key role in motivating governments to adopt more aggressive polices in order to keep up the growth of wind and solar power.


  1. Edward Wong, “Cost of environmental damage in China growing rapidly amid industrialization, The New York Times, March 29, 2013.
  2. “Copenhagen Accord,” U.N. Framework Convention on Climate Change. United Nations. 18 December 2009.
  3. Evan Lehmann, Nathanael Massey, “Obama warns Congress to act on climate change, or he will,” Scientific American, February 2013; Jack Perkowski, “China leads the world In renewable energy investment,” Forbes, July 2012.
  4. McKinsey Global Institute, “Disruptive technologies: Advances that will transform life, business, and the global economy,” May 2013