IEA notes solar progress, CCS limitations in 2023 TCEP report

The International Energy Agency has upgraded its global progress evaluation of the solar industry, noting rapid growth of clean energy technologies in certain sectors, it said in its annual Tracking Clean Energy Progress report.

TCEP tracks some 50 components spanning oil and natural gas, electricity, transport, and buildings sectors, among others.

The analysis considers geography, applications, deployment, supporting infrastructure and policy, including recommendations for both policymakers and the private sector.

Solar PV generation rose 26% in 2022, aligning itself with the average compound annual growth required through to 2030 in the agency's Net Zero Emissions by 2050 Scenario (NZE), IEA data showed.

The IEA said the sector was on track in its evaluation, alongside electric vehicles and electricity consumption for lighting as the only two other components on track in 2023.

Nuclear capacity growth was also noted in the report, with additions growing by some 40% in 2022 to the tune of 8 GW of newly installed capacity. That, according to the IEA, broke the stasis of stagnant growth in the sector from 2019-21.

Heat pumps were also highlighted as a key area of growth, with global sales up 11% last year and not far off the IEA's 15% requirement outlined in its NZE scenario

Overall, the IEA said that while more efforts were needed in many sectors, progress was "not on track" in key sectors such as oil and gas, low-emission fuels, transport and industry, adding that behavior changes also lagged.

"Russia's invasion of Ukraine and the resulting energy crisis have increased the salience of behavioral changes," the IEA said.

"The ongoing energy crisis creates a window of opportunity for crisis response measures. Across the world, governments are calling on citizens to change their energy-consuming habits to contribute to a solution to energy shortages."

Electrolyzer potential

The IEA indicated that while electrolysis capacity for dedicated hydrogen production had made progress in recent years, the rate of capacity additions had slowed by 45% in 2022, with around 130 MW of new capacity entering operation.

Concurrently, the IEA reported a 25% increase in electrolyzer manufacturing capacity, amounting to some 11 GW/year in 2022, saying the "bigger story is likely yet to come".

The IEA saw a growth trajectory with a potential of 3 GW of installed capacity by the end of 2023, if projects under development are delivered on time.

If all projects in the pipeline were realized, global installed capacity could reach 170-365 GW by 2030. That, however, would be short of the more than 550 GW needed by 2030 under the IEA's NZE Scenario.

S&P Global Commodity Insights data showed global low-carbon hydrogen project announcements totaled 5.4 million mt/year in Q2 2023, up 34% from Q1 2023.

Electrolysis-based projects were responsible for the majority of this capacity, totaling 5.2 million mt/year, according to the latest Hydrogen Market Monitor report from S&P Global analysts.

"However, the vast majority of capacity that plans to commission in the next two years has not yet secured financing," the analysts said, adding that less than 5% of electrolysis projects with a 2024-25 start-up date have reached final investment decision.

In terms of policy, however, the European Commission's latest Electrolyser Summit state of play report, published in June, highlighted its upscaling efforts in both the Critical Raw Materials Act and the Net-Zero Industry Act.

Of note, the EC has set a target of 25 GW of annual electrolyzer manufacturing capacity by 2025. The IEA said both policymakers and the private sector must aid innovation, support cost reductions and promote the creation of resilient electrolyzer supply chains.

Platts, part of S&P Global Commodity Insights, assessed the cost of producing renewable hydrogen via alkaline electrolysis in Saudi Arabia at $3.22/kg on July 12, among the lowest globally.

By contrast, production costs in Europe were assessed at Eur5.13/kg ($5.73/kg) (Netherlands, including capex), based on month-ahead power prices.

CCS limitations

Assessed as not on track, carbon capture, utilization and storage (CCUS) were also outlined as an area for improvement within the energy mix, according to the IEA.

It noted that more than 50 new CCUS projects had been announced since January 2022, aiming to be operational by 2030 and capable of capturing around 125 mt of CO2 per year, it said.

"Around 40 commercial facilities are already in operation applying carbon capture, utilization and storage (CCUS) to industrial processes, fuel transformation and power generation," the IEA said.

"Nevertheless, even at such a level, CCUS deployment would remain substantially below (around a third) the around 1.2 Gt CO2 per year that is required in the NZE scenario."

The EC identified CCUS as a strategic net zero technology in its NZIA earlier this year, setting out an EU-wide goal of achieving annual CO2 injection capacity of 50 mt by 2030.

The IEA recommended accelerated lead times for CCUS projects however, including the development of hubs and shared networks. Policy makers could also aide through implementing policies designed to stimulate investment, it said.