medium-term renewable energy market report 2012
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© OECD/IEA 2012
Medium-Term Renewable Energy Market Report 2012
Michael Waldron
Senior Renewable Energy Market Analyst
© OECD/IEA 2012
Objective and scope
With the increasing role of a portfolio of maturing renewable technologies in the power mix…
The IEA is publishing its first medium-term report focused on renewable energy Bottom-up, global renewable forecast of renewable electricity
capacity and generation over 2011-17
Detailed analysis of 12 OECD countries (Austria, Denmark, France,
Germany, Italy, Japan, Norway, Spain, Sweden, Turkey, UK, US) and China, India, Brazil (~80% of world renewable electricity)
For 2012 edition, focus on 8 technologies in power sector with some analysis on solar thermal heating
Completes slate of IEA MT forecasts: oil, gas, coal
Methodology consistent with other MT reports
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Global Overview
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Key trends As a portfolio of renewable technologies matures, global
renewable power generation is forecast to rise 40% Supported by policy/market frameworks and economic
attractiveness in increasing range of countries and circumstances
Technology cost developments, grid/system integration, cost/availability of financing also weigh as key variables
High level of economic/policy uncertainty in some countries
This projected growth is an acceleration vs previous period Growth is 60% higher over 2011-17 versus 2005-11
Renewable deployment is projected to spread out geographically, with increased activity in emerging markets Deployment spurring economies of scale in some technologies -
virtuous cycle of improved competition and cost reductions
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Growth in renewable power is forecast to accelerate Hydropower remains the main renewable power source (+3.1% p.a.)
Non-hydro renewable sources grow at double-digit annual percentage rates (+14.3% p.a.)
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Global renewable electricity production and forecast
Hydropower Wind onshore Bioenergy Solar PV
Geothermal Wind offshore CSP Ocean
TWh
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Growth is led by non-OECD countries Non-OECD accounts for two-thirds of the overall growth
China, Brazil, India lead; others grow significantly as well
OECD growth still largely driven by Europe but Americas and Asia-Oceania make significant contributions
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TWh Global renewable electricity production and forecast
OECD Americas OECD Asia-Oceania OECD Europe
China Brazil India Rest of non-OECD
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Non-hydro technology deployment spreads out Number of countries with cumulative capacity larger than 100MW
(can cover consumption of 100k households) increases significantly
Growth areas include Asia, Africa, Latin America and the Middle East
0
20
40
60
80
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
Onshore wind
Offshore wind
Bioenergy Solar PV CSP Geothermal Ocean
Number of countries with installedcapacity above 100 MW
Non-OECD
OECD
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Annual growth patterns for non-hydro technologies vary significantly
China becomes deployment leader
OECD Europe deployment growth slows
OECD Americas growth reflects US policy uncertainties
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014 2015 2016 2017
GW Annual capacity additions , non-hydro technologies
OECD AO OECD AM OECD EUR China Rest of non-OECD
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Generation additions over 2011-17 differ across regions and technology portfolios
OECD Americas (+179 TWh)
Wind onshore
Bioenergy
Solar PV
Other technologies
OECD Asia-Oceania (+77 TWh)
Wind onshore
Bioenergy
Solar PV
Other technologies
OECD Europe (+365 TWh)
Hydropower
Wind onshore
Bioenergy
Solar PV
Other technologies
Non-OECD (+1 220 TWh)
Hydropower
Wind onshore
Bioenergy
Solar PV
Other technologies
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Investment in renewable electricity Annual investment topped USD 250 billion in 2011
Most recent quarterly data suggest some slowing
Economic and credit risks weigh on medium-term picture European bank project finance and utility finance more strained
Other sources/structures of finance play increasing role Development banks
New institutional and non-traditional corporate investors
Smaller scale financial innovation for small distributed capacity
Ultimately, cost and availability of financing to depend most on prevailing policy and technology environments
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Renewable technologies compete better in a wider range of circumstances
Renewable generation in general still more expensive than bulk power but… Hydropower and geothermal mostly competitive
Onshore wind competes well in good resource areas
Solar PV approaches peak gen. costs in places with summer peak
Residential PV can be cheaper than average retail power prices
0
100
200
300
400
500
USD/MWh Levelised costs of power generation
Small scaleUtility scale
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Country and Regional Outlooks
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US renewable generation to grow steadily
Average renewable growth of 2.4% annually over 2011-17
Non-hydropower growth at stronger rate, + 8.4% annually Onshore wind, solar PV and bioenergy grow strongest
CSP and geothermal growth are large in global terms
% of total power gen: 9% (2005), 13% (2011), 14-15% (2017)
0
100
200
300
400
500
600
700
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
United States renewable generation and forecast
Hydropower Wind onshore Bioenergy Solar PV Geothermal CSP Wind offshore
TWh
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State mandates drive the US picture
Source: DSIRE (March 2012).
Main US deployment drivers: state RPSs, federal financial incentive levels, ample grid capacity, innovative financing
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But other challenges remain in the US
0
2
4
6
8
10
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
GW US wind capacity growth
Forecast based on expiration of PTC at end-2012
Expiration of federal PTC
Main US deployment challenges: Duration of federal incentives
Wind production tax credit (PTC) expires at end-2012; but investment tax credit for solar goes through 2016
Competition with natural gas
Cost and availability of tax equity finance
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China accounts for 40% of global growth
Drivers: Growing energy needs
Diversification
Government targets
Ample low-cost finance
Robust manufacturing
Challenges: Pricing framework
Priority dispatch
Grid upgrades
Prohibitive licensing for small-scale systems
0
300
600
900
1 200
1 500
1 800
2011 2012 2013 2014 2015 2016 2017
China forecast renewable generation
Hydropower Wind onshore Bioenergy Solar PV Wind offshore CSP
TWh
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
2 000
4 000
6 000
8 000
2005 2008 2011 2014 2017
Y-o-YChg
TWh China power demand vs GDP growth
Demand Demand, Y-o-Y (RHS) GDP, Y-o-Y (RHS)
Source:
Challenges: Pricing framework
Priority dispatch
Grid upgrades
Prohibitive licensing for small-scale systems
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0
50
100
150
200
250
2011 2012 2013 2014 2015 2016 2017
India forecast renewable generation
Hydropower Wind onshore Bioenergy Solar PV CSP Ocean
TWh
India sees strong hydropower, wind and solar growth
Drivers: Supportive policy
environment: Five-Year Plan targets, diverse financial incentives
Low-cost financing from dev. banks and private sector
Rural electrification needs – distributed generation
0%
20%
40%
60%
80%
100%
0
200
400
600
800
1 000
2000 2002 2004 2006 2008 2010
TWh India domestic electricity supply and distribution losses
Domestic electricity supply Percentage losses (RHS)
Challenges: High distribution losses and
regulated prices
Grid strengthening and expansion needed
Complex administrative requirements for projects
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0
100
200
300
400
500
600
2011 2012 2013 2014 2015 2016 2017
Brazil forecast renewable generation
Hydropower Wind onshore Bioenergy Solar PV
TWh
Brazil’s hydropower and wind grow strongly Drivers:
Government sponsored power auctions
Cost reductions – wind recently outbid natural gas
Pipeline of hydropower projects
Low-cost financing from dev. banks and private sector
Challenges: Adequate margins for wind
projects (?)
Environmental licensing
Economic attractiveness of solar PV (?)
0
20
40
60
80
100
120
140
160
2009 2010 2010 2011 2011 2011
Reserve A-3 Reserve A-3 Reserve A-5
Brazil average auction price for new wind
BRL per megawatt-hour
USD per megawatt-hour
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Questions