Image Source: Stanford Woods Institute
Renewable energy generation capacity has been trending upward globally since its dawn. However, in the coming years, the demand for renewable energy is poised to skyrocket, fueled by an energy market filled with uncertainties. Over the past year, the importance of energy security has been highlighted by the events of the Russia-Ukraine war, leading to shortages of fossil fuels, and subsequently, a truly global energy crisis. As a result of this, analysts in many countries see renewables as the only way to effectively stabilize energy supply domestically. This, combined with oil prices that have remained high in a post-pandemic world, has driven many countries "to strengthen policies supporting renewables," leading the International Energy Agency (IEA) to revise their already high renewable generation forecasts [1].
The researchers at IEA now believe that "renewable capacity expansion over the next five years will be much faster than what was expected just a year ago" [1]. In the years 2022-2027, renewable energy capacity is expected to increase by 2,400 GW, accounting for over 90% of forecast electricity expansion over the same time period. This revision equates to an almost 30% increase in expected generation growth compared to last year's forecast [1]. For perspective, this projected expansion is equivalent to the current installed renewable energy capacity in China today.
Another milestone for renewable sources is the expectation that by 2025, they will surpass coal in terms of electricity generation, becoming the largest source of electrical energy worldwide. Relating to market share, renewables are also the only electrical generation source that is expected to increase, with the capacity of wind and solar likely to more than double over the next five years. These two technologies will lead the charge in capacity expansion, accounting for "80% of global renewable generation increase" [1]. The market share of all other electricity sources is expected to decrease.
However, according to the IEA revisions, by 2027, solar PV capacity is expected to surpass coal, becoming the largest source of energy. As a result of supporting legislation, distributed solar sources are set to play a massive role in this expansion. Despite this, utility-scale solar is still expected to be the most cost-effective solution, as elevated commodity prices will keep initial investments in solar high. Overall, over the five-year time period considered, the total capacity of solar sources is expected to more than triple [1].
Revisions to the EU forecast accounted for a majority of the expected generation growth. In the most recent report, the prediction for EU renewable capacity growth was increased by 30%, driven not only by the proceeding war but also by increased climate concerns and supporting policies. Both Germany and Spain are expected to lead the way, increasing renewable electricity generation targets, as well as streamlining the process to bring new projects online. The IEA expects the renewable generation capacities of the two countries to increase by 50% and 60%, respectively.
Source: IEA, "Renewable Capacity Growth in the Main and Accelerated Cases, 2022-2027"
Despite this, renewable energy still faces challenges. As seen above, the forecasted growth is still below what is required in order to meet the "net zero by 2050" goal set forth by the Paris Agreement. Even in the "accelerated case," generation growth will still be 800 GW short of what is required. In order to meet this goal, a massive overhaul of the electrical energy industry will be required. An important note from the report is the decreasing market share of the nuclear energy industry. A resurgence of nuclear may be necessary in order to meet these lofty goals. As of right now, despite industry drivers, net zero is a long ways off. While the revised forecast given by the IEA is a fantastic improvement, there is still work to be done, and opportunity for development across all sectors.
Source
[1] Bahar, "Renewables 2022, Analysis and Forecast to 2027," International Energy Agency. Paris, France. Dec. 2022
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