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Are We Underestimating The Growth Of Renewable Energy?

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Although renewable energy sources such as wind and solar provide a small percentage of the world’s power, their share of the global energy portfolio is growing. For instance, global solar generation nearly doubled in 2011, with energy consumers using 55 terawatt hours of renewable electricity compared to 30 terawatt hours in 2010. Even major players such as Google, Hewlett Packard, and Warren Buffett have jumped on the renewable energy bandwagon by making major investments in solar power plants.

But despite such remarkable gains made by the solar industry in recent years, the International Energy Agency projects a slower growth in renewables over the next decade. The Agency predicts solar will provide only 4.5% of the world’s energy by 2035.

These recent predictions have led many analysts to claim that the IEA is perhaps underestimating the growth of renewable energy.

For instance, a chart made by Gregor MacDonald based on BP’s Statistical Review of World Energy reveals exponential growth in solar power over the past 10 years. Of course, many critics would hasten to point out that the growth of solar has been spurred by favorable government subsidies and cheap solar panel prices. When government subsidies end, they argue, we’re going to see a huge tapering off in the number of solar plants developed.

However, the cost associated with solar generation continues to flirt with price-parity of coal and technology continues to improve. Pessimists in the past have very frequently been proven wrong about renewable energy. And why is their reason to believe predictions from the IEA when their past predictions of renewable energy were so off the mark?

Back in 2000, the IEA predicted that non-hydro forms of renewable energy would constitute 3% of global energy usage in 2020. But by 2008, the world had already achieved that 3% figure.

My prediction is that renewable energy will continue to achieve strong growth around the world as countries such as China and India invest in solar power in such a big way. Although the retraction of government subsidies in the US may have a short-term impact on renewable energy projects, in the long-term growth will still continue as prices decrease and technology improves.

What are your thoughts on renewable energy? How much do you think the renewable energy sector will grow over the next 10 years?

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