A new report from the International Energy Agency confirms that electricity is set to be the fuel of the future, powered by renewable sources. And the new German government’s decision to allocate 2% of Germany’s landmass to windfarms confirms the scale of the changes underway.
The IEA’s chart above details the expansions now planned on a year-by-year basis, and also compares with the period from 2014. Its analysis notes:
- “Renewable capacity will account for ~95% of the increase in global power capacity through 2026
- “Globally, renewable electricity capacity increases by >60% between 2020-2026 to <4 800 GW
- “This is equivalent to the current global power capacity of fossil fuels and nuclear combined”
The IEA has also introduced an “Acceleration” scenario, given the current levels of growth, as China and Europe are both set to overshoot current targets:
China has set “new nearer-term targets, such as 1 200 GW of total wind and solar PV capacity by 2030. We forecast that China will reach this target four years early thanks to the availability of long-term contracts, improved grid integration, and the cost competitiveness of onshore wind and solar PV compared with coal generation in many provinces.”
Europe is similarly set to reach “the stronger targets being finalised under the “Fit for 55” programme. Rapid deployment is being driven by member countries implementing larger auction volumes, corporations contracting for more renewable electricity, and consumers continuing to install large amounts of solar panels“.
Of course, today’s supply chain crisis and OPEC’s decision to withhold 6mbd of oil production have pushed up prices for the raw materials needed to build renewables capacity. But as the IEA note, this is a double-edged sword as it has also improved the competitiveness of wind and solar power.
And importantly for consumers and governments, wind and solar power are priced on long-term contracts. Today’s oil and gas prices are forcing pensioners to choose between feeding themselves and keeping warm. But renewable prices are usually fixed for the lifetime of the contract. And with proper back-up storage plans, supply doesn’t disappear when it is needed.
GERMANY’S NEW POLICIES WILL TURBOCHARGE EUROPEAN RENEWABLES GROWTH
The new German government’s Net Zero plans were only announced only last week, and came too late to be included in the IEA report. But they are very ambitious, as the coalition agreement confirms:
- “Renewables to make up 80% of electricity output by 2030, up from previous target of 65%”
- “Use 2% of German land for onshore wind power; begin work on comprehensive planning of these areas in H1 2022 with federal, national, local authorities”
Portugal is therefore likely to become a case study for the benefits of moving quickly to renewables. As an ICIS report highlighted earlier this year:
- “Portugal is already capable of satisfying approximately two-thirds of domestic demand from renewable sources
- “It will cover 100% of domestic demand via renewables before 2030 and 150% by 2040
- “It will be one of the cheapest markets in Europe post-2030
- “It will also reduce CO2 emissions by 75% by 2030 relative to 2021 – from 12 million tonnes to less than 3 million tonnes”
The shift to renewables is highly likely to have bumps along the road. But the end result is likely to be a world where electricity prices reduce, along with CO2 emissions. And consumers are no longer held to ransom by geopolitical events.