The International Energy Agency (IEA, Paris) has issued a report which predicts that global solar photovoltaic (PV) generation capacity will more than double to 308 GW by 2018, with concentrating power (CSP) tripling.
“Renewable Energy Medium-Term Market Report 2013” also forecasts an increase in the number of nations with more than 100 MW of installed PV to 65 by 2018. The report cites falling costs for PV technology, which it says is becoming competitive without subsidies.
Power generation from hydro, wind, solar and other renewable sources worldwide will exceed that from gas and be twice that from nuclear by 2016, the International Energy Agency (IEA) said today in its second annual Medium-Term Renewable Energy Market Report (MTRMR).
According to the MTRMR, despite a difficult economic context, renewable power is expected to increase by 40% in the next five years. Renewables are now the fastest-growing power generation sector and will make up almost a quarter of the global power mix by 2018, up from an estimated 20% in 2011. The share of non-hydro sources such as wind, solar, bioenergy and geothermal in total power generation will double, reaching 8% by 2018, up from 4% in 2011 and just 2% in 2006.
“As their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation,” said IEA Executive Director Maria van der Hoeven as she presented the report at the Renewable Energy Finance Forum in New York. “This is good news for a global energy system that needs to become cleaner and more diversified, but it should not be an excuse for government complacency, especially among OECD countries.”
Even as the role of renewables increases across all sectors, the MTRMR cautions that renewable development is becoming more complex and faces challenges – especially in the policy arena. In several European countries with stagnating economies and energy demand, debate about the costs of renewable support policies is mounting. In addressing these issues, Ms. Van der Hoeven warned that “policy uncertainty is public enemy number one” for investors: “Many renewables no longer require high economic incentives. But they do still need long-term policies that provide a predictable and reliable market and regulatory framework compatible with societal goals,” she stated. “And worldwide subsidies for fossil fuels remain six times higher than economic incentives for renewables.”
The forecasts in the report build on the impressive growth registered in 2012, when global renewable generation rose by over 8% despite a challenging investment, policy and industry context in some areas. In absolute terms, global renewable generation in 2012 – at 4 860 TWh – exceeded the total estimated electricity consumption of China.
Two main factors are driving the positive outlook for renewable power generation. First, investment and deployment are accelerating in emerging markets, where renewables help to address fast-rising electricity demand, energy diversification needs and local pollution concerns while contributing to climate change mitigation. Led by China, non-OECD countries are expected to account for two-thirds of the global increase in renewable power generation between now and 2018. Such rapid deployment is expected to more than compensate for slower growth and smooth out volatility in other areas, notably Europe and the US.
Second, in addition to the well-established competitiveness of hydropower, geothermal and bioenergy, renewables are becoming cost-competitive in a wider set of circumstances. For example, wind competes well with new fossil-fuel power plants in several markets, including Brazil, Turkey and New Zealand. Solar is attractive in markets with high peak prices for electricity, for instance, those resulting from oil-fired generation. Decentralised solar photovoltaic generation costs can be lower than retail electricity prices in a number of countries.
The MTRMR also sees gains for biofuels in transport and for renewable sources for heat, though at somewhat slower growth rates than renewable electricity. Biofuels output, adjusted for energy content, should account for nearly 4% of global oil demand for road transport in 2018, up from 3% in 2012. But advanced biofuels growth is proceeding only slowly.
As a portion of final energy consumption for heat, renewable sources, excluding traditional biomass, should rise to almost 10% in 2018, from over 8% in 2011. But the potential of renewable heat remains largely unexploited.
“Levelized costs for other renewables generally remain higher than new fossil-fuel generation; as such, these sources often require policy support to remain economically attractive,” states the report’s executive summary.
“Yet the most dynamic technologies – onshore wind and solar PV – have reached, or are approaching, competitiveness in a number of markets without generation-based incentives.”
Competitiveness of PV, CSP depends on regional factors
The report also finds that PV and CSP are particularly competitive in regions with certain natural and market conditions. IEA states that a combination of PV during the day and CSP in the evening can be competitive in nations with strong natural solar potential where oil-fired generation is used to meet peak demand.
The report also finds that in oil-exporting nations, the economics of PV generation improve when compared to the opportunity cost of not selling petroleum on the global market.
In other market segments, including much of Europe, Australia and parts of the United States, IEA notes that the cost of decentralized PV systems has fallen below the retail electricity prices that system owners would otherwise pay.
Solar thermal growth slower
The company finds a slower growth rate for solar thermal technologies, with solar thermal growth in Europe driven by policies and in China driven by the market competitiveness of the technology.