Table Of ContentPART ONE
Trends and Outlooks
1
CHAPTER ONE
Global and Regional Trends
in Renewable Energy
Contents
1.1. Renewable Energy Markets 4
1.2. Electricity Market Trends: Rapid Growth 5
1.3. Transportation Market Trends: A Mixed Picture 10
1.4. Heating/Cooling Market Trends: Slow Awakening of the “Sleeping Giant” 11
1.5. Investments Increasing at all Development Stages 13
1.6. Cost Trends and Future Prospects 18
1.7. Policy Trends 22
1.8. International Players 23
1.9. Near-Term Market Outlook 24
1.10. Global Wind Market Projections 24
1.11. Global Solar PV Market Projections 26
1.12. To Get Ready for the Next Step 28
Renewable energy is clearly entering the mainstream. In 2010, an
estimated 16.7% of global final energy was supplied by renewable
energy—including hydropower, wind, solar, geothermal, and
traditional and modern biomass energy. Modern renewable energy
provided about 8.2% of this total, with traditional biomass account-
ing for an estimated 8.5% according to the REN21 Renewables
2012 Global Status Report. Further, renewables accounted for
almost half of new electric capacity added worldwide during 2011,
and generate about 20.3% of global electricity based on generat-
ing capacity in operation at year’s end. Market growth has been
rapid in recent years, with an accelerated growth rate for some
technologies over the past half-decade. The global economic crises
of 2009 and 2011 slowed growth in some technologies and regions,
but overall growth has continued.
Renewable energy markets have continued their rapid growth in
recent years, both in total scale and in geographic distribution, in spite of
the global economic recession. Global investment in renewable power and
fuels, at all stages of development, has also risen rapidly and was up more
than sixfold between 2004 and 2011. In response to technology advances
Renewable Energy Action on Deployment © 2012 Elsevier Inc.
http://dx.doi.org/10.1016/B978-0-12-405519-3.00001-3 All rights reserved. 3
4 Renewable Energy Action on Deployment
and greater economies of scale, renewable energy costs have fallen dramat-
ically and further cost reductions are expected in all technologies. All of
these developments are due greatly to a significant increase in government
support policies for renewable energy and a growing number and expand-
ing breadth of international players involved with renewable energy.
This chapter reviews the major trends in renewable energy development
over the past two decades, with emphasis on the past five years. It begins
with an overview of market trends by the end-use sector and technology,
followed by developments in renewable energy investment in recent years,
and past cost trends and future expected reductions. Trends related to gov-
ernment policies focused specifically on renewable energy are covered next,
followed by a brief discussion of relevant international players in the renew-
able energy arena, ranging from international organizations to international
finance organizations to nongovernmental organizations (NGOs) and the
private sector. The final section provides an overview of various projections
for future market development and renewable energy deployment.
Except where otherwise noted, data and trends in this chapter are
drawn primarily from the Renewables 2012 Global Status Report of REN21
(Renewable Energy Policy Network for the 21st Century); the investment
data are from Bloomberg New Energy Finance (BNEF) and drawn from
Global Trends in Renewable Energy Investment 2012 (UN Environment Pro-
gramme, Frankfurt School, and BNEF).
1.1. RENEWABLE ENERGY MARKETS
Renewable energy markets have grown rapidly over the past several
years, particularly in the electricity sector, where solar photovoltaics (PV) has
witnessed rapid expansion and has remained the world’s fastest growing energy
technology for some time. Figure 1.1 shows growth rates of several renewable
technologies for the year 2011, and annual averages for the five year period
from the end of 2006 through 2011. Many technologies experienced remark-
able growth, with solar PV and solar hot water/heating seeing even higher
rates of growth during 2011 than the average over the 2006–2011 period.
After PV, concentrating solar thermal power (CSP) has witnessed the most
rapid relative growth in the electricity sector over the past five years, growing
from a small base, and wind power capacity has also grown rapidly. In terms
of total new capacity added during this period, wind power takes the lead
with about 164 GW, followed by hydropower. As seen in Figure 1.1, biofuel
production and consumption took off in the middle of the last decade, but
growth rates have since slowed, with ethanol production remaining stable
Global and Regional Trends in Renewable Energy 5
ate 90% 2011 only
R
owth 80% 74% Ethnrodu-2g0h0 260 11
Gr 70% (five year
period)
60% 58%
50%
40% 37%
35%
30% 26% 27% 27%
20% 20% 17% 17% 16%
10%
1%2% 3%3% –0.5%
0%
Solar PV (all) Wind power CSP Geothermalpower Hydropower Solar hotwater/ heating Ethanolproduction Biodieselproduction
FIGURE 1.1 Average Annual Growth Rates of Renewable Energy Capacity and Biofuels
Production, 2006–2011 (From REN21, Renewables 2012 Global Status Report). For color
version of this figure, the reader is referred to the online version of this book.
or declining slightly in 2011. The renewables heat sector is considered by
many to be a sleeping giant, with enormous potential that is still waiting to
be tapped, although markets have begun to pick up in recent years. Table 1.1
shows the changes in cumulative capacity or annual production that various
renewables witnessed between 2006 and 2011.
In 2011, renewable energy accounted for almost half of the electric capacity
added worldwide.
1.2. ELECTRICITY MARKET TRENDS: RAPID GROWTH
In 2011, renewable energy accounted for almost half of the ~208
GW of electric capacity added worldwide. Renewables account for about
a quarter of the world’s electric capacity (estimated to be 5360 GW at the
end of 2011) and provide an estimated 20.3% of global electricity supply,
based on total global generating capacity in place at the end of 2011.
Hydropower
Hydropower is used in more than 150 countries and generates most of this
supply, accounting for an estimated 15.3% of global electricity production
in 2011. Asia leads the world for total hydropower capacity, followed by
Europe, North and South America, and finally Africa at a distant fifth. Asia
6 Renewable Energy Action on Deployment
TABLE 1.1 Global renewable energy installed capacity or annual production, 2006
and 2011
2006 2011
Technology (GW) (GW)
Hydropowera ~830 970
Wind power 74 238
Biomass power 45 72
Solar power
• PV 7 70
• CSP 0.4 1.8
Geothermal power 10 11.2
Ocean power 0.3 0.5
GW GW
th th
Biomass heat NA 290
Solar heatb 107 232
Geothermal heat 33 58
billion liters per year billion liters per year
Biofuels
• Ethanol 39 86
• Biodiesel 6 21
aHydropower data are estimated and do not include pure pumped storage.
bSolar heat data are estimated and do not include unglazed systems (for swimming pools).
Source: Data rounded and sourced from REN21, Renewables Global Status Report, various years.
and South America, led by China and Brazil, are the most active markets
for new development, with several large dams under construction as well as
many small-scale projects. New plants are also being constructed in North
America and Europe, although the greatest focus is on modernization of
existing plants and development of pumped storage to support high-capacity
shares of variable renewable technologies.
Despite the large increases in hydropower capacity in recent years, as
seen in Table 1.1, hydropower’s share of total global electricity production
has declined (from 19% in the mid-1990s) as consumption has expanded at
a faster pace. Further, hydropower’s share of total renewable capacity is fall-
ing as markets for other renewable technologies surge. In 2004, hydropower
accounted for about 89% of total installed renewable electric capacity; by
the end of 2011, its share had fallen to an estimated 71.3%.
Wind Power
After hydropower, wind power has experienced the largest capacity gains,
rising rapidly from 74 GW in operation at the end of 2006 to nearly 238
Global and Regional Trends in Renewable Energy 7
GW at the end of 2011. An estimated 40 GW was added during 2011,
increasing total global capacity by about 20% relative to year end 2010.
By the end of 2011, wind power capacity installed was enough to meet
an estimated 2–3% of global electricity consumption; while still a small
share, it was up significantly in a few short years. And wind power’s share of
total demand was far higher in several individual countries—for example,
nearly 26% in Denmark, 15.9% in Spain, 15.6% in Portugal, and 12% in
Ireland—while wind power capacity installed in the European Union (EU)
by the end of 2011 was enough to meet 6.3% of the region’s electricity
use in a normal wind year (up from 5.3% in 2010). Shares are even higher
in many states and provinces. For example, four German states met more
than 46% of their electricity demand with wind in 2011; South Australia
produces 20% of its electricity with wind; and five U.S. states met more than
10% of their electricity demand with wind in 2011.
Policy uncertainty and the continuing economic crisis have combined to
slow the growth of wind power in developed countries, although the United
States saw a jump in capacity additions in 2011 driven by the approaching
expiration of some important federal incentives. For the second year in a
row, the majority of new capacity was added in developing countries and
emerging markets rather than in wind’s traditional markets. Leadership has
shifted from Europe (initially Denmark, and more recently Germany and
Spain) to the United States, and most recently to China, which accounted
for half the global market in 2010 and an estimated 44% in 2011. In recent
years, wind power has become one of the broadest-based renewable energy
technologies, with commercial installations in more than 70 countries by
2006, and in 83 countries by 2010; at least 68 countries around the world
had more than 10 MW of reported wind power capacity in 2011.
Offshore wind power shows great promise, but to date markets have devel-
oped relatively slowly due to high costs and siting and permitting challenges.
Most capacity is installed off the coastlines of Europe; the first major offshore
wind project outside of Europe began operating in China during 2010. There
is a trend toward increasing the size of individual wind turbines as well as the
capacity of individual projects; at the same time, interest in community-based
wind power projects is on the rise beyond the traditional cooperatives in
Denmark and Germany, and interest in small-scale turbines is also increasing.
Biomass Power
Trends in biomass power markets are more difficult to track because of the
diversity of feedstock and technologies, and because there are no industry
8 Renewable Energy Action on Deployment
associations that undertake a systematic and comprehensive compilation of
global data (as there are for wind and solar PV, for example). However, it is
clear that the use of biomass for electricity generation is increasing, particu-
larly in Europe (led by Germany, Sweden, and the UK), the United States,
Brazil, China, India, and Japan. Although on a much smaller scale, biomass
power has also grown significantly in several other Latin American and Asian
countries, including Costa Rica, Malaysia, Mexico, Thailand, and Uruguay,
and there is increasing interest in modern biomass power in Africa as well.
Global biomass power capacity reached an estimated 72 GW in 2011.
Approximately 88% of biomass power is generated with solid biomass fuels,
with the remainder provided by biogas and liquid biofuels.
In many countries, much if not most biomass power capacity is in the
form of cogeneration (or combined heat and power; CHP), particularly in
some European countries and in countries with large sugarcane industries,
where waste bagasse is used to produce heat and power. Solid biomass is
also being used increasingly for cofiring with fossil fuels (particularly coal)
in existing power plants. Use of biogas (from agricultural sources or landfill
gas) is also expanding rapidly; for example, most biomass power in Germany
came from biogas as of 2010, with capacity increasing more than 20% dur-
ing that year alone.
Solar PV
Almost 30 GW of solar PV capacity came into operation during 2011,
bringing total global capacity to nearly 70 GW by year’s end. This represents
about 10 times global capacity in operation only five years earlier. Cumu-
lative global PV capacity increased at an average annual rate of more than
58% between 2006 and 2011, and grew 74% in 2011.
The EU dominated the global PV market in 2011, as it has for the past
several years, accounting for about 57% of new operating capacity. Italy
took the top spot from Germany in 2011, followed by China (moving up
from sixth in 2010), the United States, France, and Japan. Germany, which
led the market for five years, added more capacity during 2010 than the
entire world installed in the previous year; by the end of 2010, Germany
alone had more total capacity than the world did two years earlier. As of the
end of 2011, Germany had an estimated 24.8 GW of PV capacity in opera-
tion, followed by Italy with 12.8 GW.
Since 2005, when nearly all global PV systems were installed remotely
and off the grid, the use of PV has shifted dramatically and almost all capac-
ity was grid connected by the end of 2011 (although off-grid capacity
Global and Regional Trends in Renewable Energy 9
continues to rise). While most of the world’s PV systems are still small scale
and distributed, there is a trend toward utility-scale PV plants. By early
2012, at least 12 countries (in Europe, North America, and Asia) had plants
exceeding 20 MW.
Although the concentrating PV market is still small, interest is increasing
in this technology as well. During 2011, the world’s first multi-megawatt
projects were installed. The largest markets by year’s end were Spain and
the United States, but projects were operating in at least 20 other countries
around the world.
CSP
The CSP market has also been focused on Europe (primarily Spain) and the
United States. After several years of inactivity, capacity increased from less
than 400 MW in 2005 to an estimated 1,760 MW at the end of 2011, with
more than 450 MW added during 2011. Although Spain and the United
States remain home to almost all of the world’s existing capacity, projects
are now under construction or planned in several countries in North Africa,
the Middle East, and Asia. Egypt and Morocco brought their first projects
on line in 2010, and Algeria, Thailand, and India started operating their first
CSP plants during 2011.
Due to rapid reductions in PV costs, in 2010 and 2011 several planned
projects in the United States shifted from CSP technologies to utility-scale
PV. In addition, the Arab Spring slowed development in the Middle East–
North Africa region during 2011. However, CSP growth is expected to
accelerate internationally in the coming years.
Geothermal Power
Geothermal power markets have been relatively slow in recent years,
increasing at an average annual rate of just over 2% between 2006 and 2011.
More than 135 MW came on line during 2011, with most of this in Iceland,
and the rest in Nicaragua and the United States. Geothermal electricity
generation was an estimated 69 TWh in 2011, and global capacity reached
approximately 11.2 GW by year’s end.
Geothermal power plants are operating in at least 24 countries, with
the vast majority of global capacity located in the United States, the
Philippines, Indonesia, Mexico, Italy, Iceland, New Zealand, and Japan.
Iceland produced about 26% of its electricity with geothermal energy in
2010, and the Philippines generated approximately 18% of its total. Kenya,
10 Renewable Energy Action on Deployment
with about 200 MW of capacity in operation, leads Africa for geothermal
electric capacity.
Deployment is expected to accelerate as markets broaden across Africa,
Latin America, and elsewhere, and as advanced technologies enable devel-
opment of geothermal power in new locations.
Ocean Energy
Ocean energy technologies are still relatively immature, but they continue
to advance. After years with development of only small pilot ocean energy
projects, global capacity almost doubled in 2011 with the addition of about
254 MW. Almost all of this capacity began operation off the shores of South
Korea, and it brought total global ocean energy capacity (most of which is
tidal power) to 527 MW. Elsewhere around the world, numerous projects of
various scales, from small-pilot plants to utility-scale projects, are in devel-
opment or under contract. At least 25 countries are actively developing
projects, particularly wave and tidal plants.
1.3. TRANSPORTATION MARKET TRENDS: A MIXED
PICTURE
Renewable energy is used in the transportation sector in the form
of biofuels, biogas, renewable electricity for electric vehicles, and renew-
ably produced hydrogen. Data are available at the national level for some of
these options; for example, biogas accounted for 11% (on an energy basis) of
the total 5.7% biofuels share of Sweden’s transport fuels in 2010. However,
global market and production data are available only for liquid biofuels.
Production of ethanol and biodiesel increased rapidly from 2000 to 2010,
particularly in the middle of the decade. Growth has since slowed, with
ethanol production holding steady or dropping slightly during 2011, and
biodiesel increasing by about 16% relative to 2010.
Most renewable fuel is used for road transport, but there is increasing
interest in aviation biofuels, and several airlines around the world began
operating commercial flights with various biofuel blends during 2011.
Fuel Ethanol
The United States and Brazil lead the world for ethanol production, account-
ing for 87% of the 86 billion liters produced in 2011. After more than 25 years
as the leading producer and user of ethanol, Brazil was overtaken by the United
States in 2006. In 2010, after several years as a net importer, the United States
