IEA World Energy Outlook 2020: Solar Power Is the New King
18 October 2020
Each year, the International Energy Agency publishes its World Energy Outlook. The 2020 edition published in October predicts a slowdown in global energy consumption, due to the impact of COVID-19. However, growth will remain strong for renewable sources, and especially solar power, which is now considered the cheapest electricity source in history.
The World Energy Outlook 2020 estimates that global energy demand will be 5.3% less by the end of 2020. This will represent a 6.6% drop in emissions, which is equivalent to 2.4 gigatonnes (2,400 million tonnes). Overall investment in the energy sector will be reduced by 18.3%.
The three major fossil fuels will suffer a drop in demand, according to the IEA: 8.5% for oil, 6.7% for coal, and 3.3% for natural gas. Nuclear power will also be affected, with a 4.5% reduction. However, renewable sources will grow by 0.9% in spite of the energy sector slowdown.
Modeling World Energy Consumption for the Next Decade
To estimate how global energy consumption could behave after 2020, the International Energy Agency considered four scenarios. Without the coronavirus pandemic, the estimated growth in energy demand for 2020-2030 was 12%.
- Stated Policies Scenario: COVID-19 is controlled and the global economy recovers before the end of 2021. Energy demand recovers by 2023, and grows by 9% between 2020 and 2030.
- Delayed Recovery Scenario: The pandemic is extended and economic recovery is achieved until 2023. Energy demand recovers by 2025, and grows by only 4% between 2020 and 2030.
- Sustainable Development Scenario: Same as the Stated Policies Scenario, with the addition of clean energy policies that can achieve sustainability objectives like the Paris Agreement.
- Net Zero Emissions by 2050 Scenario: The IEA models the energy growth that would be necessary to put the world on track towards net zero by 2050.
Before the COVID-19 crisis, global GDP was expected to grow by 3.6% annually between 2019 and 2030. However, annual growth is reduced to 3.0% in the Stated Policies Scenario, and 2.2% in the Delayed Recovery Scenario.
Unfortunately, the most vulnerable persons will be affected the most by the slowdown in energy investments. In Sub-Saharan Africa, electricity access had been gradually improving in the last years: between 2013 and 2019, the number of people without access to electricity had been reduced from 609 million to 579 million. However, the IEA estimates that this figure will increase again to 592 million by the end of 2020. Solar power could play a key role in bringing electricity to vulnerable communities: solar panels don’t depend on fuel deliveries, and sunlight reaches the point of use for free every day.
Solar Power Will Dominate the Energy Sector in 2020-2030
Renewable energy continues to grow in all four scenarios, and especially solar power. In the least favorable scenario (Stated Policies), renewable sources represent 80% of electricity demand growth between 2020 and 2030. Solar power will have the highest growth among renewable sources, followed by onshore wind power.
According to the IEA, solar power is now the cheapest electricity source in history. With favorable site conditions and government policies, solar power can reach electricity costs below US$20 per megawatt-hour (below US$0.02 per kWh).
- In China and India, utility-scale solar power is currently reaching prices between US$20 and US$40 per megawatt-hour.
- This is roughly the same electricity cost as existing coal power plants.
- New coal power plants can no longer compete with solar farms in terms of cost.
The IEA considers that managing power grids will be a key challenge, and they are considered the “weak link” of the energy sector in the 2020 report. Their ownership costs are high, and the COVID-19 pandemic has hurt the financial situation of grid operators, especially in developing countries. The IEA estimates that 16 million kilometres of new power lines will be needed between 2020 and 2030.
Affordable energy storage could reduce the need for grid expansions, since electricity can be generated and stored at the point of use. Utility-scale batteries can also reduce the load on critical grid segments, by meeting demand that would normally fall on power lines.