“I see solar becoming the new king of the world’s electricity markets”: Fatih Birol.

The Paris-based International Energy Agency (IEA) released its annual World Energy Outlook report on the future of the industry, and as they did, IEA Executive Director Fatih Birol shared to reporters his vision for the future: “I see solar becoming the new king of the world’s electricity markets.”

Why? With solar projects getting cheaper to manufacture and install, more and more countries where solar is already cheaper than coal and gas, governments are setting ambitious targets to cut emissions and reduce their fossil fuel dependence. With this information at hand, the IEA predicts that renewables will account for 80% of new power generation over the next decade. IEA states in its report that capital spending on energy this year is set to plunge by 18%, as global energy demand is expected to fall by 5% in 2020, a pullback not seen since World War II, a cause accelerating the world’s transition to cleaner sources of energy as the coronavirus pandemic accelerates a shift in investment away from fossil fuels. A more ambitious scenario, including for instance the adoption of net-zero emissions targets by 2050, would see PV electricity generation perform more strongly still, the report said. Integrating new wind and solar power will depend on adequate investment in all parts of the system, including distribution networks, the report added.

The next decade will be crucial in determining whether the transition to clean energy pushes “emissions into structural decline,” the report sentences.

Word from the top

“This is very important for clean energy technologies as they require relatively high upfront costs. Putting these things together we are seeing a big boom in renewable energies,” said IEA executive director Fatih Birol, per the Wall Street Journal. “Solar is now the new king of electricity markets.” Mr. Birol said that meeting new demand with renewables wasn’t enough to reduce greenhouse gas emissions. He noted that existing energy and heavy industry facilities—including coal and petrochemical plants, cement kilns, steel and iron manufacturers—would generate enough emissions before they are retired and replaced to increase global temperatures. Mark Florian, head of the global energy and power infrastructure funds at BlackRock Inc., the world’s largest asset manager, said some investors were attracted to the stable returns that renewable projects could provide, but that the sentiment wasn’t universal. “We definitely see further growth in renewable energy investment and certain institutional investors who want to push harder, but I wouldn’t say that is ubiquitous.”

“It is a challenging year for our industry and many others, but as economies recover, we remain optimistic about what lies ahead,” said Frank Macchiarola, a senior vice president at the American Petroleum Institute, a U.S.-based trade group of oil producers. “Oil and natural gas will continue to be a significant source of that energy for decades to come.”