Solar to dominate US energy mix in 2023. Here’s what you need to know about the global energy transition this week

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Roberto Bocca, Head of Shaping the Future of Energy and Materials; Member of the Executive Committee, World Economic Forum, Stefan Ellerbeck, Senior Writer, Formative Content

• This weekly round-up brings you the latest on developments in the global energy sector.
• Top energy news: South Africa invokes disaster law over power crisis; Solar to dominate new US energy capacity this year; Big oil makes record profits.
• For more on the World Economic Forum’s work in the energy space, visit the Shaping the Future of Energy, Materials and Infrastructure Platform.

1. News in brief: Energy stories from around the world

South African President Cyril Ramaphosa has declared a national “state of disaster” over his country’s crippling power shortages, saying they pose an existential threat to the economy and social fabric. State electricity utility Eskom has been implementing the most severe rolling blackouts on record, leaving households in the dark and disrupting businesses.

EU leaders have agreed to allow “targeted, temporary and proportionate” support to ensure Europe’s future as a manufacturing base for green tech products and counter US and Chinese competition. The European Commission has proposed loosening rules on state aid for investments in renewable energy, decarbonizing industry, hydrogen or zero-emission vehicles, partly in response to the US Inflation Reduction Act.

The UK’s biggest bank, Natwest, says it will immediately stop all reserve-based lending for new customers financing oil and gas exploration and extraction, before phasing it out entirely by the end of 2025. Smaller oil and gas producers rely heavily on reserve-based lending facilities to operate, which provides a line of credit based on oil and gas reserves.

Over 99% of existing US coal power plants are costlier to keep in operation than solar and wind-power replacements, according to a new study. The report by the Energy Innovation think tank says the cost of renewables has dropped significantly over the past decade, whereas coal costs have stayed flat or risen.

A €600 million ($640 million) upgrade to a solar panel manufacturing facility in Sicily has made it the biggest in Europe, Euractiv reports. The 3Sun factory now has production capacity of around 200 megawatts per year, and plans to expand this even further to 3,000 megawatts by mid-2024.

Citicore Renewable Energy, one of the Philippines’ biggest solar power producers, is planning to go public this year to fund a $4 billion investment in new solar projects over the next five years. The Philippines aims to increase the share of renewables in its power mix to 35% by 2030, and to 50% by 2040.

A Canadian company says it has become the first green hydrogen producer in North America to secure the necessary permits for a commercial-scale facility. Authorities in Canada granted environmental approval for EverWind Fuels to begin converting a former oil storage facility and marine terminal in Nova Scotia into a green hydrogen and ammonia production hub.

India, the world’s third-biggest oil importer has diversified its sources of energy imports but will continue to buy most of its oil from the Middle East for “a long time”, oil minister, Hardeep Singh Puri says. He also said India will consider buying oil from Iran and Venezuela if sanctions are lifted, and would continue purchases from Russia if prices “continue to be good”.

The world’s largest producer of wind turbines, Danish firm Vestas Wind Systems, says it has developed a solution using chemicals to breakdown and recycle used turbine blades, Bloomberg reports. Industry body Wind Europe has previously called on authorities to ban blades from ending up in landfills.

2. Solar to dominate US energy mix in 2023

The US plans to add 54.5 gigawatts (GW) of new electric generating capacity in 2023, with more than half being powered by solar energy, the country’s Energy Information Administration (EIA) says. Texas and California are expected to have most of the new solar capacity this year, with 7.7GW and 4.2GW, respectively. Those two states will account for 41% of the planned solar additions.

Additions of solar capacity declined by 23% in 2022 compared with 2021 due to supply chain disruptions and other challenges related to COVID-19 , the EIA said. “We expect that some of those delayed 2022 projects will begin operating in 2023, when developers plan to install 29.1GW of solar power in the United States,” it said. That would represent about 54% of the total planned new generating capacity.

Solar power will make up 54% of new US electric-generating capacity in 2023. Image: EIA

If all projects come online as planned, the new utility-scale solar capacity added in 2023 will be the most in a single year, more than doubling the current record of 13.4GW in 2021.

Developers also plan to add 9.4GW of battery storage in 2023 to the existing 8.8GW, and 6.0GW of wind capacity.

3. Big oil makes record profits

The biggest Western oil firms more than doubled their combined profits in 2022 to $219 billion, smashing previous records in a year where Russia’s invasion of Ukraine reshaped global energy markets. The combined profits of BP, Chevron, Equinor, Exxon Mobil, Shell and TotalEnergies meant a record $110 billion in dividends and share repurchases was paid out to investors in 2022.

Sharp rises in oil and gas prices, falling debt levels and the abrupt drop in Russian supplies to Europe also spurred increased spending on fossil fuel production as governments prioritized security of supply over hard-won net-zero ambitions. Some European companies that had outlined plans to reduce or slow oil and gas investments and build large renewables and low-carbon businesses to cut greenhouse gas emissions have adjusted their strategies as a result.

BP Chief Executive Bernard Looney is rowing back the company’s plans to reduce its oil and gas output and carbon emissions by 2030. “We need lower-carbon energy, but we also need secure energy, and we need affordable energy. And that’s what governments and society around the world are asking for.”

More on energy from Agenda

Analysis by Carbon Brief of the International Energy Agency’s Electricity Market Report 2023 shows that renewables, combined with resurgent nuclear power, will more than cover growth in electricity demand between 2022 and 2025. This means clean-energy sources will start displacing fossil fuels.

Moving towards a low-emission global economy will require new “green jobs” and reskilling, including in the maritime industry. A group of experts explain how shipping’s green transition could create new jobs and skills for hundreds of thousands of seafarers worldwide.

Solar and wind power generated a fifth of Europe’s electricity in 2022, overtaking gas for the first time. Analysis by energy think tank Ember says solar capacity increased by 24%, which was double its previous record.

To learn more about the work of the Energy, Materials, Infrastructure Platform, contact Ella Yutong Lin: ellayutong.lin@weforum.org