medium- term renewable energy market report 2016...affordable solar pv and onshore wind...
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© OECD/IEA 2016© OECD/IEA 2016
Heymi Bahar Project ManagerRenewable Energy DivisionInternational Energy Agency
Columbia University SIPA, New York, 01 November 2016
Medium- Term Renewable Energy Market Report 2016
© OECD/IEA 2016
Context
A year of records for renewable electricity
A record amount of new capacity was installed in 2015
Total capacity has now overtaken coal
COP21 Paris Agreement gives momentum to renewables
Local air pollution & energy security are also key drivers
Energy investment flows confirm shift to renewables
But policy makers need to heighten their commitments and provide investors more clarity & certainty
© OECD/IEA 2016
New policies underpin a more bullish forecast for renewables
China remains key growth market for renewable capacity, while the United States surpasses the EU for the first time
Renewable electricity capacity growth (GW) in MTRMR’s main case
13%
0
100
200
300
400
500
600
700
800
900
MTRMR 2015 Forecast 2014-2020 MTRMR 2016 Forecast 2015-21
Net ad
ditio
ns (GW
)
Others
Brazil
India
China
Japan
United States
EU28
© OECD/IEA 2016
Renewables to remain fastest growing source of electricity generation
Generation from renewables to rise by almost two-fifths over 2015-2021, pushing their share of total electricity generation from 23% to 28%
Indexed electricity generation by fuel (2001-21)
100
120
140
160
180
200
220
240
260
280
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
2001
=10
0
Global power generation Coal Natural gas Renewable electricity generation
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A two-speed world for renewable electricity
The increase in generation from renewables in 2015-2021 represents 60% of the global increase in electricity output, but prospects vary across regionally
Electricity and renewable generation growth by country/region
0
200
400
600
800
1 000
1 200
1 400
China India ASEAN Africa EU28 United States Japan
TWh
Electricity generation growth (2015-21) Renewable generation growth (2015-21)
Source: Total electricity generation from World Energy Outlook 2016, forthcoming.
© OECD/IEA 2016
Renewable costs reductions to remain an important driver for future growth
Utility-scale solar PV generation costs to fall by another quarter and onshore wind by 15% over 2015-21, largest absolute cost reduction expected from offshore wind
Weighted average generation costs for solar PV and wind
0
50
100
150
200
250
300
350
400
2011 2016 2021
USD
2015
/MWh
Onshore wind Offshore wind Solar PV - utility scale
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Policy transition from government-set tariffs to policy-driven auctions/tenders
Best results occur where price competition, long-term contracts and good resource availability are combined
0
20
40
60
80
100
120
140
2013 2014 2015 2016
USD/
MWh
(nom
inal)
Jordan
South Africa
BrazilCanada
Brazil
US
Australia
South Africa Brazil
Egypt
MoroccoPeru
South Africa
India
UruguayChile
Brazil
India
Germany
France
Jordan
Denmark
US South Africa
UAE
India
PeruMexico
Solar PV Onshore wind Offshore wind
Germany Netherlands
UAE
Chile
Chile
Recent announced long-term contract prices for new renewable power to be
commissioned over 2016-2019
© OECD/IEA 2016
Wind and solar PV compensate for slower hydropower growth
Predicting policy-driven boom and bust cycles remains a challenge, which is expected to continue over the medium-term.
0
10
20
30
40
50
60
70
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Annu
al add
ition
s (GW)
Hydropower Wind Solar Other renewables
Italy PV boom
China FiT
reduction boom
US PTC boom
Japan PV bust
Renewable electricity capacity additions by technology (2001-21)
© OECD/IEA 2016
China is the undisputed leader of renewable capacity growth
Despite strong growth, grid integration remains an important challenge along with overcapacity in the power sector
Share of China in global renewable capacity growth(2015-21)
36%
64%
China
Rest of the world
40%
60%
China
Rest of the world
36%
64%
China
Rest of the world
Hydropower Wind
Solar PV
© OECD/IEA 2016
US multi-year tax credit extension to drive 60% more growth
United States annual renewable capacity additions
0.0
5.0
10.0
15.0
20.0
25.0
2016 2017 2018 2019 2020 2021
Annu
al add
ition
s (GW)
Hydropower Bioenergy Onshore wind Offshore windSolar PV Geothermal CSP MTRMR 2015
ITC and PTC extension to give more policy visibility to wind and solar developers but uncertainty remains for other renewables
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Slower growth in Europe as policy transition continues
Annual renewable additions for France, Germany, Italy and UK
Pending EU legislations concerning 2030 renewable targets, incentive reductions, policy uncertainties at country level and overcapacity remain challenges
0
2
4
6
8
10
12
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Annu
al add
ition
s (GW)
France Germany Italy United Kingdom
© OECD/IEA 2016
Solar PV to drive India’s forecast but meeting the target remains a challenge
India renewable capacity by technology
Financial health of utilities, better state-level implementation of RPOs, faster grid infrastructure expansion and reducing land acquisition barriers remain challenges
0 10 20 30 40 50 60 70 80
Bioenergy
Solar PV
Wind
Hydropower
Cumulative capacity (GW)
2009 2015 2021
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Latin America to take advantage of more affordable solar PV and onshore wind
Diversification needs, energy security concerns and decreasing prices, drive solar and wind expansion in Latin America while large-scale hydropower growth will continue.
Latin America renewable capacity growth (GW)
0
10
20
30
40
50
60
2009-15 2015-21
Capa
city grow
th (GW
))
Hydropower Bioenergy Onshore wind Offshore wind Solar PV Geothermal CSP
© OECD/IEA 2016
Demand and diversification drive growth in Middle East & Africa
Net additions to capacity (GW)
Non-hydro pace dictated by auction schedules and grid integration; faster growth possible with quicker implementation and more access to low-cost financing
0
10
20
30
40
50
60
70
80
2009-15 2015-21 Accelerated
GW
Hydropower Solar PV Wind Others
+60 %
x3
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More ambitious policies could further enhance the outlook in line 2°C target
Renewables are in line with NDC pledges by 2030 but reducing policy uncertainty and overcoming financing & grid integration challenges remain key to achieve 2°C target
Renewable electricity capacity additions in Accelerated Case vs. Main Case
0
50
100
150
200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
GW
Main case Accelerated case
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Renewables to dominate electricity growth, but less progress in heat and transport
The share of renewables rises in all sectors, despite persistent challenges in heat & transport; interactions between energy efficiency & renewables become critical
Share of renewables in electricity, heat and transport sectors
0%
5%
10%
15%
20%
25%
30%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Share of ren
ewab
les in sector de
man
d
Renewable electricity Renewable heat Biofuels in road transport
© OECD/IEA 2016
Renewable heat grows slowly as barriers remain in both building and industry
Heat accounts for 54% of final energy consumption and 38% of CO2 emissions
Bioenergy continue to dominate heat production over the medium term
Final renewable heat consumption by sector and source (2015-21)
0%
20%
40%
60%
80%
100%
2015 2021
Industry Buildings Electricity
0
5
10
15
20
25
2015 2021Re
newa
ble he
at (EJ)
Modern bioenergy Solar thermalGeothermal Commercial heatElectricity
© OECD/IEA 2016
Biofuel production shifts to Asia, as EU and US slows
Structural challenges in the US & policy uncertainty post-2020 in the EU slow growth; Thailand, India & Indonesia have strengthened policies despite low oil prices
Biofuels production growth (billion litres)
0
5
10
15
20
United States EU28 Brazil Asia
Prod
uctio
n grow
th (billion
L)
Production growth 2009-15 Production growth 2015-21
© OECD/IEA 2016
Conclusions
Prospects for renewables electricity revised upwards, driven by policy improvements, cost reductions & efforts to improve air quality
The impact of lower fossil fuel prices on renewables varies by sector. Wind (onshore) & solar PV are the only technologies on track for a 2oC scenario
Competition in Asia between renewables & coal/gas will be critical to meeting global decarbonisation targets
Attracting investment in renewables hinges on appropriate market rules & regulations, particularly in markets with slow electricity demand growth
IEA is working to accelerate energy transition with its analysis on policy & technology and system integration of renewables.
© OECD/IEA 2016
Questions?
TeamYasmina Abdelilah
Heymi BaharUte Collier
Karolina DaszkiewiczPharoah Le Feuvre
Megan MercerYasuhiro Sakuma