Renewable Energy Outlook to 2025 – the Inconvenient Facts

Contributed by Robert Lyman ©2020

The International Energy Agency (IEA) last week published its Renewable 2020 Report, an analysis of current trends in global renewable energy markets and a projection of the supply and demand for renewable energy (defined as hydro, wind, solar and biofuels) to 2025.

The report began by noting that, in contrast to other fuels, renewables used for generating electricity are projected to grow by 7% in 2020, even as global energy demand declines by 5%.

Net installed renewable energy generation capacity will grow by nearly 4% in 2020, reaching almost 200 gigawatts (GW). These additions will account for almost 90% of the increase in total power capacity worldwide. The report stated that solar photovoltaic (PV) and onshore wind are already the cheapest way of adding new electricity generating plants in most countries. It projected that renewables will account for 95% of the net increase in power capacity through 2025. The few media reports on this subject characterized it as showing that renewables are “growing from strength to strength”, and likely to “power past coal and gas”.

The IEA’s enthusiasm for renewable energy, and especially, wind and solar energy, should be viewed in the context of several important facts relating to historical global energy trends, the relative importance of electricity in the fuel mix, the real cost of renewables (i.e. taking subsidies and intermittency into account), and important policy and market uncertainties.

Inconvenient Facts

• Since 1994, global energy demand has been dominated by coal, oil, and natural gas. As of 2019, these three energy sources continued to provide 84% of global energy needs.
• In 2019, wind and solar energy used for power generation constitutes only 2% of global primary energy consumption.
• Non-hydro renewables, including biomass, supply 5% of primary energy demand.
• In other words, even if renewables continue to grow in usage at a fast pace, it will be many years before they come to be as important to the world economy as the other energy sources.
• In most countries, the utilities that produce, transmit and distribute electricity are government owned, operated, controlled, and regulated. This goes a long way to explaining why renewable energy investments are increasing.
• The cost of overcoming the variability, intermittency and unreliably of solar and wind electrical power is so high that it raises the costs to electricity customers to unacceptably high levels and will continue to do so even if the capital costs of building renewable energy plants continue to decline.
• The most often published costs of wind and solar energy plants ignore the role of taxpayer subsidies. In fact, there are about 20 generic types of subsidies provided to the manufacturers and builders of these plants.
• The IEA report assumes that Asian countries, and mainly China and India, will all adhere to their commitments under the 2015 Paris Agreement. Most are failing to do so.
• Supply, demand, and competitive markets have in the past largely determined the role that different energy sources play in the world economy and, climate policy or not, it is difficult to believe that this will not be the case in future.

About the Author

ROBERT LYMAN is an economist with 27 years’ experience as an analyst, policy advisor and manager in the Canadian federal government, primarily in the areas of energy, transportation, and environmental policy. He was also a diplomat for 10 years. Subsequently he has worked as a private consultant conducting policy research and analysis on energy and transportation issues as a principal for Entrans Policy Research Group. He is a frequent contributor of articles and reports for Friends of Science, a Calgary-based independent organization concerned about climate change-related issues. He resides in Ottawa, Canada. Full bio.