This chart shows how the global power sector is going on

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Last year was an unusual year for the global electricity sector. Despite massive and near-immediate changes in demand due to the Covid 19 epidemic, global power generation fell only two-tenths of a percent for all of 2020. Coal-fired power generation fell 3% year on year, gas-fired power fell 1% and nuclear power declined 3%. Wind, solar, and hydropower all grew, and the result is something new for the power sector.

BloombergNEF recently analyzed a decade worth of data from 137 individual power markets, and aggregated data from the rest of the world, and found something significant. Last year was the first year in which renewable wind, solar, hydropower and biomass and waste power provided the completeness of the growth in global power generation.

Let's look at the past decade and look out a bit from 2020. A full ten years of data shows other trends. In the chart above, coal's contribution to power generation growth is very evident through 2014 and again in 2017 and 2018. The addition of wind and solar power is evidenced by the growth of natural gas power. Nuclear power's massive post-Fukushima drop in 2011 and 2012 is unmistakable.

We see something else noteworthy when you compare the data for each technology for the decade. The growth of coal power grew the most, but gas-fired power growth was barely less than that of gas over the past 10 years, and wind power growth was only slightly less than that of gas. Coal accounted for 22.8% of total power generation growth, gas for 22.5% and wind for 21.6%.

It is important to remember that coal is the largest source of power generation, with more than 8,900 terawatt-hours a year generated in 2020, about 45% more than gas and double what hydropower generates. Over the decade, none of the major sources have a significant growth rate. Coal grows only 1.6% a year, gas, 2.5%, and hydro, 2.9%.

There are two technologies that have more robust growth rates: wind and solar. The compound growth rate for the past decade, 16.6%, is enough for annual global wind generation to double in less than five years. There is solar energy. Its compound growth rate is just shy of 39%, which means that annual solar power generation doubles in less than two years.

We can do some simple math with intriguing implications if we use wind and solar growth rates. The first step is to assume that each technology's 10 year compound growth rate is indicative of what its future growth might be. The second is to apply that rate to each technology's 2020 global power generation.

If wind generation would grow at its current 10 year rate for just one more year, it would become the single biggest source of new power generation since 2010. If solar were to grow in the same way, it would be the biggest contributor to power generation growth by 2023.

Solar will probably add more than 180 gigawatts of new capacity this year, more than the total amount of combined coal and gas capacity added in any year this century and will probably ever increase, as a result of its compound growth rate.

Two years of significant declines dragged coal's growth rate down, and massive nuclear power shutdowns in 2011 have changed its position for the entire decade. For the sake of global emissions, coal's growth rate should decline further, and nuclear power's growth rate should return to positive territory and then some.

The power sector's near future may look different in places, of course. Most forecasters see the near future clearly. The International Energy Agency found that by 2026 renewables will be the largest source of power generation based on current policies and market developments. It may seem imaginative to suggest that in one year wind will be the biggest contributor to power generation since 2010, and solar will be the biggest just two years later. It is the opposite of imaginative: it requires only the assumption that the next few years look like the past decade.

None Charlie Penner, the Investor Reshaping Exxon From the Inside