How critical is renewable energy in Energy Transition?

5 min readMar 13, 2024

With the conscious and concerted efforts of industries across the world moving towards lowering carbon emissions and progressing towards Net Zero, the question that often arises is , are Renewables a key component of this transition?

Let’s dive in!

Firstly let’s look at what does Energy Transition (ET) entail

In simple terms, the transitioning from highly carbon intensive energy sources to zero carbon energy sources is the easiest way to explain ET.

The increasing penetration of renewable energy into the energy supply mix, the onset of electrification and improvements in energy storage are all key drivers of the energy transition.

Clearly Renewable Energy is a critical component.

Renewables, including solar, wind, hydropower, biofuels and others, are at the centre of the transition to less carbon-intensive and more sustainable energy systems. It is heartening to see that renewable energy capacity has grown rapidly, driven by policy support and sharp cost reductions for solar photovoltaics and wind power.

Spurred by structural, permanent changes to energy supply, demand, and prices, the energy transition also aims to reduce energy-related greenhouse gas emissions through various forms of decarbonization.

The costs of both solar and wind have fallen so drastically that in some regions of the U.S., as well as in the U.K. and Europe, wind power has become cheaper than high-carbon energy resources. As costs continue to fall and wind and solar become mainstream, the renewable energy sector will only keep growing and solidify as a strong investment opportunity.

The Trifecta

Generating power from renewables is only part of the energy transition. Mass introduction of electric transportation infrastructure and energy storage, coupled with greater usage of technologies to improve energy efficiency, are also driving this movement.

As the average cost of lithium-ion batteries has fallen due to economies of scale and technology improvements, companies and consumers are increasingly turning to electrification for power transportation, making the transition to electric vehicles (EVs) one of the largest areas for electrification. The global EV adoption rate could reach 10%-12.5% by 2025.

Another key factor for renewable energy and electrification is renewable energy storage. Eenergy storage has begun playing a broader role in the energy transition, with the potential to enable the eventual decarbonization of energy systems. As costs fall, renewable energy storage has the potential for broad use beyond the niche markets in which it is currently used.

Global regulatory structures in the realm of energy transition have been fairly uneven. In Europe, regulators have taken a leading role in pushing toward a review on how to reach the carbon-neutral economy by launching EU’s net-zero greenhouse gas emissions target for 2050. Many EU countries have been outspoken about their energy and electrification priorities by publicly setting related targets. Led in large part by China, emerging economies are also trying to determine how to increase energy access and sustain development while also transitioning toward cleaner energy sources. In the U.S., there is growing political momentum around lower greenhouse gas-emitting power generation and a clean energy economy.

It’s not all hunky dory!

The electricity sector remains the brightest spot for renewables with the strong growth of solar photovoltaics and wind in recent years. But electricity accounts for only a fifth of global energy consumption and finding a greater role for renewable energy sources in transportation and heating remains critical to the energy transition.

The supply of renewables needs to accelerate to reach around 13% expansion annually over 2023–2030 to align with the NZE Scenario. Despite record renewable electricity capacity additions in 2022, supply growth was still significantly below that level. Much faster deployment of all renewable technologies in all regions of the world will be needed to put the world on track with the NZE Scenario.

The supply of renewables needs to accelerate to reach around 13% expansion annually over 2024–2030 to align with the NZE Scenario. Despite record renewable electricity capacity additions in 2022/23, supply growth was still significantly below that level. Much faster deployment of all renewable technologies in all regions of the world will be needed to put the world on track with the NZE Scenario.

Technology

Accelerating wind and solar PV capacity additions are driving the growth in renewable energy supply, but activity needs to ramp up rapidly to align with the NZE Scenario.

Solar PV has been the fastest growing technology by capacity additions in recent years and is aligned with the NZE Scenario. In the case of wind, hydropower and bioenergy, more efforts are needed to get on track, as growth in recent years and that expected in the near future is significantly below required levels. Other less widely used renewable technologies, such as CSP, geothermal and ocean power, are not on track and require a rapid step-up in support.

Policy Development

Positive policy developments in China, the European Union, the United States and India will drive faster renewables growth in the coming years.

Renewable electricity is subject to policy support and national targets i. Various types of support have been implemented, including technology-specific measures.

China published its 14th Five-Year Plan for Renewable Energy in June 2022, which includes an ambitious target of 33% of electricity generation to come from renewables by 2025 (up from about 29% in 2021) and, for the first time, a target for renewable heat use.
In August 2022 the federal government of the United States introduced the IRA, which significantly expands support for renewable energy in the next ten years through tax credits and other measures.
Many European countries have already expanded their renewables support mechanisms in order to accelerate renewable power and heat use with a view to the 2030 targets and in response to the energy crisis resulting from Russia’s invasion of Ukraine. In addition, in February 2023 the Commission announced The Green Deal Industrial Plan, aiming to support the expansion of clean energy technology manufacturing.