IEA: Renewables Will Exceed Natural Gas And Nuclear By 2016

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Natural gas is widely considered the bridge to take us from fossil fuel dependence to a clean energy future – but that bridge may be a lot shorter than anyone could have predicted.

Global renewable electricity production
Global renewable electricity production by region image via IEA

The International Energy Agency (IEA) predicts power generation from renewable sources will exceed natural gas and be twice the contribution from nuclear energy globally by 2016 – just three short years from now.

IEA’s second-annual Medium-Term Renewable Energy Market Report (MTRMR) forecasts renewable generation will grow 40% in the next five years despite difficult economic conditions.

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Wind And Solar Power The Renewables Charge

Renewable energy is now the fastest-growing sector of the global power market, and will represent 25% of all energy generation worldwide by 2018, up from 20% in 2011. In addition, renewable electricity generation is expected to reach 6,850 terawatt-hours (TWh) and total installed renewable capacity should hit 2,350 gigawatts (GW), both by 2018.

Wind and solar photovoltaic generation is powering this jump, and non-hydro renewable power will double from 4% of gross generation in 2011 to 8% in 2018. IEA cites two main drivers for their incredible outlook: accelerating investment and deployment, and growing cost competitiveness versus fossil fuels.

Strongest Growth In Developing Countries

Even though government funding has been inconsistent, private investment has remained strong, especially in developing economies. Rural electrification, energy poverty, and rising demand have been major challenges for policymakers in these countries, and renewables have become an increasingly attractive option for diverse and non-polluting power.

Countries above 100MW non-hydro renewable capacity
Countries with non-hydro renewable capacity above 100MW image via IEA

Non-developed countries, led by China, are expected to contribute two-thirds of all renewable market growth between now and 2018, compensating for slower growth and market volatility acorss Europe and the US.

Indeed, non-hydro renewable power will make up 11% of gross generation in these countries by 2018, up from 7% in 2012. By itself, China will account for 310GW, or 40% of all global renewable power capacity increases over this time period.

Falling Costs, Rising Capacity

Solving energy poverty issues without harmful emissions is key to renewables growth, but the larger reason for IEA’s outlook is more likely falling costs. The report finds renewables now cost-competitive with fossil fuels across many countries and a wide set of circumstances.

Solar PV capacity additions
Solar PV annual capacity additions by region image via IEA

IEA notes wind is competitive with new fossil fuel in multiple markets, including Brazil, South Africa, Mexico, and New Zealand, and solar is competitive both in markets with high peak prices and decentralized power needs. “As their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation,” said Maria van der Hoeven of IEA.

IEA – Policy Uncertainty Is Public Enemy #1

However, the IEA warns renewables still face a challenging future. Global investment fell in 2012, and policy uncertainties loom over clean energy technology in several important markets. In addition, grid integration challenges have materialized in some regions as renewables penetration has hit new levels.

“Policy uncertainty is public enemy number one,” said Van der Hoeven. “Many renewables no longer require high economic incentives, but they do still need long-term policies that provide a predictable and reliable market and regulatory framework.”


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