On Tuesday the International Energy Agency (IEA) released World Energy Outlook (WEO) 2014, the latest in its series of annual publications on the future of world energy systems.
WEO 2014 predicts that renewable energy will overtake coal to be the world’s largest source of electricity by 2035, with the share of solar and wind in electricity increasing fourfold. The publication expects electricity to make up a higher portion of the global energy mix even as demand grows, with 37% higher primary global energy demand in 2040.
IEA predicts that renewable energy will meet 37% of electric demand in the developed world in 2040, but grow twice as fast in the developing world, including India, China, Latin America and Africa.
Overly conservative estimates
Many energy experts find that that the IEA’s predictions are overly conservative. Gerrit Jan Schaeffer, research director at Flemish research organization VITO and chair of the Belgian Energy Research Alliance, notes that IEA is predicting a greatly reduced rate of growth for PV. If you look at the last 12 years, there has been a hundredfold increase in global PV capacity, Schaeffer told pv magazine. In 26 years, why would it go down to a fourfold increase?
Schaeffer notes that the dynamics between installed capacities and cost reduction are driving exponential PV market growth. There is 20% reduction of cost with every doubling of the committed capacity, but you also see that, at least since the 80’s, the average growth rate has been about 40%. Which means doubling every two years, observes Schaeffer. I see those trends, and for this reason I don’t see any reason why it would stop.
However, Schaeffer also notes that with each year’s report the IEA becomes more optimistic about the future of renewable energy.
A bright future for solar in Sub-Saharan Africa
IEA expects more rapid growth in renewable energy in the developing world, where overall electricity capacities are growing rapidly. This year’s WEO has a special focus on Sub-Saharan Africa, which the agency notes has very strong solar resources.
WEO 2014 expects electricity generation to quadruple in the region by 2040, and that almost half the growth in the region’s generation will come from renewable energy. This comes the same day that Solar Reserve put online Africa’s largest PV plant at 96 MW in South Africa.
The organization notes strong potential in other regions, but in some cases these are impacted by existing policies. IEA estimates that fossil fuel subsidies totalled $550 billion in 2013, which it says is holding back investments in efficiency and renewables.
It also finds that fossil fuel subsidies are difficult to reform. This is even true in Middle Eastern nations, where governments are facing huge opportunity costs by subsidizing petroleum for electricity instead of selling it on the world market.
In the Middle East, nearly 2 mb/d of crude oil and oil products are used to generate electricity when, in the absence of subsidies, the main renewable energy technologies would be competitive with oil-fired power plants, notes WEO 2014’s executive summary.