IEA: Renewables to Surpass Gas by 2016 in the Global Power Mix – Twice the Output of Nuclear

According to the International Energy Agency’s second annual Medium-Term Renewable Energy Market Report (MTRMR), renewable power is expected to increase by 40% worldwide in the next five years. The output is seen to  exceed that from gas and be twice that from nuclear by 2016, IEA  said on Wednesday.

“Renewables are now the fastest-growing power generation sector and will make up almost a quarter of the global power mix by 2018, up from an estimated 20% in 2011. The share of non-hydro sources such as wind, solar, bioenergy and geothermal in total power generation will double, reaching 8% by 2018, up from 4% in 2011 and just 2% in 2006″, IEA believes. The forecasts made are based on the growth recorded in 2012 when global renewable generation rose by over 8%” despite a challenging investment, policy and industry context in some areas” as IEA points out. In absolute terms, the global renewable generation of 4.860 TWh in 2012 exceeded the total estimated electricity consumption of China.

“As their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation,” IEA Executive Director Maria van der Hoeven said when presenting the report.

Two main factors are driving the positive outlook for renewable power generation, according to the IEA. First, investment and deployment are accelerating in emerging markets. “Led by China, non-OECD countries are expected to account for two-thirds of the global increase in renewable power generation between now and 2018”, IEA believes. Second, IEA names the increasing cost-competitveness of renewables beyond what it calls the “well-established competitiveness of hydropower, geothermal and bioenergy”, highlighting for example wind power in markets like Brazil, Turkey and New Zealand.

The MTRMR also sees gains for biofuels in transport and for renewable sources for heat, though at somewhat slower growth rates than renewable electricity.

Despite the positive outlook, the MTRMR “cautions that renewable development is becoming more complex and faces challenges – especially in the policy arena”, naming the increasing debates about the costs of renewable support policies “in several European countries with stagnating economies and energy demand”. “Many renewables no longer require high economic incentives. But they do still need long-term policies that provide a predictable and reliable market and regulatory framework compatible with societal goals,” Maria van der Hoeven stated. “And worldwide subsidies for fossil fuels remain six times higher than economic incentives for renewables.”

In a review of German energy policies presented in May, IEA had commended Germany for its Energiewende, i.e. its energy  policy shift towards a renewable energy supply, but said further policy measures were necessary if the Energiewende was to maintain a balance between sustainability, affordability and competitiveness (please see related post below).

Based on data from the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) for 2012, the share of renewable energy sources in Germany’s gross electricity consumption rose to 22.9% in 2012, after 20.5% in 2011. The increase was largely due to a sharp increase in electricity generation from photovoltaic systems.. Poor wind conditions led to a decline in electricity generation from wind.

At the end of 2012, new German photovoltaic installation totalling 7,604 MW brought overall capacity on the grid to 32,643 MW. Generation climbed 45% against the previous year to around 28 billion kWh,  meaning 4.7% of total gross electricity consumption.  New net wind capacity of 2,244 MW was added in 2012, leading to a total installed wind capacity in Germany of early 31,315 MW. 280 MW were offshore. However, electricity generation was lower in 2012, with 46 billion kWh compared to 48.9 billion kWh in 2011. The decrease was due to poor wind conditions. With a share of 7.7% (2011: 8.1%) wind remained the main source of renewable electricity in Germany.

Sources: IEA, BMU

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