Clean energy sources will set new records through 2025

But so will coal and natural gas.

The IEA’s latest Electricity Mid-Year Update Report is out on the status of world electricity. This is an important document, because it can assist policy makers in selecting for the current trends in electricity markets. As should not be a surprise to my audience, it seems that all three clean energy sources—wind, solar, and nuclear—are currently growing at a record scale.

Many energy analysts often fall into the “either-or” trap without considering that global energy consumption is still set to increase. In fact, China is currently the leader in the rollout of coal, nuclear, wind, and solar technologies. Meanwhile, energy consumption in Africa (excluding South Africa) is only one-eighth of South Africa’s and one-tenth of France’s. This implies that the world still requires a significant amount of energy to improve living standards, and several technologies are expected to increase their market penetration.

What I found interesting about the IAE’s analysis is that negative prices, which caused a panic in Europe, have not had a significant impact on retail electricity prices.

Another interesting point is on electricity prices in general. As it turns out, the United States has the most affordable wholesale prices at $30 per MWh, whereas in Europe it is more than double at $70 per MWh. In nuclear-powered France, it stands at $55 lower per MWh than in Germany.

French prices in H1 2024 were further reduced by low seasonal electricity consumption and generation oversupply. The previously tight electricity market in France has eased as output from nuclear power plants continued to rise, the backbone of the country’s electricity generation. Since mid-March 2024, the cross zonal transmission was restricted due to safety concerns. With limited import/export availability, this has partly isolated domestic wholesale prices. Prices in France were on average about USD 55/MWh lower than in Germany in Q2 2024. While futures prices indicate an expectation that the wholesale price spread shrinks, they also suggest higher prices in Germany than in France.

What should one make of this discrepancy? Well, it is worth noting that the United States enjoys affordable electricity due to the widespread availability of affordable natural gas. It is natural gas prices that set the wholesale price of electricity.

However, on a worldwide basis, renewable are clearly leading in terms of new electricity generation. Nevertheless, as the report rightly states, coal, gas, and nuclear are all set to increase in the coming future.

We have not seen either peak coal, peak oil , peak natural gas and certainly not peak nuclear.

Personally, I do not see a major threat to them because the world will first focus on energy addition before considering a transition.