Solar power is set to boom over the next decade as renewables cover the majority of any increase in global demand for electricity, the International Energy Agency has said.
The industry watchdog has also predicted that energy demand will grow at its slowest rate since the 1930s over the decade if Covid-19 is not brought under control as soon as next year.
In the latest IEA analysis of the pandemic’s impact, the group predicts that global energy demand is set to drop by 5pc in 2020, energy-related CO2 emissions will fall by 7pc, and energy investment by 18pc.
Renewables are expected to meet 80pc of global electricity demand growth over the decade, the group said. Hydropower will remain the largest renewable source, but solar will be the largest growth area for energy, followed by onshore and offshore wind.
Boris Johnson pledged last week to quadruple British offshore wind capacity to 40GW within the decade, part of a so-called green industrial revolution that the Prime Minister believes could create millions of jobs over the next 10 years.
The IEA’s executive director Fatih Birol said: “I see solar becoming the new king of the world’s electricity markets. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022.”
Solar power is now consistently cheaper than new coal- or gas-fired power plants in most countries, the IEA said, and solar projects offer “some of the lowest cost electricity ever seen”.
In the group’s World Energy Outlook 2020 report, published on Tuesday, it outlined four potential scenarios for energy demand and addressing climate change. Under the first, known as the Stated Policies Scenario, energy demand recovers to pre-pandemic levels by early 2023.
In the second, known as the Delayed Recovery Scenario, the virus has a deeper economic impact than currently forecast, and recovery does not happen until 2025.
This slower demand growth will lower the outlook for oil and gas prices compared with pre-crisis trends, the IEA predicts.
In the final two scenarios, a surge in clean energy policies and investment puts the energy system on track to achieve climate change objectives in full.
Under each of the four scenarios, the IEA said, clean power is set to play a crucial role. “If governments and investors step up their clean energy efforts in line with our Sustainable Development Scenario, the growth of both solar and wind would be even more spectacular – and hugely encouraging for overcoming the world’s climate challenge,” Mr Birol said.
Coal demand will not return to pre-crisis levels in the IEA’s baseline forecast, with its share in the 2040 energy mix falling below 20pc for the first time since the Industrial Revolution.
Demand for natural gas will grow significantly, mainly in Asia, the group said, while oil remains vulnerable due to the major economic uncertainties resulting from the pandemic.
“The era of global oil demand growth will come to an end in the next decade,” Mr Birol said.
However, the IEA said the oil industry is unlikely to collapse in the immediate future.
“Based on today’s policy settings, a global economic rebound would soon push oil demand back to pre-crisis levels,” Mr Birol said.
Even with the drop in demand for fossil fuels, global emissions are unlikely to remain subdued.
“Despite a record drop in global emissions this year, the world is far from doing enough to put them into decisive decline,” Mr Birol said.
“The economic downturn has temporarily suppressed emissions, but low economic growth is not a low-emissions strategy – it is a strategy that would only serve to further impoverish the world’s most vulnerable populations.”