One ship load of solar PV is worth more to the grid than 100 ships of coal: IEA says fossil fuels losing race

The renewable energy naysers often site land use of wind and solar as a reason why they shouldn’t be built. Some of the claims are absurd, including one that suggested the entire land mass of South Australia would be required to power Australia with wind and solar.

But in a turn up for the books, and the many erroneous assumptions about fossil fuels, consider this: The International Energy Agency says that a single large container ship of PV modules can generate the same amount of electricity as 100 large coal ships, or 50 LNG tankers.

It all comes down to efficiency, and the IEA’s latest report into future technologies paints a picture of an industry that is rapidly overtaking the fossil fuels pioneered in the 1800s, and which has already reduced global shipping needs — and emissions — by 10 per cent in a decade.

It’s also an industry that is increasingly less reliant on extra policy support from governments. 

The Energy Technology Perspectives 2024 report says that if governments change no policy settings at all, by 2035 the global market for solar PV, wind turbines, electric vehicles (EVs), batteries, electrolysers and heat pumps will match the size of the global crude oil market today.

Trade in clean tech – if governments do nothing new – will be 50 per cent larger than the global trade in natural gas today, reaching $US570 billion ($A869 billion).

China’s exports alone are on track to pass $US340 billion in 2035, or roughly equivalent to the projected oil export revenue this year of Saudi Arabia and the United Arab Emirates combined.

“The market for clean technologies is set to multiply in value in the coming decade, increasingly catching up with the markets for fossil fuels,” said IEA executive director Fatih Birol.

“Clean energy transitions present a major economic opportunity  and countries are rightly seeking to capitalise on that. However, governments should strive to develop measures that also foster continued competition, innovation and cost reductions, as well as progress towards their energy and climate goals.”

What will be a problem are geopolitical trade tensions.

These already mean that tariffs on renewable energy systems and components are on average more than twice those applied to fossil fuels, a key problem for EV adoption.

No surprises: China owns clean tech

While the IEA doesn’t rule out non-China manufacturers, its report does highlight a problem for the rest of the world: the Asian giant has the clean tech industry locked up. 

Compared to China, it costs 40 per cent more to make solar panels in the US, 45 per cent more in the EU and even 25 per cent more in India, the other rising manufacturing hub. 

“China has greater economies of scale, a larger domestic market and highly integrated firms and facilities along the supply chain for these technologies,” the report says. 

“Other factors, besides costs, that influence investment decisions… include various forms of policy support, access to markets, skills and knowledge in the industrial base, and infrastructure.”

But the IEA also expects some spillover from China into southeast Asia, and for Brazil in particular and North Africa to step up as clean tech manufacturing hubs. 

It predicts Southeast Asia to become a large EV, battery and component producer, with energy storage production of more than 400 GWh by 2035, or enough to cover three quarters of its own needs a bit left over for export.

Indonesia would be the biggest player in this scenario, as it’s already exporting about 1 million left-hand drive EVs to Australia and New Zealand.

The region also has potential to be one of the cheapest places to produce polysilicon and wafers for solar panels within the next 10 years.

Brazil has the potential to scale up wind turbine manufacturing for export to other countries in the Americas, while North Africa has the ingredients to become an EV manufacturing hub within the next decade.

Governments are buying in

Governments and companies are recognising the potential of clean tech, with investment in making solar PV, wind turbines, EVs, batteries, electrolysers and heat pumps surging by 50 per cent in 2023 alone to $US235 billion, the IEA says. 

That’s equivalent to 3 per cent of global GDP growth seen last year.

The vast majority of this money went into solar and battery manufacturing, with EVs taking a slightly 15 per cent share. 

The wave of government investment is from the more than 13 countries around the world with new clean technology industrial policies – Australia’s ‘Future Made in Australia Act’ being one of them. 

These plans mean the US could meet almost all of its solar PV module and polysilicon demand from domestic production by 2035, Mexico could become an EV maker hub and make up 35 per cent of US imports, and the EU has already met its 40 per cent locally-made benchmark for heat pumps. 

Shipping will be an issue

It’s not all good news, however. 

Half of clean technology trade today goes through the heavily pirated Strait of Malacca in southeast Asia, compared to 20 per cent of oil shipments through the Strait of Hormuz bottleneck between Oman and Iran. 

“This dependency on maritime chokepoints poses risks to supply chain resilience, especially as the average clean technology cargo is more than ten times the value of the average fossil fuel cargo per tonne,” the report says.

Emissions from international shipping are set to drop by almost 60 per cent by 2035 and 90 per cent by 2050, driven by a switch to biofuels and near-zero emissions ammonia and methanol.

But the reduced need for shipping – given one ship of solar PV modules can provide the equivalent electricity as 100 coal ships – will slow shipping trade growth.