What is renewable energy? | CNBC Explains


It was 1931 when Thomas Edison said: “I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that.” Well, there were no solar stocks in 1931, so he couldn't quite put his money on it. But more than 85 years since Edison spoke those words, oil, gas and coal continue to be our main sources of energy. But renewables are growing – rapidly. By 2040, 37 percent of power generation is expected to come from renewables. That’s compared to 23% today, which would probably make Thomas Edison happy. But what is considered renewable energy anyway? Let's take a closer look. The earth’s core is as hot as the surface of the sun. So geothermal energy makes use of that internal heat – from the hot water just below ground to the steam created by molten rock. And for places like Iceland, with plenty of hot springs and volcanoes, it’s a serious energy source.

A whopping quarter of Iceland’s electricity is produced by geothermal resources. Hydropower is actually one of the world’s oldest energy sources. It captures the energy of flowing water, by using dams for example, and converts it into electricity. The Itaipu dam located on the border of Brazil and Paraguay is the biggest generator of renewable energy in the world. Since it began operating in 1984, it’s generated more than 2.4 billion megawatt hours. Solar panels are being used by homes, businesses and large-scale solar facilities. And as solar technology evolves, panels are becoming less expensive and more efficient, making it more competitive with other technologies. Prices are coming down so fast there's been an 85-percent drop in the price of solar modules per watt since 2008. Wind turbines produce some of the lowest-priced clean energy available – particularly if you live in a windy location. Those places are already cost-competitive without government subsidies.

And in some regions, it’s even less expensive than fossil fuels. Globally, wind energy has grown by 24 percent annually on average. Then there's biomass — which is the term for generating energy from living or recently living organisms. The most obvious example is burning wood to make a fire. But things like forest residue, algae and switchgrass are also used. 21 percent of Brazil's industrial sector is powered by biomass. New advancements combined with more environmental awareness have fueled the rise of clean energy. But when oil prices are low, sources of energy like wind and solar are less attractive – and that could be the biggest threat to the world's transition to clean energy. If that’s the case, Thomas Edison may have to wait around a bit longer..