Energy transition becoming a global business model

Renewable energy has become the centrepiece of global energy. When it comes to electricity generation, more renewables-based capcacity was built in 2017 than conventional power plants.

Illustration shows: Renewable energy has become the centrepiece of global energy. When it comes to electricity generation, more renewables-based capcacity was built in 2017 than conventional power plants.© Federal Ministry for Economic Affairs and Energy; based on data from IRENA, Renewable Capaci-ty Statistics 2018

The energy transition has long developed into a global phenomenon. According to the latest figures from the International Renewable Energy Agency IRENA, some 8.3% more renewables-based electricity generation capacity (net) was built in 2017 than in the previous year, a total of 167 gigawatts (GW). This was more than in conventional energy sector. Solar energy showed the strongest rate of growth, with an increase of 32% compared to 2016. Wind energy, the second largest renewable energy source after hydropower, expanded by 10%. According to the Working Group on Renewable Energy Statistics AGEE-Stat, in 2017, Germany added a further 8.3 GW of electricity generation capacity to its existing renewables-based stock (net). Wind energy posted the strongest growth, increasing by 6.3 GW to 55.9 GW (12.7% more than in the previous year). New photovoltaic capacity in Germany was equivalent to an extra 1.7 GW, bringing PV capacity up to 42.4 GW (+4.1%) at the end of 2017. This meant that at the end of last year, total renewables-based electricity generation capacity in Germany amounted to 111.9 GW.

Around the world, renewable energy accounted for around 25% of electricity generation last year but, according to IRENA, this is not enough. The agency said that the UN climate goal of keeping global warming well below two degrees Celsius cannot be achieved on the basis of current energy policy.

Berlin Energy Transition Dialogue: Speeding up the energy transition

When the Federal Government hosted its 4th Berlin Energy Transition Dialogue from 17-18 April 2018, a major task was to develop long-term prospects for the next steps in the energy transition based on statistics provided by IRENA. Secretary-General of the agency, Adnan Z. Amin, and Executive Director of the International Energy Agency IEA, Dr Fatih Birol, each presented studies that analyse how the two-degree objective set out in the Paris Climate Agreement can be implemented.

The IRENA study, entitled Global Energy Transformation: A Roadmap to 2050, estimates that we will need at least six times more renewables-based capacity than we have in the world today if we want to achieve the targets set. It also says that renewable energy sources will have to account for two thirds of energy consumption and 85% of electricity generation by 2050. So, according to the study, speeding up the energy transition would make good economic sense. By 2050, it says, 7.4 million jobs will disappear from fossil energy, while at the same time, 19 million new jobs will be created in renewables, energy efficiency, grid expansion and energy flexibility – a net total of 11.6 million more jobs in the energy sector worldwide. According to the analysis, the savings that are made possible as a result of the energy transition far outweigh the additional costs. IRENA’s scenario indicates that completing a comprehensive, long-term energy transition by 2050 would cost $1.7 trillion more each year than is being spent under current energy policy. However, costs of $6 trillion a year could be saved through lower rates of air pollution, reduced environmental damage, and the improvements to human health that this would bring. In addition, the energy transition would stimulate economic growth. The study calculates that when compared to a business-as-usual scenario, economic output up to 2050 would increase by $52 trillion.

The role of energy efficiency

According to an IEA analysis presented at the Berlin Energy Transition Dialogue, expanding renewable energy is, on its own, not enough to reduce greenhouse gas emissions to the extent necessary. The underlying study, entitled ‘Perspectives for the Energy Transition: The Role of Energy Efficiency’, suggests that more efforts would be also needed across the world to improve energy efficiency which, it says, could generate 35% of the reduction in carbon emissions aimed for in the Paris Climate Agreement.

The IEA analysis shows how the three biggest energy-consuming sectors – industry, transport and buildings – can contribute to achieving these goals through raising their energy efficiency. Although investments in energy efficiency pay off over a plant’s lifetime, as the study emphasises, this period is, it concludes, usually longer than consumers or companies take into account when making decisions.

The study goes on to show that a lack of knowledge and information about potential savings are also reasons why too little a focus is placed on energy efficiency. According to the IEA, global energy intensity – measured as the amount of primary energy demand needed to produce one unit of gross domestic product (GDP) – only improved by 1.7% in 2017, which was less than in the three years previous. This is why the IEA is seeking to provide energy-efficient advice to governments worldwide by means of analyses, best practice models and training.