© OECD/IEA, 2016
Global Renewable Market Outlook
Marrakech – China Pavillon, 15 November 2016
Cédric Philibert
Renewable Energy Division International Energy Agency
© OECD/IEA 2016
An 8% reduction in 2015 global energy investment results from a $200 billion decline in fossil fuels, while the share of renewables, networks and efficiency expands
Power Generation
23% Biofuels and Solar
Heat 1%
Renewables 17%
USD 1.8 trillion
Investment flows signal a reorientation of the global energy system
Oil & Gas 46%
Coal 4%
Electricity Networks
14%
Energy Efficiency
12%
Global Energy Investment, 2015
Thermal Power
7%
Wind = 6%
© OECD/IEA 2016
Renewables investment buys much more electricity
Investment in renewables-based capacity more than covers 2015 global electricity growth. Wind leads, surging 35% in 2015 on economics and record offshore growth
0
50
100
150
200
250
300
350
2011 2013 2015
USD (2015) billion
Hydropower Solar PV Wind Other renewables
0
50
100
150
200
250
300
350
400
2011 2013 2015
TWh +33%
+0%
Global renewable power investment Generation from investment in capacity
© OECD/IEA 2016
New capacity in renewables, led by wind, exceeds fossil-fired plants
Net capacity increases, 2015 (in GW)
2015 saw record level annual additions in wind and
solar, compensating a decrease in hydropower
© OECD/IEA 2016
2015: a record year for renewables
Renewable additions (2014-15) and cumulative installed power capacity
Cumulative renewable capacity surpassed coal at the end of 2015
0
500
1000
1500
2000
2500
2014 2015
Cumulative installed
capa
city (GW)
Coal Gas Oil Nuclear Renewables
0
20
40
60
80
100
120
140
160
180
2014 2015
Annu
al a
ddition
s (GW)
Wind Solar PV Hydropower Other renewables
5
© OECD/IEA 2016
Recent announced long-term contract prices for new renewable power to be commissioned over 2016-2019
Record low price announcements
Best results occur where price competition, long-term contracts and good resource availability are combined
Onshore wind Utility-scale solar PV
Chile USD 30/MWh
Brazil USD 75-81/MWh
United States USD 65-70/MWh
Mexico USD 45/MWh
India USD 55-94/MWh
United Arab Emirates USD 30/MWh
South Africa USD 65/MWh
United States USD 47/MWh
Brazil USD 49/MWh
Mexico USD 55/MWh
South Africa USD 51/MWh
Australia USD 69/MWh
Turkey USD 73/MWh
China USD 80–91/MWh
Germany USD 67-100/MWh
Egypt USD 41-50/MWh
Jordan USD 61-77/MWh
Uruguay USD 90/MWh
Germany USD 87 /MWh
Canada USD 62-66/MWh
This map is without prejudice to the status or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area
Morocco USD 30-35/MWh
Note: Values reported in nominal USD includes preferred bidders, PPAs or FITs. US values are calculated excluding tax credits. Delivery date and costs may be different than those reported at the time of the auction.
© OECD/IEA 2016
Renewables to meet new generation needs and replace old power capacity
Between 2015-21 wind generation doubles and solar PV almost triples,
with renewables reaching around 27% of total electricity by 2021
Global renewable electricity generation
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
TWh
Ocean
STE
Geothermal
PV
Offshore wind
Onshore wind
Bioenergy
Hydropower
7
© OECD/IEA 2016
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
© OECD/IEA 2016 Source: IEA estimates from IEA Medium-Term Renewable Energy Market Report 2016.
Towards high shares of variable renewables
Share of variable electricity generation in 2015 and 2021
0% 10% 20% 30% 40% 50% 60%
Indonesia
Thailand
South Africa
China
United States
Chile
Mexico
Australia
Sweden
Italy
Morocco
Spain
Belgium
United…
Germany
Ireland
Denmark
PV share 2015 Wind share 2015 Additional PV share 2021 Additional wind share 2021
Experience in a number of countries shows how to integrate significant shares of VRE
© OECD/IEA 2016
Global electricity mix changes in the 2DS
A shift reversal is needed with renewables providing over 60% of global electricity by 2050 or before
© OECD/IEA 2016
Electricity mixes by 2050 in the 2DS vary widely
Electricity mixes by 2050 in the 2DS in selected regions
9%
8%
5%
10%
8%
6%
9%
14%
14%
11%
7%
10%
16%
20%
12%
10%
21%
32%
24%
14%
10%
14%
7%
14%
15%
19%
16%
11%
14%
63%
5%
7%
5%
5%
7%
15%
9%
17%
17%
20%
16%
15%
22%
10%
4%
28%
29%
12%
23%
28%
11%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
OECD Americas
OECD Europe
China
India
Middle East
RSA
ASEAN
Brazil
Other renewables
STE
Solar PV
Wind
Hydro
Biomass and waste
Nuclear
Natural gas
Coal
Oil
Resources and shape of the demand explains the variations
© OECD/IEA 2016
Industry, led by iron & steel, cement
and chemicals, becomes 1st
CO2 source
2DS 36%
20%
29% 45%
31%
9%
36%
28%
30%
24%
38%
31% 2DS
© OECD/IEA 2016 - 13
Next-generation policies needed
Next-generation wind and solar PV need ‘next-generation policies’ focusing on system value and not just costs
Focus on five main areas: • System services
• Location of deployment
• Technology mix
• Generation time profile
• Integrating planning, monitoring and revision
Examples of best practice in Denmark, Germany, Spain, US, Mexico, Brazil, China, South Africa
© OECD/IEA 2016 - 14
3) Increase flexibility of other power system
components
Grids Generation
Storage Demand Side
1) Foster System-friendly
RE
Increasing variable RE will need more system flexibility
2) Better market design & operation
© OECD/IEA 2016 - 15
Complementary roles of PV and STE
©
Thanks to thermal storage, STE is generated on demand when the sun sets while demand often peaks and value of electricity increases
Source: IEA Technology Roadmap (2014)
Possible power mix in a sunny country, 2030
GWh
© OECD/IEA 2016 - 16
Optimising generation time profile
The design of wind and solar plants can be optimised to increase value Spreading the energy on more hours
Making generation match the demand more closely
Policy mechanisms need to signal difference in value depending on time
Partial exposure to market prices via premium systems
Power purchase agreements adjusting remuneration to time of delivery (TOD)
Premiums for system friendly deployment choices
Policy example: California, USA
• West-facing PV systems produce closer to peak demand and receive payments up to 15% higher than south-facing systems
• TOD factors integrated into PPAs for large scale solar systems
DC to AC ratio by mounting type and installation year, United States
1.15
1.20
1.25
1.30
1.35
2010 2011 2012 2013 2014 2015
DC/AC ratio
Fixed PV
plants
Tracking PV
plants
All PV plants
© OECD/IEA 2016
Policies remain crucial to attract financing
Sharp cost reductions of wind and solar costs change policy needs
• From providing financial support to creating a framework for investment
• Innovation must extend from renewable technology to system integration
Financing system-friendly RE deployment
• Securing long term remuneration is key to investment and low-cost finance
• But short term price signals must reflect the value of power
• Time-structured power purchase agreements, and feed-in premiums combined with spot market prices, are the main options
Energy policies must be consistent and extend beyond power
• Electrification of end-use sectors will ease integration of variable renewable and promote decarbonisation of buildings, transport and industry
• Removing fossil fuel subsidies and pricing carbon is both easier and more necessary when fossil fuel prices are low
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