Recent reports about booming oil and gas production in the U.S. have helped to steal the spotlight somewhat from the renewable energy sector. But some less trumpeted projections from the International Energy Agency's World Energy Outlook 2012 could help to bring back a little of that excitement.
The Paris-based organization predicts that, by 2035, renewables could rival coal as the largest source of the world's electricity.
Report sees big changes to come
To many Americans, the biggest news coming out of the group's latest annual projections was that the U.S. is set to become the largest oil producer in the world - it already passed Russia this year with the help of North Dakota's Bakken shale, but growing offshore and unconventional production should push the country past even Saudi Arabia.
While any increase in oil output is far from a guarantee of lower gasoline prices, so-called "energy independence" has always been a popular refrain for many American politicians. And other estimates have already predicted the reemergence of the American market. The U.S. Energy Information Administration suggested earlier this year that the country would become the globe's top producer in roughly the same timeframe as the IEA projects.
But probably the more interesting prediction the IEA made is the one that differs notably from its counterpart across the Atlantic.
In its International Energy Outlook 2011, the EIA predicts that worldwide renewable energy generation will grow to 8.2 trillion kilowatt-hours in 2035, more than double the 3.7 trillion kilowatt-hours from 2008. With a dramatic growth in overall power demand, that rise is enough to give renewables a bit more than 23 percent of the total power market - up 4 percentage points from 2008.
By contrast, the IEA estimates in its baseline model that the world will add around 3 terawatts of renewable energy capacity between now and 2035, accounting for more than half of all added generation in the world. This massive influx of renewable sources, including huge growth in everything from hydroelectricity and bioenergy to wind and solar, brings renewable energy's share of the world market from around 20 percent today to 31 percent at the end of outlook period.
Simultaneous pressure from the natural gas industry will help to erode coal's share of generation capacity from around two-fifths to roughly one-third, though a major emphasis on energy efficiency will also play a major role.
Rising renewables, from hydro to solar
The shift is expected to come from different sources depending on the country. Developing economies will see the largest growth by far - 41 percent - from hydroelectric plants. But the developed world - specifically the Organisation of Economic Co-operation and Development - is mainly going to keep moving forward with the newer technologies like wind (47 percent), bioenergy (16 percent) and solar photovoltaics (15 percent).
"A steady increase in hydropower and the rapid expansion of wind and solar power has cemented the position of renewables as an indispensable part of the global energy mix," the IEA said in its report. "Renewables become the world’s second-largest source of power generation by 2015 (roughly half that of coal) and, by 2035, they approach coal as the primary source of global electricity."
The shorter-term prediction meshes fairly well with the EIA's expectations. The American agency expects renewables to take the second place spot in 2015 and hold it until 2035, when natural gas finally pushes it into third. But over the long term, the two organizations' expectations differ fairly markedly, for coal power in particular. By 2035, the EIA expects coal will remain the top power source by a wide margin, producing nearly 37 percent of all electricity, compared to 24 percent and 23 percent for natural gas and renewables, respectively.
The key, as it usually is with renewable energy, lies in differing perspectives on the regulatory landscape and the availability of subsidies. The EIA expects that federal subsidies in the U.S. will end - as it looks like they will for wind come January - and the agency points out that government support abroad is somewhat inconsistent. Renewables subsidies in Europe are under fire after feed-in tariffs led to varying degrees of oversupply in Spain, Italy and Germany, while both Spain and Germany have been encouraging renewed investment in coal-fired generation.
The IEA agrees in part, noting that subsidies for fossil fuels worldwide reached $523 billion in 2011, up 30 percent from the year before and well more than spending on renewables - only around $88 billion that year. But the IEA predicts a dramatic rise in support for renewables over the course of the next two decades plus, nearly tripling to $240 billion by 2035.
Nature of power market in the balance
And the debate is far from academic. Power buyers, utilities and even manufacturers rely on predictable power data to guide their own activities. Generally, the demand picture is the most variable, depending in large part on day-to-day and hourly changes in the weather. But as more countries, particularly in the OECD, more extensively adopt intermittent renewable energy sources like wind and solar, the production picture will steadily become just as variable as demand.
Unavoidably, that means that electricity prices will rise worldwide, as much as 15 percent by 2035 by the IEA's estimates. Combined with the need for capital-intensive new production capacity and the growing number of carbon pricing schemes, some regions are likely to see even more dramatic price spikes, particularly Europe and Japan.
The saving grace from the report is that the agency is projecting the vast majority of viable efficiency projects to go ignored. While that might seem a negative, it gives policymakers and businesses a clear target for improvement over the IEA's model.
"Action to improve energy efficiency could delay the complete 'lock-in' of the allowable emissions of carbon dioxide under a 2oC trajectory – which is currently set to happen in 2017 – until 2022, buying time to secure a much-needed global climate agreement. It would also bring substantial energy security and economic benefits, including cutting fuel bills by 20 percent on average," explained Fatih Birol, IEA Chief Economist and the report's lead author.