The International Energy Agency came out with its mid-term forecast for renewables and, if you’ve followed the IEA forecasts for a while, the stunning reversal in the agency’s view of renewables continues. Back in 2004, the IEA’s energy forecasts didn’t mention solar once and only mentioned efficiency twice. It predicted modern renewables would only account for 6% of the total energy mix.
In the most recent, report, the IEA said that renewables accounted for 153GW of new capacity in 2015, more than fossil fuels. Granted, solar and wind can’t produce around the clock so the capacity number will be less than actual generation. Still, the percentage of renewables will continue to climb. (That's number one.)
Some other interesting predictions:
2. Wind Has a Lot of Wind Left in the Sails. 63GW of wind was put into the ground last year. Recent tender offers for projects also indicate that offshore wind prices could drop by 40% to 50% over the next five years as technology improves, economies of scale improve and developers and financial institutions cultivate their collective tribal wisdom in projects in Europe, North America and North Africa.
Onshore wind, meanwhile, could drop 15% in the same time frame. Growth is renewables, of course, also means jobs in the construction industry and those with expertise in offshore platforms.
3. Electricity Is King. Global electricity capacity could grow to 825GW by 2021, a 42% increase from today and well above the 13% growth predicted by the IEA last year. Chalk it up to policies favoring power, technology improvements and insatiable demand for power in places like China. China could represent nearly 40% of the growth over the next five years.
Declining prices help too. “Record deployment was accompanied by continued sharp generation cost reductions, with announced record-low long-term remuneration prices ranging from USD 30/megawatt hours (MWh) to 50/MWh for both onshore wind and solar (PV) plants,” the IEA said.
4. Heat Heats Up. Solar photovoltaics and onshore wind will account for 75% of the total renewable capacity increase through 2021, but they aren’t the complete story. Renewable heat from solar thermal technology, biomass, biogas and/or geothermal will scale significantly from a small base. Overall, renewable heat will grow by 21% in the forecast period and account for 10% of heat energy by 2021.
These technologies have their issues. Solar thermal (and cooling) have not declined in price like PV. Geothermal can be a crapshoot. And only a few select cities like Helsinki and Minneapolis have heat grids in the form of district heating networks. Still, prices are coming down and some emerging Asian markets are promoting biogas as a way to eliminate pollution and generate heat.
5. Biofuels Are Still in First Gear. Their overall share of the market will only inch up from 3% of liquid fuels to 4%. Blame it on low oil prices.
6. A Word of Caution. While the IEA predicted that the share of renewables in overall electricity generation will rise from over 23% in 2015 to almost 28% in 2021, the overall demand for power is slightly lower than in earlier predictions. That tees up the developers' (and manufacturers') nightmare: excess capacity. That could mean, potentially, profitless prosperity. China is experiencing a "slowdown in electricity demand growth driven by several factors including energy efficiency," the report stated.
7. The Sunny Outlook: The Final Results Could Even Be Bigger. Under an accelerated scenario driven by large power producing nations like the U.S., China and Brazil, renewable capacity could be 29% above the
