A raft of new analyses has come to underscore the split views on whether COVID-19 will derail years of renewable cost drops, with predictions from the International Energy Agency (IEA) subjected to fresh scrutiny.
This week, think tank the IEEFA released a study predicting the cost-efficiency gains of solar and others will continue despite the pandemic, contrasting the forecast with those it claimed the IEA had issued last month.
“IEEFA draws a conclusion completely at odds with what the IEA is saying, notably that COVID-19 is a setback for the inevitable technology-driven trends of deflationary renewables,” the report said, adding: “We see increased stranded thermal asset risks.”
The analysts linked their optimism with post-COVID renewable costs to the specific case of solar, citing “dramatic” declines for the technology in recent years. They pointed at the US$0.0135/kWh tariff scored in May by the 2GW Al Dhafra solar project, awarded to EDF and Jinko Solar.
The study noted the 90% fall of solar module prices between 2010 (US$2 per watt) and 2020 (US$0.17-0.2 per watt), adding: “For many years commentators like the IEA have ignored this trend, and consistently forecast ~4% annual deflation of solar costs over the coming decade.”
“IEEFA also expects the IEA to continue to be surprised every year over the coming decade at the speed of ongoing technology-driven deflation and hence the rate of uptake of renewable energy, electric vehicles and battery storage,” the report went on to say.
Renewables front and centre after ‘underestimating’ row
Approached by PV Tech, the IEA had not offered any comment on IEEFA’s claims by the time this article was published.
The scrutiny on the agency’s green energy estimates goes back years. In late 2016, Carbon Brief analysts said the organisation had “consistently underestimated” the renewable momentum in preceding years, despite the release every year of figures showing that growth was accelerating.
So far this year, the IEA has maintained a cautiously optimistic outlook on renewables’ post-COVID prospects. In late May, the agency said the pandemic would “hurt” green energy growth – with solar roll-out set to decline this year from 106GW-plus to 90GW – but “not halt” it.
Renewables, the IEA went on to say in separate analysis, would be the only power source to sidestep the “historic shock” from COVID-19. “Only renewables are holding up during the previously unheard-of slump in electricity use,” was how executive director Fatih Birol put it.
As governments scramble to legislate for the COVID-19 recovery, the agency has repeatedly called on them – and oil majors – to place the energy transition at the heart of stimulus plans. It has urged for clean energy finance to ramp up, amid findings that spending will dip 10% year-on-year.
In addition, the IEA has recently co-produced research bolstering the business case of clean energy. In a study alongside Imperial College London, the agency found that returns from listed renewable portfolios “significantly” outstripped those of fossil fuels in major Western economies.