7 Predictions For The Future Of Renewable Energy07 Nov, 20224:58
Back in 2020, we published our predictions on the future of renewable energy. This report wa...
Back in 2020, we published our predictions on the future of renewable energy. This report was based on the predictions mid-pandemic, and since then, the landscape of energy has changed again.
During the pandemic, growth in the energy industry stalled as energy usage dipped. Since 2021, this demand has steadily increased again as production, transport, and business resumed. Projections for Net Zero were again adjusted in 2022, when the conflict in Ukraine resulted in energy market volatility. Countries are looking to become less reliant on imported oil and gas, while balancing net-zero targets with an immediate need for alternative energy sources. Government policy continues to change and adapt, with many predictions being unstable due to global crises.
The combined factors of a volatile market, the recovery from the pandemic, and global climate change targets means there is a continued push for renewable energy, with predictions for the biggest growth to be in Solar, Wind, and Biofuel technology.
"Energy market developments in recent months – especially in Europe – have proven once again the essential role of renewables in improving energy security, in addition to their well-established effectiveness at reducing emissions."
IEA Executive Director
China will continue to lead the way in renewable energy development
China is well on the way to achieving their target of generating 33% of electricity consumption to come from renewable sources. It still creates around a third of the world’s greenhouse gases, and through policy and action, is looking to reduce their carbon footprint. China was responsible for almost 70% of wind energy growth in 2021. This trend will continue to rise as the country follows its Five Year Plan to reduce its reliance on fossil fuels and increase local renewable energy production and consumption.
A recent report indicates that of 31 provinces with government targets to increase their renewables target as a share of electricity consumption in 2021, only Gansu and Xinjiang fell behind. China is, in spite of emissions, leading the world in the adoption of renewable technology and are currently forecast to pass their own renewables target by 50% by 2030.
It is looking to achieve this by building large-scale renewable energy facilities in the north-western desert regions of the country, as well as plans for a large offshore wind farm in the Taiwan Strait.
2022 and 2023 renewable capacity forecast revisions by percentage, December 2021 vs May 2022 (source - IEA)
Onshore is still dominating but offshore is set to increase its share
Of the total capacity of wind farms installed in 2021, 93% were onshore systems. Continuing into 2023 and beyond, more countries including Canada, the US, India, China and the UK are looking to increase their offshore capability as the technology improves and becomes more widely available.
The Hornsea wind farm is already the largest offshore wind farm in the world, but an even larger farm – the three-phase Dogger Bank Wind Farm – will take the top spot once development is complete.
Approximately 22% of total wind capacity growth in 2021 was delivered by offshore technology, but this number is set to plateau across 2023 with fewer projects due to come online.
Increased costs could hold growth back
One of the biggest challenges through 2022 in deploying new renewables projects has been materials costs. The rising cost of fossil fuels, electricity and transport costs have made construction of new projects in remote areas more expensive. With the price of PV-grade polysilicon up by 400%, steel by 50%, and copper by 70% between 2021 and 2022, pushing the costs of onshore wind facilities have increased by up to 25%.
On the other hand, the cost of fossil fuel production has also increased due to the Russian invasion of Ukraine and governments seeking to secure energy for winter. This has kept the comparable price of renewables competitive in the market.
Recent IEA data suggests that after a year of steady growth in 2022, renewable energy developments are likely to stabilise in 2023, owing to the instability of the energy market. Policy has changed rapidly over the last 12 months, leaning towards energy security and affordability, in reaction to the instability caused by the war in Ukraine and sanctions against Russian energy in Europe. This policy will have to continue to adapt quickly to ensure growth in the renewable market can continue.
Solar still a dominating market
Solar PV capacity is an area that will see continued growth and is forecast to surpass a terawatt of global solar power generation by 2023, accounting for almost 60% of renewable growth. Despite the costs of solar PV rising, it is still ultimately cheaper than any other form of energy production.
Growth in the sector is high, with China, the US, Japan, Germany, and India all at the forefront of the industry. New solar projects are being developed across the globe to leverage this form of power; Germany is focusing on solar energy in their biggest ever expansion into the industry. In the UK, renewables firm NTR are beginning construction of Europe’s largest solar farm built on a landfill site, and Iraq is planning to launch 5 GW of solar projects in 2023.
Biofuel costs will continue to remain high
Biofuel costs are also heavily influenced by the conflict in Ukraine, due to the higher prices of feedstock, and higher diesel prices. The IEA’s forecast adjusted their biofuel demand growth forecasts to 3% in 2023 earlier in the year, and with no end to the conflict in sight, the instability continues to make predictions difficult.
A recent OECD report states that demand for biofuel in 2023 is likely to grow, despite disruptions to the market, with a 3% year-on-year increase in biofuel demand, primarily for transport. This is lower than the previous 5% year on year increases for 2021-2022 but shows continued growth.
Energy Storage is a growing market
Energy security is a key focus globally in 2023, linked to the continued growth of the electric vehicle (EV) market. It is estimated that there will be 836 million EVs in circulation and the infrastructure and technology to power these vehicles will follow this upwards trend. Bloomberg have estimated that growth for domestic energy storage batteries to power EVs will rise to 155 GWh by 2030, growing 30% annually.
In line with the countries growing their global share in renewables, China, the US, Japan, and India are the leaders in battery storage technology and facilities into 2023 and beyond.
Predictions beyond 2023 are unreliable
The global energy market continues to be highly volatile, with factors including global recession, energy crises, climate policy and conflict making predictions beyond 2023 difficult. Broadly, we expect the technological and policy developments in renewables to be offset by rising costs and fluctuating demand.
The consensus is that European countries will continue to work to use renewable energy to offset their dependence on imported energy, China will continue to work to meet their renewable energy target to meet their climate goals and industrial requirements, and the US will continue to pursue policy that reduces reliance on fossil fuels.
Countries globally are looking for ways to invest in cost-effective renewable energy to meet the challenges of climate change, during a global period of financial challenges.
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