Explanation of the exponential growth of renewable energies

The rapid growth of solar and wind energy in recent years has drawn hope in global efforts to reduce greenhouse gas emissions and limit the most dangerous effects of climate change.

In 2010, sun and wind together made up just 1.7 percent of global electricity generation. By last year it had risen to 8.7 percent – far more than had previously been predicted by mainstream energy models. For example, in 2012 the International Energy Agency expected global solar power generation to reach 550 terawatt hours by 2030, but that number was exceeded in 2018. These models often assume that the growth of sun and wind will be linear, but in reality the growth has been exponential.

Understanding the exponential growth of renewables in the past makes us more optimistic about how quickly it can be ramped up to meet climate goals in the future. This article explains why solar and wind power are growing, how much progress has been made and what is needed to go further.

Why are renewable energies growing so quickly?

Falling costs were the biggest factor in the renewable energy explosion. Since 2010, the cost of photovoltaic power has decreased by 85 percent, and the cost of onshore and offshore wind power has been cut by about half. Both renewable energy sources are inexpensive with electricity from fossil fuels.

The cost has come down so dramatically because of positive feedback loops. The more renewable energy technologies are used, the cheaper they become due, among other things, to economies of scale and competitive supply chains. These falling costs in turn drive further use. For example, over the past decade, the price of installing solar capacity has fallen by 34 percent every time the solar capacity used worldwide has doubled. Because renewable energy technologies are modular and standardized, cost improvements or technological advances made in one place can quickly be copied elsewhere.

Other aspects of renewable energy use are also self-reinforcing. As renewable energies grow in popularity, expand their political influence, and attract more funding, it becomes easier to leverage more political support and funding. As financiers become more familiar with the technical and project-related risks of renewable energy, the cost of capital has decreased. In addition, there is evidence that the proliferation of renewable energies is socially contagious – if a house installs solar systems on the roof, the neighbors who see and talk about it are more likely to install solar systems on the roof themselves.

Political support has also been essential for renewable energy growth. Renewable energy tax credits and subsidies, feed-in tariffs, and competitive auctions have all helped cut costs and drive expansion. And government investment in research and development has been critical to fueling innovation in renewable energy. China, Europe and the United States lead the way in solar and wind energy through political support, and 165 countries around the world have renewable energy targets. It’s not just countries either; More than 600 cities worldwide have 100 percent renewable energy targets.

Renewable energy growth timeline

Wind energy began in the early 2000s, while solar energy emerged about a decade later, but is growing even faster than wind. The factors that drove renewable energy growth were systemic, but certain key moments have mirrored the larger trends or acted as turning points in the adoption of renewable energy.

(Source: WRI)

Understanding S-curve growth dynamics

A 2020 report from Climate Action Tracker includes a global decarbonization target for the share of renewable electricity to keep global warming to safe levels. To be adapted to the 1.5 degree Celsius path, renewable energies must reach 55 to 95 percent by 2030 and 98 to 100 percent of global electricity by 2050, with solar and wind energy making up the dominant share, supplemented by others renewable energy. These goals are closely related to the United Nations’ high-ranking champions’ Race to Zero ‘campaign, which has worked to target key sectoral actors to groundbreaking actions and ambitions that can catalyze change, and the 2021 State of Climate Policy Report, which was released in November before COP26.

Achieving such a high percentage of renewable energy sounds daunting, but it is less when you consider the power of exponential growth. The market share of solar and wind energy in global electricity generation grew from 2015 to 2020 with an average annual growth rate of 15 percent. If exponential growth continues at this rate, sun and wind would account for 45 percent by 2030 and 100 percent by 2033.

Problem solved? Not quite. Historically, exponentially growing technologies have a “top speed” for growth – a maximum growth rate that is reached, lasts for a while, and then slows down as it approaches 100 percent adoption. This pattern is known as the S-curve.

A new article in Nature Energy tries to figure out what that top speed is for solar and wind power growth by looking at the countries that are the most advanced and have already hit the steepest part of the S-curve for sun or wind.

They find that in countries where solar growth has stabilized at maximum levels, this growth averages 0.6 percent of total electricity supply per year. This is less than the 1.4 percent annual rate needed worldwide to meet the 1.5 degree C target of the Paris Agreement according to their own benchmarks. Chile is the only country with a mature solar market where the maximum growth rate has exceeded demand.

In countries where onshore wind growth has stabilized at a maximum rate, this growth averages 0.8 percent of total electricity supply per year, which is lower than the 1.3 percent annual rate required worldwide. Only a handful of countries with mature wind markets had maximum growth rates that exceeded demand, including Ireland, Portugal and Brazil.

Countries like this prove that growth as fast as this is possible – but the key will be to maintain high maximum growth rates and do so globally, not just in selected countries with ideal conditions.

What will happen to renewable energies in the future?

Despite a clear dynamic, it appears that renewables growth needs to be accelerated, although there is still much uncertainty about how much acceleration is needed.

The graphic below illustrates one possible way in which sun and wind could meet the climate goals necessary to limit global warming to 1.5 ° C. This is not the only shape an S-curve could take in order to achieve its goals, nor is it necessarily the most likely, but it does give a general impression of what is needed.

Possible way for an alignment at 1.5 degrees Celsius (source: WRI)

More political support is needed to ensure that renewables adoption follows an S-curve and grows fast enough to meet the goals of the Paris Agreement. All countries, including those that are not yet leaders in this sector, need to incentivize rapid deployment and keep costs down.

Governments should set targets and requirements for the use of renewable energy. These are currently most common in the energy sector, but should also be applied to other end-use sectors such as heating and cooling, industry and transport. Governments must also increase the flexibility of the electricity grid to accommodate renewable energies, for example by investing in long-range transmission lines and adopting new energy storage technologies.

Despite the challenges to be overcome, nonlinear change is a powerful force. If we were to travel back in time ten years ago, energy industry experts would be shocked to hear how much the cost of renewable energies has fallen and how annual use has quadrupled. How shocked will we be in 2030? It depends on what we are doing today.

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