As we learned from the Medium-Term Renewable Energy Market Report 2016 published by the International Energy Agency (IEA) this month, renewable electricity generation increased more than ever in 2015. At around 153 gigawatts, this represents a 15 per cent increase from 2014 and constituted more than 50 per cent of the new capacity installed across the world last year.
The IEA has increased its five-year growth forecast for renewables between 2015 and 2021 by 13 per cent. In contrast though, in November 2015, the Department of Energy and Climate Change (now part of BEIS, the Department for Business, Energy and Industrial Strategy) reduced its forecasts for new renewable energy capacity over the next 10 years in the UK by over 30 per cent.
So why is the rest of the world doing so well?
- Main players – The IEA report attributes most of the increase to changes in policy and improved market conditions in the world's two largest economies; the United States which has extended federal tax credits expected to boost solar PV and onshore wind and China which, after achieving the energy intensity and carbon intensity reduction targets set in its 12th Five Year Plan, is now aiming to reduce carbon intensity by 18 per cent from 2015 levels. The developing economies of India and Mexico are also expected to contribute to the renewable energy growth and have similarly set themselves ambitious goals.
- Policy direction – There is significant Government support across the world, with many countries introducing innovative and varying mechanisms to incentivise the development of their renewable energy capacity. By early 2016, 173 countries had introduced renewable energy targets and 146 of these had developed supporting policies. In many countries this is driven as much by the need to reduce air pollution and improve the security of energy supplies by diversification as by the need to moderate climate change.
- Emerging economies – 2015 saw investment in renewable energy in the developing world exceed that in the developed world for the first time. As technologies decrease in price and opportunities for finance improve, developing countries are turning to renewables for the energy security that they require to facilitate growth.
- Economics – Production and installation costs have decreased over the last decade and the IEA report anticipates that between 2015 and 2021 the costs of solar PV will drop by 25 per cent and the costs of onshore wind by 15 per cent. It is anticipated that projects with a current lifespan of around 25 to 30 years (or longer for tidal and hydro plants) will be able to continue past these dates with updated technology, at a lower cost and with increased efficiency.
This is extremely positive news but with 2015's Paris summit seeing a decision to try to limit global warming to 1.5°C, we do need to keep this in perspective. Although the IEA reports that over the next five years at least 60 per cent of the increase in generation of electricity across the world will be attributable to renewables, the energy demand of developing countries is expected to continue outstripping their renewable energy supply. There is still some way to go.