Page 4 - AsiaElec Week 41

AsiaElec COMMENTARY AsiaElec

Solar crowned king of

global energy markets

Solar may now be the cheapest source of electricity in history, but the IEA has called on
governments to invest more in renewables or risk missing the Paris Agreement goals

GLOBAL THE International Energy Agency (IEA) has IEA calls the “new king” of electricity supply and
identified solar power as the key motor of the looks set for massive expansion.
WHAT: global energy transition over the next few years, Between 2020 to 2030, solar PV is predicted
Solar now offers the with renewables as a whole meeting 80% of new to grow by an average of 13% per year, meeting
cheapest electricity ever demand for electricity between now and 2030. almost one-third of electricity demand growth
The IEA’s World Energy Outlook (WEO), over the period.
WHY: published this week, found that solar had so far Global solar PV deployment is set to bounce
Falling technology costs been one of the most resilient sourced of energy back quickly after the pandemic in 2020,
means renewables will in what it termed a “tumultuous year for the exceeding pre-crisis levels by 2021 and setting
overtake coal by 2025 global energy system.” new records each year after 2022.
The report states that supportive policies This will be driven by widely available
WHAT NEXT: from governments and maturing technologies resources, declining costs and policy support in
Deep and quick structural are enabling very cheap access to capital in lead- over 130 countries.
changes are needed ing markets. Our analysis of solar PV financing costs indi-
to promote energy Therefore solar PV is now consistently cates that, despite monetary policy measures,
investment, generation cheaper than new coal or gas-fired power plants the weighted average cost of capital edged up in
and consumption in most countries, and solar projects now offer 2020 after years of going down.
patterns if the Paris goals some of the lowest-cost electricity ever seen. Even so, policy support frameworks enable
are to be met “I see solar becoming the new king of the very low financing costs, making new solar
world’s electricity markets. Based on today’s pol- PV more cost effective than coal and gas-fired
icy settings, it is on track to set new records for power in many countries today, including in the
deployment every year after 2022,” said Dr Fatih largest markets (United States, European Union,
Birol, the IEA Executive Director. China and India).
For projects with low-cost financing that
2020 tap high-quality resources, solar PV is now the
Indeed, global energy demand is set to drop by cheapest source of electricity in history.
5% in 2020, energy-related CO2 emissions by 7%
and energy investment by 18%. Decline of coal
The fall in CO2 emissions, worth 2.4mn On the other hand, coal’s decline is quite certain,
tonnes, takes annual emissions back to where the IEA predicts.
they were a decade ago. The report confirms that coal peaked in 2018,
The report estimated an 8% decrease in with coal’s share of global generation falling to
oil demand and 7% in coal use in 2020, com- 37% in 2019, 35% in 2020 and 28% in 2080.
pared with a slight rise in the contribution of Put simply, coal will no longer be as easily
renewables. profitable as it once was. The report said chal-
The reduction in natural gas demand is esti- lenging market conditions would contribute to
mated at 3%, while global electricity demand 275GW of coal-fired capacity retirements by
looks set to be down by a relatively modest 2% 2025 (13% of the 2019 total), including 100GW
for 2020. in the US and 75GW in the European Union,
The IEA based its estimates on what it terms where 16 out of 27 EU member states aim to
The Stated Policies Scenario (STEPS), in which phase out all unabated coal.
coronavirus (COVID-19) is gradually brought Yet these retirements and falling share of gen-
under control in 2021, the global economy eration disguise coal’s resilience in China, India
returns to pre-crisis levels the same year and and Southeast Asia, where 130GW currently
global energy demand rebounds to its pre-crisis under construction is set to come online by 2025.
level in early 2023. As a result, global CO2 emissions from the
power sector are set to rise above 13bn tonnes
Solar on the up by 2024 and stabilise by 2030, although they will
Solar photovoltaic (PV) is set to become what the never return to pre-crisis levels.

P4 www. NEWSBASE .com Week 41 14•October•2020