More and more wind and sun in the future of renewable energy

by Eladio Pascual – Director of Operations Audax Renovables

“A quarter of the energy used is green”, “Renewables are booming: towards overcoming coal” or “Within two decades, most energy will be solar and wind” and we could go on. This, in fact, is the tenor of the headlines with which the mass media tell of the important growth of renewable energy sources in the global energy mix.

The news of the excellent results of wind energy in the USA was released a few days ago: + 8% compared to 2017 and almost 97 GW of installed power. According to the annual report of the American Wind Energy Association (AWEA), wind would now be able to provide electricity to approximately 30 million American families. A new way of considering energy and its production that sees the state of Texas at the forefront, with 25 GW of installed power on its territory. [+info]

But where are we with the development of renewables? How far away is the goal of a global energy transition?

Let's start with three considerations.

1. First of all, it is useful to remember that fossil fuels – oil in the lead – will continue to be the protagonists of the energy scene in the coming decades. According to the scenarios outlined by the International Energy Agency (IEA) [+info] coal, for example, will lose its second position in the global energy mix only in 2040, overtaken by natural gas. It is now unthinkable that both the main world economies - especially those of fast-growing nations such as China and India - and those of developing countries could give it up. The demand for hydrocarbons will also continue to rise and will peak around 2030. Equally, their role in energy production will remain strong, with forecasts of demand that will oscillate between 80 and 130 million barrels of oil per day, compared to around 95 million barrels currently (BP Report 2019 data +info).
2. Second, energy consumers have changed or will change. In 2000, Europe and North America accounted for more than 40% of global energy demand, and developing economies in Asia for about 20%. In just over 20 years, the situation will be reversed; already today, half of the world's growth in gas demand, 60% of wind and solar demand, more than 80% of oil demand, and more than 100% of the increase in coal and nuclear consumption are attributable to Asian nations.
3. Third: electricity has taken on an increasingly central role, especially in modern economies, becoming the second most used source globally after crude oil. Today it represents 19% of world consumption, but the outlook speaks of a future in which it will reach 65%. And in this context we can place the progressive and - in recent years - sustained growth of RES.

However, the Texas mentioned at the beginning is a further sign that the "situation is changing". Even just from a symbolic point of view, we are faced with a reversal of the classic image of that American state that has always been the bearer of a "universal epic" of oil so strong that it has forcefully entered popular culture and celebrated by cinema, literature and mass media.

So where are we at? With an increase of 7.9%, today the share of generation from renewable sources is approximately 25%, while projections for 2040 speak of a percentage no less than 40%.

For IRENA, the International Renewable Energy Agency [+info], the total capacity of all the plants in the world is 2,351 GW. Hydroelectricity still dominates with almost 50% (1,172 GW); however, it is likely that this will not always be the case, considering the rates at which other technologies are growing.

Chart 1. Generation by source

(source IRENA, March 2019)

In the meantime, solar has reached 564 GW, wind power 486 GW, while so-called bioenergy has exceeded 13 GW for geothermal and 500 MW for tidal, wave and ocean energy respectively.

Chart 2. Capacity growth

(source IRENA, March 2019)

Looking at the evolution of renewables, the progress made over almost twenty years is impressive; if in 2001 the installed GW were around 20, in 2018 this figure reached over 160. It should also be remembered that 63% of the power added in the past year is attributable to RES; a percentage that rises to 95% if we look at the European Union alone (Irex data).

Meanwhile, 61% of new capacity came from Asia, or 1TW of renewable capacity, or 44% of the global total. Asia and Oceania were also the fastest growing regions, with 11.4% and 17.7% respectively. Europe recorded +24 GW, with an increase of 4.6%, while North America recorded +19 GW, corresponding to +5.4%. Africa stood at +3.6 GW (+8.4%).

Graph 3. New power generated from renewables

(source IRENA, March 2019)

Graph 4. Capacity generated by renewables by geographical areas

(source IRENA, March 2019)

But which technology achieved the best performance?

Photovoltaic and wind are the ones that contributed the most with 84% of installed capacity. While solar photovoltaic grew by 24% compared to 2017, reaching almost 94 GW installed, wind remains the main renewable source, recording a +10% with 49 GW. Hydroelectric growth was more moderate (+2% equal to 21 GW), while renewable electricity generated by other technologies grew by 6%.

Naturally, hydroelectricity remains the most widely used technology: it represents just under 50% of all electricity supplied from green sources. A primacy that will continue to decrease, considering the progressive growth of other technologies.

In fact, returning to solar and wind energy, the American company Fitch Solutions [+info] predicts that the capacity of these non-hydro renewable sources should double between 2018 and 2028, to reach 2.4 TW.

In this growth the sun will prevail over the wind. This technology will be favored by the greater speed and lower construction costs of a photovoltaic plant compared to a wind plant (not to mention a hydroelectric plant). According to the study, within 4 years, photovoltaic plants for 675 GW should be installed compared to the 482 GW expected for the wind sector. In 10 years, solar photovoltaic should cover 48% of the total non-hydroelectric renewables compared to 44% for wind.

Even from a financial point of view, solar photovoltaic seems to have attracted much more investment than other renewable sources: to be precise (2017 data) it is 160.8 out of 279.8 billion dollars, that is +18% compared to any other technology and, percentage-wise, 57% of the total for all renewables (mega-hydroelectric aside). A figure that has exceeded the 103 billion dollars invested globally in coal and gas power plants (data from the Report “Global Trends in Renewable Energy Investment 2018”, commissioned to the Frankfurt School – Unep Collaborating Center by UN Environment and BloombergNewEnergyFinance +info)

The country that invested the most was China, which is eager to reduce its dependence on fossil fuels – coal first of all – favoring energy sources that are environmentally sustainable and strategically useful; in 2018, Beijing added 44 GW of capacity. In the United States and India, 2018 levels were flat compared to 2017, while in Europe capacity grew, as it had not done since 2015.