Is The Demand For Renewable Energy Increasing?
Renewable energy comes from naturally replenishing sources such as sunlight, wind, water, and geothermal heat. It includes resources like solar power, hydropower, wind energy, and biomass. Renewable energy is considered clean energy because it produces little to no greenhouse gas emissions that contribute to climate change. With rising concerns about the impacts of burning fossil fuels like coal and natural gas, there is increasing interest in transitioning to renewable energy sources.
However, renewable energy made up only 11% of total U.S. energy consumption in 2019, while fossil fuels accounted for 80% (1). This raises the question – is demand for renewable energy increasing despite fossil fuels still dominating global energy supply? This article will examine the growth in demand for renewable energy worldwide and the key factors driving this trend.
Factors Driving Renewable Energy Demand
There are several key factors that are driving the rapid growth in renewable energy demand worldwide:
Reducing carbon emissions and mitigating climate change have become top priorities for many governments and corporations. As the impacts of climate change intensify around the world, there is growing urgency to transition away from fossil fuels and towards zero-emission renewable energy sources like wind, solar, and hydroelectric power. According to the International Energy Agency (IEA), renewables are set to account for almost 95% of the increase in global power capacity through 2026, with solar PV alone providing more than half of renewable capacity growth [1].
The costs of renewable energy technologies, especially solar and wind, have declined dramatically in the past decade making them more economically competitive with fossil fuels. Improvements in technology and manufacturing have driven down the costs per kWh for solar by over 90% since 2009 and for wind by 70% in the same time period [2]. As costs continue to fall, it makes the economics of switching to renewables very compelling.
Government incentives, tax credits, and favorable renewable energy policies have accelerated the transition in many countries. Governments from China to the EU to the U.S. have set ambitious renewable energy targets and enacted policies to incentivize greater investment in wind, solar, hydro, and other renewable technologies.
Growth of Solar and Wind
Renewable energy sources like solar and wind power have seen exponential growth in recent years. According to the International Energy Agency (IEA), the world added a record 384 gigawatts (GW) of renewable electricity capacity in 2022, over 80% of which came from solar and wind (IEA). This represents an increase of 13.5% from 2021. The IEA projects global renewable electricity capacity will reach 4,500 GW by the end of 2023, with solar and wind accounting for over 90% of renewable capacity additions (IEA).
A key driver of this growth has been rapidly decreasing costs, especially for solar photovoltaics. According to BloombergNEF, the global benchmark levelized cost for onshore wind declined 15% between 2020-2022 while utility-scale solar PV costs fell 13% (BloombergNEF). Further cost reductions are expected as technology improves.
Looking ahead, wind and solar are forecast to generate over one-third of global electricity by 2030. The International Renewable Energy Agency predicts solar and wind will supply up to 39% of total electricity generation by 2030, more than tripling their share from 2020 levels (Reuters). This continued exponential growth reflects improving economics as well as strong policy support in many countries.
Increase in Electric Vehicles
Global sales of electric vehicles are rising rapidly as more models become available and governments provide incentives for adoption. According to the International Energy Agency, electric car sales hit 6.6 million in 2021, almost doubling from 2020. Demand is expected to leap 35% in 2023 after record sales in 2022.1 Electric vehicles accounted for almost 9% of global car sales and about 1% of all vehicles on the road in 2021.
Charging infrastructure is also growing to meet the needs of EV drivers. The number of public charging points worldwide exceeded 1 million in 2021, a 40% increase from 2020. Companies like ChargePoint and EVgo are expanding charging networks. Home charging installation is also rising. However, more infrastructure is still needed for mass EV adoption.
The rise of EVs will significantly impact electricity demand. According to one analysis, the global charging load could reach over 5,000 TWh by 2040 under an ambitious electrification scenario, with private home charging accounting for the majority.2 Managing this new demand via smart charging and vehicle-grid integration will be crucial.
Corporate Renewable Energy Procurement
Major corporations have been increasingly making bold commitments to transition to 100% renewable energy. Over 300 companies globally have joined the RE100 initiative and pledged to source 100% renewable power by 2050, including Google, Apple, Facebook, Walmart, and Coca-Cola [1]. Companies utilize a combination of onsite renewable energy projects, like rooftop solar, as well as offsite options through power purchase agreements where they contract for electricity from a specific renewable energy project.
Some critics argue that corporate renewable procurement claims can be misleading if the renewable energy is not additional – meaning the renewable energy project would not have been built without the corporation’s support [2]. Companies must ensure their procurement directly leads to more renewable energy on the grid. The level of additionality depends on factors like the contract length, location, and structure.
Policy Support
Government policies have been a major driver of increased renewable energy demand. Many countries have enacted policies like tax credits, incentives, and mandates to support renewable energy growth.
One key policy is renewable portfolio standards (RPS), which require utilities to source a minimum percentage of their electricity from renewable sources. As of 2021, RPS programs existed in over 100 jurisdictions globally, covering over 70% of U.S. retail electricity sales.[1] These mandates have significantly increased demand for renewable energy.
Tax credits and other financial incentives have also boosted renewable energy demand. In the U.S., the investment tax credit (ITC) and production tax credit (PTC) have incentivized tens of billions in renewable energy investments.[2] Many countries provide feed-in tariffs, rebates, grants and other incentives to make renewable power more financially attractive.
Fossil fuel subsidy phase outs are another policy lever. Globally, governments spend over $400 billion annually subsidizing fossil fuels.[3] Phasing out these subsidies improves the competitiveness of renewable energy.
Public Opinion
Public opinion polls show high levels of support among Americans for renewable energy and taking action on climate change. A Pew Research Center survey from March 2022 found that 69% of Americans say the more important energy priority for the country should be developing renewable sources like wind and solar power. Only 27% prioritized fossil fuel sources like oil, coal and natural gas.
However, the Pew survey also found concerns among some Americans about the costs associated with transitioning to renewable energy. Just 31% said U.S. policies aimed at reducing the impacts of climate change would bolster economic growth and provide new jobs. A majority of 53% felt such policies would slow the economy and cost jobs.
According to a 2022 Clean Power poll, 80% of voters believe clean energy like wind and solar is as reliable or more reliable than traditional fossil fuel generation. But addressing costs remains an important factor in gaining wider public acceptance.
Sources:
https://www.pewresearch.org/science/2022/03/01/americans-largely-favor-u-s-taking-steps-to-become-carbon-neutral-by-2050/
1. What Americans think about an energy transition from fossil fuels to renewables
Poll: National survey shows strong support for clean power among American Voters
Challenges and Counterarguments
Despite the strong growth and momentum behind renewable energy, there are still challenges and counterarguments that need to be addressed.
One key challenge is intermittency and grid integration. Renewable sources like wind and solar are variable and weather-dependent. Integrating large amounts of renewables requires grid flexibility, energy storage, and smart grid technologies to balance supply and demand (source).
Another counterargument against renewables is their upfront costs. While costs have declined dramatically in recent years, renewable projects require large upfront capital expenditures. However, over the lifetime of a project, renewable energy is cost-competitive with fossil fuels (source).
Finally, the incumbency of fossil fuels presents a barrier. The fossil fuel industry has vast economic, political, and infrastructural resources they can leverage to slow the transition. But despite these challenges, market forces, policy support, and public demand for renewables continue to overcome these barriers.
Developing World
Energy access remains a major challenge in developing countries, where hundreds of millions still lack basic electricity services. However, these nations also represent a major opportunity for renewable energy growth and adoption. Rather than following the fossil-fuel dependent path of more industrialized nations, many developing countries have the potential to “leapfrog” directly to renewable energy as their electricity grids expand.
For example, Africa has abundant solar and wind resources that could help power economic development through clean energy rather than dirty fuels. With the right financial and technical support, sub-Saharan Africa could meet nearly 70% of its electricity needs from renewables by 2030, according to IRENA estimates (https://dspace.knust.edu.gh/bitstreams/1ca132b3-cbc2-484a-a909-479e432755d4/download).
Key enablers for developing nations to transition to renewable energy include access to financing, technology transfer, and technical skills training. International climate funds dedicated to renewable energy expansion, like the Green Climate Fund, can provide capital to overcome initial cost barriers. Partnerships with more industrialized nations can facilitate knowledge sharing around grid integration, storage, and renewable energy project development. With targeted financial and technical assistance, developing countries have the potential to be leaders in Building a renewable energy future.
Conclusion
As we’ve explored, multiple factors have driven increased demand for renewable energy and are expected to continue to do so moving forward. The costs of solar and wind power have declined dramatically, making them more cost-competitive with fossil fuels. Electric vehicles are beginning to take off worldwide, which will require more renewable electricity generation. Major corporations are increasingly pledging to source renewable energy for their operations in response to customer expectations. Governments globally are enacting supportive policies to meet climate goals and accelerate the transition. Public opinion solidly favors clean renewable power as well.
As a result, projections indicate robust growth for renewables in the years ahead, supplanting fossil fuels in electricity generation. The International Energy Agency forecasts renewables will contribute 80% of new power capacity through 2030 based on current policy settings alone, with solar accounting for the bulk of capacity additions 1. Meeting climate targets will require even greater renewable energy deployment, with annual clean energy investment potentially needing to quadruple by 2030 2. While challenges remain, the outlook is for renewables’ share of global energy supply to grow substantially in the years ahead.
