In June 2004, delegates from 154 countries converged in Bonn, Germany, for the world’s first government-hosted international conference on renewable energy. REN21 emerged from that process to become the first international organisation to track renewable energy developments. We take an in-depth look at how far the organisation has come, the strides it has made in the last 12 months, and the influence it has had on the wind industry in particular.
Back in the early 2000s, there were visible upwards trends in global renewable energy capacity and output, investment, policy support, investment, and integration. Yet even ambitious projections did not anticipate the extraordinary expansion of renewables that was to unfold over the decade ahead.
Global perceptions of renewable energy have shifted considerably since 2004. Over the last 10 years, continuing technology advances and rapid deployment of many renewable energy technologies have demonstrated that their potential can be achieved. Renewables advanced further towards realising that potential during the last 12 months.
Renewable energy provided an estimated 19% of global final energy consumption in 2012 and continued to grow in the last 12 months. Of this total share in 2012, modern renewables accounted for approximately 10%, with the remainder (estimated at just over 9%) coming from traditional biomass. Heat energy from modern renewable sources accounted for an estimated 4.2% of total final energy use; hydropower made up about 3.8%, and an estimated 2% was provided by power from wind, solar, geothermal, and biomass, as well as by biofuels.
The combined modern and traditional renewable energy share remained about level with 2011, even as the share of modern renewables increased. This is because the rapid growth in modern renewable energy is tempered by both a slow migration away from traditional biomass and a continued rise in total global energy demand.
As renewable energy markets and industries mature, they increasingly face new and different challenges, as well as a wide range of opportunities. In the last 12 months, renewables faced declining policy support and uncertainty in many European countries and the United States. Electric grid-related constraints, opposition in some countries from electric utilities concerned about rising competition, and continuing high global subsidies for fossil fuels were also issues. Overall – with some exceptions in Europe and the United States – renewable energy developments were positive in the last 12 months.
Markets, manufacturing, and investment expanded further across the developing world, and it became increasingly evident that renewables are no longer dependent upon a small handful of countries. Aided by continuing technological advances, falling prices, and innovations in financing – all driven largely by policy support – renewables have become increasingly affordable for a broader range of consumers worldwide. In a rising number of countries, renewable energy is considered crucial for meeting current and future energy needs.
As markets have become more global, renewable energy industries have responded by increasing their flexibility, diversifying their products, and developing global supply chains. Several industries had a difficult year, with consolidation continuing, particularly for solar energy and wind power. But the picture brightened by the end of the last 12 months, with many solar photovoltaics (PV) and wind turbine manufacturers returning to profitability.
The most significant growth occurred in the power sector, with global capacity exceeding 1,560 gigawatts (GW), up more than 8% over 2012. Hydropower rose by 4% to approximately 1,000 GW, and other renewables collectively grew nearly 17% to more than 560 GW. For the first time, the world added more solar PV than wind power capacity; solar PV and hydropower were essentially tied, each accounting for about one-third of new capacity. Solar PV has continued to expand at a rapid rate, with growth in global capacity averaging almost 55% annually over the past five years.
Wind power has added the most capacity of all renewable technologies over the same period. In the last 12 months, renewables accounted for more than 56% of net additions to global power capacity and represented far higher shares of capacity added in several countries.
Over the past few years, the levelised costs of electricity generation from onshore wind and, particularly, solar PV have fallen sharply. As a result, an increasing number of wind and solar power projects are being built without public financial support.
Around the world, major industrial and commercial customers are turning to renewables to reduce their energy costs while increasing the reliability of their energy supply. Many set ambitious renewable energy targets, installed and operated their own renewable power systems, or signed power purchase agreements to buy directly from renewable energy project operators, bypassing utilities.
By the end of 2013, China, the United States, Brazil, Canada, and Germany remained the top countries for total installed renewable power capacity; the top countries for non-hydro capacity were again China, the United States, and Germany, followed by Spain, Italy, and India. Among the world’s top 20 countries for non-hydro capacity, Denmark had a clear lead for total capacity per capita. Uruguay, Mauritius, and Costa Rica were among the top countries for investment in new renewable power and fuels relative to annual GDP.
In the heating and cooling sector, trends included the increasing use of renewables in combined heat and power plants; the feeding of renewable heating and cooling into district systems; hybrid solutions in the building renovation sector; and the growing use of renewable heat for industrial purposes. Heat from modern biomass, solar, and geothermal sources accounts for a small but gradually rising share of final global heat demand, amounting to an estimated 10%. The use of modern renewable technologies for heating and cooling is still limited relative to their vast potential.
Some highlights include:
In the European Union, renewables represented the majority of new electric generating capacity for the sixth consecutive year. The 72% share in 2013 is in stark contrast to a decade earlier, when conventional fossil generation accounted for 80% of new capacity in the EU-27 plus Norway and Switzerland.
Even as global investment in solar PV declined nearly 22% relative to 2012, new capacity installations increased by about 32%.
China’s new renewable power capacity surpassed new fossil fuel and nuclear capacity for the first time.
Variable renewables achieved high levels of penetration in several countries. For example, throughout 2013, wind power met 33.2% of electricity demand in Denmark and 20.9% in Spain; in Italy, solar PV met 7.8% of total annual electricity demand.
Wind power was excluded from one of Brazil’s national auctions because it was pricing all other generation sources out of the market.
Denmark banned the use of fossil fuel-fired boilers in new buildings as of 2013 and aims for renewables to provide almost 40% of total heat supply by 2020.
Growing numbers of cities, states, and regions seek to transition to 100% renewable energy in either individual sectors or economy-wide. For example, Djibouti, Scotland, and the small-island state of Tuvalu aim to derive 100% of their electricity from renewable sources by 2020. Among those who have already achieved their goals are about 20 million Germans who live in so-called 100% renewable energy regions.
The impacts of these developments on employment numbers in the renewable energy sector have varied by country and technology, but, globally, the number of people working in renewable industries has continued to rise. An estimated 6.5 million people worldwide work directly or indirectly in the sector.
An evolving policy landscape
By early 2014, at least 144 countries had renewable energy targets and 138 countries had renewable energy support policies in place, up from the 138 and 127 countries, respectively, that were reported in GSR 2013. Developing and emerging economies have led the expansion in recent years and account for 95 of the countries with support policies, up from 15 in 2005. The rate of adoption remained slow relative to much of the past decade, due largely to the fact that so many countries have already enacted policies.
In the last 12 months, there was an increasing focus on revisions to existing policies and targets, including retroactive changes, with some adjustments made to improve policy effectiveness and efficiency, and others aimed to curtail costs associated with supporting the deployment of renewables. At the same time, some countries expanded support and adopted ambitious new targets.
Policy mechanisms continued to evolve, with some becoming more differentiated by technology. Feed-in policies in many countries evolved further towards premium payments in the power sector, and continued to be adapted for use in the heating sector. Particularly in Europe, new policies are emerging to advance or manage the integration of high shares of renewable electricity into existing power systems, including support for energy storage, demand-side management, and smart grid technologies.
As in past years, most renewable energy policies enacted or revised during the last 12 months focus on the power sector. A mix of regulatory policies, fiscal incentives, and public financing mechanisms continued to be adopted.
Feed-in policies and renewable portfolio standards (RPS) remained the most commonly used support mechanisms, although their pace of adoption continued to slow. Public competitive bidding, or tendering, gained further prominence, with the number of countries turning to public auctions rising from 9 in 2009 to 55 as of early 2014.
Although the heating and cooling sector lags far behind the renewable power sector for attention from policymakers, the adoption of targets and support policies has increased steadily. As of early 2014, at least 24 countries had adopted renewable heating (and cooling) targets, and at least 19 countries had obligations at the national or state/provincial level. Renewable heating and cooling is also supported through fiscal incentives, as well as through building codes and other measures at the national and local levels in several countries.
As of early 2014, at least 63 countries used regulatory policies to promote the production or consumption of biofuels for transport; this was up from the 49 reported in GSR 2013. Some existing blend mandates were strengthened, and the use of fiscal incentives and public financing expanded. In some countries, however, support for first-generation biofuels was reduced due to environmental and social sustainability concerns.
Although most transport-related policies focus on biofuels, many governments continued to explore other options such as increasing the number of vehicles fuelled with biomethane and electricity from renewable sources.
Thousands of cities and towns worldwide have policies, plans, and targets to advance renewable energy, often far outpacing the ambitions of national legislation. Policy momentum continued in the last 12 months as city and local governments acted to reduce emissions, support and create local industry, relieve grid capacity stress, and achieve security of supply.
To accomplish these goals, they increasingly made use of their authority to regulate, make expenditure and procurement decisions, facilitate and ease the financing of renewable energy projects, and influence advocacy and information sharing. As cities seek to share and scale up best practices, highlight their commitments to renewable energy, and account for their achievements, local governments are increasingly prioritising systematic measurement and reporting of climate and energy data.
Investment flows
Global new investment in renewable power and fuels – not including hydropower projects >50 megawatts (MW)i – was an estimated USD 214.4 billion in 2013, down 14% relative to 2012 and 23% lower than the record level in 2011. Including the unreported investments in hydropower projects larger than 50 MW, total new investment in renewable power and fuels was at least USD 249.4 billion in the last 12 months.
The second consecutive year of decline in investment – after several years of growth – was due in part to uncertainty over incentive policies in Europe and the United States, and to retroactive reductions in support in some countries. Europe’s renewable energy investment was down 44% from 2012. The year 2013 also saw an end to eight consecutive years of rising renewable energy investment in developing countries.
Yet the global decline also resulted from sharp reductions in technology costs. This was particularly true for solar PV, which saw record levels of new installations in the last 12 months, despite a 22% decline in dollars invested.
Lower costs and efficiency improvements made it possible to build onshore wind and solar PV installations in a number of locations around the world in the last 12 months without subsidy support, particularly in Latin America. Considering only net investment in new power capacity, renewables outpaced fossil fuels for the fourth year running. Further, despite the overall downward trend in global investment, there were significant exceptions at the country level. The most notable was Japan, where investment in renewable energy (excluding research and development) increased by 80% relative to 2012 levels.
Other countries that increased their investment in the last 12 months included Canada, Chile, Israel, New Zealand, the United Kingdom, and Uruguay. Despite the overall decline in China’s investment, for the first time ever, China invested more in renewable energy than did all of Europe combined, and it invested more in renewable power capacity than in fossil fuels.
Solar power was again the leading sector by far in terms of money committed during the last 12 months, receiving 53% (USD 113.7 billion) of total new investment in renewable power and fuels (with 90% going to solar PV). Wind power followed with USD 80.1 billion. Asset finance of utility-scale projects declined for the second consecutive year, but it again made up the vast majority of total investment in renewable energy, totalling USD 133.4 billion.
Clean energy funds (equities) had a strong year, and clean energy project bonds set a new record in the last 12 months. North America saw the emergence of innovative yield-oriented financing vehicles, and crowd funding moved further into the mainstream in a number of countries. Institutional investors continued to play an increasing role, particularly in Europe, with a record volume of renewable energy investment during the year. Development banks were again an important source of clean energy investment, with some banks pledging to curtail funding for fossil fuels, especially coal power.
Wind’s continued ascent
More than 35 GW of wind power capacity was added in the last 12 months, for a total above 318 GW. However, following several record years, the market was down nearly 10 GW compared to 2012, reflecting primarily a steep drop in the U.S. market. While the European Union remained the top region for cumulative wind capacity, Asia was nipping at its heels and is set to take the lead in 2014.
New markets continued to emerge in all regions, and, for the first time, Latin America represented a significant share of new installations. Offshore wind had a record year, with 1.6 GW added, almost all of it in the EU. However, the record level hides delays due to policy uncertainty and project cancellations or downsizing.
Asia remained the largest market for the sixth consecutive year, accounting for almost 52% of added capacity, followed by the EU (about 32%) and North America (less than 8%).
Non-OECD countries were responsible for the majority of installations, and, for the first time, Latin America had a substantial share (more than 4.5%). China led the market, followed distantly by Germany, the United Kingdom, India, and Canada. Others in the top 10 were the United States, Brazil, Poland, Sweden, and Romania, and new markets continued to emerge in Africa, Asia, and Latin America. The leading countries for wind power capacity per inhabitant were Denmark (863 W per person), Sweden (487.6), Spain (420.5), Portugal (412), and Ireland (381).
China added an estimated 16.1 GW of new capacity in 2013, increasing total installed capacity by 21% to 91.4 GW. About 14.1 GW was integrated into the grid, with approximately 75.5 GW in commercial operation by year’s end. Difficulties continued in transmitting power from turbines (particularly in remote northeast areas) to population demand centres, and about 16 TWh lost due to curtailment.
However, new transmission lines and turbine deployment in areas with better grid access are reducing the number of idled turbines, and the rate of curtailment dropped from 17% in 2012 to 11% in 2013.
Wind generated 140.1 billion kWh in China during 2013, up 40% over 2012 and exceeding nuclear generation for the second year running. By year’s end, almost 25% of total capacity was in the Inner Mongolia Autonomous Region, followed by Hebei (10%), Gansu (9.1%), and Liaoning (7.3%) provinces, but wind continued its spread across China – 10 provinces had more than 3 GW of capacity.
The European Union remained the top region for cumulative wind capacity, with 37% of the world’s total, although Asia was nipping at its heels with more than 36%.
Wind accounted for the largest share (32%) of new EU power capacity in 2013; more than 11 GW of wind capacity was added for a total exceeding 117 GW. Europe is experiencing a seaward shift, with the offshore market up 34%. However, the total market in the region was down 8% relative to 2012, and financing of new projects is becoming more challenging in response to policy uncertainty and declining incentives. Germany and the United Kingdom accounted for 46% of new EU installations, a level of concentration not seen since 2007.
Driven largely by anticipated reforms to the Renewable Energy Sources Act (EEG), Germany remained Europe’s largest market and set a new record for installations. More than 3.2 GW was added to the German grid in 2013, including more than 0.2 GW for repowering; by year’s end, a total of 34.3 GW was grid connected (and 34.7 GW total installed). Germany generated 53.4 TWh with the wind in 2013. The United Kingdom added 1.9 GW to the grid, 39% of which was offshore, for a year-end total of 10.5 GW.
Other top EU markets were Poland (0.9 GW), Sweden (0.7 GW), Romania (0.7 GW), and Denmark (0.7 GW). France (0.6 GW) and Italy (0.4 GW) both saw significant market reductions in 2013. Spain remained third in the region for cumulative capacity, but recent policy changes have brought the market to a virtual standstill, with the lowest additions (less than 0.2 GW) in 16 years.
The highest growth rates were seen in Croatia (68%) and Finland (56.3%), from low bases, and Romania (36.5%) and Poland (35.8%). Slovenia added capacity for the first time. India was the fourth largest market in 2013, although demand contracted by 26%.
Over 1.7 GW was installed for a total approaching 20.2 GW. A steep devaluation of the rupee against the U.S. dollar (which increased financing and import costs), and removal of key support policies in 2012, delayed investment in wind power.
However, retroactive reinstatement of the Generation Based Incentive in late 2013 helped resurrect the market. Elsewhere in the region, Japan saw a slowdown in deployment, due largely to new regulatory requirements and delays for grid access, while Thailand and Pakistan both doubled their capacity.
Canada installed a record 1.6 GW, a market increase of more than 70%, for a total of 7.8 GW, led by Ontario (2.5 GW) and Quebec (2.4 GW). The United States ended the year with 61.6 GW, up by just over 1 GW. This represented a significant drop from the 13.1 GW installed in 2012, when developers rushed to complete projects before the federal Production Tax Credit (PTC) expired.
Even so, utilities and corporate purchasers signed a record number of long-term contracts in response to low power prices, and more than 12 GW of projects was under construction by year’s end. Texas led for total capacity (12.4 GW), followed by California (5.8 GW), Iowa (5.2 GW), Illinois (3.6 GW), and Oregon (3.2 GW).
Elsewhere, the most significant growth was seen in Latin America. Brazil installed more than 0.9 GW of capacity (down from 1.1 GW in 2012) to rank seventh for newly installed wind capacity. It ended the year with almost 3.5 GW of commissioned capacity – nearly three-quarters of the region’s total – of which 2.2 GW was grid-connected and in commercial operation. Utility interest in wind power is increasing because it complements Brazil’s reliance on hydropower, and by year’s end more than 10 GW of additional capacity was under contract.
Others in the region to add wind capacity included Argentina, Chile, and Mexico. Australia was again the only country in the Pacific to add wind capacity (0.7 GW), bringing its total to more than 3.2 GW. In Turkey, where interest in wind power is driven partly by heavy reliance on Russian gas, 0.6 GW was installed for a total approaching 3 GW.
Africa and the Middle East saw little new operating capacity beyond Morocco (0.2 GW) and Ethiopia, which completed Africa’s largest individual wind farm (120 MW), with the aim of mitigating the impact of dry seasons on national hydropower output. However, other countries in the region moved ahead with new projects, and several announced long-term plans.
Offshore wind is still small compared with global onshore capacity, but it is growing rapidly. A record 1.6 GW was added to the world’s grids for a total exceeding 7 GW in 14 countries by year’s end. More than 93% of total capacity was located off Europe, which added 1,567 MW to the grid for a total of 6,562 MW in 11 countries.
The United Kingdom has more than 52% of the world’s offshore capacity. It was the largest market (adding 733 MW) in 2013, followed in Europe by Denmark (350 MW), Germany (595 MW total, and 240 MW grid-connected), and Belgium (192 MW). But the EU record hides delays due to policy uncertainty, particularly in Germany and the United Kingdom, and cancellation or downsizing of projects due to cost and wildlife concerns.
The remaining offshore capacity is in China, Japan, and South Korea; China added 39 MW for almost 430 MW total. Two U.S. projects qualified for the PTC before it expired and are competing to be the first commercial project operating off U.S. shores. Offshore and on, independent power producers and energy utilities remained the most important clients in the market in terms of capacity installed.
However, there is growing interest in other sectors. The number of large corporate purchasers of wind power and turbines continued to increase during 2013. In addition, interest in community-owned wind power projects is growing in Australia, Canada, Japan, the United States, parts of Europe, and elsewhere. Community and co-operative power has long represented the mainstream ownership model in Denmark and Germany.
Today, shared ownership is expanding through a variety of means, including innovative financing mechanisms such as crowd funding.
The use of individual small-scale turbines is increasing, with applications including defence, rural electrification, water pumping, battery charging, telecommunications, and other remote uses. Off-grid and mini-grid applications prevail in developing countries.
Worldwide, at least 806,000 small-scale turbines were operating at the end of 2012, exceeding 678 MW (up 18% over 2011). While most countries have some small-scale turbines in use, capacity is predominantly in China and the United States, with an estimated 274 MW and 216 MW, respectively, by the end of 2012.
They are followed by the United Kingdom, which added a record 38 MW in 2012, driven by a micro-generator FIT, to exceed 100 MW total. Other leaders include Germany, Ukraine, Canada, Italy, Poland, and Spain. Repowering of existing wind capacity has also expanded in recent years. The replacement of old turbines with fewer, larger, taller, and more efficient and reliable machines is driven by technology improvements and the desire to increase output while improving grid compliance and reducing noise and bird mortality.
Repowering began in Denmark and Germany, due to a combination of incentives and a large number of ageing turbines, and has spread to several other countries. During 2013, turbines were repowered in Denmark, Finland, and Japan, and in Germany, which replaced 373 turbines with combined capacity of 236 MW with 256 turbines totalling 726 MW.66 There is also a thriving international market in used turbines in several developing and emerging economies.
Wind power is playing a major role in power supply in an increasing number of countries. In the EU, capacity operating at year’s end was enough to cover nearly 8% of electricity consumption in a normal wind year (up from 7% in 2012), and several EU countries met higher shares of their demand with wind. Wind was the top power source in Spain (20.9%, up from 16.3%) during 2013, and met 33.2% of electricity demand in Denmark (up from 30%). Four German states had enough wind capacity at year’s end to meet over 50% of their electricity needs.
In the United States, wind power represented 4.1% of total electricity generation (up from 3.5% in 2012) and met more than 12% of demand in nine states (up from 10% in nine states in 2012), with Iowa at over 27% (up from 25%) and South Dakota at 26% (up from 24%). Wind power accounted for 2.6% of China’s electricity generation. Globally, wind power capacity by the end of 2013 was enough to meet an estimated 2.9% of total electricity consumption.
PES would like to thank the Renewable Energy Policy Network for the 21st Century. For more insight and analysis, visit: www.ren21.net
