Switching to the green light – Economics – Kommersant

The first truly global energy crisis triggered by the Russian military operation in Ukraine has given an unprecedented boost to the development of renewable energy sources, according to a report by the International Energy Agency (IEA). A new study confirms and refines the forecasts the organization made in June (see “Kommersant” dated June 27): the volume of world investments in “clean energy” is growing, but growth, as expected, is provided mainly by the EU, the US and China. The agency expects RES to become the world’s largest source of electricity by 2025, overtaking coal generation despite its current growth to overcome the difficult transition period.

In 2022, for reasons of “energy security”, many countries revised their support policies for renewable energy and increased investment in the development of renewable energy. The increase in capacity in the future will be much faster than expected a year ago, according to the IEA. It is expected that in 2022-2027 the volume of renewable energy will grow by almost 2,400 GW, which is comparable to the total installed capacity for electricity generation in China (at the end of 2021 it was 2,377 GW), which is 85% more than in previous years. five years, and almost 30% higher than forecast in the 2021 report. The IEA emphasizes that this is “the largest upward revision” in the history of the agency.

According to the organization’s forecasts, the share of renewable energy in the structure of energy consumption will increase by ten percentage points in the next five years and will amount to 38% in 2027.

The total capacity of solar generation over this period will almost triple and already in 2026 will “overtake” natural gas in this indicator, and in 2027 coal. In the EU, where the demand for coal has increased especially noticeably over the past year due to sanctions, the share of renewable energy is planned to be increased to 45% over eight years, and not to 40%, as previously stated. Some steps in this direction have already been taken. For example, over the past year, Germany and Spain have changed their long-term targets for renewable energy and reduced the timeframe for issuing permits for the construction of solar power plants.

The slowest introduction of renewable energy sources is in the field of transport and heating of buildings, the IEA notes. The share of renewable energy sources in the transport sector is expected to increase from 9% in 2020 to 15% in 2027, which is not in line with EU plans and needs. The agency emphasizes that businesses do not yet have incentives to increase the share of renewable energy in this sector, despite the fact that demand for electric cars and biofuels is growing. The likely increase in the share of renewable energy in building heating will be only 3% (11% in 2022, 14% in 2027). The authors of the report explain the low rate of introduction of renewable energy sources in this area by the “insufficient level of development”.

One of the questions the IEA is trying to answer in a new study is whether renewable energy producers have made windfall profits amid rising electricity prices.

The compilers of the report do not give an unequivocal answer, citing “non-political factors” that affect the size of profits: long-term bilateral contracts for the purchase of electricity, hedging strategies and risks in the wholesale electricity market. At the same time, the IEA emphasizes that enterprises reporting high incomes also report significantly increasing costs. The situation comes as the European Council issued a ruling in October requiring energy companies to pay windfall profits with a tax, a “temporary solidarity contribution.” It is still difficult to assess its consequences: each EU member state has the right to interpret and implement it in its own way. “Inconsistencies between regulatory regimes can create a situation of uncertainty for investors looking into RES. It is important that regulations tax profits from the sale of energy on the wholesale market, and not income, ”the agency explains.

Part of the IEA report focuses on the main challenges countries face in trying to increase their share of clean energy: advanced economies face the hardest challenges to scale, emerging market economies face political and legal uncertainties, and developing economies face a lack of funding. Despite the difficulties, over the next five years the world will produce as much renewable energy as over the past 20 years, the IEA concludes.

Christina Borovikova