A new report on the state of the global renewable energy industry outlines a few trends for another “record-breaking” year for renewables: Additions in installed renewable capacity set new records in 2016, renewables are becoming the least-cost option, the inherent need for “baseload” is a myth, and energy-related carbon-dioxide emissions remain stable.
According to Paris-based nonprofit REN21’s “Renewables 2017 Global Status Report (GSR),” 161 GW of renewable power capacity was installed in 2016, increasing total global capacity by almost 9% over 2015 to nearly 2,017 GW. Solar photovoltaics accounted for around 47% of the capacity added, followed by wind power at 34% and hydropower at 15.5%. Notably, the record renewable energy capacity of 161 GW required 23% less investment over the year prior, according to the report.
As for cost, recent deals in Denmark, Egypt, India, Mexico, Peru and the United Arab Emirates saw renewable electricity being delivered at $0.05/kWh or less. This is well below equivalent costs for fossil fuel and nuclear generating capacity in each of these countries, notes REN21. Also demonstrating that renewables can be the least-cost option was Germany, where winners of two recent auctions for offshore wind relied only on the wholesale price of power without government support.
In terms of the “baseload” myth, the report says, integrating large shares of variable renewable generation can be done without fossil fuel and nuclear baseload with sufficient flexibility in the power system – through grid interconnections; sector coupling; and enabling technologies such as storage systems, electric vehicles and heat pumps.
This sort of flexibility not only balances variable generation but also optimizes the system and reduces generation costs overall, says REN21. Therefore, it comes as no surprise that the number of countries successfully managing peaks approaching or exceeding 100% electricity generation from renewable sources is on the rise. In 2016, Denmark and Germany, for example, successfully managed peaks of renewable electricity of 140% and 86.3%, respectively, the report points out.
Despite a 3% growth in the economy and an increased demand for energy, global energy-related carbon-dioxide emissions remained stable for a third year in a row. This can be attributed primarily to the decline of coal, as well as the growth in renewable energy capacity and improvements in energy efficiency, the report says.
In another positive trend for 2016, innovations and breakthroughs in storage technology are increasingly providing additional flexibility to the power system. In 2016, approximately 0.8 GW of new advanced energy storage capacity became operational, bringing the year-end total to an estimated 6.4 GW.
In addition, markets for mini-grids and stand-alone systems are evolving rapidly, and pay-as-you-go (PAYG) business models, supported by mobile technology, are exploding, says the report. In 2012, investments in PAYG solar companies amounted to only $3 million; by 2016, that figure had risen to $223 million (up from $158 million in 2015).
“The world is adding more renewable power capacity each year than it adds in new capacity from all fossil fuels combined,” says Arthouros Zervos, chair of REN21. “One of the most important findings of this year’s GSR is that holistic, systemic approaches are key and should become the rule rather than the exception. As the share of renewables grows, we will need investment in infrastructure, as well as a comprehensive set of tools: integrated and interconnected transmission and distribution networks, measures to balance supply and demand, sector coupling (for example, the integration of power and transport networks), and deployment of a wide range of enabling technologies.”
REN21 argues, however, that the energy transition is not happening fast enough to achieve the goals of the Paris Agreement.
“We are encouraged by the continuing global growth in the renewable energy sector and happy to see the United States retain its place as a top investor for 2016, with 19 percent of all renewable energy financing,” states Gregory Wetstone, president and CEO the American Council On Renewable Energy. “Given the decision to exit the Paris Agreement, it is essential for U.S. cities, states and businesses to accelerate their investments in the thriving American renewable energy sector in 2017 and beyond. Our analysis suggests that continued grid modernization efforts – combined with a 50 percent increase in annual renewable energy investments over the years between now and 2025 -will enable the U.S. to meet its initial greenhouse-gas reduction targets under the accord.”
The report also points out that investments are down: Although global investment in new renewable power and fuel capacity was roughly double that of fossil fuels in 2016, investments in new renewable energy installations were down 23% compared with 2015. Among developing and emerging market countries, renewable energy investment fell 30% to $116.6 billion, while that of developed countries fell 14% to $125 billion. Investment continues to be heavily focused on wind and solar PV; however, all renewable energy technologies need to be deployed in order to fight global warming, says the report.
Lastly, REN21 says fossil fuel subsidies are continuing to impede progress. Globally, subsidies for fossil fuels and nuclear power continue to dramatically exceed those for renewable technologies, according to the report. By the end of 2016, more than 50 countries had committed to phasing out fossil fuel subsidies, and although some reforms have occurred, there have not been enough, REN21 says.
“The world is in a race against time,” concludes Christine Lins, executive secretary of REN21. “The single most important thing we could do to reduce CO2 emissions quickly and cost-effectively is phase out coal and speed up investments in energy efficiency and renewables. When China announced in January that it was canceling more than 100 coal plants currently in development, they set an example for governments everywhere: Change happens quickly when governments act – by establishing clear, long-term policy and financial signals and incentives.”