REN21 report says greater capacity installed at 23% lower investment cost
A record 161 gigawatts (GW) of renewable energy capacity was installed worldwide in 2016, a global status report said, while reductions in the cost of the technology lowered investments by 23 percent.
The “Renewables 2017 Global Status Report (GSR)” published by the Renewable Energy Policy Network for the 21st Century (REN21), which is associated with the UN Environment Program, said the additional power installations increased total global capacity by almost 9 percent over 2015 to nearly 2,017 GW.
Solar photovoltaic (PV) installations accounted for 47 percent of the added capacity, followed by wind power at 34 percent and hydropower at 15.5 percent, the report said
The report noted that in several important markets renewable energy is now significantly less expensive than conventional forms of electricity generation.
“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,” the report said.
“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,” it added.
The lower costs of various renewable technologies helped to drive down the total investment in 2016 by 23 percent, the report said, even though global investment in new renewable power was roughly double that in fossil fuel-based power. Among developing and emerging market countries, renewable energy investment fell 30 percent to $116.6 billion, while that of developed countries fell 14 percent to $125 billion.
REN21 did not see the lower investment as an entirely positive development, however, noting that most of the investment was directed to solar PV and wind power.
“All renewable energy technologies need to be deployed in order to keep global warming well below 2C (2 degrees Celsius over pre-Industrial levels),” the UN-attached agency said.
‘Baseload need’ a myth
The report also stressed that advances in renewable technology, particularly in energy storage and in increased reliability of systems, had successfully refuted the “myth” that large capacity in fossil fuel or nuclear power is necessary to provide a baseload. “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 ICT, storage systems, electric vehicles, and heat pumps,” the report said. “It comes as no surprise, therefore that the number of countries successfully managing peaks approaching or exceeding 100 percent electricity generation from renewable sources are on the rise. In 2016, Denmark and Germany, for example, successfully managed peaks of renewables electricity of 140 percent and 86.3 percent, respectively.”
Additional flexibility will come from the continuing development of advanced storage systems, the report said, noting that this still new area of technology was growing steadily. In 2016, approximately 0.8 GW of new energy storage capacity became operational, pushing the global total to about 6.4 GW.
Two significant positive developments were noted in the GSR. First, global energy-related CO2 emissions from fossil fuel power generation and other industry remained stable for a third straight year, despite 3 percent growth in the global economy.
The report attributed the lack of increase in emissions primarily to the decline of coal power, but suggested improvements in energy efficiency and the growth in renewable energy capacity also played an important role.
Another positive development was the rapid growth in mini-grids, stand-alone systems, and “pay as you go” business models in 2016, the report said. Investments in the pay as you go or prepaid electricity model, which is supported by mobile phone technology, grew from just $3 million in 2012 to $223 million in 2016, which was 41 percent higher than the $158 million in investments in 2015.
In a statement, REN21 chairman Arthouros Zervos said, “The world is adding more renewable power capacity each year than it adds in new capacity from all fossil fuels combined. 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.”
The report said that despite advances, the transport and heating and cooling sectors continued to lag behind the power sector in terms of adoption of renewable technologies.
In the heating and cooling sector, the challenges were attributed largely to “the unique and distributed nature of this market,” the report said.
The GSR’s conclusions were sharply critical of the transport sector. “Renewables-based decarbonization of the transport sector is not yet being seriously considered, or seen as a priority,” the report said.
Among the problems identified were a lag in infrastructure development, such as charging stations, to match the growth in the electric vehicle industry, and a need to ensure that infrastructure is powered by renewable energy. REN21 also said that the development of solutions for the shipping and aviation sectors is being stymied by government policies and commercial disruption.
The report was also critical of the continued use of fossil fuel subsidies, saying these are impeding progress in renewable energy.
“Globally, subsidies for fossil fuels and nuclear power continue to dramatically exceed those for renewable technologies. By the end of 2016 more than 50 countries had committed to phasing out fossil fuel subsidies, and some reforms have occurred, but not enough,” it said.
The report pointed out that as recently as 2014, the ratio of fossil fuel subsidies to renewable energy subsidies on a global basis was four to one, meaning that for every $1 in renewable energy subsidies, governments were spending $4 on fossil fuel subsidies.