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© OECD/IEA, 2016
Medium Term Renewable Energy Market Report 2016
Clean Energy Investment and Trends
IETA Pavilion COP22, Marrakech
November 10, 2016
Liwayway Adkins
Environment and Climate Change Unit International Energy Agency
© OECD/IEA, 2016
The IEA works around the world to support an
accelerated clean energy transition that is
enabled by real-world SOLUTIONS
supported by ANALYSIS
and built on DATA
© OECD/IEA, 2016
Context
A year of records for renewable electricity
Total capacity has now overtaken coal
A record amount of new capacity was installed in 2015
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
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
Wind and solar PV compensate for slower hydropower growth
Solar PV & wind account for almost 2/3 of rise in renewables generation; total renewable electricity overpasses 7600 TWh by 2021, equivalent to EU+US today
Renewable electricity generation by source 2015
71%
8%
15%
4%
2%
Hydropower
Bioenergy
Wind
Solar PV
Other renewables
Renewable electricity generation by source 2021
© 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
© OECD/IEA, 2016
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
Brazil Canada
Brazil
US
Australia
South Africa Brazil
Egypt
Morocco Peru
South Africa
India
Uruguay Chile
Brazil
India
Germany
France
Jordan
Denmark
US South Africa
UAE
India
Peru Mexico
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
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
© OECD/IEA, 2016
Decentralised renewables could improve electricity access and reliability
Sub-Saharan Africa requires electrification solutions tailored to population density. Affordable small-scale solar PV can help access in rural areas and improve reliability in urban zones.
Less than 50%
More than 50%
No information
Share of population with access to electricity:
Urban
38%
Rural
62%
Urban
4%
Rural
96%
Nigeria
100 million without access
Ethiopia
75 million without access
© 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
© OECD/IEA, 2016
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
Medium-term renewable power forecast in line with COP21 goals
But even more is needed to meet the ambitious climate targets agreed at COP21
Renewable electricity generation indexed to INDC targets
0
20
40
60
80
100
120
140
World United States EU28 Japan China India Others
2030
IND
C target =
100
Renewable generation in 2015 Renewable generation in 2021
INDC renewable generation targets in 2030
Global 2°C target in 2030
© 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
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
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
Africa can leapfrog to growth based on more affordable renewables
• Predictable and rapidly adaptive incentives
• Focus on non-economic barriers
• Manage total support costs
• System integration Market design and expose RE to competition
• Publicacceptance
Time
Deplo
ymen
t
Initiation Take-off Mainstreaming
Gene
ratio
n Pric
es
International benchmark prices
Key
Objective
Critical Mass Reduce Costs System
Integration
Policy Priorities Clear regulatory
framework
Cost convergence
with international
benchmarks
Develop flexible
energy system
Secure financial
support
Introduce
competition Market reform
Policy priorities change over time
© 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 wind Solar 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
© OECD/IEA, 2016
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
© OECD/IEA, 2016
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
