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Despite Low Oil Prices, a Sunny Outlook for Renewables
Despite rapidly declining oil prices, the data make it clear: the long-term forecast for renewable energy worldwide remains sunny.
The stock market is all over the place, and oil prices are right in the thick of it. But in the middle of all this volatility, some good news is trying to push through, at least according to Tomas Kaberger, an energy professor at Chalmers University of Technology in Sweden.
Kaberger analyzed data from the International Energy Agency (IEA) and the U.S. Energy Information Administration. He found that fossil fuel-powered electric generation, like coal and oil, fell in 2019 in the U.S., the European Union, and India. At the same time, the overall electric power output rose, indicating a shift in the global energy mix towards more renewable energy.
This development is significant as the three countries and regions are, together with China, the largest producers of electric power from fossil fuels. China was an exception to this trend; fossil-fuel powered electricity consumption rose alongside the rise in renewable energy generation.
This trend has been evident for several years and will likely continue. IEA predicts that global renewable energy could account for at least one-third of total energy consumption by 2022; it already accounts for about 30 percent of capacity. As solar and wind reach parity with fossil fuels, the cost for further deployment of these clean energy technologies has dropped significantly. Several factors account for that, including economies of scale, reduction in cost-effectiveness of coal and technological advances in the renewables sector.
Volatile oil prices strengthen the case for renewables
Economics are one of the major driving forces in enabling the greater deployment of solar and wind. Coal can no longer compete, and the U.S. economy in particular has benefited (in terms of economics) from the development of domestic natural gas. Now, the war over oil prices waged by Saudia Arabia and Russia is throwing markets into turmoil, coupled with lower energy demand from countries like China because of the coronavirus. It feels chaotic because it is. Energy markets are a complex, unpredictable web of economics, geopolitics, and technology.
Because the energy market forces are so inextricably linked, pulling one thread sets off a chain reaction. One thing that renewable energy can offer is some semblance of independence. Renewables could potentially have a stabilizing effect on markets tied to oil prices. In addition to its unlimited potential (as opposed to fossil fuels, which will eventually run out), the nature of renewable energy generation means the electric grid and utility business models could be reimagined and made more flexible and resilient through technologies that allow for distributed energy, microgrids and demand-side management.
Remember fossil fuels’ impact on water supplies worldwide
The reduction in fossil fuel-powered electric generation is also the right move to protect water resources. Fossil fuels and nuclear power use significant amounts of water to generate electricity. Water scarcity is a concern in the U.S., the European Union and India. Tackling water scarcity, much like addressing increasing demand and emissions in the electric sector, is a complicated, multi-faceted issue.
India has a particularly complex problem to solve. The country uses more groundwater than any other and faces a situation that could potentially upend not only political and economy stability, but also threaten public health as people struggle meet their basic needs. More efficient water management is key, but a shift away from fossil fuels towards renewables to generate power could free up this valuable resource for other uses.
To be fair, India has ambitious renewable energy goals. Its current installed capacity is around 369 gigawatts (GW) with renewable energy comprising 86.3 GW of that. The country aims to have 175 GW of renewable capacity by 2022 and 450 GW by 2030. The incredibly complex political and economic situation will make reaching these targets a serious challenge, but as the trend shows, the market is moving in that direction, and will move more quickly with aggressive goals. Regardless of how they get there, reducing the water demands of the energy sector will be a benefit.
It is tempting to watch every ebb and flow of the energy markets as they move all over the board. Energy markets are by nature volatile, but the trend line towards deploying more renewable energy into the mix is one that is likely to continue. Everything may feel dark at the moment, but the forecast for renewable energy remains sunny.
Image credit: Pixabay
Kate is a writer and policy wonk, with a focus on water, clean energy, climate change and environmental security. She spent over a decade running energy-water nexus and energy efficiency programs at Environmental Defense Fund as well as time at the U.S. Departments of Energy and Defense, U.S. Government Accountability Office, and state and federal legislatures. She serves as an Advisory Board member of CleanTX, which aims to accelerate the growth of the clean tech industry in Texas.
