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Renewable capacity growth continues

by Dave Elliott

REN 21’s annual Renewable Energy Global Status report for 2017 shows continued progress in new capacity installation. Renewable power generating capacity saw its largest annual increase ever in 2016, with an estimated 161 GW of capacity added. Total global renewable capacity was up nearly 9% compared to 2015, to almost 2,017 GW at year’s end, with a rise in renewable electricity generation from 23.7% in 2015 to 24.5% in 2016. Crucially, the world continued to add more renewable power capacity annually than it added (net) capacity from all fossil fuels combined, with wind and PV growing at 4.7%, faster than demand at 2% p.a. Wind reached 487 GW, PV solar 300 GW, with energy storage rising to 156 GW, most of that being pumped hydro but with 1.7 GW of batteries.

This global expansion has been driven mainly by falling costs. REN 21 says ‘Renewables are becoming the least cost option. Recent deals in Denmark, Egypt, India, Mexico, Peru and the United Arab Emirates saw renewable electricity being delivered at $0.05 per kilowatt-hour or less. This is well below equivalent costs for fossil fuel and nuclear generating capacity in each of these countries. Winners of two recent auctions for offshore wind in Germany have done so relying only on the wholesale price of power without the need for government support, demonstrating that renewables can be the least cost option.’ 

However, while the renewables contribution to electricity supply has continued to boom, progress in heating and transport was less good. As a result of that, and rising transport demand, overall renewables still only provided an estimated 19.3% of global final energy consumption in 2015, only slightly up from 19.2% in 2014. But the capacity growth did mean that the renewable energy sector employed 9.8 million people in 2016, a rise of 1.1% over 2015. By technology, solar PV and biofuels provided the largest numbers of jobs. Employment shifted further towards Asia, which accounted for 62% of all renewable energy jobs (not including large-scale hydropower), led by China.

As ever, BP’s annual global energy review for 2017 comes out with seemingly lower estimates than REN21, with renewables said to be providing just under 4% of primary energy globally in 2016. However, REN21’s 19.3%, as above (for 2015) was for all renewables, including hydro – without hydro it was 6.6%. In addition, it’s also for global final energy consumption – not raw energy input. BP’s use of the primary input metric disguises the huge losses in conversion from fuel to electricity, losses that don’t apply to most renewables. Thus, to get a ‘million tonnes of oil equivalent’ figure for renewables, to compare with ‘mtoe’ figures for oil, the data are ‘converted on the basis of thermal equivalence assuming 38% conversion efficiency in a modern thermal power station’. But what really matters is output, not viritual primary energy shares…

Even so, BP does accept that ‘once again, renewables were the fastest growing energy source in 2016’, noting that, excluding hydro power, renewable energy grew by 12%, and adding that ‘while below the 10-year average rate of growth for renewables of 15.7%, this still represented the largest annual incremental increase in output on record, an increase of 55 Mtoe – more than the decline in coal consumption’.

Clearly you can play with the numbers to make the story for renewables look good (REN21: a near 25% power input) or less good (BP: under 4% of global energy), or even diabolical (effectively zero from wind and solar), as in this Spectator article. But, however it is played, the reality is that they are growing, and that looks likely to continue and expand as prices continue to fall.

REN21 puts total global investment in 2016 at $242bn p.a., down a bit from last year. However, in part this is because the technologies are getting cheaper, so you can get more output for less investment, although funding cuts have also played a role. But it seems likely that investment will have to rise in absolute terms during the ongoing energy transition. One recent review of what a full low-carbon global energy transition might cost suggests €530 bn p.a by 2020 and €810 bn by 2030. Another study, by ETC, the Energy Transitions Commission, put the cost of a global transition aimed at keeping below 2 degrees C by 2040 at between $300-600 bn p.a., with a $50/tonne carbon price in the 2020s rising to $100 in the 2030s.

So the investment needed could rise to be significantly more than now. However, set against that, the climate and air-pollution related health impact costs of not taking action could be very much larger than any of these sums. For example, it’s claimed that the limited switch to renewables has already avoided $88 bn in health costs in the US. There is also the point that, whatever happens, all of the existing energy system will need to be replaced as plants get old, and doing that with other technologies may not actually be any cheaper, longer term, especially given the likely rise in fossil fuel cost.

As ETC says, ‘provided appropriate policies are put in place, it will be possible within 15 years to build power systems that rely on variable renewables for 80/90% of power supply and that can deliver electricity at an all-in cost (including back-up and flexibility needs) of less than $70 per MWh, which is likely to be competitive with fossil fuels based power generation’. As for nuclear, REN21 reports it as supplying just 2.3% of global energy in 2015.  Renewables will soon be supplying 10 times that and mostly at lower costs…

There are obviously many battles ahead. Fossil fuels still dominate in many markets and  nuclear is desperately trying to retain and expand its small share, but the wave of the future looks clear – renewable will spread rapidly. The only questions are how rapidly and will that be enough to compensate for growth in energy demand? As REN21 indicates, renewables overall  including hydro are growing a bit faster (at 2.8% p.a) than demand (at 2%), but not much. But new renewables like wind and solar are doing much better (4.7%) and all of them are doing much better than fossil/nuclear (1.8%). Clearly, to cut emissions, we need to get demand down more, as well as renewables up even more…

So we need some big changes. In the next few posts I will look at some of the more awkward areas, options and issues – including biomass, hydro, energy saving and transport.


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