'Turning point’ in green energy prompts IEA to drastically raise 5-year outlook
By Sara Sjolin
Political support in U.S. and China key driver for growth, IEA says
About half a million solar panels were installed every day around the world last year, according to the IEA
Move aside fossil fuels, a big energy watchdog is getting bullish on renewable sources.
In its medium-term Renewable Market Report, the International Energy Agency on Tuesday significantly raised its five-year forecast for green energy, thanks to a rapid decline in costs and strong political support in key countries, such as the U.S. and China.
The agency now sees global renewable electricity capacity jumping by 42% by 2021, up 13% from its forecast last year. The upbeat outlook comes after a record 2015 for renewables, when clean energy overtook coal as the biggest source of newly installed capacity in the world.
“Last year marked a turning point for renewables. Led by wind and solar, renewables represented more than half the new power capacity around the world,” the Paris-based agency said in a statement.
“We are witnessing a transformation of global power markets led by renewables and, as is the case with other fields, the center of gravity for renewable growth is moving to emerging markets,” IEA’s executive director Fatih Birol added.
The share of renewables in global energy production is forecast to climb to 23% in 2015 from 28% in 2021, making it the fastest growing source of electricity generation, according to the IEA. That’s mainly driven by three factors: more competition, political support and technological improvements.
“While climate change mitigation is a powerful driver for renewables, it is not the only one. In many countries, cutting deadly air pollution and diversifying energy supplies to improve energy security play an equally strong role in growing low-carbon energy sources, especially in emerging Asia,” the IEA said.
China alone, for example, counts for 40% of global growth in green energy, driven by higher targets set under the government’s five-year plan. In India, a sharp drop in costs is a key driver for a more optimistic outlook for solar energy, while the U.S.’s extension of federal tax credits for the industry is set to boost both solar and onshore wind power, according to the agency.
The IEA warned, however, that there are still reasons to be cautious. The cost of financing remains an obstacle in many emerging markets, while there’s still a lot of political uncertainty in many countries, it said.
“Meeting the objective of the COP21 global climate agreement to hold the increase in global average temperature to well below 2°C, will require stronger decarbonisation rates and accelerated penetration of renewables in all three sectors: power, transport and heat,” the IEA said.
Particularly in the transportation segment, the green energy industry is facing challenges from consistently low oil pricesCLZ6, -0.53% LCOZ6, -0.66% . The share of biofuels, for example, in transport fuels is expected to rise only marginally to 4% in 2021 from 3% in 2015.
Green energy stocks rose in Europe after the report was released, with shares of wind-turbine makers Vestas Wind Systems AS VWS, -0.36% and Gamesa Corporacion Tecnologica SA GAM, +0.96% 1% and 0.5% higher, respectively, while SolarWorld AG SWVK, -1.21% gained 1%.
U.S. renewables stocks were little changed ahead of the bell, including SolarCity Corp. SCTY, +0.87% and SunEdison Inc.SUNEQ, +30.56% . The Guggenheim Solar ETF TAN, -2.38% and PowerShares Clean Energy Portfolio PBW, +0.00% were also showing no action.
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