The global energy sector is constantly changing as hydro, nuclear, wind and solar options continue to grow in popularity and fossil fuels are slowly phased out. As we look to the future, more and more governing bodies are passing rules and standards surrounding emissions, and we can expect the current trends to continue. In this blog, we’re examining two recent reports about the current energy outlook from the International Energy Agency. We’ll also explain how our Combined Heat & Power (CHP) and on-site energy solutions can help you adapt to these trends while reducing your carbon footprint and saving you money.
The Future of Renewables
First, the Renewables 2021 report forecasts the deployment of renewable energy technologies in electricity, transport and heat to from present day until 2026 while also identifying barriers to faster growth. The report finds that additions of solar photovoltaic (PV) sources pushed the industry to new heights in 2021, but still short of goals to reach net-zero emissions by 2050. Nearly 290 gigawatts (GW) of new renewable power were commissioned in 2021, which was 3% higher than 2020’s already high growth. Solar PV alone accounted for more than half of that expansion, followed wind and hydropower. And the trend will continue: the growth of renewable capacity is expected to accelerate in the next five years, accounting for almost 95% of the increase in global power capacity through 2026.
Meanwhile, higher natural gas and coal prices have improved the competitiveness of wind and solar PV sources. For corporations, fixed-price renewable energy contracts serve as a safe bet against the rising prices for fossil fuel energy. Despite this optimistic outlook, governments need to address current policy and implementation challenges and increase the adoption of all renewable energy uses in order to get renewables on track for net zero by 2050.
The Outlook for Electricity Demand
The demand for electricity drastically increased in 2021, due to strong economic growth following the COVID-19 pandemic and more extreme weather conditions than the previous year. It’s the largest growth since 2010, when the world was recovering from the Great Recession. In the recent IEA Electricity Market Report for 2022, the agency found that renewables are set to meet the vast majority of expected increases until 2024, but not all. Here’s a look at the numbers:
- Renewables grew by 6%, despite growth being limited by unfavorable weather conditions.
- Coal-fired electricity generation reached an all-time high, growing by 9%, propelled by the exceptionally high demand and coal’s cost competitiveness in some markets compared to gas.
- Gas-fired generation grew by 2%.
- Nuclear power increased by 3.5%.
- Overall CO2 emissions from electricity rose by close to 7%, taking them to a record high.
The major takeaway from this report is how today’s policy settings are insufficient to cut emissions. Instead of decreasing, power sector emissions are expected to stagnate until 2024, which will prevent them from keeping pace with goals to be net zero by 2050. This underlines the massive changes needed in terms of energy efficiency for the electricity sector to fulfil its critical role in decarbonizing the overall energy system.
How Can We Help?
As the data suggests, now is the time to act for a green energy future—CHP and onsite energy systems have a big role to play. Also known as cogeneration, CHP systems use on-site natural gas engines to generate electricity while reclaiming heat off the engine to provide thermal energy. The United States Department of Energy acknowledges them as an efficient method of providing these necessities while also reducing energy costs and carbon emissions. Incorporating CHP into the electric grids and gas systems of tomorrow will aid tremendously in further reducing carbon emissions and lowering your energy costs.
Facilities can also transition to renewable energy today by investing in other on-site energy generation methods. Our partner, Dalkia Energy Solutions, provides solar and storage options to facilities looking to lower costs and carbon emissions. Incorporating these technologies will reduce emissions and push back in the fight against climate change. If you are interested in learning more about our CHP systems or our on-site energy solutions, please reach out today.