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BP made a mistake in its 2018 World Energy Outlook by underestimating the speed of renewables adoption, notably solar capacity. In an interview with Euractiv, BP’s chief economist, Spencer Dale, explained that while BP was aware of the learning curve typical of solar capacity adoption, it was unaware just how far along that curve the world had traveled.
The learning curve in solar energy capacity expansion is closely related to production costs: for every doubling of capacity, costs fall by a quarter. So, BP was apparently surprised not by the scale of the transition to renewable energy, especially in China and India, but by the speed.
As Dale said, the actual solar capacity figures from China are “telling us less about solar energy and more about the pace of the energy transition in China. And the pace at which essentially they’ve reduced their share of coal and filled up that hole with solar energy.”
According to some, this is not the first time BP has underestimated renewables adoption. “Every year BP has predicted a sudden slowdown in renewable energy growth, and every year it has been wrong,” Greg Muttitt from green NPO Oil Change International told Euractiv. However, it’s not only BP that has been consistently underestimating alternative energy. The IEA has also underestimated renewables as had the European Commission.
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Even so, Dale made a point of warning that China’s solar race could start sputtering some time in the future. This should be a safe enough prediction: sooner or later the local energy market will become saturated with solar power capacity.
Last year, China added 53 GW of new solar capacity with investments of US$86.5 billion. The new capacity addition accounted for more than half of the global total for 2017, which stood at a record-high 98 GW. Global investments in solar power last year reached US$160.8 billion.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.