‘Turbocharged’ Renewables: The IEA Hawking Its Wares Again

Originally posted at Forbes

Tilak Doshi

I analyze energy economics and related public policy issues.

The International Energy Agency is at it again. In May 2021, it issued an astonishing report calling for an end to all investments in oil, gas and coal to reach the fantasy goal of net zero by 2050. Now, as the world grapples with an energy crisis with surging prices of fuels, fertilizers and food, the organization issued its new report on Renewables 2022 last Tuesday. The organization’s chief Fatih Birol tweeted “big news”, claiming that “the world is set to add as much renewable power in the next 5 years as it did in the whole of the past 20 years as countries seek to take advantage of renewables’ energy security benefits”. The mainstream press loyally reported the IEA’s claims of a “renewable energy rollout ‘turbocharged’ by global energy crisis”.

Let’s look under the hood, shall we?

Renewables 2022-27: The IEA’s Outlook

In the report’s 159 pages, 52 figures and 8 tables, the IEA lays out its 5-year outlook with glowing forecasts of a ‘turbocharged’ future for solar PV and wind energy along with a limited amount of non-intermittent sources such as biofuels, hydropower, geothermal and concentrated solar power. It starts off with the observation that the world’s first “truly global” energy crisis caused by the Russian invasion of Ukraine “sparked an unprecedented momentum for renewables”.

The IEA finds that the disruptions to Russia’s supplies of fossil fuel exports have shown “the energy security benefits of domestically generated renewable electricity, leading many countries to strengthen policies supporting renewables”. The report asserts that higher fossil fuel prices worldwide have improved the competitiveness of solar PV and wind generation against other fuels.

In the 5-year forecast, the report expects renewables to account for over 90% of global electricity capacity expansion, driven by energy policy developments in China, the European Union, the United States and India. The IEA predicts that solar PV installed capacity will “surpass” that of coal by 2027. This is backed by the claim that “utility scale solar PV is the least costly option for new electricity generation in a significant majority of countries worldwide”. There is, the IEA says, “growing policy support to help consumers save money on their energy bills”.

The report encourages governments to adopt policy improvements so that they “can drastically increase renewables expansion” in line with net zero emission goals. Such “policy improvements” “would require governments to “reduce permitting and licensing timelines, extend auction schemes with clear schedules, redesign auctions to reflect the increasing cost of renewables and their energy security benefits, and improve incentive schemes for distributed solar PV generation”.

While China dominates the global solar PV supply chain overwhelmingly, the IEA believes that the US and India will progress in diversifying global manufacturing of solar modules. Global biofuels use will expand by over 20% and policy efforts are turning hydrogen production from wind and solar power (“green hydrogen”) into a “new growth area”. In sum, renewable energy development will be rapid over the next 5 years and governments need only to pursue policies that support even faster growth of the sector.

Now Back To The Real World

Along with the mainstream media, the IEA lays the blame for the energy crisis afflicting the world — the EU region in particular— on the war in Ukraine. This is myopic and dishonest. Between June 2021 and January 2022 prior to the Russian invasion of Ukraine which commenced in late February, Dutch TTF natural gas prices almost quadrupled, South African coal export prices increased by 50% and Dated Brent crude oil prices by 17%. Crude oil prices had begun their ascent earlier as the global economy recovered from the covid lockdowns leading to a recovery in oil demand while supply remained constricted. Brent crude more than doubled in price in January this year from its $40 per barrel level in October 2020.

Surging energy prices weren’t merely a result of the Russian invasion which accentuated the price shock. The spikes in fuel prices were a cumulative result of government policies in the West that focused exclusively on speculative model-based forecasts of the climate impacts of carbon emissions. These policies starved the oil, gas and coal sectors of capital investments and diverted trillions of dollars of public funds to subsidize intermittent wind and solar technologies which could not replace fossil fuels. Last month, Jeff Currie, Goldman Sachs’ Head of Commodities Research, pointed out in an interview that at end 2021, fossil fuels accounted for 81% of global energy consumption, down from 82% a decade previously. The cost for this marginal change? A cool $3.8 trillion!

The German example is illustrative. The country’s hugely expensive Energiewende (“energy transition”) strategy was adopted in 2010, aiming for a rapid transition away from fossil fuels towards reliance on renewables for the country’s energy needs. Germany shut down most of its coal and nuclear plants in short order and expected solar and wind energy to replace its dependence on fossil fuels. What transpired in fact was that its Green Party-driven imperatives to “save the planet” by replacing fossil fuels led to an over-dependence on imports of Russian fossil fuels. On the eve of Russian invasion of Ukraine, the country imported 60% of its natural gas, 50% of its coal and 35% of its oil from Russia. One looks in vain for these facts in the IEA’s report.

Fatih Birol’s assertion that the Ukraine war has led countries seek to take advantage of renewables’ “energy security benefits” is nothing short of preposterous. With Europe’s energy crisis worsening, Germans were looking to firewood to survive winter as gas prices soared, Chancellor Olaf Scholz welcomed a 15-year deal with Qatar to import LNG for its energy security benefits and the country demolished a wind farm to make room for a coal mine expansion. Europe is now shifting back to coal as its sanctions on Russian energy exports boomerang, importing coal from exporters such as South Africa, Colombia and Indonesia. The Irish are now turning to burning peat, as their forefathers did in the days of yore.

In what can only be described as a case of utter moral depravity, the EU which did all it could to force a moratorium on fossil fuel investments in Africa now calls for such investments to be encouraged provided that the fossil fuel products are exported to Europe. Ugandan president Yoweri Museveni called this situation “a truly perverse twist” and “the purest hypocrisy.”

In the UK — which leads even Germany in its zeal to replace fossil fuels — Bloomberg journalist Javier Blass tweeted two days ago that the “UK wholesale day-ahead electricity prices surge to a record high as cold, dry and calm weather cripples wind production and sends demand soaring”. While the baseload price of electricity on Monday cleared at £674 per MWh, the evening peak load cleared at a shocking price above £2,000 per MWh. As large swathes of Britain were blanketed in snow with the cold snap that descended on Monday, natural gas was producing more than half of the country’s power supply.

Intermittent wind power failed to make an appearance in calm cold weather that Germans call the “dark doldrums”. In a further paradox, Prime Minister Rishi Sunak re-introduced the ban on fracking gas in the UK — which was discarded previously by the short-lived government of Liz Truss — while agreeing to import fracked gas from the US at far greater expense. The “security benefits” of renewable energy indeed.

The IEA report states that solar will overtake coal as the largest source of electricity generation. But elsewhere in the report, it refers to solar becoming the largest source of power capacity in the world. The statement that “by 2027, the biggest source of the world’s electricity will be solar power, followed by coal, natural gas and wind” is highly misleading. It is only solar capacity which will be greater, not actual power generated.

The comparison made by the IEA between solar and coal power contributions to power supply is false, given that the average global utility-scale solar power capacity utilization factor stood at 17.2% in 2021, compared to coal which is typically over 80%. For instance, in Japan’s efficiently-run coal power plants, the capacity utilization factor stood at 95.2% in October 2022. The daily capacity factors for Europe’s offshore and onshore wind farms stood at 13.4% and 22.9% respectively two days ago. However large the capacities of wind and solar power may be, they are irrelevant when the wind does not blow and the sun does not shine.

Yet another example of misleading comparisons in the IEA report relates to costs. It asserts that utility scale solar power is the “least costly option for a significant majority of countries worldwide”. The standard method for comparing costs of electricity sources is called “Levelized Cost of Electricity (LCOE)” which is calculated by adding up the total costs of a source over its lifetime and dividing it by the total energy expected from that source over the lifetime. But this metric ($ per MWh) fails when comparing costs between “dispatchable” (available on demand) sources of electricity such as coal or natural gas with those that are intermittent and subject to the vagaries of weather such as wind and solar.

Intermittent sources of electricity such as wind and solar are parasitical in the true sense of the word. They impose costs on the electricity grid since they need back-up from coal or gas-generated sources whenever solar and wind power fail to deliver needed energy. The costs of integrating fluctuating sources of power into an electricity grid are substantial. By destabilizing the grid with intermittency, unreliable renewable energy imposes costs borne by ratepayers. Added to these are the costs of building and running transmission lines from remote grid-scale solar or wind farms to places where people actually live. Any full assessment of the costs of renewables needs to take these necessary investments into account.

If renewable energy were indeed cheaper than coal or gas generated power, as the IEA assures us, why would it be necessary to call for government restrictions on fossil fuels or subsidies to renewables, as the IEA does? Aren’t competition and market prices the best means to deliver affordable and reliable energy to consumers? It is no surprise that electricity is costliest in those countries that have achieved the greatest penetration of renewables in their power grids via green mandates such as GermanyCalifornia and South Australia.

Neither Economics Nor Physics But Green Politics

The glowing forecasts for renewable energy presented by the IEA seem free of the laws of physics and written to promote an agenda. The descent of the once leading organization — devoted to rigorous analysis of energy economics and its policy consequences for its OECD member countries — into advocacy and shoddy analysis for the Green cause is complete. Fixated on spurious models that allegedly link carbon dioxide emissions to apocalyptic forecasts of global warming, the IEA couldn’t care less about the intolerable financial burdens imposed on ordinary people that need affordable food, heating (or cooling), lighting and mobility. Worse still, it is intent on imposing its climate change predilections on the vast majority of the world’s population that live in developing countries. But people are connecting the dots between the West’s incoherent ideological energy policies and the adverse impacts on their livelihoods.

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Tilak Doshi

I have worked in the oil and gas sector as an economist in both private industry and in think tanks, in Asia, the Middle East and the US over the past 25 years. I focus on global energy developments from the perspective of Asian countries that remain large markets for oil, gas and coal. I have written extensively on the areas of economic development, environment and energy economics. My publications include “Singapore in a Post-Kyoto World: Energy, Environment and the Economy” published by the Institute of Southeast Asian Studies (2015). I won the 1984 Robert S. McNamara Research Fellow award of the World Bank and received my Ph.D. in Economics in 1992.

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Tom Halla
December 15, 2022 10:11 am

Central planning always requires more information than exists, and using false assumptions make it even worse. The Greens have perverse standards, apparently preferring lignite to fracked gas or nuclear.

Tom Halla
Reply to  Tom Halla
December 15, 2022 2:49 pm

What time zone are you in? It is 4:48 PM here, and it is a bit early to be that drunk.

Hivemind
Reply to  Tom Halla
December 15, 2022 3:58 pm

Did you forget the /sarc tag?

ATheoK
Reply to  Hivemind
December 17, 2022 7:29 pm

He’s asking himself, Hivemind.
He knows the answer to his question.

Nick Stokes
December 15, 2022 10:20 am

“Surging energy prices weren’t merely a result of the Russian invasion which accentuated the price shock. The spikes in fuel prices were a cumulative result of government policies in the West that focused exclusively…”
This is myopic and dishonest. Here is the linked graph of Dutch TTF gas prices (spot market futures), but over 5 years:

comment image

The progress is anything but cumulative. Those policies were well in force in the years to July 2021, when prices are very flat (and low). Something clearly caused great instability that wasn’t there before. Covid was a factor, but the threat of war in Ukraine, which had been clearly telegraphed, is an obvious cause. And if it was those policies, why has the price come back?

DonM
Reply to  Nick Stokes
December 15, 2022 11:23 am

you just used myopic to describe some one else ???

“…the cumulative effect of government policies …” NOT,

‘the cumulative impact as a result of …’

Think ‘the straw that broke the camels back’ as example.

PCman999
Reply to  Nick Stokes
December 15, 2022 8:37 pm

Price come back? It’s still ridiculously high given the lack of industrial production in the West – shows the prices are driven by a mad scramble to reserve resources now that it’s obvious that renewables can’t be relied on.

Why do you try to defend the obvious screw-up by the various governments of Europe.

Nick Stokes
Reply to  PCman999
December 15, 2022 8:50 pm

It i very obvious from this graph and others that the mad scramble to reserve resources coincided with a very real threat of break in supply from a major supplier.

MarkW
December 15, 2022 10:33 am

In order to protect the Right whales, the Biden maladministration is proposing new rules on boats.
Despite the fact that there have been only 5 instances of boats under 65 feet striking whales in the last 15 years, his Lordship has proposed limiting the speed of boats under 65 feet to 10 knots or less.

https://www.foxnews.com/politics/biden-administration-boating-proposal-would-greatest-regulatory-overreach-kind-critics-warn

ATheoK
Reply to  MarkW
December 16, 2022 6:18 am
Curious George
December 15, 2022 10:36 am

“The disruptions to Russia’s supplies of fossil fuel exports have shown the energy security benefits of domestically generated renewable electricity.”
One example, please.

Energywise
December 15, 2022 10:55 am

Superb analysis, backed by facts – a must read for any fence sitters

tilak doshi
Reply to  Energywise
December 16, 2022 11:19 am

Glad you liked the article

cuddywhiffer
December 15, 2022 11:10 am

Excellent article, Tilak

Rud Istvan
December 15, 2022 11:15 am

IEA is notoriously bad. So bad that the very first essay in ebook Blowing Smoke is titled ‘IEA fictions’. Richly illustrated with many IEA versus reality examples.

MarkW
Reply to  Rud Istvan
December 15, 2022 11:19 am

I responded to your question regarding regen breaks at low speeds in the Electric Bus post.

cuddywhiffer
December 15, 2022 11:15 am

You can put lipstick on a pig, and even a dress and glassesl You can sprinkle a ton of glitter on a turd… They still remain just a tarted up pig, and a glistening turd.

The IEA has lost its way, and is now irrelevant.

cgh
Reply to  cuddywhiffer
December 15, 2022 5:32 pm

What is left unanswered is WHY the IEA is such a policy wasteland. Who is funding it, and to do what? Its mission statement seems opaque and misleading.
Mission – About – IEA

Dave Andrews
Reply to  cgh
December 16, 2022 6:16 am

It is also ironic that the IEA was set up in 1974 as a response by the industrialised countries to the oil embargo instituted by the major oil producers in 1973-4 to try to ensure that it couldn’t happen again.

cgh
Reply to  Dave Andrews
December 16, 2022 2:25 pm

I agree but that doesn’t help much. What are we left to conclude: a) that Fatih Birol is a lying a*****e or b) that he is a driveling moron? No one can simply put rubbish out there, and when ALL the evidence is contrary, pretend like nothing happened.

Dave Andrews
Reply to  cgh
December 17, 2022 5:51 am

He’s probably angling for a senior position in the UN, perhaps even Sec. General.

cgh
Reply to  Dave Andrews
December 17, 2022 11:40 am

That was the crook Maurice Strong’s big play in the mid-1990s. It failed because the US couldn’t stand him – one of the few things that Bill Clinton got right.

Joseph Zorzin
December 15, 2022 11:15 am

“If renewable energy were indeed cheaper than coal or gas generated power, as the IEA assures us, why would it be necessary to call for government restrictions on fossil fuels or subsidies to renewables, as the IEA does?”

Nailed it! Great article!

tilak doshi
Reply to  Joseph Zorzin
December 16, 2022 11:20 am

Thanks Joseph!

Peta of Newark
December 15, 2022 11:19 am

Quote:the world’s first “truly global” energy crisis

Actuality:= Exaggeration

Result: Complete loss of credibility

Final words: Thank you. Next….

Kit P
December 15, 2022 1:24 pm

In the past you could go to the web and find how much electricity was actually being produced. Then the information would disappear.

Maybe it was because of snarky comments I would post. Like you plan on replacing coal but you can not make toast and coffee with your panels. Did you know know the marine layer does not burn off until after noon most days?

RickWill
December 15, 2022 1:30 pm

The illusion is sustained by China’s massive subsidy of internally sourced coal. China mines about half the World’s coal. They burn more than half the global annual consumption of coal. This has enabled China to become the dominate global manufacturer of everything.

All that “renewable” stuff being installed globally is courtesy of China’s coal mining industry. This underpins the illusion that “renewables” are useful. Their destiny is energy poverty. They are a huge waste of precious resources.

No country can produce “renewables” using “renewable” energy. This stuff is an energy sink. It can never recover the energy that was liberated from the coal to produce it.

Crunch time is when China can no longer source vast quantity of low cost coal to subsidise its manufacturing. Or they stop accepting debt from the developed countries.

John Oliver
December 15, 2022 5:16 pm

I’m just wondering when we in the western world reach “Peak Stupid and brainwashed”. If we don’t get busy and start building a bunch of nuclear power plants using the latest in nuclear power plant design concept ;and simultaneously free-up the fossil fuel industry- well we’re all going to be screwed.

Tom Abbott
Reply to  John Oliver
December 16, 2022 7:10 am

That’s correct.

Our Western leaders seem to double-down on stupid when it comes to energy, so Peak Stupid is yet to be determined.

All over an unreasonable, unwarranted fear of CO2.

Our leaders are living in/creating a False Reality where CO2 is dangerous.

There is no evidence that CO2 is anything other than a benign gas, essential for life on Earth.

Our leaders are delusional to the point of destoying our societies and economies trying to control the production of CO2. CO2 does not need to be controlled. It is not harming anything. Therefore, our leaders are delusional. Nearly all of them.

John Hultquist
December 15, 2022 10:04 pm

network issue so this might repeat —

Check out the non-performance of the wind sector in Oregon and Washington that feeds into the BPA’s balancing of load and supply:
https://transmission.bpa.gov/Business/Operations/Wind/baltwg.aspx

The chart is for a week and updates every 5 minutes. To summarize, wind has been near Zero for the last 3 days. Dec. 13, 14, & 15. Temperatures are low and going lower with that part of the US south of Canada’s Prairies headed deep into the minuses. Ouch!

Tom Abbott
Reply to  John Hultquist
December 16, 2022 7:12 am

The alarmists would tell us we need to build more windmills to fix this problem.

The alarmists are divorced from reality.

Dave Andrews
December 16, 2022 6:24 am

The telling point is that fossil fuels at the end of 2021 provided 81% of the world’s energy the same as it did in the 1970s despite all the hype about unreliables.

And of course that is 81% of a much higher use of energy than in the 1970s

Last edited 1 month ago by Dave Andrews
Tom Abbott
Reply to  Dave Andrews
December 16, 2022 7:12 am

Good point.

Energywise
December 16, 2022 11:00 am

The IEA is similar to OFGEM – both run by full on green blob nut zero conmen – not a competent Engineer in sight

Last edited 1 month ago by Energywise
ATheoK
December 17, 2022 7:26 pm

Now, as the world grapples with an energy crisis with surging prices of fuels, fertilizers and food, the organization issued its new report on Renewables 2022 last Tuesday. The organization’s chief Fatih Birol tweeted “big news”, claiming that “the world is set to add as much renewable power in the next 5 years as it did in the whole of the past 20 years as countries seek to take advantage of renewables’ energy security benefits”.

Yes…

If you depended upon getting your paycheck from Biden’s Administration, what would you write?

As long as democrats are in charge, forget common sense coming from the government.
In fact, it may take decades to clear out climate and other cultists, so forget government having any common sense for years.

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