An era of fossil decline is about to begin, according to the Global Electricity Review 2023 published by Ember.
1. Expensive fossil fuels
The rise in clean energy sources reached a 12% share in the global electricity mix, up from 10% in 2021. Over the past decade, both wind and solar energy have become increasingly affordable compared to traditional fossil fuels such as coal and natural gas. With the geopolitics of war and the almost total ban of energy imports from Russia to the West, fossil fuels have become more expensive, boosting incentives to invest on clean sources.
According to the Global Electricity Review 2023, clean energy growth is likely to outpace electricity demand growth in 2023, leading to a small decline in fossil power generation. A separate analysis revealed that last year, power capacity from clean energy sources in the US comprised 40.6% of the country’s electricity mix.
Fossil fuels have held their share of global energy supply steady at about 80% for decades. But the energy world is changing fast — and clean technologies are building momentum.Fatih Birol, the International Energy Agency’s (IEA) Executive Director on the Financial Times
2. Cheaper wind and solar
The report reveals that wind and solar power are now cheaper than fossil fuels, noting that China added 50% of global wind power and 40% of new solar power by 2022, contributing to the growth of renewable energy sources. In total, wind and solar accounted for 80% of the increase in electricity demand globally, indicating that these renewable energy sources are outpacing the growth of fossil fuels.
3. Tech advancements and economies of scale
One of the main reasons for this energy revolution is related to technological advancements and economies of scale. As more wind and solar installations have been built around the world, the cost of manufacturing and installing renewable energy equipment has decreased. In addition, improvements in efficiency have made wind and solar power more productive, which helps to further lower their costs.
Another factor that has contributed to the cost reduction is the increasing awareness of the environmental impacts of burning fossil fuels, which has led to government subsidies and incentives for renewable energy development. According to IEA, electricity and heat generation accounted for nearly 40% of global CO2 emissions in 2021.
4. Challenges ahead
While wind and solar energy are now often the cheapest sources of new electricity generation in many parts of the world, it’s worth noting that the cost of energy storage technology — which is needed to store energy produced by wind and solar when the sun isn’t shining or the wind isn’t blowing — is still relatively high. Moreover, getting wind and solar permits can be a complex process that varies depending on the specific location and legislation in the area.
“Permitting remains the biggest bottleneck for deploying wind at scale. Approximately 80 GW of wind power capacity is currently stuck in permitting procedures across Europe, of which at least 59 GW are onshore,” stated WindEurope, reacting to the latest decision by the European Union institutions, which agreed on the simplification of renewables permitting.