Solar power expected to outpace coal within five years, says IEA

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Solar energy is experiencing a big moment as the energy crisis promotes a shift to renewable energy with the Ukraine War. According to the forecast of the IEA (International Energy Agency), the source should exceed energy production with coal by 2027.

Renewable energy in general will become the biggest source of global electricity generation in early 2025, the IEA said, and the world will add twice as much renewable capacity from 2022 to 2027 as in the previous five years.

Not only are countries pushing the “expansion of new renewable energy” to meet climate targets, energy security and the need to “diversify” China’s renewable supply chains have become increasingly important, said the executive director of the IEA, Fatih Birol, in an interview.

“There is strong competition among the world’s largest economies to take a leading position in the industry’s next chapter,” he said, whether in solar, wind, batteries or electric vehicles.

The rush to replace oil and gas that no longer comes from Russia and to build domestic renewable energy sectors has led to a push for industry incentives and subsidies.

The United States is moving forward with its landmark climate package, the $369 billion Reduction Inflation Act, which includes incentives for solar energy manufacturing through the $10 billion allocated for clean energy tax credits generally and $27 billion set aside in a “green bank” to support clean energy projects in communities.

Between 2022 and 2027, global renewable energy capacity will increase by 2,400 gigawatts, equivalent to China’s current energy capacity, the IEA estimated in its latest annual report on renewable energy. That’s 30% higher than the agency’s forecast a year ago.

The US and India are expected to lead the way in diversifying the solar manufacturing supply chain, the IEA said, reducing China’s dominance. Solar investment by the two countries is expected to reach nearly $25 billion between 2022 and 2027, a sevenfold increase over the last five years.

China, however, will remain a “dominant player”, the IEA said, with its market share estimated to be around 75% in 2027, compared to 90% today.

The IEA warned in June that China’s dominance of the solar panel supply chain could slow the global shift to cleaner energy. The country will account for nearly half of newly added renewable energy by 2027, aided by policies included in China’s latest five-year plan, the agency said this week.

The success of solar energy is expected to accelerate in the next couple of years. Iberdrola, Europe’s leading renewable energy company, plans to “more than double our global solar capacity, to 10.6 gigawatts, by the end of 2025,” said Xabier Viteri Solaun, the company’s director of sustainable energy.

Solar projects can be developed and built faster than other renewable sources, he added, and the company is “seeing an increase in solar capacity being added to new and existing wind farms”.

Even faster growth could come if European countries make it easier to obtain permits for new projects, improve incentives for rooftop solar installations and offer better terms in renewable energy auctions, the IEA noted.

Despite generally encouraging trends, the European wind industry is facing a “major challenge”, Birol said. The combination of Chinese and US competition and rising raw material and supply costs are creating financial stress.

Birol also repeated warnings about replacing Russia’s fossil fuels with new oil and gas projects. Supply must come from existing fields, he said, while measures must be taken to reduce demand.

“Russia’s invasion of Ukraine should not be a justification for large-scale investments in fossil fuels,” he said, as this would not only put “climate goals at risk” but would end up as stranded assets.

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