Solar energy emerges from the energy crisis. The wind loses

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From the way the public conversation was unfolding, one would think that renewables were firmly in the background due to the energy crisis that has rocked the world since late last year.

Transportation fuel taxes have been reduced to ease the pain of high crude prices in the European Union, India, the United Kingdom and the United States, among other countries. European power plants burned 51% more coal in early March than a year earlier. China’s rush to use more coal after last year’s power cuts has been even more dramatic: the country mined 687 million metric tons of solid fuel in January and February, equivalent to nearly two years of European coal consumption and a third more than in the same period of 2019.

This is troubling, given the warning from the Intergovernmental Panel on Climate Change last week that carbon pollution must peak by 2025 if the world is to avoid catastrophic global warming.

And yet, the real picture is quite different. Far from being reversed, the transition to renewable energies is showing many signs of accelerating. The world will build about 245 gigawatts of photovoltaic capacity in 2022, BloombergNEF estimated last month – a third more than in 2021 and a 7.5% increase from a previous estimate for this year, as the energy crisis started last fall.

The numbers on this scale are staggering: 245 GW, for example, is equivalent to about two-thirds of the world’s total installed nuclear capacity. By early 2020, a cumulative 651 GW of solar panels had been installed throughout human history. In about 12 months, we’ll probably have doubled that number in just over three years.

Players in the solar sector are betting on growth. After shortages of polysilicon raw materials drove up prices last year, a flood of new manufacturing capacity has entered the market. The bottleneck in the supply chain is now the production of silicon wafers, but even that is enough to produce about 431 GW of cells each year, according to BloombergNEF. With relatively minor increases in ingot and wafer capacity, the global solar supply chain is now large enough to connect around 5,300 GW of panels by 2030, which is enough to put us on track to achieve net zero emissions by 2050. If the industry growth rate were to drop approximately 10 percentage points from the 25% average seen over the past five years, we would still have achieved this goal .

This all sounds rather optimistic. The problem comes from the other side of the renewable energy coin – wind power. Unlike the unbroken solar power boom, wind generation seems to be hitting the pads. Installed turbine capacity actually fell slightly last year from the record 2020 total of 94 GW, the Global Wind Energy Council said in a report this month. It will then stagnate at levels not much higher than that until the middle of the decade, leaving the world in 2030 with only about 64% of the wind energy needed to reach net zero.

This is usually not due to failures in technology. Instead, it is the result of the regulatory challenges necessary to operate a wind farm, especially onshore. “Permitting is the main obstacle to our progress,” wrote Xabier Viteri Solaun, head of renewable energy business at Iberdrola SA. In Italy, it takes an average of five years to obtain the necessary licenses for a new wind farm. Across Europe, only half of the 20 GW of onshore wind capacity auctioned in 2021 has been awarded a contract.

These factors are compounded when you consider that the transmission lines needed to integrate all these new power plants, and to balance generation over long distances to compensate for regional deficits, also require lengthy permitting processes. The European Union will announce plans next month to remove these roadblocks, but much of the relevant regulation happens at the national and municipal level, so it will be difficult to dislodge.

One of the encouraging aspects of the simultaneous growth of wind and solar over the past decade is that they complement each other well. Photovoltaic production tends to be lower in winter and non-existent at night. The wind, on the other hand, works best at these times. Pushing global grid emissions to zero will require much more than these two technologies, with hydro, nuclear, geothermal, biomass and even reduced fossil power likely to play a part. With wind misfires, however, any hope of rounding the corner in time seems out of reach.

Don’t be misled by soaring coal, oil and gas prices right now. This is a short term phenomenon and in the long term the high costs will make fossil fuels even less attractive to utilities, households and manufacturers where cheaper and less polluting alternatives are available. Regulatory barriers to wind power and transmission, on the other hand, represent an unabated cost. It is a much greater threat to the energy transition.

More other writers at Bloomberg Opinion:

• Europe must end its dependence on Russian natural gas: editorial

• Putin boosts coal more than Trump ever: Liam Denning

• Europe must reduce its energy demand. Now: Javier Blas

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

More stories like this are available at bloomberg.com/opinion

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