You have to hand it to the Guardian. The people who write articles for publication there are nothing if not optimistic and enthusiastic when it comes to pushing the renewable energy agenda. An upbeat headline on the Guardian website, about a new report from the International Energy Agency (IEA) caught my attention at the beginning of this month. “Renewable energy has ‘another record year of growth’ says IEA”i, which sounded very impressive, though it paled into insignificance compared to the sub-heading, which was to the effect that “Renewables will account for about 95% of growth in global power-generation capacity up to the end of 2026, finds energy agency”.
The article does a very good job of re-working and summarising the press releaseii accompanying the International Energy Agency’s “Renewables 2021” reportiii. I think this was probably the key paragraph cheer-leading the progress of renewable energy:
According to the IEA report, published on Wednesday, renewables will account for about 95% of the increase in global power-generation capacity from now to the end of 2026, with solar power alone providing about half of the increase.
It doesn’t take long to deflate the celebratory nature of the claim, however. First, as we all know, the capacity of renewables to generate energy is not the same thing as the amount of energy actually generated by renewables. According to the Sunmetrix websiteiv (which, as its name might suggest, concentrates on solar panel energy production):
One of the most confusing aspects of renewable energy is the difference between installed (nameplate) capacity and the actual output that is obtained from these systems….the capacity factor varies quite a bit for solar photovoltaic systems depending on the location. Generally, it is in the range of 10-25%. One of the key reasons for this low ratio is the nature of renewable power. After all, when it comes to solar, wind and hydro, we are at the mercy of the [sic] nature. If there is no wind at a given moment, a wind turbine will sit idle. If there is no rain or snow to fill the reservoirs, a hydroelectric plant cannot generate power. Compared to wind and hydro, solar energy has an additional limitation: there is absolutely no energy production during night time…
10-25% isn’t terribly impressive, and makes a nonsense of claims based around “power-generation capacity”. All the more so when compared with the competitors to renewables. According to SunMetrix, the equivalent figures for wind turbines are around 25% (still pretty measly); hydroelectric power stations are at 40% (better, but still far from great); coal fired power plants are at 70%; and nuclear power plants are at 89%. Combined cycle gas turbines, by the way, are rated by SunMetrix at a measly 38%. It sounds as though – on this measure at least – we should be cheer-leading for coal and nuclear. Whatever the rights and wrongs of renewable versus fossil fuel generation, perhaps there should be some sort of equivalent of trading standards laws, preventing the use of misleading statistics that refer to “power-generation capacity” and compel the use of actual power generation instead.
The second flaw in the claim becomes readily apparent when one reads the executive summary to the IEA report:
We have revised up our forecast from a year earlier, as stronger policy support and ambitious climate targets announced for COP26 outweigh the current record commodity prices that have increased the costs of building new wind and solar PV installations.
In other words, there is a real problem with regard to claims that renewable energy generation is becoming cheaper. Record prices for commodities that are essential for renewable energy projects are a big problem, and a problem that is growing, given the pressure on resources as the world emerges (however erratically) from the downturn caused by the covid pandemic. This upward pressure on prices seems likely only to increase as China continues to seek to take control of the markets for such commodities.
Thus, as the IEA report acknowledges, the “building [of] new wind and solar PV installations” is increasingly dependent on “stronger policy support and ambitious climate targets”. Take away taxpayer subsidies and leave it to the market and the projected huge growth in renewable energy will melt away like snow in spring. This is arguably all the more so (contra the reasoning in the IEA Report) as the price of oil and gas have recovered strongly in the latter part of 2021, following a torrid 2020 thanks to the covid pandemic. As energy costs rise, will taxpayers and energy users really be happy about paying more and more subsidies for expensive and unreliable renewable energy? And, as the price of oil and gas rises, exploitation of those resources becomes financially attractive to fossil fuel companies once again.
If you’ll forgive the pun, there are also strong headwinds that will cause problems for the growth of renewable energy, as the IEA Report’s Executive Summary makes clear:
Rising commodity, energy and shipping prices have increased the cost of producing and transporting solar PV modules, wind turbines and biofuels worldwide. Since the beginning of 2020, prices for PV-grade polysilicon more than quadrupled, steel has increased by 50%, aluminium by 80%, copper by 60%, and freight fees have risen six-fold. Compared with commodity prices in 2019, we estimate that investment costs for utility-scale solar PV and onshore wind are 25% higher. In addition, restrictive trade measures have brought additional price increases to solar PV modules and wind turbines in key markets such as the United States, India and the European Union.
Finally, with the best will in the world, the IEA report is a projection of the future, not (by and large) a report on existing developments. It is a guess – admittedly, an informed guess – and we have all seen how wildly inaccurate expert predictions have proved to be in recent years. In short, the report is a non-story.
BP Statistical Review of World Energy 2021v
By contrast, the BP Statistical Review of World Energy provides us, year on year, with a detailed report of the state of play regarding the world’s energy mix. The 2021 report looks back to 2020, a year when energy demand was badly hit by the covid pandemic. To that extent, I don’t think it’s unreasonable to assume that the 2020 figures relating to fossil fuel use may prove to be on the low side compared to the figures going forward, especially given what we have learned about the recent massive spike in demand for coal, gas, and to some extent oil in recent months. Unlike the IEA report, the BP figures are not conjecture. And this is what we learn at page 12:
Oil continues to hold the largest share of the energy mix (31.2%). Coal is the second largest fuel in 2020, accounting for 27.2% of total primary energy consumption, a slight increase from 27.1% in the previous year. The share of both natural gas and renewables rose to record highs of 24.7% and 5.7% respectively. Renewables has [sic] now overtaken nuclear which makes up only 4.3% of the energy mix. Hydro’s share of energy increased by 0.4 percentage points last year to 6.9%, the first increase since 2014.
In other words: yes, the share of renewables is growing, but it is extraordinary, to my mind at least, to reflect on the fact that after 25 COPs (which was how many there had been by 2020) and decades of propaganda and subsidies in favour of renewables, they still provided only 5.7% of the world’s energy mix last year, and given recent developments, that is a percentage that the 2022 report may even show to have fallen during 2021 as energy demand increased, and as the world turned once more to fossil fuels to fill the gap. Furthermore, we learn that:
Oil remains the dominant fuel in Africa, Europe and the Americas, while natural gas dominates in CIS and the Middle East, accounting for more than half of the energy mix in both regions. Coal is the dominant fuel in the Asia Pacific region. In 2020 coal’s share of primary energy fell to its lowest level in our data series in North America and Europe to 12% and 9%, respectively.
It’s no surprise to learn that coal’s share of primary energy is falling in North America and in Europe. Of course, in Asia (and indeed in much of the rest of the world, as we will see below), the picture is very different indeed.
At page 64 of the BP Report, we learn that:
Natural gas is the dominant fuel used for power generation in North America, CIS, the Middle East and Africa. More than half of the power in South and Central America is hydroelectricity, while in Asia, coal comprises 57% of the generation mix – a far higher share than any other region. In Europe, renewables (including biopower) are the largest source of power generation with 23.8% for the first time, overtaking nuclear on 21.6%. Generation in Europe is spread fairly evenly between renewables, nuclear, gas (19.6%) and hydro (16.9%).
It’s a pity that the report lumps biopower in with renewables, given that I suspect most thinking people do not regard biopower as renewable energy, in any meaningful sense of the word. Take biopower out of the renewables mix, and even in Europe, where the kitchen sink has been thrown at funding renewable power projects, the situation looks decidedly indifferent. What of the rest of the world?
At a global level, coal is the dominant fuel for power generation, however its share fell 1.3 percentage points to 35.1% in 2020, the lowest level in our data series. The share of renewables rose to record levels last year (11.7%), with the combined share of renewables and gas-fired power (35.1%) equalling coal for the first time.
Here, note, we are talking about power generation – I assume, in other words, the production of electricity, as opposed to total power use (which includes transport etc.). Hence the 11.7% figure for renewables, compared to the 5.7% figure quoted above.
I have no doubt that renewable energy production will continue to grow, and to grow substantially, especially as politicians fall over themselves to throw taxpayer subsidies at these projects. However, a growing world population, growing demand for energy, and a need for energy to be reliable and predictable (which renewable energy certainly hasn’t been in Europe in 2021) will make it difficult for renewable energy to do anything other than increase its share of total energy supply very slowly indeed.
Renewable energy may or may not supply “95% of the increase in global power-generation capacity from now to the end of 2026”, though my money would be on “not”. However, even if I’m wrong I would still be very surprised indeed if renewable energy makes up as much as 7.5% of total energy needs by the end of 2026. Guardian headlines and IEA reports might give some people a warm feeling, but in the real world, the situation isn’t as they would wish.