Investment in clean, renewable energy smashed existing records in 2015, and is now seeing twice as much global funding compared to fossil fuels.

If there was any doubt about the future direction of coal, oil and gas prices, this should clear things up a bit. Just a hint, it’s not up.

Australia is also getting on board, with the Federal government announcing a new $1 billion clean energy innovation fund, which will provide loans for new projects – with $100 million provided each year over 10 years.

In Port Augusta, South Australia, local have been pushing to set up a solar thermal energy plant to fill the looming gap created when the town’s coal-fired power stations close. The Northern brown coal power plant is due to close on March 31, but that date has now been extended to May 8. The Playford power station has been mothballed for a number of years. The Leigh Creek coal mine was closed in November 2015.

That story is being played out around the world, as the push for renewable energy gathers momentum. The main reason is that it has become much, much cheaper to produce renewable energy.

Recent wind and solar auctions in Mexico and Morocco ended with winning bids from companies that promised to produce electricity at the cheapest rate, from any source, anywhere in the world according to Bloomberg New Energy Finance (BNEF) chairman of the advisory board, Michael Liebreich.

Even with record low oil prices, investment in renewables is double that invested in fossil fuels, as the chart below shows.

Renewables are beating fossil fuels Apr 2016

Source: Bloomberg New Energy Finance

 

And as investment soars, electricity produced by renewables continues to double. Since 2000, solar electricity production has doubled 7 times, and wind power, 4 times.

Coal demand is falling in OECD countries, is flattening in China and growth in non-OECD countries is slowing. Britain was once a coal superpower but now produces less power from coal than it has since at least 1850. In Australia, a number of resource companies are closing their coal mines either temporarily or permanently, or reviewing their operations in light of the record low commodity prices.

Coal producers like Glencore, Whitehaven Coal Limited (ASX: WHC), South32 Ltd (ASX: S32), Rio Tinto Limited (ASX: RIO)BHP Billiton Limited (ASX: BHP) and New Hope Corporation Limited (ASX: NHC) will still see demand for their coal – particularly their higher-quality coal – but they may have to accept much lower prices in future. Currently, 40% of the world’s electricity is produced from coal, according to South32, so it’s not going to disappear overnight.

The rapid adoption and popularity of electric cars – witness the 325,000 people who have already paid a US$1,000 deposit for Tesla’s Model 3 – is likely to see oil demand drop too.

The changing global picture is one of the reasons why energy players like Origin Energy Limited (ASX: ORG) and AGL Energy Ltd (ASX: AGL) are forming alliances with companies like Tesla to roll out the company’s storage batteries and encourage the government to embrace the newer technologies.

Foolish takeaway

As technology advances, renewable energy is likely to become even cheaper and more efficient, while battery storage will also become more efficient and much smaller than the fridge-sized batteries of today. The writing is well and truly on the wall for fossil fuels.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.