IEA’s low carbon scenario again underestimates the role of renewables

The IEA has just produced its World Energy Outlook Special Report on Energy and Climate Change, which is intended to describe how the energy sector can transition to being part of a lower carbon world.  It includes a new Bridge Scenario which emphasises what can be done over the next decade or two.  There is much that is good in the report, including its mention of the potential to reduce methane emissions from the energy sector, a subject which I’ll return to in a future post.  However its renewables projections are less satisfactory.

I previously noted how the IEA has vastly underestimated renewables growth in the past (see here), and that their current projections show future rates of deployment of renewables slowing substantially from present levels (see here).  I had hoped that, especially given its topic, this latest report would include a more realistic outlook for renewables.  However even the Bridge Scenario projections continue to look much too pessimistic.

The table below shows a comparison of the IEA’s wind and solar PV projections for the 2020s with actual installations for last year and expected rates for this year.  It shows that the IEA projects installation rates for the 2020s at about last year’s level and below levels expected for this year, implying a stagnation or contraction of the industry rather than continued growth, even as measures to reduce emissions are increased.

Annual average installation rates for wind and solar PV (GW)

Notes: Historic data is taken from Bloomberg, BP, and the Global Wind Energy Council (GWEC). Data for wind installation in 2014 is similar at 49 GW, 52GW, and 51 GW respectively according to each source. Different data sources give somewhat different values for the amount of solar PV installation in 2015. BP shows solar PV at around 40GW, Bloomberg around 45GW. I have taken the mid-point of these two values. There are various possible explanations for the difference, for example different estimates of which projects were completed by the end of the year. Previous years’ estimates for the amount of solar PV installed are very similar between the two sources (within a GW or so).

The IEA seems to continue to be concerned about the costs of renewables, leading them to be very cautious in their projections.  But with costs falling, pressure for action to reduce emissions increasing, and penetration of both wind and solar PV globally remaining well below saturation levels, continued growth in the rate of deployment seems much more likely than stagnation or decline.The chart below (an update from my previous post) shows this data graphically, and compares it with history and the IEA’s 2014 World Energy Outlook New Policies Scenario.  It shows welcome but limited increases in the rate of installation of both wind and solar PV projected by the IEA.  There is still a clear trend break between history and the projections.

Note: IEA projections are for 2012 or 2013-2020 and for each 5 years thereafter, and are shown at the mid-point of each interval.

The IEA’s work is widely respected and quoted.  This makes it all the more important that their renewables scenarios become more realistic.  Currently they serve mainly to distort the public debate on pathways to decarbonisation, and detract from the other good work in this area that the IEA does.   The time for the IEA to improve its projections for renewables seems long overdue.

Adam Whitmore is a leading expert on climate change policy and energy economics.  He authors a blog called On Climate Change Policy.