Boom of renewables. Green will become the dominant color in the coming years. The International Energy Agency (IEA), in a report made public yesterday, confirmed that clean energy is entering an unprecedented golden age.
If investments in these technologies began to flourish as an instrument to combat climate change, now the needs to guarantee security of supply as a result of the war in Ukraine are the elements that have given it the definitive push, along with its economic cost. decreasing. “Solar PV and onshore wind are already the cheapest options for generating electricity in most countries around the world,” says the IEA.
In addition, the high prices of gas and electricity derived from the global energy crisis this year have made these technologies even more attractive. "The volatility of fossil fuel prices has made renewables now more competitive," explained IEA Director General Fatih Birol. "A new global energy system is emerging," he said.
The data is unequivocal. The growth of global renewable energy capacity will double in the next five years. In detail, it is expected to increase by 2,400 gigawatts – which is equivalent to all of China's current energy capacity – to reach 5,640 GW in 2027. By 2027, the world will incorporate as much renewable energy as in the previous 20 years.
These technologies will become the largest source of global electricity generation at the beginning of 2025, surpassing coal (38% of the total against 29%). They are also the only source of electricity generation whose share is expected to increase, while coal, natural gas, nuclear power and oil will decline.
A separate chapter deserves solar energy. Its growth seems unstoppable. “The sun will be king,” Birol said. Indeed, the world's photovoltaic solar energy capacity will almost triple in the period 2022-2027, surpassing coal and becoming the largest source of energy capacity in the world.
The report also anticipates an acceleration of residential and commercial rooftop solar panel installations, which help consumers reduce energy bills. This would explain why this technology is growing at a faster rate than others (such as wind or hydraulic), which are more difficult to implement, according to Heymi Bahar, the economist who led the study.
As for the rest of green energies, the total world demand for biofuels will grow by 22% in 2022-2027, while wind power will double its capacity.
This energy revolution would not have been possible without the support of public policies. In this specific case, we can point to programs such as the Repower EU in Europe or the Inflation Act in the US. China decided to bet decisively on renewables many years ago, but the report now observes emerging signs of diversification in the global photovoltaic supply chains, thanks to the push of new countries that want to boost their energy sovereignty and that are expected to boost investment in solar manufacturing by up to 25,000 million dollars during the period 2022-2027. Although China remains the dominant player, its share of global manufacturing capacity could drop from 90% today to 75% in 2027.
The International Energy Agency sends two messages. One of lime and one of sand. The good news is that these projections represent a baseline scenario, which is likely to even improve (20% more in terms of capacity), especially if there is strong financial support from the authorities.
The most negative note is that these investments, which could amount to some two trillion dollars by the year 2030, may be insufficient to meet the goal of limiting warming to 1.5ºC by the year 2050. It would even be necessary to double this matter, but Faith Birol still believes that it is still possible for the world to meet the deadlines.
Much will depend in advanced economies on how to address various regulatory and permitting challenges for faster penetration of the heating and transport sectors. In emerging economies, political and regulatory uncertainties, poor infrastructure and lack of access to affordable finance will have to be overcome.
