Clean Energy
What Are the Five Major Types of Renewable Energy?
The Renewable Energy Age
This was originally published on June 8, 2022, on Elements.
Awareness around climate change is shaping the future of the global economy in several ways.
Governments are planning how to reduce emissions, investors are scrutinizing companies’ environmental performance, and consumers are becoming conscious of their carbon footprints. But no matter the stakeholder, energy generation and consumption from fossil fuels is one of the biggest contributors to emissions.
Therefore, renewable energy sources have never been more top-of-mind than they are today.
The Five Types of Renewable Energy
Renewable energy technologies harness the power of the sun, wind, and heat from the Earth’s core, and then transforms it into usable forms of energy like heat, electricity, and fuel.
The above infographic uses data from Lazard, Ember, and other sources to outline everything you need to know about the five key types of renewable energy:
| Energy Source | % of 2021 Global Electricity Generation | Avg. levelized cost of energy per MWh |
|---|---|---|
| Hydro 💧 | 15.3% | $64 |
| Wind 🌬 | 6.6% | $38 |
| Solar ☀️ | 3.7% | $36 |
| Biomass 🌱 | 2.3% | $114 |
| Geothermal ♨️ | <1% | $75 |
Editor’s note: We have excluded nuclear from the mix here, because although it is often defined as a sustainable energy source, it is not technically renewable (i.e. there are finite amounts of uranium).
Though often out of the limelight, hydro is the largest renewable electricity source, followed by wind and then solar.
Together, the five main sources combined for roughly 28% of global electricity generation in 2021, with wind and solar collectively breaking the 10% share barrier for the first time.
The levelized cost of energy (LCOE) measures the lifetime costs of a new utility-scale plant divided by total electricity generation. The LCOE of solar and wind is almost one-fifth that of coal ($167/MWh), meaning that new solar and wind plants are now much cheaper to build and operate than new coal plants over a longer time horizon.
With this in mind, here’s a closer look at the five types of renewable energy and how they work.
1. Wind
Wind turbines use large rotor blades, mounted at tall heights on both land and sea, to capture the kinetic energy created by wind.
When wind flows across the blade, the air pressure on one side of the blade decreases, pulling it down with a force described as the lift. The difference in air pressure across the two sides causes the blades to rotate, spinning the rotor.
The rotor is connected to a turbine generator, which spins to convert the wind’s kinetic energy into electricity.
2. Solar (Photovoltaic)
Solar technologies capture light or electromagnetic radiation from the sun and convert it into electricity.
Photovoltaic (PV) solar cells contain a semiconductor wafer, positive on one side and negative on the other, forming an electric field. When light hits the cell, the semiconductor absorbs the sunlight and transfers the energy in the form of electrons. These electrons are captured by the electric field in the form of an electric current.
A solar system’s ability to generate electricity depends on the semiconductor material, along with environmental conditions like heat, dirt, and shade.
3. Geothermal
Geothermal energy originates straight from the Earth’s core—heat from the core boils underground reservoirs of water, known as geothermal resources.
Geothermal plants typically use wells to pump hot water from geothermal resources and convert it into steam for a turbine generator. The extracted water and steam can then be reinjected, making it a renewable energy source.
4. Hydropower
Similar to wind turbines, hydropower plants channel the kinetic energy from flowing water into electricity by using a turbine generator.
Hydro plants are typically situated near bodies of water and use diversion structures like dams to change the flow of water. Power generation depends on the volume and change in elevation or head of the flowing water.
Greater water volumes and higher heads produce more energy and electricity, and vice versa.
5. Biomass
Humans have likely used energy from biomass or bioenergy for heat ever since our ancestors learned how to build fires.
Biomass—organic material like wood, dry leaves, and agricultural waste—is typically burned but considered renewable because it can be regrown or replenished. Burning biomass in a boiler produces high-pressure steam, which rotates a turbine generator to produce electricity.
Biomass is also converted into liquid or gaseous fuels for transportation. However, emissions from biomass vary with the material combusted and are often higher than other clean sources.
When Will Renewable Energy Take Over?
Despite the recent growth of renewables, fossil fuels still dominate the global energy mix.
Most countries are in the early stages of the energy transition, and only a handful get significant portions of their electricity from clean sources. However, the ongoing decade might see even more growth than recent record-breaking years.
The IEA forecasts that, by 2026, global renewable electricity capacity is set to grow by 60% from 2020 levels to over 4,800 gigawatts—equal to the current power output of fossil fuels and nuclear combined. So, regardless of when renewables will take over, it’s clear that the global energy economy will continue changing.
Clean Energy
The 2022 Energy Crisis: A Tipping Point for Clean Energy
See how the energy crisis of 2022 accelerated the growth of clean energy.
The 2022 Energy Crisis: A Tipping Point for Clean Energy
The global energy crisis of 2022 sent shockwaves in the energy markets.
The crisis acted as a double-edged sword—on one hand, consumers felt the pinch of rising energy prices, but on the other hand, it became a turning point for clean energy, spurring action from governments to cut dependence on fossil fuels.
This infographic from the National Public Utilities Council explores how the energy crisis accelerated the growth of clean energy and nuclear power.
Shockwaves From the Energy Crisis
Although the consequences of the crisis were felt in 2022, its roots go back to 2020 when energy demand dipped during the pandemic.
Following the unprecedented fall in demand, energy markets tightened in 2021 as the global economy rebounded to grow at the fastest pace since 1973. Russia’s invasion of Ukraine escalated the situation, creating a full-scale energy crisis.
As a result, energy prices soared to their highest levels in decades, resulting in rampant inflation worldwide. This highlighted how many nations remained dependent on fossil fuels for energy, in turn creating a tipping point for clean energy.
Clean Energy Turns the Corner
Countries including the United States, the UK, and many EU member states have supercharged clean energy investment over the last two years, partly in response to the energy crisis.
Here’s how global government spending for clean energy has grown since July 2021, as tracked by the IEA:
- $380 billion as of July 2021
- $470 billion as of October 2021
- $714 billion as of March 2022
- $1,215 billion as of November 2022
European countries deployed funding for energy efficiency and low-carbon power generation (through REPowerEU) in response to natural gas supply disruptions from Russia. In August of 2022, the U.S. signed the Inflation Reduction Act into law, providing over $390 billion in clean energy and climate funding.
Consequently, clean energy technologies are growing at an unprecedented rate. The IEA forecasts that global renewable electricity capacity additions from 2022 to 2027 (2,383 GW) will nearly equal all the renewable capacity added between 2001 and 2021 (2,409 GW).
Nuclear Turnaround
Besides renewables, nuclear power has seen a resurgence as governments look for a reliable energy source to replace fossil generation.
Here’s a look at the top 10 countries by the number of prospective nuclear reactors based on the Global Nuclear Power Tracker. This includes announced, pre-construction, and under-construction reactors.
| Country | Number of Prospective Reactors | % of Global Total |
|---|---|---|
| China 🇨🇳 | 103 | 41% |
| India 🇮🇳 | 32 | 13% |
| Russia 🇷🇺 | 30 | 12% |
| Turkey 🇹🇷 | 12 | 5% |
| U.S. 🇺🇸 | 12 | 5% |
| Romania 🇷🇴 | 8 | 3% |
| Poland 🇵🇱 | 6 | 2% |
| UK 🇬🇧 | 6 | 2% |
| South Korea 🇰🇷 | 5 | 2% |
| Bulgaria 🇧🇬 | 4 | 2% |
Besides the countries building and planning reactors, others have reversed their plans to phase out nuclear power:
- Germany extended the lifetime of three plants that were set to shut down in 2022.
- France reversed course to reduce reliance on nuclear, with a plan to build six new reactors.
- Japan accelerated the restarts of nine reactors by winter 2022 and a further seven by summer 2023.
The impact of this accelerated clean energy deployment is already evident.
In 2022, the growth of clean energy technologies helped avoid 550 million tonnes of CO2 emissions, according to the IEA. On the other hand, a decline in nuclear power generation led to an additional 55 million tonnes in CO2 emissions, highlighting the importance of nuclear in reducing emissions.
Clean Energy
Breaking Down Clean Energy Funding in the Inflation Reduction Act
This graphic breaks down the $392.5 billion in clean energy funding in the Inflation Reduction Act of 2022.
Breaking Down Clean Energy Funding in the Inflation Reduction Act
The Inflation Reduction Act (IRA), signed into law on August 16, 2022, is the largest climate legislation in U.S. history.
Along with fighting inflation and boosting domestic manufacturing, the IRA ultimately aims to help the U.S. achieve its goal of reaching net-zero emissions by 2050.
This infographic sponsored by the National Public Utilities Council breaks down the $392.5 billion in clean energy and climate spending in the Inflation Reduction Act, based on estimates from the Congressional Budget Office.
Note: The figures in the graphic and article refer to the IRA’s estimated spending for each program. Spending estimates tend to be lower than the total amount of funds allocated by the act.
Deconstructing the Inflation Reduction Act
The IRA’s clean energy and climate spending can be broken down into seven broader categories:
| Category | Estimated Spending (2022–2031, millions) |
|---|---|
| Clean Electricity Tax Credits | $160,940 |
| Air Pollution, Hazardous Materials, Transportation and Infrastructure | $41,870 |
| Individual Clean Energy Incentives | $36,878 |
| Clean Manufacturing Tax Credits | $36,877 |
| Clean Fuel and Vehicle Tax Credits | $35,995 |
| Conservation, Rural Development, Forestry | $34,681 |
| Building Efficiency, Electrification, Transmission, Industrial, DOE Grants and Loans | $27,270 |
| Other Energy and Climate Spending | $18,000 |
| Total | $392,511 |
Clean Electricity Tax Credits, which include the Clean Electricity Production Tax Credit (PTC) and Investment Tax Credit (ITC), account for the largest share of climate spending at 41% of the $392.5 billion.
Furthermore, the IRA mobilizes around $42 billion for programs aimed at air pollution, hazardous materials, and infrastructure. The Individual Clean Energy Incentives and Clean Manufacturing Tax Credits programs each receive $37 billion to incentivize residential clean energy use and domestic manufacturing of clean technology components.
Below, we’ll unpack the IRA’s clean energy spending in further detail.
Clean Electricity Tax Credits
Of the $161 billion of funding for Clean Electricity Tax Credits, $132 billion is for just three programs.
| Program | Estimated Spending (2022-2031, millions) |
|---|---|
| Credit for Electricity Produced From Renewable Resources* | $51,062 |
| Clean Electricity Investment Credit | $50,858 |
| Zero-Emission Nuclear Power Production Credit | $30,001 |
| Energy Investment Credit* | $13,962 |
| Clean Electricity Production Credit | $11,204 |
| Credit for Carbon Oxide Sequestration* | $3,229 |
| Other | $624 |
| Total | $160,940 |
*Indicates extensions or modifications of existing credits.
The Credit for Electricity Produced from Renewable Sources is a PTC that provides from $5 to $25 per megawatt-hour (MWh) of electricity generated from renewable facilities. Wind, solar, geothermal, marine, biomass, hydro, and landfill gas facilities are eligible for this credit.
The Clean Electricity Investment Credit is an ITC with a base credit of 6% (rising to 30% if other requirements are met) on the total cost of installed equipment for a zero-emissions power generation facility. Besides renewables, nuclear, fuel cells, and battery storage systems qualify for this credit.
Nuclear is set to get a $30 billion boost through the Zero-Emission Nuclear Power Production Credit, which offers from $3 up to $15 per MWh of electricity generated from nuclear reactors. This is applicable for all reactors in service in 2024 and continues through 2032.
Clean electricity projects can either claim the PTC or the ITC (not both). Projects with high capital costs are likely to benefit from the ITC. On the other hand, projects with high capacity factors could benefit from credits per unit of electricity from the PTC.
Air Pollution, Hazardous Materials, Transportation and Infrastructure
Nearly half the spending for programs in this category–around $20 billion—is for the Greenhouse Gas (GHG) Reduction Fund.
| Program | Estimated Spending (2022-2031, millions) |
|---|---|
| Greenhouse Gas Reduction Fund | $19,980 |
| Climate Pollution Reduction Grants | $4,050 |
| Hazardous Materials | $3,000 |
| Grants to Reduce Air Pollution at Ports | $3,000 |
| Neighborhood Access and Equity Grant Program | $2,900 |
| Use of Low-Carbon Materials | $2,150 |
| Low-Carbon Transportation Materials Grants | $1,700 |
| Clean Heavy-Duty Vehicles | $1,000 |
| Other | $4,090 |
| Total | $41,870 |
The GHG Reduction Fund, managed by the Environmental Protection Agency (EPA), aims to provide grants for clean energy and climate projects that reduce GHG emissions, with a focus on low-income and disadvantaged communities.
Similarly, other policies in this category provide the EPA with funding for grants to reduce various kinds of air pollution and curb hazardous material usage.
Individual Clean Energy Incentives
The IRA provides various tax credits to incentivize clean energy use and energy efficiency in American households.
| Program | Estimated Spending (2022-2031, millions) |
|---|---|
| Residential Clean Energy Credit | $22,022 |
| Nonbusiness Energy Property Credit* | $12,451 |
| New Energy Efficient Home Credit* | $2,043 |
| Energy Efficient Commercial Buildings Deduction | $362 |
| Total | $36,878 |
*Indicates extensions or modifications of existing credits.
The Residential Clean Energy Credit, accounting for $22 billion in spending, provides a 30% credit on the cost of residential clean energy equipment. This includes rooftop solar panels, geothermal heating systems, small wind turbines, and battery storage systems.
The Nonbusiness Energy Property Credit, now known as the Energy Efficient Home Improvement Credit, offers up to $3,200 annually for energy efficient home upgrades, including insulation, heat pumps, efficient doors, and more.
Clean Manufacturing Tax Credits
Besides energy generation, the IRA incentivizes domestic manufacturing of clean technologies with the following credits:
| Program | Estimated Spending (2022-2031, millions) |
|---|---|
| Advanced Manufacturing Production Credit | $30,622 |
| Extension of the Advanced Energy Project Credit | $6,255 |
| Total | $36,877 |
The Advanced Manufacturing Production Credit is a tax credit for the domestic production of solar and wind energy components, inverters, battery components, and critical minerals. The credit for critical minerals is permanent, unlike credits for other items, which will phase out in 2032.
Other Climate Funding in the IRA
In addition to the policies above, the IRA sanctions another $116 billion for clean energy and climate programs.
This includes incentives for clean hydrogen production, electric vehicle purchases, and alternative fuels. Furthermore, the Department of Energy receives around $9.8 billion for clean energy innovation and infrastructure loan and grant programs.
The act also invests in environmental conservation and rural development. It includes an estimated $9.6 billion in assistance for rural electric cooperatives, along with other incentives for energy efficiency and renewable energy.
With billions in climate funding, the Inflation Reduction Act is set to provide a significant boost to America’s clean energy plans. According to an assessment by the Department of Energy, the IRA could help reduce economy-wide GHG emissions to 40% below 2005 levels by 2030, marking a major milestone on the road to net-zero.
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