Renewable energy generation capacity is on course to surpass that of natural gas and later coal, as governments hold fast in support of renewables and carbon goals.
Wind and solar generation capacity are set to overtake natural gas capacity in 2023 and coal in 2024, according to a new report by the International Energy Agency (IEA). The Paris-based agency anticipates a 1,123 gigawatt (GW) increase in wind and solar generation, including hydro and bioenergy, which means that current capacity will double between 2020 and 2025.
Governments and investors worldwide have long sought increased renewable energy generation to battle carbon emissions and global warming. This support has traditionally come via state subsidy, which helped provide guaranteed revenue as manufacturers pushed generation costs lower to increase profits. In some cases, renewables generators have become competitive on price.
The pandemic and related economic downturns have failed to put a dent in state backing for renewables. The European Union has forged ahead with carbon-neutral pledges, while newly elected U.S. President Joe Biden has pledged a “clean energy revolution” to fight climate change.
But it’s not solely a state initiative. The corporate world has actively sought investment and purchases of clean energy specifically.
Wind, solar and other renewable sources will account for 95 percent of the increase in the world’s electricity generating capacity over the next five years, according to the IEA. This will be enough to meet 99 percent of the rise in electricity demand by 2025.
Spending on renewable power is set to overtake oil and gas drilling for the first time in 2021 and is currently on track to become a $16 trillion investment opportunity through 2030, according to Goldman Sachs.
There are many different companies involved in this trend. Vestas, Siemens Gamesa and General Electric are the largest suppliers for wind turbines, according to Wood Mackenzie. The three companies put up record installations in a global market predicted to total $600 billion between 2019-2028. The world’s largest solar panel producers are mainly Chinese, using scale and logistics to offer the lowest prices for more retail size use.
Meanwhile, traditional oil companies are also making a transformation to renewable energy. BP, for instance, wants 50 GW of renewables in its portfolio by 2030, up from just 2.5 GW currently and more than the total renewable capacity in the United Kingdom at the moment.
This, however, doesn’t mean that oil companies will altogether remove fossil fuels from their portfolio. The same BP still plans to double its liquefied natural gas (LNG) portfolio by 2030.
So even under the most optimistic scenarios of renewable energy adoption, a full transition to renewables is not right around the corner. In 2019, the U.S. consumed more than 400 million gallons of gasoline per day, an energy capacity that currently can’t be substituted with wind and solar alone.
That said, support for clean energy in wind and solar investments will continue to align corporations, consumers, governments and investors who are increasingly concerned about the fate of the planet.
Regardless of whether the IEA has got the numbers exactly right, the trend is clear. Wind, solar and other renewables are set for a massive increase in scale over the next decade, which will transform the global energy landscape as we know it.