The International Energy Agency released its Renewables 2022 report this month, which blames a global energy crisis on the invasion of Ukraine.
It also declares high energy costs to be a great opportunity for growth in renewable energy, on the assumption that greater amounts of intermittent wind and solar will increase energy supply and bring down costs.
The report forecasts that in the next five years, wind and solar will grow as much as they did in the past 20 years.
Energy Versus Electricity
The report lays out a five-year outlook with rosy predictions of a future of extreme solar and wind energy growth, along with some non-intermittent sources such as hydropower, biofuels, geothermal and concentrated solar power, which is a facility that reflects sunlight to a central point to generate heat.
In that five-year period, the report expects renewables to account for more than 90% of the global electrical generation capacity expansion.
Perception Vs. Reality
But what the report says and what’s reported in the media are very different.
The Washington Post covered the report with the headline, “Renewables to overtake coal as world’s top energy source by 2025, IEA says.”
The Post is equating electrical generation with energy use. Electricity is only about 20% of the world’s energy use. The vast bulk is industrial heating, which comes almost entirely from coking coal and natural gas; and transportation, of which wind and solar provide a barely measurable amount.
As for the growth of wind and solar the IEA forecasts, Mark Mills, senior fellow at the Manhattan Institute and a faculty fellow at Northwestern University’s McCormick School of Engineering and Applied Science, said it’s possible, but improbable.
What makes it unlikely, Mills said, is that the cost of wind turbines and solar panels are rapidly increasing. Wind turbine orders in Europe fell 36% in the third quarter of 2022 over the previous year.
“In a world of more expensive machines at higher interest rates, developers are canceling big projects,” Mills said. “There’s something going on, a disconnect, if you like.”
The other factor that will undermine the forecast coming true is the cost of minerals. The supply of rare earth minerals, copper, lithium, nickel and a host of other materials needed to produce wind turbines and solar panels is not rising at the rate of this demand.
These minerals also are needed for other goods, such as consumer appliances and electronics.
“Either have to build fewer wind turbines and solar arrays, or build fewer appliances in homes. We’re going to have to make choices. That kind of world is emerging,” Mills said.
The other problem is the transmission capacity that will need to be constructed to connect wind and solar farms to consumers. These structures draw upon their own supply of minerals and often take long permitting times before construction can begin.
‘Myopic And Dishonest’
Writing in Forbes, Dr. Tilak Doshi, a Singapore economist with 25 years experience working in the oil and gas sector and think tanks throughout the world, said that blaming the war in Ukraine for the European energy crisis is “myopic and dishonest.”
As the world came out of COVID lockdowns, Doshi wrote, natural gas and crude oil prices were already rapidly increasing well before the invasion. The demand grew, but policies kept the supply of oil and gas low.
Mills said there was nothing about the invasion of Ukraine that changed the demand for energy.
“It’s a dislocation on geopolitical dependencies. Essentially, we’ve realigned where gas and oil go — so who’s selling and who’s buying,” Mills said. “But if you look at the overall numbers, the world is using more oil and gas now than it was before the Ukraine war.”
Dan Kish, senior fellow with the Institute of Energy Research, pointed out that China is building coal-fired generation plants at breakneck speed. In the next decade, it will have an increase of 270 gigawatts of coal-fired generation capacity, which is more than the total coal-fired generation capacity the U.S. now has.
These plants, Kish said, are state-of-the-art, highly efficient coal plants.
“They will last 50, 60, 70 years,” Kish said.
India also is greatly increasing coal-fired generation.
Should the IEA’s forecast turn out accurate, wind and solar will increase from 3% of the world’s energy use to 6%. With the world’s most populous nations rapidly increasing their coal use, it’s hard to justify that renewables will rival fossil fuels anytime soon.