While anti-renewables protestors rally in Canberra and large-scale developments in Australia stall, Europe continues to power ahead with adoption of solar and wind energy.
Rystad Energy has forecast that in 2024, solar energy generation in Europe will grow by about 50 terawatt hours (TWh), the first time that it will outpace any other generation source due to major capacity installations.
Wind power generation will also increase, though the rate of growth is not expected to match the 50TWh increase seen in 2023.
Germany, which went from being a major electricity exporter to a net importer in 2023, is the clear leader as Europe’s largest economy seeks to reduce its dependence on external sources of energy.
Along with more stable output from nuclear generation, Rystad Energy believes the greater adoption of renewable energy will lead to a further decline in fossil fuel demand for power.
“As the demand for power in Europe is only growing slightly, we can conclude that Europe is fulfilling its electricity demand growth entirely with renewable sources,” Rystad head of renewables & power EMEA Research Vegard Wiik Vollset said.
“This indicates that the growth of renewable energy is more than sufficient to cover the growth in demand, which is why we are observing a decline in the use of fossil fuels.”
Not a good look
Australia’s comparatively slow increase in renewables generation capacity in recent times – with the Clean Energy Council finding that just $150m of wind, solar and battery projects reached financial close in the September 2023 quarter – is not a great look when compared with Europe’s progress.
While it is not quite comparing apples to apples, many European countries are members of the OECD, meaning that they are pretty much in the same peer group at the very least.
So for Australia not to be able to keep pace with some of our peers is rather telling and is a hint that we might not achieve our emissions goals.
It could also be the jolt needed for us to look at how Europe is increasing the use of renewables and doing the same here.
Addressing misinformation, fast-tracking regulatory approvals and providing financial support are all steps that can be taken to do so.
Is oil losing momentum?
While the growing use in renewable energy is likely to lead to declines in fossil fuel usage, they are certainly going away soon though it does seem that oil is losing momentum.
Increased geopolitical risks and OPEC output cuts have delivered short-term boosts that failed to sustain themselves, leaving the benchmark Brent crude price hovering mid-way between US$70 and US$80 for each barrel.
There is also little to no consensus about whether demand for crude will increase or not.
While OPEC had previously flagged its expectation that demand will climb by 1.85MMbbl per day in 2025, the IEA believes that demand will slow almost to a halt in the coming years.
The Bank of America has also chipped in with its forecast that while demand will continue to rise for now, the rate of growth has likely peaked.
It adds that Chinese crude demand is likely to peak near 2030 though India will remain the fastest growing market.
The upshot of this is that while crude prices might still pick up later this year as demand catches up with supply, there’s a finite point where demand will start falling, which – depending on whether supply falls faster or slower – means that are likely to be set limits on how high prices can climb.
Should the use of renewables and energy storage accelerate and the use of EVs rise accordingly, this drop in demand might happen sooner rather than later – though this is conjecture at this stage.