Renewable energy costs are high, but their competitiveness is improving due to the sharp rise in gas and coal prices
The capacity of renewable sources (RES) is expected to increase further by more than 8 percent in 2022, reaching almost 320 gigawatts (GW). This is stated by experts from the International Energy Agency (IEA) in its updated report – Renewable Energy Market Update – May 2022, BTA reported.
Demand for biofuels recovered in 2021 after low levels due to KOVID-19 in 2020 and is currently close to 2019. IAEA experts expect growth to increase by 5 percent on an annual basis in 2022. and 3 percent in 2023. On the other hand, rising commodity prices and many countries’ policies are slowing growth in the short term, leading to a 20 percent drop in the IAEA’s previous forecast for rising demand for biofuels. Russia’s invasion of Ukraine is also putting pressure on the already high price of raw materials for biofuels, especially vegetable oils.
The current global energy crisis calls for an acceleration of the transition to clean energy and reiterates the key role of renewable energy, the IEA said. The updated forecast states that wind and solar energy have the potential to reduce the European Union’s energy sector’s dependence on Russian natural gas by 2023.
Renewable energy set a new record in 2021, rising 6 percent to almost 295 gigawatts (GW), despite continuing supply chain challenges caused by the pandemic, construction delays and record commodity prices. The costs of solar photovoltaic and wind energy are expected to remain higher in 2022 and 2023 compared to pre-pandemic levels due to higher commodity prices, experts say. However, their competitiveness is improving due to the sharper rise in gas and coal prices.
While the growing market uncertainty is increasing the challenges, the new focus on energy security – especially in the European Union – is also giving an unprecedented political impetus to accelerate energy efficiency and renewable energy sources. Ultimately, the forecast for renewable markets for 2023 and beyond will depend on whether new and stronger policies are introduced and implemented over the next six months, IAEA experts conclude.
