Many people still think that it will not be long before renewable energy such as solar and wind becomes outright cheaper than fossil fuels, thereby leading to a rapid expansion of the thin orange slither in the graph below. This is an ideologically very attractive notion, but, as discussed in this article, it is questionable whether this is in fact physically possible.
So, what does renewable energy have to accomplish before it can compete with fossil fuels in an open market? Well, in short, we will have to overcome the diffuse and intermittent nature of renewable energy more efficiently than we can overcome the declining reserve qualities and unrefined nature of fossil fuels.
In other words, renewables need to overcome the following two challenges in order to displace fossil fuels in a fair market:
Solar panels and wind turbines need to become cheaper than raw fossil fuels. This is the challenge posed by the diffuse nature of renewables.
Storage solutions need to become cheaper than fossil fuel refineries (e.g. power plants). This is the challenge posed by the intermittent nature of renewables.