Today’s modern society requires an enormous amount of energy to function. In 2018, it was estimated that energy equivalent to 14,391,000,000 tonnes of oil was consumed. The world’s total energy is 85% sourced from oil, coal, and natural gas. With such a large emphasis on climate change, can less dependence on fossil fuels and more on renewable energy become a viable option?


World Energy Consumption

Since 1990, the world’s population has increased by an average rate of 1.3% per year, energy consumption has increased by a rate of 1.8% per year, and total emissions have increased by an average rate of 1.8% per year. The disparity between population growth and the other two metrics is due to people using more electricity per capita than they ever have before. Surprisingly, this metric is led by Canada, having the highest energy used per capita out of the ten highest energy-consuming countries in the world. As the population approaches eight billion people, we are on track for record-setting levels of energy consumption.

Table 1: World Energy Consumption vs. Total Population

China is currently the world’s largest consumer of energy and accounts for 22% of the world’s energy consumption. China overtook the United States (US) in 2009 as the largest consumer. The US is now the second-highest consumer at 16%, followed by India at 6%. The US has shifted its primary energy source away from high-emission coal and has transitioned to natural gas, which now contributes to 31% of its energy needs.

Natural gas is overtaking coal as the primary energy source in more developed countries as it is more affordable and produces far fewer emissions. However, it requires a large amount of infrastructure to be incorporated into the energy system. Less developed countries such as China and India have only recently begun to implement this energy source. Both China and India remain heavily dependent on coal for energy production, with 56% of India’s energy mix, and 58% of China’s energy mix being coal-based.

Table 2: Fuel Used for Electricity Production

Renewable Energy

Renewable energy is a controversial topic lately, with an international push away from fossil fuels and toward environmentally friendly, renewable forms of energy. Renewable energy currently represents 25% of the world’s total electricity production. Renewable energy is often confused for green energy; Renewable energy is defined as any source of energy that does not deplete or can be replenished within a human’s lifetime. While green energy is a subsection of renewable energy and is defined as Renewable energy that has a low environmental impact.

The main forms of renewable energy include solar, wind, biomass, geothermal, hydropower, ocean resources, solid biomass, biogas, and biofuels. The green energy segment is made up of solar, wind, small impact hydropower, and geothermal.

Figure 1: Renewable Energy

Within the past 10 years, there has been a large change in the proportion of our electricity that is generated from renewables. From 18% in 2008 to over 25% of electricity production in 2018. The average growth rate of the electricity supplied by renewables has increased at an average rate of 2.09% over the past 10 years. This is 0.5% above the 10-year average growth rate in total energy consumption. This indicates that the growth in renewable energy is covering the growth in energy consumption and slightly making up for the already existing energy supply based on fossil fuels.

However, at the current rates, it will be very long term before the excess growth of renewables can replace the existing fossil fuel power generation. For countries to shift their primary electricity source to renewables, it will require increases in capital investments to fuel larger growth. Some countries, such as Norway, have already achieved this target. They source 98% of their electricity from renewable sources, largely from 330 operating hydroelectric dams.

Table 3: Renewable Energy Growth Rate vs. Total Energy Consumption Growth Rate

Renewable Sources

Hydro – The largest source of renewable power is from Hydro with 4193.1 terawatt-hours (TWh) generated in 2018, and 62.8% of the market share. It had above-average renewable energy 10-year growth with an average rate of 2.58%. The large production of hydroelectricity is partly due to the high capacity of hydroelectric dams. The largest being the Three Gorges dam in China, with a capacity of 22,500 Megawatt-hours (MWh). In comparison, the average coal power plant can produce about 600 MWh’s. Hydro dams rarely stop production and have a constant supply of water. Hydro has a lower level of emissions than coal, gas, biomass, solar, and geothermal. However, large hydro projects can have negative effects on the environment by damaging the waterway ecosystem. Hydro is expected to continue to grow at a consistent rate of 2.5% into the near future, with an estimated 4576 TWh’s to be produced in 2023.

Wind – The second largest contributor to renewable energy is wind, with a global capacity of 1270 TWh’s produced in 2018, making up 19% of the global renewable energy share. Onshore wind produced 90% of the total wind contributions in 2018. In 2018, its capacity increased by 12% from 51 giga-watt hours of new operations. Onshore wind has some of the lowest capital costs to construct, making it an attractive area for large scale investments. However, inconsistent wind needs to be taken into consideration which results in more downtime than some of the other renewable sources. China currently has the largest onshore wind capacity with continued plans to expand. It is estimated the global sector will grow to 1708 terawatt-hour capacity by 2023.

Offshore wind is a rapidly growing sector of renewables that has almost limitless growth capacity, as it can be implemented almost anywhere in the ocean using fixed or floating turbines. Offshore electricity production increased by 20% in 2018 to 65.8 TWh’s. This is expected to grow to increase rapidly to 173 terawatt-hours in 2023. China has seen the largest expansion in this sector as they tripled their capacity in 2018. Offshore wind is more ideal than onshore because it consistently maintains a high speed, whereas onshore wind can often be too slow or too fast, reducing capacity. Larger turbines with higher generating capacities can be installed offshore and typically can be installed in larger numbers. However, installing turbines in the ocean is far more expensive than onshore and requires much more infrastructure. Offshore electricity is still more expensive than other renewable solutions resulting in less production in this area. Recent estimates indicate that cost reductions of 45-50% in the next 5 years are imminent due to economies of scale and further innovations. Large investments in R&D have led to increases in wind turbine efficiency and capacity. GE Renewable Energy (NYSE:GE) has committed $400 million to the development and deployment of the Haliade-X offshore turbine. It would become the largest turbine to date at a 12MWh capacity. One singular turbine would produce enough energy to power 16,000 households.

Solar – The third largest contributor to renewable energy is solar with a global capacity of 584.6 TWh’s produced in 2018, making up 8.8% of the global renewable energy market. It saw a 31% generation increase in 2018, the largest growth out of all renewables. It is expected to continue its large growth and reach 1460 TWh’s in 2023. Increases in technology and economies of scale have declined the price of solar power globally by about 70% over the past decade, making it a more viable option for investors. China had the largest additions to its capacity in 2018 at 44 giga-watt-hours (GWh), more than the US, India, and the EU combined.

Table 4: Renewable Capacity Growth Between 2019 and 2024 by Technology

Capital Costs

Overnight Capital – To compare building different types of power generating plants, the metric overnight capital costs is used. It sums all costs to construct an energy production facility at the current market costs. The following rates were taken from the U.S. Energy Information Administration 2019 report.

The most affordable power plant to construct is a natural gas plant at $1,040 USD/KWh. This is followed by four renewable energy sources, onshore wind, solar, hydro, and biomass respectively, all require less capital to install than coal and nuclear. However, unlike natural gas, renewable sources of wind, solar, and hydro do not require an expensive commodity to produce electricity. Based on this, the private sector alongside governments will continue to push the renewable energy sectors to slowly overtake fossil fuels.

Table 5: Total Overnight Capital Costs per RE Source

Moving Forward, Environmentally

As climate change draws more attention and countries continue to develop and evolve, we need to be prepared for the imminent population growth explosion that is expected to hit within our lifetime. The need for more energy is imperative, but the energy sources we are relying on now are not in-line with our planet’s design. Moving towards renewable energy does not just help produce the energy we need to develop further, it is greener, sustainable, more affordable, and has major economic opportunities.

So, why not go renewable?

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