The two most authoritative accounts of the global power markets, including the role of renewables, were recently published: World Energy Outlook 2014 from the International Energy Agency (IEA) and REthinking Energy from the International Renewable Energy Agency (IRENA).
Both flagship reports describe two completely different worlds: that of the global power market today and that of the global power market of tomorrow.
The two reports tell a similar tale. The power sector is changing the world, but not enough to keep the world unchanged.
The studies confirm that we have enough economically viable technology, and still enough time, to solve some of the worldâ€™s most serious problems. However, time is running out if we continue our subsidised self-destruction for much longer, while denying 1.3 billion of our fellow citizens access to electricity and 2.7 billion people access to clean cooking equipment.
We have the means and solutions to act but we fail to apply them. Therefore, the next generation may look back on 2014 and conclude that it was the best of times, it was the worst of times.
For electricity, times are good and will become better, the reports agree. It is the fastest growing energy source and it will continue to be for the coming decades. The future looks particularly good for renewables, not least for PV and wind power. Fossil fuel-based electricity peaked in 2013 and will continue its decline.
â€œThe power sector is undergoing one of the most profound transformations since its birth in the late 19th century,â€ according to IEAâ€™s World Energy Outlook.
â€œRenewables are expected to go from strength to strength, and it is incredible that we can now see a point where they become the worldâ€™s number one source of electricity generation,â€ IEA executive director Maria van der Hoeven says.
â€œIt is no longer a matter of whether but of when a systematic switch to renewable energy takes place,â€ IRENA director general, Adnan Amin, writes in his foreword to IRENAâ€™s REthinking Energy.
Total investment in (non-large hydro) renewable electricity has increased from $55bn in 2004 to $214bn in 2013. PV made up 24% of total global investments in new capacity, hydro accounted for 20% and wind power 15%. 19% of investments went to coal and 12% to gas last year, according to World Energy Outlook. Around 70% of global investments went to non-hydro renewables in the OECD. In the non-OECD countries, the share was 27%.
Wind turbine costs are down 30% since 2008 and onshore wind electricity cost has fallen by 18% since 2009, â€œmaking it the cheapest source of new electricity in a wide and growing range of markets,â€ according to REthinking Energy, which concludes that â€œrenewable energy is often competitive with fossil fuel power at utility scale, and is generally cheaper in decentralised settingsâ€.
While the recent performance of renewable electricity is remarkable, power generation as a whole has not become cleaner. Today, electricity accounts for more than 40% of man-made CO2 emissions. REthinking Energy points out that the average emissions intensity has only been marginally improved in the past 20 years â€“ from 586 g/kWh in 1990 to 565 g/kWh in 2010.
This will change, but not enough unless we act. Emission intensity reaches 498 g/kWh by 2030 if current policies and plans are carried out â€“ a reduction of 12% compared to now, says IRENA.
However, a doubling of the share of renewables compared to today, coupled with energy efficiency measures, could reduce intensity by 40% to 349 g/kWh in 2030, enough to avert disastrous climate change. More importantly, â€œthe good news is that the technology is sufficiently mature, and the economics sufficiently favourable, that the solution is entirely within countriesâ€™ grasp,â€ according to REthinking Energy.
The world already produced twice as much renewable electricity (4,808 TWh) as nuclear power (2,461 TWh) in 2012. Looking ahead, renewable electricity production triples between now and 2040, increasing more than coal and gas combined.
Renewable energy capacity additions exceed those of fossil fuel and nuclear, combined â€“ both in terms of net and gross additions. Already this year, the world will produce more renewable power than gas-generated electricity and by the 2035 renewables will replace coal as the worldâ€™s largest power source, says the IEA.
A staggering $12 trillion will be invested in new power plants between 2014 and 2040. Renewables will account for $7.4 trillion (61%), $3.2 trillion will be invested in fossil fuel and $1.5 trillion in nuclear power plants. The dominance of renewables is quite remarkable, given that this is a â€˜business-as-usualâ€™ scenario.
While renewables in general, and PV and wind power in particular, are clearly now established and have bright futures, the same cannot be said about the condition of our globe and many of its inhabitants, unless progress is accelerated soon.
Even with the projected dramatic changes, the transformation of our rigid energy system is simply happening too slowly, IRENAâ€™s analysis shows.
Enforcing current national plans only result in an increase in the share of renewable energy from 18% in 2010 to 21% in 2030. A doubling to 36% (including 44% renewable electricity) is needed to keep global warming below 2 degree Celsius. â€œWhile impressive, business-as-usual renewables expansion will deliver neither the economic nor environmental outcomes needed for sustainable development,â€ says IRENA.
Despite improved carbon intensities, actual emissions from the power sector will be 16% higher in 2040 than today and total emissions will increase by 20%, consistent with a global temperature rise of 3.6 Â°C, according to the World Energy Outlook.
Cumulatively, we have emitted about 500 Gt of carbon. If we want to stay on the good side of 2Â°C, we cannot emit more than another 1,000 Gt from 2014 and onwards. On current trends, the world will exceed that budget in 2040, according to the World Energy Outlook.
The dramatic changes we will see in the worldâ€™s power markets will not be enough to keep climate change under control, to avoid massive degradation of the Earthâ€™s environment or to meet the worldâ€™s development and energy access goals.
The two reports tell a tale of a strange species. We know that CO2 is bad for our planet, our environment and our health, and we choose to subsidise its use. We know that we can provide access to basic electricity and clean cooking for all and thereby save millions of lives annually by investing an average ofÂ $60bn per year. We choose not to, and spend $550bn on subsidising fossil fuels instead â€“ each year.
We have discovered a great natural product â€“ hydrocarbons â€“ which we will need forever to produce essential high value-added products such as detergents, fertilizers, medicines, paints, plastics, synthetic fibres, and rubber.
Still, we choose to waste them in inefficient power plants that make two thirds of their energy content vanish into thin, but gradually warmer, air. And we choose to waste most of those scarce hydrocarbons in combustion engines that only return a fraction of their energy content in the form of usable energy, despite having developed, decades ago, electric engines that are 2-3 times more efficient.
Charles Dickens wrote his opening sentence to A Tale of Two Cities in 1859:
It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light it was the season of Darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.
Judge for yourself, to which extent these words apply to our world of 2014.
The article was published by Recharge News on 1 December 2014.