- The fast growth of renewable energy over recent years offers us a stronger chance of avoiding the worst effects of climate change.
- Last year, solar and wind combined made up 8.7% of global electricity generation, compared to 1.7% in 2010.
- Prediction models often assume that the growth of solar and wind will be linear; however, evidence shows this growth is actually exponential.
- This piece explores the reasons behind solar and wind's growth and how we can continue to accelerate this.
The rapid growth of solar and wind power in recent years has breathed hope into global efforts to reduce greenhouse gas emissions and limit the most dangerous effects of climate change.
In 2010, solar and wind combined made up only 1.7% of global electricity generation. By last year, it had climbed to 8.7% — far higher than what had previously been predicted by mainstream energy models. For example, in 2012 the International Energy Agency expected that global solar energy generation would reach 550 terrawatt-hours in 2030, but that number was exceeded by 2018. These models often assume that the growth of solar and wind will be linear, but in reality the growth has been exponential.
Understanding the exponential growth of renewable energy in the past gives us reason to be more optimistic about how fast it can ramp up to meet climate goals in the future. This article explains the reasons behind solar and wind’s growth, how much progress has already been made, and what’s needed to go even further.
Reasons behind the growth of renewable energy
Falling costs have been the biggest factor in the explosion of renewable energy. Since 2010, the cost of solar photovoltaic electricity has fallen 85%, and the costs of both onshore and offshore wind electricity have been cut by about half. Both of these renewable sources are now cost-competitive with fossil fuel electricity.
Costs have fallen so dramatically due to positive feedback loops. The more that renewable energy technologies are deployed, the cheaper they become due to economies of scale and competitive supply chains, among other factors. These falling costs in turn spur more deployment. For example, in the past decade, each time that the amount of solar capacity deployed worldwide has doubled, the price of installing solar capacity has declined by 34%. As renewable energy technologies are modular and standardized, cost improvements or technological advances made in one place can be quickly copied elsewhere.
Other aspects of renewable energy deployment are also self-reinforcing. As renewables grow in popularity, expand their political influence, and attract more finance, it becomes easier to leverage further policy support and finance. As financiers become more familiar with the technical and project risks of renewable energy, the cost of capital has decreased. In addition, evidence suggests the spread of renewable energy is socially contagious — when one house installs rooftop solar, the neighbors who see it and talk about it are more likely to install rooftop solar themselves.
Policy support has also been essential for the growth of renewable energy. Renewable energy tax credits and subsidies, feed-in tariffs, and competitive auctions have all helped reduce costs and spur deployment. And government investment in research and development has been essential in promoting innovation in renewable energy. China, Europe and the United States have become leaders in solar and wind through policy support, and worldwide, 165 countries have targets to increase renewable energy. It’s not just countries either; more than 600 cities worldwide have 100% renewable energy targets.
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Timeline of renewable energy’s growth
Wind energy first took off in the early 2000s, while solar energy took off about a decade later but has been growing even faster than wind. The factors driving the growth in renewable energy have been systemic, but certain key moments have reflected the larger trends or acted as turning points in renewable energy adoption.
Understanding S-curve growth dynamics
A 2020 report from Climate Action Tracker includes a global decarbonization target for the share of renewable electricity to limit global warming to safe levels. To be aligned with the 1.5 degrees C pathway, renewables will need to reach 55 to 95% of global electricity by 2030 and 98 to 100% by 2050, with solar and wind making up the dominant share, complemented by other renewables. These targets are closely tied with the UN High Level Champions’ Race to Zero campaign, which has been working to align key sectoral actors on breakthrough actions and ambitions that can catalyze change, and the State of Climate Action 2021 report, which will be published in November ahead of COP26.
Reaching such high levels of renewables sounds daunting, but is less so when you consider the power of exponential growth of renewable energy. The market share of solar and wind in global electricity generation grew at a compound average annual growth rate of 15% from 2015-2020. If exponential growth continued at this rate, solar and wind would reach 45% of electricity generation by 2030 and 100% by 2033.
Problem solved? Not quite. Historically, technologies that are growing exponentially have a “top speed” for growth — a maximum growth rate that is achieved, that lasts awhile and then slows down as it approaches 100% adoption. This pattern is known as an S-curve.
A new article in Nature Energy attempts to find out what that top speed is for solar and wind energy growth by looking at the countries that are furthest along and have already reached the steepest part of the S-curve for either solar or wind.
They find that in the countries where solar growth has stabilized at a maximum rate, that growth has been on average 0.6% of the total electricity supply per year. This is lower than the 1.4% annual rate needed globally to meet the 1.5 degrees C goal of the Paris Agreement, according to their own benchmarks. Chile is the only country with a mature solar market where the maximum growth rate has been higher than what’s needed.
Meanwhile, in the countries where onshore wind growth has stabilized at a maximum rate, that growth has been on average 0.8% of the total electricity supply per year, which is lower than the 1.3% annual rate needed globally. Only a handful of countries with mature wind markets have had maximum growth rates higher that what’s needed, including Ireland, Portugal, and Brazil.
Countries like these prove that the rapid growth of renewable energy can be achieved — but the key will be to sustain high maximum growth rates and do it globally, not just in select countries with ideal conditions.
What will happen to renewable energy in the future?
Despite clear momentum, it does appear that the growth of renewable energy must accelerate, though much uncertainty remains over how much acceleration is needed.
The graphic below illustrates one potential pathway for how solar and wind could reach the climate targets needed to limit global warming to 1.5 degrees C. This is not the only shape an S-curve could take to meet the targets, nor necessarily the most likely, but it gives a general sense of what’s needed.
More policy support is needed to make sure that the renewable energy adoption follows an S-curve and grows fast enough to meet the Paris Agreement’s goals. All countries, including those that are not yet leaders in this sector, will need to incentivize rapid deployment and keep reducing costs.
Governments should set targets and requirements for the use of renewable energy. Currently these are most common for the power sector, but they should also be applied to other end-use sectors like heating and cooling, industry and transportation. Governments will also need to increase the flexibility of the electricity grid to accommodate renewables, for example by investing in long-range transmission lines and introducing new energy storage technologies.
What's the World Economic Forum doing about the transition to clean energy?
Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.
Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.
Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.
Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.
To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.
Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.
Is your organisation interested in working with the World Economic Forum? Find out more here.
Despite the challenges that need to be overcome, non-linear change is a powerful force. If we time-traveled to a decade ago, energy industry experts would be shocked to hear how much renewable energy costs have fallen and how the yearly growth of renewable energy deployment has quadrupled. How shocked will we be in 2030? That depends on what we do today.