Solar is Now Cheapest Electricity in History, Confirms IEA - 2020

Solar Energy / Economics

Carbon Brief editors opine in 2020 that according to the International Energy Agency’s World Energy Outlook 2020. The 464-page outlook, published today by the IEA, also outlines the “extraordinarily turbulent” impact of coronavirus and the “highly uncertain” future of global energy use over the next two decades. Reflecting this uncertainty, this year’s version of the highly influential annual outlook offers four “pathways” to 2040, all of which see a major rise in renewables. The IEA’s main scenario has 43% more solar output by 2040 than it expected in 2018, partly due to detailed new analysis showing that solar power is 20-50% cheaper than thought.

Despite a more rapid rise for renewables and a “structural” decline for coal, the IEA says it is too soon to declare a peak in global oil use, unless there is stronger climate action. Similarly, it says demand for gas could rise 30% by 2040, unless the policy response to global warming steps up. This means that, while global CO2 emissions have effectively peaked, they are “far from the immediate peak and decline” needed to stabilize the climate. The IEA says achieving net-zero emissions will require “unprecedented” efforts from every part of the global economy, not just the power sector.

For the first time, the IEA includes detailed modeling of a 1.5C pathway that reaches global net-zero CO₂ emissions by 2050. It says individual behavior change, such as working from home “three days a week”, would play an “essential” role in reaching this new “net-zero emissions by 2050 case” 

Future Scenarios
The IEA’s annual World Energy Outlook (WEO) arrives every autumn and contains some of the most detailed and heavily scrutinized analysis of the global energy system. Over hundreds of densely packed pages, it draws on thousands of datapoints and the IEA’s World Energy Model. The outlook includes several different scenarios, to reflect uncertainty over the many decisions that will affect the future path of the global economy, as well as the route taken out of the coronavirus crisis during the “critical” next decade. The WEO also aims to inform policymakers by showing how their plans would need to change if they want to shift onto a more sustainable path.

This year it omits the “current policies scenario” (CPS), which usually “provides a baseline…by outlining a future in which no new policies are added to those already in place”. This is because “[i]t is difficult to imagine this ‘business as-usual’ approach prevailing in today’s circumstances”.

Those circumstances are the unprecedented fallout from the coronavirus pandemic, which remains highly uncertain as to its depth and duration. The crisis is expected to cause a dramatic decline in global energy demand in 2020, with fossil fuels taking the biggest hit.

The main WEO pathway is again the “stated policies scenario” (STEPS, formerly NPS). This shows the impact of government pledges to go beyond the current policy baseline. Crucially, however, the IEA makes its own assessment of whether governments are credibly following through on their targets.

Taken together, the rapid rise of renewable energy and the structural decline for coal help keep a lid on global CO₂ emissions, the outlook suggests. But steady demand for oil and rising gas use mean CO₂ only flattens off, rather than declining rapidly as required to meet global climate goals.

These competing trends are shown in the chart, below, which tracks primary energy demand for each fuel under the IEA STEPS, with solid lines. Overall, renewables meet three-fifths of the increase in energy demand by 2040, while accounting for another two-fifths of the total. Smaller increases for oil and nuclear are enough to offset the decline in coal energy use.

[Here is an example of IEA bias in this report: "Although nuclear would contribute a small part of the increase in zero-carbon generation by 2030 in the NZE2050, the IEA notes that the “long lead time of large-scale nuclear facilities” limits the technology’s potential to scale more quickly this decade." This is old information that ignores the SMRs and new technology coming on quickly. This IEA report also does not mention increasing O&M costs of large solar and wind projects.]