Dresden 1, the first commercial nuclear-power plant in the U.S., was switched on in 1960. It took three years and, in today's money, about $250 million to build.
You may have noticed that nuclear-power projects require a little more time and money these days: Last week, the Trump administration offered $3.7 billion of loan guarantees to Southern Co.'s Vogtle project in Georgia. The budget for that has spiraled past $25 billion; and while construction began in 2009, it isn't expected to start generating power until we are well into President Donald Trump's second term (or his successor's first).
Phil Verleger, an energy economist, cited the contrast between Dresden 1 and Vogtle in a report this summer as an example of how the costs and lead-times of energy mega-projects have spiraled . I similarly compared the travails of the U.K.'s Hinkley C nuclear project to the development of big oil and gas fields here.
Rising costs are an obvious impediment to any industrial project, while falling costs provide an obvious edge. But don't overlook the importance of time.
On Wednesday, the International Energy Agency released its latest outlook for renewable energy and made this observation:
We see renewables growing by about 1,000 gigawatts by 2022, which equals about half of the current global capacity in coal power, which took 80 years to build.
Let's adjust those numbers for utilization and say, very roughly, that coal plants produce at just 60 percent of their capacity and renewable sources at just 30 percent. Even then, we are talking about renewable energy with the equivalent of a quarter of the effective capacity of the world's coal power, which took eight decades to build, switching on within half a decade.
Regular readers (indulge me) will know that I tend to harp on about the importance of marginal change in energy trends. This time is no different.
Here's the breakdown of global electricity generation, courtesy of the IEA:
The message there is that coal's share of the global power mix slipped slightly from about 41 percent in 2001 to 39 percent last year. Renewables, meanwhile, climbed from about a fifth to one-quarter (the vast majority of that growth involving solar and wind power rather than hydroelectricity).
It is, of course, tough to have your interest piqued by a move of a few percentage points spread over 15 years. What is quite notable, however, is the picture that emerges when you look at the annual change by source:
To make that a little clearer, here's how renewable power's share of growth in global power output has changed in that time (on a rolling-three year basis to smooth out the wild swings in the financial crisis):
The IEA projects the share of renewable energy in the world's electricity mix to rise from about 24 percent in 2016 to 29 percent by 2022. By that year, therefore, renewable energy output is expected to be bigger than the entire electricity consumption of China, India and Germany combined.
More importantly, the extra electricity those projects will produce is expected to account for about 70 percent of the overall growth in power production worldwide. The implication is that coal and natural gas (along with nuclear power) will be slugging it out for a shrunken share of growth.
Just as important, though, is how quickly they are being built.
One of the inherent advantages of wind and solar power installations is their scalability. By this somewhat ungainly term, I mean that a project can begin small and get added to over time (or not) as required. In a world where energy demand growth has slowed -- especially in developed economies -- this modular approach can look more attractive than plunging into a mega-project requiring billions of dollars (and years of development) up front in the hope its output will be bought at a decent price down the road.
The added sting here is that, with every new turbine and panel installed, the market share of price-taking capacity with zero fuel costs rises. The depressing effect this has on electricity prices, along with flat demand, is one reason why the Trump administration is now proposing the effective re-regulation of wholesale power markets to favor coal and nuclear plants.
Is this the end of coal? Of course not: It will still be the single-largest source of power in 2022, under the IEA's assumptions.
Equally, though, those thousand-gigawatts of renewable projects the IEA foresees represent some major facts on the ground springing up in what is, for this industry, the blink of an eye. For anyone invested in coal (and natural gas, for that matter) to look at this and conclude "no biggie" would be delusional.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To contact the editor responsible for this story:
Mark Gongloff at email@example.com