As costs of renewables remain on the downward trajectory, the cumulative installed renewable power capacity is steadily growing with another record-breaking year in 2016, which saw 161 GW capacity added for 23% less investment, totaling $ 241.6 billion, reads a new report by multi-stakeholder renewable energy policy network REN21, which was released this week.
The increase in total global capacity reached almost 9% over 2015, with the addition of solar PV particularly dominant at around 47%, followed by wind power at 34% and hydropower at 15.5%, reads the report titled Renewables 2017.
Rapidly falling costs and rise of the new markets
Recent deals in Denmark, Egypt, India, Mexico, Peru and the United Arab Emirates (UAE) saw renewable electricity being delivered at $0.05 per kWh or less. In terms of solar power prices, the tenders in India continued to set record lows with the latest winning bid of INR 2.44 ($ 0.037)/kWh, successfully putting thermal behind solar on costs.
Meanwhile, markets for mini-grids and standalone systems are evolving rapidly and Pay-As-You-Go (PAYG) business models, supported by mobile technology, are exploding. In 2012, investments in PAYG solar companies amounted to only $3 million; by 2016 that figure rose to $223 million (up from $158 million in 2015), finds the report.
Flexibility of the power system
Integrating large shares of renewables into the energy mix can be done without fossil fuel and nuclear “baseload”, ensuring sufficient flexibility of the power system. By means of interconnections, sector coupling and enabling technologies such as ICT, storage systems electric vehicles and heat pumps, the energy system can be optimized, while reducing generation costs. Consequently, the number of countries successfully managing peaks approaching or exceeding 100% electricity generation from renewable sources are on the rise. In 2016, Denmark and Germany, for example, successfully managed peaks of renewables electricity of 140% and 86.3%, respectively, states the report.
Moreover, additional flexibility of the power system is coming from the innovative storage technology. According to the report, in 2016, approximately 0.8 GW of new advanced energy storage capacity came online, bringing the year-end total to an estimated 6.4 GW.
CO2 emissions stable, but energy transition lags behind the Paris Agreement goals
Among the positive trends noted are the stable global energy-related CO2 emissions from fossil fuels and industry for a third year in a row despite 3% growth in the global economy and an increased demand for energy. This can be attributed primarily to the decline of coal, but also to the growth in renewable energy capacity and to improvements in energy efficiency, reads the report.
However, regardless of the fact that global investment in new renewable power and fuel capacity was roughly double that in fossil fuels, investments in new renewable energy installations were down 23% compared to 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, with investments still heavily focused on wind and solar, finds the report.
In order to keep global warming well below 2C, investments must be directed in all renewable energy technologies, states the report. Moreover, the renewables-based decarbonization of the transport, heating and cooling sectors still needs to catch up the pace.
In terms of subsidies for fossil fuels and nuclear power, they continue to dramatically exceed those for renewable technologies, although by the end of 2016 more than 50 countries had committed to phasing out fossil fuel subsidies. The report finds that for every $1 spent on renewables, governments spent $4 perpetuating our dependence on fossil fuels.
Solar PV saves the day
Ranked No.1 in terms of additional power generating capacity in 2016, the solar PV market increased nearly 50% to at least 75 GW – equivalent to more than 31,000 solar panels installed every hour – raising the global total to at least 303 GW, finds the REN21 report.
The top five countries, led by China, accounted for 85% of additions, whereas emerging markets are contributing significantly to global growth, and many see solar PV as a cost-competitive source for increasing electricity production and for providing energy access.
The year 2016 saw unprecedented price reductions, particularly for modules, despite huge demand growth. Furthermore, declining capital expenditures and improving capacity factors are making solar PV increasingly competitive with traditional power sources, and new record low bids were set in tenders in 2016. Consequently, falling prices and rising demand have lured new players into the industry, including electric utilities and oil and gas companies.
According to the report, at least 17 countries had enough solar PV capacity by year’s end to meet 2% or more of their electricity demand, and several countries met far higher shares during 2016, including Honduras (9 .8%), Italy (7 .3%), Greece (7 .2%) and Germany (6 .4%).