The IEA (Finally) Changes its Analysis

figur1.2When the International Energy Agency (IEA) recently said wind and solar can produce up to 30% of electricity needs at little additional cost in the long term, many analysts (with the exception of  those at Accessible Clean Energy) were left scratching their heads. Isn’t this the same agency that was consistently pessimistic in their assumptions about the growth potential and cost development of solar power? According to Terje Osmundsen, Senior Vice President of the Norwegian-based international solar power company Scatec Solar, the cost assumptions that have consistently been used by the IEA are 100% higher than even current market prices. He notes that as a result of the IEA’s misleading information, policymakers are under the false impression that the spread of solar power will require huge subsidies. He made a powerfully argued plea that the IEA get together with the International Renewable Energy Agency (IRENA) to conduct a joint study on the real economics of solar power.

And the result? An extraordinary volte-face on the part of the IEA which recently released a seminal study on solar and wind, and its conclusions are definitively different from its past perspectives. This latest report, The Power of Transformation-Wind, Sun and the Economics of Flexible Power Systems, describes a world where energy infrastructure not only accepts, but embraces the use of wind and solar power as powerful assets in any energy portfolio. IEA Executive Director Maria van der Hoeven discusses:

“This new IEA analysis calls for a change of perspective. In the classical approach, variable renewables are added to an existing system without considering all available options for adapting it as a whole.     This approach misses the point. Integration is not simply about adding wind and solar on top of ‘business as usual’. We need to transform the system as a whole to do this cost-effectively.”

Some countries such as Denmark  never waited for IEA analysis to  come into line with market reality. Denmark currently gets 55% of its electricity from renewables. Other countries such as Italy, Germany, Ireland, Spain, and Portugal pull from 10% to more than 30% of their energy from renewable sources.

We can’t help wondering what role was played by Terje Osmundsen’s incisive paper in bringing the IEA up to date in its analysis.

Categories: Economic Indicators

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