Renewables Key But Oil And Gas Needed For Stable Power, Says OPEC Chief

(MENAFN- Trend News Agency) BAKU, Azerbaijan, September 15. Renewable energy has become a significant part of electricity generation, and it is clear it will play an increasing role in the future, said Haitham Al Ghais, Secretary General of OPEC, Trend reports.

In his latest article, Al Ghais emphasized the growing role of renewable energy in global electricity generation but cautioned that a broader perspective is needed to fully understand its implications.

“While we do hear talk of falling costs for renewables, it is important to look more broadly at the potential implications and true costs of the expansion, for example, in terms of what they bring to grid reliability and from the perspective of overall affordability and ensuring a balance,” he said.

Al Ghais highlighted that new pressures on electricity grids, including the expanding use of AI and the massive data it requires, have made grid reliability a central concern worldwide.“The increasing share of renewables is in fact exposing technical limitations in grid flexibility and stability. Ageing infrastructure and the pressing need for new grid capabilities to accommodate decentralized renewable technologies are becoming increasingly apparent,” he noted.

Citing OPEC's World Oil Outlook 2025, he pointed out that global electricity generation is projected to rise from 31,345 TWh in 2024 to 57,556 TWh by 2050, with wind and solar seeing the largest increase - a rise from 4,931 TWh to 26,013 TWh over the same period. Non-hydrocarbon sources are expected to grow from 42% to 67% of the electricity mix.

However, Al Ghais warned that traditional measures of renewable costs, such as the Levelized Cost of Energy (LCOE), do not capture the full system costs.“These additional costs include the infrastructure needed, as renewables are geographically constrained, increasing reliance on long transmission lines, as well as meeting the challenges that strain system stability, such as curtailment and intermittency,” he explained. When such factors are included, OPEC calculates that real costs rise to $77/MWh for solar, $72/MWh for onshore wind, and $127/MWh for offshore wind.

He also drew attention to the growing financial pressures linked to critical minerals, essential for wind and solar technologies. “Although the price of a solar module has dropped significantly over the past decade, these declines have begun to slow due to the rising cost of minerals. Wind power faces even more pronounced cost vulnerabilities, with offshore particularly exposed to price shocks and supply chain pressures,” Al Ghais said.

Stress on electricity demand is expected to increase dramatically, not only from AI and data centers but also for everyday needs including cooking, transportation, air conditioning, and essential services.“Electricity must be reliable and affordable for all people. This points once again for the need to have an all-peoples, all-energies and all-technologies approach to future energy pathways,” he stated.

While acknowledging the importance of emissions reductions, Al Ghais stressed pragmatism in energy planning.“Renewables will continue to be a key component for electricity generation, but we also need to recognize that oil and gas provide a stable, affordable and reliable source of energy to support the consistent baseload power supply required to meet the electricity needs of humankind,” he concluded.

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