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© OECD/IEA 2018
Renewables 2018Analysis and Forecasts to 2023
Heymi Bahar
Columbia University SIPA, 26 October 2018
IEA
2© OECD/IEA 2018
Context
CO2 emissions to rise again in 2018
Progress in energy efficiency is slowing
Expensive energy is back
Solar PV capacity rose faster than any other fuel in 2017 driven by China; offshore wind
installations broke a record with auction prices showing significant cost reduction potential
Global electricity demand grew by over 3% in 2017, a faster rate than overall energy
demand but electricity only accounts for 20% of total final energy consumption
The world energy system has a number of “blind-spots” that require policy attention to
achieve a secure , sustainable and affordable energy system
3© OECD/IEA 2018
100 200 300 400 500Mtoe
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 fromrenewables
Electricity
Heat
Transport
31%
4© 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
5© 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
6© 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)
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
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
10© 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%
11© 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
12© 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)
13© 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
China57%
India6%
EU5%
United States
2%
RoW30%
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)
15© 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
16© 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
17© OECD/IEA 2018
Thank you
Renewables 2018 Team
Yasmina Abdelilah
Heymi Bahar
Ute Collier
Karolina Daszkiewicz
Hideki Kamatatara
Pharoah Le Feuvre
Tobias Rinke
Questions and comments: [email protected]
