© OECD/IEA 2018

Renewables 2018 Analysis and Forecasts to 2023

Cédric Philibert, Renewable Energy Division

CEEW&TERI, New Delhi, 13 November 2018

IEA

2 © OECD/IEA 2018

100 200 300 400 500 Mtoe

Modern bioenergy: the overlooked giant of renewables

Total final energy consumption

from renewables, 2017

Modern bioenergy is the only renewable source that can provide electricity, direct heat and transport fuels

Two thirds of modern bioenergy heat is used in industry

50%

9%

4% 6% Modern

bioenergy

Hydropower

Wind

Solar PV

Other renewables

Total final energy consumption

from renewables by sector, 2017

Electricity from renewables

Electricity

Heat

Transport

31%

3 © OECD/IEA 2018

Total renewable energy consumption is expected to increase by almost 30% over 2018-2023,

covering 40% of global energy demand growth

Total energy consumption growth of renewables over 2012-23

Modern bioenergy set to lead renewables growth

0

10

20

30

40

50

60

70

80

Modernbioenergy

Solar PV Wind Hydropower

Mtoe

2012-17 2018-23

4 © OECD/IEA 2018

Electricity contributes to two-thirds of renewables growth but heat remains the largest end-use by 2023

Overall, renewables are not on track to meet long-term climate goals

Share of renewables in the electricity, heat and transport sectors

Renewables share of energy consumption increases by one-fifth

0%

5%

10%

15%

20%

25%

30%

2011 2014 2017 2020 2023

%

Renewable electricity Renewable heat

Renewable transport % of renewables in total energy consumption

5 © OECD/IEA 2018

China accounts for the largest absolute growth over the forecast period surpassing the EU,

while renewable energy consumption in India increases by 50%

China becomes the largest RE consumer, Brazil has the highest share

Renewables contribution to energy consumption by country in 2017 and 2023

0%

10%

20%

30%

40%

50%

0

50

100

150

200

250

2017 2023 2017 2023 2017 2023 2017 2023 2017 2023

European Union China United States Brazil India

Mtoe

Modern bioenergy Hydropower Wind Solar PV Others % of renewables (right axis)

6 © OECD/IEA 2018

Renewables share in heat remains at 12% over 2018-23 as demand in industry and buildings to increase

rapidly while renewables progress faster in the electricity sector

India’s renewable growth led by bioenergy, PV and wind

Renewables contribution to energy consumption in India, 2017 and 2023

17% 23%

12% 12% 0.8% 1.4%

-5%

5%

15%

25%

35%

45%

0

10

20

30

40

50

60

2017 2023 2017 2023 2017 2023

Electricity Heat Transport

Mtoe

Modern bioenergy Hydropower

Wind Solar PV

Others % of renewables (right axis)

0

100

200

300

400

500

600

700

800

2017 2023

Total energy consumption

Mtoe

Electricity Heat Transport

7 © OECD/IEA 2018

Around 60% of renewable capacity additions over 2018-23 driven by competitive remuneration schemes

Announced contract prices need to be verified as project delivery schedules and final costs may differ

Competition accelerating cost reductions

Average auction price by project commissioning date

0

50

100

150

200

250

300

2012 2014 2016 2018 2020 2022

USD/MWh

Onshore wind price Offshore wind priceSolar PV price Bioenergy price

Fixed remuneration type of utility-scale projects

0

100

200

300

400

500

600

700

800

900

2012-17 Renewables 2017,2017-22

Renewables 2018,2018-23

GW

Administratively set Competitively set

8 © OECD/IEA 2018

Renewable net capacity growth by country

Renewables account for 70% of global capacity expansion

In the accelerated case, renewable capacity could expand by 25% more reaching 1.3 TW, if governments

address challenges concerning policy uncertainty, grid integration and affordable financing

0

200

400

600

800

1 000

1 200

1 400

2000-2005 2006-11 2012-17 2018-23

Capacity growth (GW)

Accelerated case

Other

Brazil

Japan

Africa and Middle East

India

European Union

United States

China

9 © OECD/IEA 2018

India renewable capacity additions main and accelerated case and average winning PV bids

Solar PV to account for 60% of India’s renewable capacity growth

India’s renewable capacity to double over 2018-23 but this growth could be a third higher under the

accelerated case with improved financial health of DISCOMs, grid infrastructure and faster DG

0

5

10

15

20

25

30

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

GW

Hydropower Bioenergy Onshore wind

0

40

80

120

160

200

Jul-09 Nov-10 Apr-12 Aug-13 Dec-14 May-16 Sep-17 Feb-19

USD/MWh

Average solar PV winning bid prices

10 © OECD/IEA 2018

Almost 40% of the PV capacity needed to reach 2022 targets occurs in states where the financial health

of distribution companies is below average

Financial health of DISCOMs remain a key challenge

0 2 4 6 8 10 12

Kerala

Bihar

Karnataka

Punjab

Rajasthan

Madhya Pradesh

Gujarat

Tamil Nadu

Andhra Pradesh

Uttar Pradesh

Maharashtra

GW

Grading scale: A+ A B+ B C/C+ A+/A

Solar PV capacity needed to reach 2022 targets vs financial health of utilities per state as of July 2018

11 © OECD/IEA 2018

Distributed generation capacity growth makes the difference in solar PV’s leadership

Cumulative PV capacity could reach 1.1 TW and wind over 0.9 TW by 2023 under the accelerated case

Renewable electricity capacity growth by technology

Solar PV expansion in electricity larger than all renewables combined

0

100

200

300

400

500

600

700

800

2006-2011 2012-2017 2018-2023

GW

Wind Utility-scale PV Distributed PV HydropowerBioenergy Other renewables Accelerated case

12 © OECD/IEA 2018

Distributed PV capacity growth by policy type for remuneration of excess generation

Policies for remuneration to play a key role for distributed generation

Utilities revenue losses due to self-consumption to almost quadruple (USD 12 bln) by 2023 but

accounting for less than 0.3% of total retail bill collection revenues

0 50 100 150

MENA

Latin America

Europe

North America

Asia-Pacific

China

Capacity growth over 2018-23 (GW)

All generation with fixed tariff Retail tariff Wholesale price Value-based tariff No remuneration

51%

21%

3%

22%

3%

Self-consumption +

13 © OECD/IEA 2018

Biofuels production grows by 16%; EVs electricity consumption triples, with renewables providing 30%

of demand from electrified transport by 2023

Biofuel production growth 2018-23

Asia and Latin America dominate biofuel production growth

- 2

0

2

4

6

8

10

12

Brazil UnitedStates

EU China India ASEAN

Billion L

Ethanol Biodiesel

Renewables consumption in transport in 2023

Road biofuels

Aviation biofuels

Maritime biofuels

Rail electricity

Road electricity

Other electricity

14 © OECD/IEA 2018

Policies remain key to bridge the cost gap between aviation biofuels and fossil jet fuels

The most efficient aircraft could reduce fuel costs by around 15%

Cost premium of commercial aviation biofuels (15% blend) per passenger from London

Biofuels open new avenues for more sustainable aviation

0

5

10

15

20

25

30

35

Sydney Tokyo Delhi New York Berlin

Cost per passenger (USD)

15 © OECD/IEA 2018

Bioenergy to continue dominating renewable heat consumption

Bioenergy is particularly prevalent in industry, whereas in buildings growth in solar heat and renewable

electricity is pushing bioenergy from the top spot.

0

50

100

150

200

250

300

2017 buildings 2023 buildings 2017 industry 2023 industry

Mtoe

Renewable electricityfor heat

Renewable districtheat

Geothermal

Solar thermal

Bioenergy

Renewable heat consumption by source in buildings and industry

© IEA 2018

Bioenergy and waste consumption in the cement industry by country

Waste: a key resource for “greener” cement production

China 57%

India 6%

EU 5%

United States

2%

RoW 30%

Cement production by country, 2017

The share of bioenergy and waste in the cement industry could be doubled if the robust waste

management frameworks present in Europe were replicated in large producing countries

0%

5%

10%

15%

20%

25%

30%

0

2

4

6

8

10

China India EU United States

Mtoe

Bioenergy and waste 2023 potential

Bioenergy and waste consumption in 2017 % of bioenergy and waste in 2017 (right axis)

17 © OECD/IEA 2018

Policies could accelerate renewable electricity growth by 25%; bioenergy could accelerate consumption

across all sectors with an enhanced use of available waste resources

Renewables upside potential over 2018-23

Accelerated deployment is possible with right policies

0

10

20

30

40

50

60

70

Electricity sector accelerated case Bioenergy scale-up potential for selected sectors

Mtoe

Renewables excl. bioenergy Bioenergy for power Road transport biofuelsBioenergy in cement Sugar and ethanol electricity Aviation biofuels

18 © OECD/IEA 2018

Conclusions

Even with ongoing cost reductions, government policy remains crucial to attract investment in

renewables, ensure appropriate market design and reliable & cost-effective system integration

Modern bioenergy will continue to lead renewables growth in the next five years and its untapped

potential remains huge particularly in China, India, Brazil and the EU

Further accelerating the use of modern bioenergy hinges on policies & incentives to foster

innovation and on rigorous sustainability frameworks

Greater use of solar, wind, bioenergy & other renewables – together with energy efficiency & other

clean energy technologies – is needed in all sectors for emissions to peak rapidly then decline - Electrification of end-use sectors

- Better alignment of energy efficiency and renewable energy policies

- Enhanced direct renewable heat uses

- Stronger renewables penetration in industry, including through hydrogen-based fuels & feedstocks

19 © OECD/IEA 2018

Thank you

Renewables 2018 Team

Yasmina Abdelilah

Heymi Bahar

Ute Collier

Karolina Daszkiewicz

Hideki Kamitatara

Pharoah Le Feuvre

Tobias Rinke

Questions and comments: IEA-REMR@iea.org