This article first appeared on Trend Investing on August 17, 2020; therefore all data is as of this date.
It is starting to look like renewable energy and electric vehicles [EVs] will be the two largest trends of the 2020’s decade. Certainly in the USA, if Biden is elected, he plans for “the U.S. to be a carbon pollution-free power sector by 2035.” This will have to be mostly renewable energy sources. Given that in 2019 just 17% of US electricity generation came from renewables (and only 11% of total energy consumption), to ramp up towards 100% renewables in just 15 years would lead to a massive boom in solar and wind installations. Meanwhile China and Europe continue to lead the way with solar, wind, and EV adoption.
In 2019 it was reported that:
Global supplies of renewable electricity are growing faster than expected and could expand by 50% in the next five years, powered by a resurgence in solar energy.
As solar and wind have become the cheapest forms of energy production the IEA reported that “solar, wind and hydropower projects are rolling out at their fastest rate in four years.”
IEA’s executive director, Fatih Birol stated:
This is a pivotal time for renewable energy……Technologies such as solar photovoltaics [PV] and wind are at the heart of transformations taking place across the global energy system. Their increasing deployment is crucial for efforts to tackle greenhouse gas emissions, reduce air pollution, and expand energy access.
Renewable energy facts
- In 2018 renewable energy made up just 12.9% of global power generation.
- BNEF – In 2019, the world financed $282 billion of renewable capacity, with onshore and offshore wind leading the way at $138 billion followed by solar at $131 billion.
Renewable energy growth forecasts
- International Energy Agency IEA [USA] – New electric generating capacity in 2020 will come primarily from wind (44%) and solar (32%).
- The IEA stated in their World Energy Outlook 2019: “The (global) share of renewable generation could nearly double, from 26% today to 44% by 2040. Combined, solar PV and wind generation’s share could surge from 7% to 24%.”
- IEA October 2019 Renewables report – “(Global) Solar PV is set to more than double in capacity in the next five years…..Solar PV alone accounts for almost 60% of the expected growth, with onshore wind representing one-quarter.
- BNEF forecast – “Wind and solar are set to contribute 48% of generation by 2050.”
IEA forecasts global renewables to surge led by solar & wind
Source: PowerMag courtesy IEA
Bloomberg’s forecasts – About half of all energy production form renewables by 2050 (renewables will be mostly wind & solar)
BNEF’s above forecasts in table format
Government support and targets for renewables
- China is aiming to reach 28.2% renewable energy in 2020, if excluding hydro would reach 10.8% renewables (mostly solar & wind). China has been subsidizing renewables since 2011, but now that renewables are reaching “grid parity” they plan to phase out these subsidies in 2020. China’s 14th 5 year plan to be announced in April 2021 is thought that it will focus on China’s autonomy, that is China will rely more on itself for development by cutting reliance on the US for technology supply and exports. At the same time, China will keep its “opening up and reform” policy framework to maintain its central place in global supply chains, particularly among Asian and European countries, and offset rising “decoupling” risks with the US. China plans to focus on higher end technology development such as EVs, autonomous vehicles, AI etc. It is expected that China will continue their focus towards a cleaner environment. Already in 2020 China increased penalties on emissions. China wants new energy vehicle sales in 2025 to be 25% of all car sales.
- Europe – The Renewable Energy Directive sets rules for the EU to achieve its 20% renewables target by 2020. This is followed by a more ambitious target of 32% renewable energy by 2030. Europe is rapidly moving towards clean energy and so far in 2020 are leading in EV sales with high subsidies in Germany and France.
- USA – The USA has a 2020 renewables energy target of 20%. If elected, Biden plans a massive $2 trillion green infrastructure and jobs plan over his first term in office. The pillar is to ensure the U.S. has a carbon pollution-free power sector by 2035 and reaches net-zero emissions no later than 2050. Biden’s plan would push to make commuter trains, buses and passenger vehicles run on electricity or clean fuel.