In the past few weeks, three interlinked events have occurred which will prove to be transformative in the global energy economy. China, Japan and South Korea have all committed to achieve net zero greenhouse gas emissions by 2050; the UK, as host of COP26, has unveiled an accelerated path to carbon neutrality; and Joe Biden won the US presidential election. 

As we close out 2020, it is possible to envisage a robust global response to both the short-term economic and social impacts of Covid-19, and the longer-term challenge of avoiding catastrophic climate change. The vehicle for delivering both objectives is renewable energy; or, put another way, the transformation of the global energy economy by renewable energy.


The International Energy Agency’s (IEA) 2020 World Energy Outlook has one clear conclusion: that renewable energy, principally solar and wind energy, will be the only technologies to grow in 2020.

Fossil fuels' decline

The resilience of these two sectors contrasts with oil and coal, which have, for separate but related reasons, had a traumatic year. Wood Mackenzie estimates the price crash of 2020 has wiped away $1.6tn in its valuation of oil and gas producers. Coal, for so long the motive power of global economic growth, is financially underwater, with only the dwindling power of incumbency keeping it afloat in key markets such as south-east Asia.

The speed at which oil and coal have become investment pariahs is due in part to the work of bodies like Carbon Tracker that have highlighted the stranded asset risks associated with these technologies.

If governments are serious about meeting their Paris Agreement climate targets, they cannot sanction the further development of fossil fuels, and will limit the running of existing plants. The decision by Japan, China and South Korea to commit to a net-zero pathway will also drastically reduce the availability of finance for new coal plants, especially in Africa and the Asia-Pacific region. It also has immediate implications for the extractive industries in Australia, Colombia and Indonesia, who are now asking who will buy their coal.

Earlier this year, Goldman Sachs echoed the sentiments of the IEA report when they stated that renewables will become the largest area of energy spending in 2021, beating oil and gas. One reason for this, and associated with growing understanding of the stranded asset risks of fossil fuels, is the rising cost of capital for new fossil projects — to a point where it is significantly higher than that for wind and solar power.

This, in turn, has reduced the rate of return for new upstream oil and gas projects, driving them to a par with wind and solar. Next year will see renewables capital expenditure exceeds that of hydrocarbons for the first time ever; another sign of the inevitable and inexorable transition to clean energy.

BP, Shell and the other European oil majors are not transitioning away from oil and gas and towards wind and solar for sentimental reasons. Their investors and their boards can read the same analysis of return expectations. 

Large scale

The transition to renewable energy is accelerating and it is happening at scale. In 2020 we have seen how it is possible to deliver very large amounts of base cost, resilient and reliable wind and solar energy in markets around the world.

In the UK, renewables, powered by that country’s increasing offshore wind reserves, delivered 44% of its electricity demand during 2020. In Chile, a global consortium of banks invested $620m in bringing 630MW of Mainstream Renewable Power’s wind and solar plant to financial close. This is the second tranche of a mammoth 1.3GW portfolio won in a competitive auction in 2016, when coal was priced out of the market.

In South Africa, the government committed to delivering its fifth round of renewables procurement, as the backers of the country’s only new independent coal plant, the 630MW Thabametsi plant, withdrew. My company, Mainstream Renewable Power, is present in all these markets, helping to lead the transition from fossil fuels to renewable energy. In each, that transition is underpinned by a global network of investors convinced, as we are, that the world is moving inexorably, and at speed, to a decarbonised energy economy. 

It is these countries’ leadership that is inspiring Vietnam, the Philippines, Indonesia and Colombia, whose modern economies were all built on coal, to envisage a transition to wind and solar. It is the example of South Korea, Japan and China in setting a timetable to reach net zero that will inspire, and finance, others regionally and globally to do the same. It is the prospect of the United States re-joining the UNFCCC process that makes the likelihood of a meaningful conclusion to COP26 in Glasgow all the greater.

Mainstream Renewable Power was founded with a vision of a world electrified by renewable energy. What is truly exciting as we look towards 2021 is the fact that we can see the framework of that new electric society in markets as diverse as Chile, South Korea and the UK. Our challenge now is to accelerate the transition to renewable energy.

In its recent report, Global Landscape of Renewable Energy Finance 2020, the International Renewable Energy Agency (IRENA) reminded us that to meet the Paris Agreement targets we need to quadruple the amount of annual investment in renewable energy. We know that there is a wall of money looking to invest in clean energy infrastructure; we know that next year that there will be more markets to invest in than in 2020; and we know that the market knows that it no longer makes sense to invest in oil or coal.

For all these reasons I am confident that we will meet the challenge that IRENA has set and that a world electrified by renewable energy is no longer a dream, but a vision embedded in reality.

Mary Quaney is the chief executive of global wind and solar development company Mainstream Renewable Power. Mainstream Renewable Power has announced 47 solar and wind projects worth $14.7bn since 2009 (Source: fDi Markets).

This article first appeared in the December/January print edition of fDi Intelligence. View a digital edition of the magazine here.