New Hampshire, USA -- Renewable energy markets and policy frameworks have evolved rapidly in recent years. Despite a challenging economic backdrop, reports reveal growth across all sectors.
REN21's Renewables Global Status Report — an overview of renewable energy market, industry, investment and policy developments worldwide, relying on an international network of more than 400 contributors — reveals that the sector continued to expand across all its various segments.
Renewable sources supplied an estimated 16.7 percent of global final energy consumption in 2010. Of this total, modern renewable energy (as opposed to traditional biomass) accounted for an estimated 8.2 percent, a share that has increased in recent years, while the share from traditional biomass has declined slightly to an estimated 8.5 percent. During 2011, modern renewables continued to grow strongly in all end-use sectors.
In the power sector, renewables accounted for almost half of the estimated 208 GW of electric capacity added globally during 2011. Wind and solar photovoltaics (PV) accounted for almost 40 percent and 30 percent of new renewable capacity respectively, followed by hydropower (nearly 25 percent). By end 2011, total renewable power capacity worldwide exceeded 1360 GW, up 8 percent over 2010; renewables comprised more than 25 percent of total global power-generating capacity (estimated at 5360 GW in 2011) and supplied an estimated 20.3 per cent of global electricity. Non-hydropower renewables exceeded 390 GW, a 24 percent capacity increase over 2010.
The heating and cooling sector offers an immense yet mostly untapped potential for renewable energy deployment. Heat from biomass, solar and geothermal sources already represents a significant portion of the energy derived from renewables, and the sector is slowly evolving.
Renewable energy is used in the transport sector in the form of gaseous and liquid biofuels; liquid biofuels provided about 3 percent of global road transport fuels in 2011, more than any other renewable energy source in the sector.
Market and industry highlights
Solar PV grew the fastest of all renewable technologies between 2006 and 2011, with operating capacity increasing by an average of 58 percent annually, followed by concentrating solar thermal power (CSP), which increased almost 37 percent annually over this period from a small base, and wind power (26 percent). Demand is also growing rapidly for solar thermal heat systems, geothermal ground-source heat pumps, and some solid biomass fuels, such as wood pellets. Biodiesel production expanded in 2011 but ethanol production was stable or down slightly compared with 2010. Hydropower and geothermal power are growing globally at rates averaging 2 percent-3 percent per year.
Wind power capacity increased by 20 per cent in 2011 to approximately 238 GW by year-end, seeing the greatest capacity additions of any renewable technology. As in 2010, more new capacity was added in developing countries and emerging markets than in OECD countries. China accounted for almost 44 per cent of the global market (adding slightly less capacity than it did in 2010), followed by the U.S. and India; Germany remained the largest market in Europe.
A year of extraordinary market growth, solar PV added almost 30 GW of operating capacity, increasing total global capacity by 74 percent to almost 70 GW. For the first time ever, PV accounted for more capacity additions in the E.U. than any other technology. While the E.U. again dominated the global market, led by Italy and Germany, markets expanded in other regions, and China has rapidly emerged as the dominant player in Asia. Module manufacturing continued its marked shift to Asia, mainly at the expense of European firms.
The growing use of biomass for heat, electricity and transport fuels has resulted in increasing international trade in biomass fuels in recent years, particularly wood pellets, biodiesel and fuel ethanol (for more on this, see page 76-80). Biomass, in the form of both solid and gaseous fuels, continues to provide the majority of heating produced with renewable energy sources. Markets are expanding rapidly, particularly in Europe, where biomass is used increasingly in district heat systems. Biomass power capacity increased from about 66 GW in 2010 to almost 72 GW at the end of 2011. The U.S. leads the world in biomass-based power generation, with other significant producers in the E.U. in addition to Brazil, China, India, and Japan.
Solar heating capacity increased by an estimated 27 percent in 2011 to reach approximately 232 GWth, excluding unglazed swimming pool heating. China again led the world for solar thermal installations, with Europe a distant second. Most solar thermal is used for water heating, but solar space heating and cooling are gaining ground, particularly in Europe.
More than 450 MW of concentrating solar thermal power (CSP) was installed in 2011, bringing global capacity to almost 1760 MW. Spain accounted for the vast majority of capacity additions, while several developing countries launched their first CSP plants. Although CSP faced challenges associated with rapidly falling PV prices and the Arab Spring, which slowed development in the MENA region, significant capacity was under construction around the world by the year's end.
Geothermal energy provided an estimated 205 TWh (736 PJ) in 2011, with two thirds in the form of heat and the remaining one-third as electricity. At least 78 countries used direct geothermal energy in 2011. Most of the growth in direct use was associated with ground source heat pumps (GHP), which can provide heating and cooling and have experienced growth rates averaging 20 per cent annually. Growth in electric capacity was modest, with an estimated 11.2 GW in place at year's end, but the rate of deployment is expected to accelerate.
An estimated 25 GW of new hydropower capacity came on line in 2011, increasing global installed capacity by nearly 2.7 per cent to approximately 970 GW. Hydropower continues to generate more electricity than any other renewable resource, with an estimated 3400 TWh produced during 2011. Asia was the most active region for new projects. Hydropower is increasingly providing balancing services, including expansion of pumped storage capacity — not counted in 970 GW total — in part to accommodate the increased use of variable solar and wind resources.
After years that saw development of only small pilot projects, global ocean power capacity almost doubled in 2011. The launch of a 254 MW tidal power plant in South Korea and a 0.3 MW wave energy plant in Spain brought total global capacity to 527 MW. A number of additional projects — small pilot- and utility-scale — were under development in 2011.
Across most technologies, renewable energy industries saw continued growth in equipment manufacturing, sales and installation during 2011. PV and onshore wind power experienced dramatic price reductions resulting from declining costs due to economies of scale and technology advances, but also due to reductions or uncertainties in policy support. At the same time, some sectors — particularly PV manufacturing — have been challenged by falling prices, declining policy support, the international financial crisis, and tensions in international trade.
Growth by country and region
Renewables represent a rapidly growing share of energy supply in a number of countries and regions. In the E.U., renewables accounted for more than 71 per cent of electric capacity additions in 2011, bringing renewable energy's share of total electric capacity to 31.1 percent. PV alone represented almost 47 per cent of capacity additions.
Germany continues to lead in Europe and to be at the forefront globally, remaining among the top users of many renewable technologies for power, heating and transport. In 2011, renewables provided 12.2 percent of Germany's final energy consumption, 20 percent of electricity consumption (up from 11.6 percent in 2006), 10.4 per cent of heating demand (up from 6.2 percent), and 5.6 percent of transport fuel (excluding air traffic).
In the U.S., renewable energy made up an estimated 39 percent of electric capacity additions in 2011. The share of U.S. net electricity generation from non-hydropower renewables has increased from 3.7 percent in 2009 to 4.7 percent in 2011. Nine states generated more than 10 percent of their electricity with non-hydro renewables in 2011, up from two states a decade ago. All renewables accounted for about 11.8 percent of U.S. primary energy production in 2011, up from 10.9 percent in 2010.
China ended 2011 with more renewable power capacity than any other nation, with an estimated 282 GW; one quarter of this total (70 GW) was non-hydro. Of the 90 GW of electric capacity newly installed during the year, renewables accounted for more than one third, and non-hydro renewables for more than one fifth.
The top seven countries for non-hydro renewable electric capacity — China, the U.S., Germany, Spain, Italy, India and Japan — accounted for about 70 percent of total capacity worldwide. By region, the EU was home to nearly 44 percent of global non-hydro renewable capacity at the end of 2011. The BRIC nations accounted for almost 26 percent, but virtually all of this capacity is in China, India and Brazil.
A dynamic policy landscape
At least 118 countries, more than half of which are developing, had renewable energy targets in place by early 2012, up from 109 in early 2010. Renewable energy targets and support policies continued to be a driving force behind increasing markets, despite some setbacks resulting from a lack of long-term policy certainty and stability in many countries.
The number of official targets and policies supporting investments in renewable energy continued to increase in 2011 and early 2012, but at a slowed adoption rate. Several countries undertook significant policy overhauls resulting in reduced support; some changes were intended to improve existing instruments and achieve more targeted results as renewable energy technologies mature, while others were part of the trend towards austerity measures.
Renewable power generation policies remain the most common type of support policy; at least 109 countries had some type of renewable power policy by early 2012, up from the 96 countries reported last year.
Feed-in-tariffs (FiTs) and renewable portfolio standards (RPSs) are the most commonly used policies in this sector. FiT policies were in place in at least 65 countries and 27 states by early 2012. While a number of new FiTs were enacted, most related policy activities involved revisions to existing laws, at times involving controversy and legal disputes. Quotas or renewable portfolio standards were in use in 18 countries and at least 53 other jurisdictions, with two new countries having enacted such policies in 2011 and early 2012.
Policies to promote renewable heating and cooling continue to be enacted less aggressively than those in other sectors, but their use has expanded in recent years. By early 2012, at least 19 countries had specific renewable heating/cooling targets in place and at least 17 countries and states had obligations/mandates to promote renewable heat. The focus of this sector is still primarily in Europe, but interest is expanding to other regions.
Regulatory policies supporting biofuels existed in at least 46 countries at the national level and in 26 states and provinces by early 2012, with three countries enacting new mandates during 2011 and at least six increasing existing mandates. Transport fuel-tax exemptions and biofuel production subsidies also existed in at least 19 countries. At the same time, Brazil's mandated ethanol blend level was reduced, partly in response to low sugarcane yields, while long-term ethanol support policies in the U.S. were allowed to expire at year's end.
Global new investment in renewable power and biofuel production capacity rose 17 percent to a record US$257 billion in 2011. This was more than six times the figure for 2004 and almost twice the total investment in 2007, the last year before the acute phase of the recent global financial crisis. This increase took place while the cost of renewable power equipment was falling rapidly and while there was uncertainty over economic growth and policy priorities in developed countries. Including large hydropower, net investment in renewable power capacity was some $40 billion higher than net investment in fossil fuel capacity.
One highlight of 2011 was the strong performance of solar power, which soared past wind power, the biggest single sector for investment in recent years (although total wind power capacity added in 2011 was higher than solar).
The top five countries for total investment were China, which led for the third year running, followed closely by the U.S., then by Germany, Italy and India. The U.S. was the clear leader if investment in energy efficiency, smart grids and other energy-smart technologies is included. India displayed the fastest expansion of any large renewables market in the world, with 62 percent growth. Developing countries saw their relative share of total global investment slip back after several years of increases, accounting for $89 billion of new investment in 2011, compared with $168 billion in developed countries. There is a long way to go, but the report shows that more people are deriving power from renewables as capacity grows, prices fall, and renewables' share of global energy rises.
Special focus: rural renewable energy
Significant technological innovations and cost reductions, along with improved business and financing models, are extending the opportunities for individuals and communities in developing countries to implement renewable energy solutions.
For a majority of very remote and dispersed users, decentralised off-grid renewable electricity is less expensive than extending the power grid. At the same time, developing countries have begun deploying more and more grid-connected renewable capacity, which is in turn expanding markets and further reducing prices, potentially improving the outlook for rural renewable energy developments.
Rural renewable energy markets in developing countries differ significantly across regions: for example, Africa has by far the lowest rates of access to modern energy services, while Asia presents significant gaps between countries, and Latin America's rate of electrification is quite high. In addition, active players in this sector are numerous, and participants differ from one region to the next. The rural renewable energy market is highly dynamic and constantly evolving; it is also challenged by the lack of structured frameworks and of consolidated data sets.
In addition to a focus on technologies and systems, most developing countries have started to identify and implement programmes and policies to improve the ongoing operational structures governing rural energy markets. Most countries are developing targets for electrification that include renewable off-grid options and/or renewably powered mini-grids; there is also some use of grid-connected renewable electricity. Such developments are increasing the attractiveness of rural energy markets and developing economies for potential investors.
Janet L. Sawin is research director and lead author of the REN21 Renewables Global Status Report.
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