Renewable energies will shrink the dominant share of fossil fuels in the global electricity market for the first time this year.
That’s the key finding from Ember, a leading London-based energy think tank, which on Wednesday published its first comprehensive Global Electricity Review, analyzing data from 215 countries.
Thanks to the rapid pace of new solar and wind capacity, renewables have captured almost all of the growth in electricity demand for five years while fossil fuels have stagnated.
But this year, Ember said, they will also reduce fossil fuels’ market share by 2 percent – the start of a decades-long process that will push them out of electricity production entirely in three dozen developed economies.
Renewable energy grew at an average rate of 3.5 percent per year over the past decade, compared with 1.5 percent per year in the previous decade, as prices for photovoltaic panels and wind turbines fell and their productivity soared.
Ember noted that the world already produced a record 30 percent of its electricity from carbon-free sources last year.
Several other factors suggest 2024 will be a turning point, said Dave Jones, one of the report’s lead authors.
On the one hand, installed capacity lagged due to light winds and droughts that affected hydropower production – conditions that are not expected to last.
“There is a certain tipping point for 2023 itself,” Jones told Al Jazeera. “The expansion of solar power generation only took place towards the end of the year and it will not be until 2024 that we will express the full power of this expansion in electricity generation.”
In addition to the year-round impact of newly installed capacity, Jones expects a 50 percent plunge in solar panel prices in the final months of 2023 will also result in record new installations.
Ember estimates that as a result, renewable energy generation will deliver a massive 1,221 terawatt-hours of electricity this year, compared to 513 TWh last year.
“What will happen in 2024 will be a next-level renewable energy boom, meaning for the first time [the] Fossil production will decline,” Jones said.
That means trouble for coal-fired power plants, but it could also mean trouble for natural gas, he said.
“Gasoline is going to be a rude awakening,” Jones said. “The gas industry used to really look forward to the collapse of coal because it would create a new market for them, but actually… wind and solar are replacing coal and gas.”
Ember’s forecast is based on hydropower recovering from the five-year drought and nuclear power continuing to provide just over 9 percent of the world’s electricity.
Europe, which leads the world in clean energy production, could have progressed even faster if Germany had not decided to shut down its nuclear power plants after Japan’s Fukushima accident in 2011, said Trevelyan Wing, a fellow at the University of Cambridge’s Center for Geopolitics, with a focus on energy is important.
But the same forces that shut down nuclear power have boosted renewable energy, he told Al Jazeera.
“The energy transition that is taking place in Germany is largely thanks to the anti-nuclear power movement. [It] really led the community energy movement that installed solar panels on roofs and really enabled the near exponential expansion of renewables in the energy sector.”
The key role of China
China plays an outsized role on both sides of the energy transition.
Last year it produced about 29 percent of global greenhouse gas emissions, twice as much as the runner-up – the United States.
But the company also installed half of the world’s solar panels and 60 percent of all wind turbines, making it a pioneer in the transition to green energy. It produces up to 85 percent of the solar panels that the rest of the world installs.
It is also a leader in the electrification of transport and heating, two of the most polluting sectors of the economy after electricity generation. Last year it put more electric vehicles on the road and heat pumps in homes than the rest of the world combined and was responsible for almost all of the new electricity demand.
Ember welcomes this, saying: “China’s need to find new export markets represents a tremendous opportunity for countries around the world to take advantage of low-cost and available solar energy compared to other sources of generation.”
But not everyone is happy with China’s state-led model of renewable energy development.
“At the moment, the very widespread adoption of renewable energy, particularly solar energy, is partly based on the very high subsidies that China provides to photovoltaic infrastructure,” energy analyst Miltiadis Aslanoglou told Al Jazeera.
“Their goal is to dominate all competitors and push them off the map in order to have a technology monopoly in the coming years.”
The European Union and the United States, leading markets for Chinese photovoltaics, are both beneficiaries and victims, Aslanoglou said.
“The accusation is that all value creation in China occurs at the expense of [what would be] a competitive renewable energy market for everyone else due to the many government subsidies.”
That has knock-on effects, Aslanoglou said, as power grids are unprepared to handle rising loads and potentially upending the business plans of expensive gas terminals, pipelines and distribution networks that take decades to recoup investments.
Nikos Tsafos, chief energy adviser to Greek Prime Minister Kyriakos Mitsotakis, believes this is a far better problem than climate change.
“We know that renewable energy is the cheapest way to generate new energy in most countries,” he told Al Jazeera. “For a country like Greece that imports fossil fuels, renewable energy is cheaper and more reliable, and that creates momentum that is hard to stop.”
Under Mitsotakis, Greece has made the transition quickly, producing 57 percent of its electricity from renewables last year and aiming to produce 80 percent by the end of the decade. For Greece, which once imported almost all of its energy, this means security of supply and price stability and underpins hopes for an economic comeback from the 2010 bankruptcy in the coming decade.
After struggling to stimulate and grow a renewable energy industry, Tsafos believes Europe has finally arrived at a very desirable problem: how to absorb the clean electricity it produces.
“There are hours when renewable energy has no market value,” Tsafos said. “The question is no longer whether renewable energy is competitive, but rather how to reform the system to absorb it.”
Like China, Europe and the USA have also opted for state solutions.
The EU Recovery and Resilience Fund 2020 will provide 270 billion euros ($290 billion) in subsidies and loans for renewable energy installations and grid expansion. Two years later, US President Joe Biden’s Inflation Reduction Act allocated $783 billion for renewable energy and measures to curb climate change.
“Some companies will close, others will emerge,” Tsafos said. “The energy transition is inevitable and not something that can be delayed or prevented. When something creates a new dependency, you have to manage the trade-offs.”