The year 2015 was an extraordinary one for renewable energy, with the largest global capacity additions seen to date, although challenges remain, particularly beyond the power sector. The year saw several developments that all have a bearing on renewable energy, including a dramatic decline in global fossil fuel prices; a series of announcements regarding the lowest-ever prices for renewable power long-term contracts; a significant increase in attention to energy storage; and a historic climate agreement in Paris that brought together the global community.1
Renewables now are established around the world as mainstream sources of energy.2 Rapid growth, particularly in the power sector, is driven by several factors including the improving cost-competitiveness of renewable technologies, dedicated policy initiatives, better access to financing, concerns about energy security and the environment, growing demand for energy in developing and emerging economies, and the need for access to modern energy.3
The year 2015 was one of firsts as well as of high-profile agreements and announcements related to renewable energy, including:
In their Declaration on Climate Change, the G7 countries committed to strive “for a transformation of the energy sectors by 2050” and to “accelerate access to renewable energy in Africa and developing countries in other regions.”4
Renewables were on the G20i agenda for the first-ever G20 Energy Ministers meeting, where the high-level participants affirmed their commitment to renewable energy and energy efficiency.5 The Ministers endorsed an 11-point Communiqué that included the adoption of a toolkit for a long-term sustainable and integrated approach to renewable energy deployment; the Communiqué was adopted by the full G20 summit in November.6 Participants also agreed on a G20 Energy Access Action Plan for sub-Saharan Africa that highlights the huge renewable energy resources in the region and the importance of improving energy efficiency.7
The United Nations (UN) General Assembly adopted 17 Sustainable Development Goals (SDGs) containing, for the first time, a dedicated goal on sustainable energy for allii.8 This achievement was due in great part to the Sustainable Energy for All (SE4All) initiativeiii, which played a strong role in the SDG debate. Throughout 2015, SE4All continued its work to further global efforts to increase energy access and to implement the new SDG, working with numerous countries to develop pathways to promote its goals.9
Twenty-five worldwide business networks representing more than 6.5 million companies from over 130 countries pledged in May to lead the global transition to a low-carbon, climate-resilient economy.10 Late in the year, 409 investors representing more than USD 24 trillion in assets called on governments to provide stable, reliable and economically meaningful carbon pricing, to strengthen regulatory support for renewables and energy efficiency, and to develop plans to phase out fossil fuel subsidies.11
A series of religious declarations released throughout the year – including the Pope’s environmental encyclical, Laudato Si’, as well as the Islamic, Hindu and Buddhist declarations on climate change – called on billions of people of faith to address climate change and to commit to a zero- or low-carbon future through renewable energy.12
The year’s events culminated in December at the UN Climate Change Conference (COP21iv) in Paris, where 195 countries agreed to limit global warming to well below 2 degrees Celsius and a majority of countries committed to scaling up renewables and energy efficiency through their Intended Nationally Determined Contributions (INDCs).13 (→) Although far more is needed to avoid the worst potential effects of climate change, there was a clear commitment from the global community to address the challenge, and many experts emerged with a sense that there is a strong international consensus to transition away from fossil fuels.14
Notable commitments included a US-China Joint Presidential Statement on Climate Change highlighting new domestic policy commitments involving renewables and energy efficiency, and a common vision for an ambitious global climate agreement in Paris.15 The European Union (EU) committed to a binding regional target of at least 40% domestic reduction of greenhouse gas emissions by 2030 (from a 1990 baseline), complemented by renewable energy and energy efficiency targets.16 The International Solar Alliance was launched by the presidents of France and India to unite more than 120 sun-drenched countries to accelerate solar energy deployment in order to enhance energy security and sustainable development, improve access to energy and advance living standards.17In parallel, precedent-setting, ambitious commitments to renewable energy were made at the regional, state and local levels in the lead-up to and during COP21 in Paris.18 Heads of state of African nations launched the African Renewable Energy Initiative with the goal of achieving by 2030 as much as 300 gigawatts (GW) of renewable capacity (about twice the continent’s total power capacity at end-2015).19 The leaders of the Climate Vulnerable Forum, a broad global coalition of 30 nations (middle-income and least-developed nations, and small-island developing states), called for 100% renewable energy by 2050 in the Manila-Paris Declaration.20
i The UN-supported Group of 20 includes the world’s 20 leading economies
individual countries plus the EU), which together account for more than 75%
of global trade. The G20 was formed in 1999 to study, review and promote high-level discussion on policy issues relating to international financial stability.
ii SDG 7: “Ensure access to affordable, reliable, sustainable and modern
energy for all” by 2030. This SDG (7.2) calls for increasing substantially the share
of renewable energy in the energy mix and for doubling the global rate of improvement in energy efficiency. See .
iv The 21st annual session of the Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC).
The growing global movement for 100% renewables – driven by the imperative of addressing climate change, and the pursuit of local economic development and community-owned energy – also gained momentum from the Paris City Hall Declaration, which calls for 100% renewable energy or 80% reductions in greenhouse gas emissions by 2050. Nearly 1,000 city mayors from five continents signed the Declaration. 21 Cities around the world have become important change makers in the renewable energy and climate arena, acting independently and collectively to share knowledge and achieve their goals.22 (→)
The private sector also strengthened its commitments to renewable energy in 2015.23 As of December, 2,025 companies had publicly pledged to reduce their carbon emissions, many through the use of renewable energy and energy efficiency; this group includes 154 US companies, with nearly 11 million employees, that have committed to purchasing 100% renewable energy.24 By year’s end, more than 50 of the world’s largest companies were participating in RE100, a global business initiative in which companies commit to getting 100% of their electricity from renewable sources.25 Many companies are moving beyond the motivation of social responsibility to the view that renewables make good business sense.26
Although most of the initiatives announced in Paris and elsewhere did not start to affect renewable energy markets in 2015, there were already signs that a global energy transition is under way.27 By some accounts, the annual growth in global carbon dioxide (CO2) emissions stalled during 2014 and 2015, even as the global economy grew, due to industrial restructuring, improvements in energy efficiency and increased global deployment of renewable energy.28 Further, per capita greenhouse gas emissions appear to be falling in 11 of the G20 economies, marking a possible shift in global trends.29 Nonetheless, atmospheric concentrations of greenhouse gases continue to rise, due largely to increasing use of fossil fuels, and annual emissions are expected to continue climbing for some time in the developing world.30
As of 2014, renewable energy provided an estimated 19.2% of global final energy consumption. Of this total share, traditional biomass, used primarily for cooking and heating in remote and rural areas of developing countries, accounted for about 8.9%, and modern renewables (not including traditional biomass) increased their share slightly over 2013 to approximately 10.3%.31 (→) In 2014, hydropower accounted for an estimated 3.9% of final energy consumption, other renewable power sources comprised 1.4%, renewable heat energy accounted for approximately 4.2% and transport biofuels provided about 0.8%.32Although the use of renewable energy is rising rapidly, the share of renewables in total final energy consumption is not growing as quickly. In developed countries, energy demand growth is slow, and displacing the large stock of existing infrastructure and fuels takes time. In developing countries, energy demand growth is rapid, and fossil fuels play a significant part in meeting this rising demand. In addition, the shift away from traditional biomass for heating and cooking to modern, more-efficient renewables and fossil fuels, while in general a very positive transition, reduces overall renewable energy shares.33 These “two worlds” into which modern renewables are making inroads present different political and policy challenges, economic structures, financial needs and availability, and other factors that delay or advance renewable energy deployment.34Figure 1. Estimated Renewable Energy Share of Global Final Energy Consumption, 2014
Government policy continued to play an important role in renewable energy developments. The number of countries with renewable energy targets and support policies increased again in 2015, and several jurisdictions made their existing targets more ambitious. (→) However, in some markets, policy changes and uncertainties (such as unexpected or retroactive changes, new taxes on renewable generators and uncertainties around the US federal Production Tax Credit for most of the year) undermined investor confidence and held up investment and deployment.35 Despite the important contribution of the heating and transport sectors to energy demand and global emissions – together these sectors account for about two-thirds of final energy consumption and more than half of global greenhouse gas emissions – policy makers have focused predominantly on the power sector, a trend that has helped to shape the current landscape.36
Even in the face of ongoing fossil fuel subsidies and tumbling prices in 2015, renewable energy continued its rapid growth in both capacity added and energy produced. The power sector experienced the greatest increases in capacity, whereas growth of renewables in the heating and cooling and transport sectors was comparatively slow.37 Solar photovoltaics (PV) and wind were the most dynamic markets, and hydropower continued to provide the majority of renewable power capacity and generation. Bioenergy remained the leader by far in the heat (buildings and industry) and transport sectors.38
Growth rates for various renewable energy technologies reflect a number of factors, including falling renewable energy technology costs and increasing competition for policy support and investment among different renewable technologies.39 Low fossil fuel prices also affected growth rates, causing turbulence in some markets, particularly for renewable heating and cooling; biofuels were sheltered in many locations where mandates exist, although the low oil prices affected the appetite for new investment.40 (→)Figure 2. Average Annual Growth Rates of Renewable Energy Capacity and Biofuels Production, End-2010 to End-2015
Global oil prices plummeted more than 70% between June 2014 and January 2016, due to oversupply and slowdown in economic growth in China and Europe.41 Coal and natural gas prices were down as well.42 While these trends affected markets for some renewables, they also highlighted the improving cost-competitiveness of solar and wind power.43 Further, these trends reinforced concerns about the volatility of fossil fuel prices.44
The dramatic rise in global coal consumption that occurred over the past decade, due largely to China, appears to be slowing somewhat.45 China’s government announced plans to close more mines and to reduce coal’s share of the energy mix in 2016, due in part to a virtual flat-lining in electricity demand; however, some countries – particularly in Asia – still have big plans for coal.46 Other countries and regions have introduced regulations that could constrain coal use (e.g., the US Clean Power Plan), have announced plans to phase it out (including Austria, Finland, Portugal and the United Kingdom) or have already achieved phase-out targets (e.g., Ontario, Canada and Scotland).47 In 2015, the United States (the world’s second largest coal consumer after China) saw the acceleration of a downward trend in coal consumption.48
Low oil prices facilitated reductions in subsidies, but globally fossil fuel subsidies remained substantial – estimated at over USD 490 billion (compared with USD 135 billion for renewables) in 2014 – and continued to temper renewable energy growth.49 Other challenges faced by renewables in 2015 included the integration of rising shares of renewable generation, policy and political instability, regulatory barriers and fiscal constraints.50 (→) In Europe, markets have slowed due in part to relatively high penetrations of renewables and to challenges related to their integration, but also to the ongoing shift in support policies that began during the financial crisis.51 Elsewhere, national energy monopolies lack awareness of renewables or demonstrate resistance to their adoption, and in many economies concerns remain about how to integrate variable renewable generation.52 In addition, in many developing countries, policy and political instability combined with corruption have made it difficult to access financing (particularly for energy access projects), which slows advances despite extensive renewable resources and positive technology developments.53Even so, markets continued their geographic spread, further establishing renewable energy as a mainstream energy source worldwide.54 Although Europe remained an important regional market and a centre for innovation, activity continued to shift towards other regions. China again led the world in new renewable power capacity installations.55 Many other countries – including Brazil, Chile, India, Mexico, Morocco and South Africa – accelerated their efforts in 2015, and the number of developing countries across Asia, Africa and Latin America that were manufacturing and deploying renewable technologies continued to expand.56
Employment and investment during 2015 followed the market expansion into new countries. The number of jobs in renewable energy rose again during 2015, reaching an estimated 8.1 direct and indirect jobs worldwide, plus an estimated 1.3 million direct jobs associated with large-scale hydropower.57 (→)
Global investment climbed to a new record level. This occurred in spite of the plunge in fossil fuel prices, the strength of the US dollar (which reduced the dollar value of non-dollar investments), the continued weakness of the European economy and further declines in per unit costs of wind power and solar PV.58 For the sixth consecutive year, renewables outpaced fossil fuels for net investment in power capacity additions.59 However, the increase in investment was due entirely to increases in solar and wind power; investment in all other renewable power technologies, as well as biofuels, declined relative to 2014.60
Private investors stepped up their commitments to renewable energy significantly during 2015, and an increasing number of investors opted to divest from fossil fuels.61 Some in the financial community backed away from coal due to its perceived high risk, and focused on clean energy.62 The year witnessed both an increase in the number of large banks active in the renewables sector and an increase in loan size, with major new commitments from international investment firms to renewables and energy efficiency.63
New investment vehicles – including green bonds, crowdfunding and yieldcos – expanded during the year. Although their levels remained relatively small, green bonds supporting renewable energy (as well as energy efficiency) grew many-fold from 2012 to 2015 and have helped to address a major challenge for renewable energy financing: lack of liquidity.64 Funding for emerging markets increased with the creation of innovative financial instruments for the African market and with the increase in financing of companies selling distributed energy products in Africa and India.65 (→) Mainstream financing and securitisation structures also continued to move into developing country markets as companies (particularly solar PV) and investors sought higher yield, even at the expense of higher risk.66
For the first time, developing countries, including China, were ahead of developed countries for total investment in renewable energy. Several developing countries saw substantial increases, due at least in part to rapidly expanding markets driven by falling solar and wind power technology costs, whereas developed countries as a group saw an 8% decline in investment. China alone accounted for more than one-third of the global totalii and was the first country to break the USD 100 billion threshold.67 By dollars spent, the leading countries for investment were China, the United States, Japan, the United Kingdom, India, Germany, Brazil, South Africa, Mexico and Chile.68 Considering investments made in new renewable power and fuels relative to annual GDP, top countries included Mauritania, Honduras, Uruguay, Morocco and Jamaica.69 Among the leading countries for investment per inhabitant were Iceland, the United Kingdom, Uruguay, Japan and Ireland.70 (→)
In parallel with growth in renewable energy markets and investments, 2015 saw continued advances in renewable energy technologies, including improvements in materials and efficiency of solar cells and modules, floating wind turbines, large-scale solar thermal district heating and cooling, and progress in pyrolysis and gasification of biomass. Ongoing energy efficiency advances, such as more-efficient lighting systems, are reducing the cost of providing energy services with renewable energy, whether on-grid or off-grid. 71 (→See and chapters.)
i International Energy Agency (IEA) estimates include subsidies to fossil fuels consumed by end-users and subsidies to consumption of electricity generated by fossil fuels. IEA, World Energy Outlook 2015 (Paris: 2015), p. 96, http://www.worldenergyoutlook.org/weo2015/.
ii Note that this estimate does not include investment in hydropower projects >50 MW, which ranked third, behind solar and wind power, for total investment in 2015. See Frankfurt School–UNEP Collaborating Centre for Climate & Sustainable Energy Finance and Bloomberg New Energy Finance (BNEF), Global Trends in Renewable Energy Investment 2016 (Frankfurt: March 2016), http://fs-unep-centre.org/publications/global-trends-renewable-energy-investment-2016. China was responsible for a large share of new large-scale hydropower capacity in 2015. (→See Hydropower section.)
The year also brought advances in enabling technologies, such as hardware and software to support the integration of renewable energy. These included management systems that aim to optimise performance and energy storage.72 The past few years have brought significant progress in the development and commercialisation of energy storage, driven largely by the growth in electric vehicle (EV) markets and in renewables (mainly solar and wind power). Development continued during 2015 in areas such as thermal storage for heating and refrigeration, and particularly for concentrating solar thermal power (CSP); conversion of electricity to heat or gas; compressed air; and batteries for EV propulsion and electricity storage.73
Batteries – including lithium-ion, graphene polymer and redox flow batteries – have been the main focus of investor and industry interest in storage.74 Although cost remains a barrier to large-scale deployment, battery costs fell rapidly during 2010–2014, and their decline accelerated in 2015. For example, average costs for EV (lithium-ion) batteries fell 35% between the second half of 2014 and the second half of 2015.75
Modern renewable energy is being used increasingly in power generation, heating and cooling, and transport. The following sections discuss 2015 developments and trends in these sectors. For discussion of off-grid renewables for providing energy access in developing countries, see the Distributed Renewable Energy chapter.
Renewable power generating capacity saw its largest annual increase ever in 2015, with an estimated 147 GW of renewable capacity added. Total global capacity was up almost 9% over 2014, to an estimated 1,849 GW at year’s end.76 Wind and solar PV both saw record additions for the second consecutive year, together making up about 77% of all renewable power capacity added in 2015.77 Hydropower capacity rose by 2.7% to an estimated 1,064 GW, accounting for approximately 19% of additions.78 ()
The world now adds more renewable power capacity annually than it adds (net) capacity from all fossil fuels combined.79 In 2015, renewables accounted for an estimated more than 60% of net additions to global power generating capacity, and for far higher shares of capacity added in several countries around the world.80 By year’s end, renewables comprised an estimated 28.9% of the world’s power generating capacity – enough to supply an estimated 23.7% of global electricity, with hydropower providing about 16.6%.81 (→)Figure 3. Estimated Renewable Energy Share of Global Electricity Production, End–2015
Technological advances, expansion into new markets with better resources, and improved financing conditions have reduced costs, particularly for wind and solar PV.82 (→) Electricity from hydro, geothermal and some biomass power sources have been broadly competitive with fossil power for some time; in favourable circumstances (i.e., good resources and a secure regulatory framework), onshore wind and solar PV also are cost-competitive with new fossil capacity, even without accounting for externalities.83 For example, wind power was the most cost-effective option for new grid-based power in 2015 in many markets, including Canada, Mexico, New Zealand, South Africa, Turkey, and parts of Australia, China and the United States.84
Expectations of further improvements were made evident in power auctions in 2015 and early 2016, with very low tender-generated prices for wind power in, for example, Egypt, Mexico, Morocco and Peru, and for solar PV in Chile, India, Mexico, Peru and the United Arab Emirates, rivalling new coal-fired capacity in these countries.85 However, the economic competitiveness of renewable technologies still depends on regulatory framework and market design.86
By the end of 2015, the top countries for total installed renewable electric capacity continued to be China, the United States, Brazil, Germany and Canada.87 China was home to more than one-quarter of the world’s renewable power capacity – totalling approximately 495 GW, including about 296 GW of hydropower.88 Considering only non-hydroi capacity, the top countries were China, the United States and Germany; they were followed by Japan, India, Italy and Spain.89 (→) Among the world’s top 20 countries for non-hydro renewable power capacity, those with the highest capacity amounts per inhabitant were Denmark, Germany, Sweden, Spain and Portugalii.90Figure 4. Renewable Power Capacities* in World, EU-28, BRICS and Top Seven Countries, End-2015
Throughout the year, there were noteworthy developments in most regions:
Asia: Of all regions, Asia installed the most renewable power generating capacity during 2015. China again led the world in additions of hydropower capacity, was a leader in bio-power capacity and set new world records for wind and solar power installations, although curtailment affected the potential for these assets to contribute to generation.91 India also ranked among the top countries for solar PV, hydro and wind power capacity additions, and Japan was second only to China for new solar PV installations.92 Turkey ranked first globally for new geothermal power capacity, third for new hydro and tenth for wind power capacity additions.93 Other countries in the region – including Malaysia, Pakistan, the Philippines, the Republic of Korea, Thailand and Vietnam – have emerged as important markets for more than one renewable power technology.94
Europe: Renewables accounted for the majority (77%) of new EU generating capacity for the eighth consecutive year, and the region continued to decommission more capacity from conventional sources than it installed.95 Between 2000 and 2015, the share of renewables in the EU’s total power capacity increased from 24% to 44%, and, as of 2015, renewables were Europe’s largest source of electricity.96 In Scotland, renewables met over half of electricity demand, a year ahead of an established target; throughout the United Kingdom, output from renewables hit a record high, passing coal for the first time in the fourth quarter of 2015.97 In Germany, renewable power output increased by 20% in 2015, and the share of renewables in electricity consumption was 32.6% (up from 27.4% in 2014).98 Even so, markets have slowed in most European countries due to reduced levels of financial support and to an increased focus on the integration of variable renewable generation.99
North America: In the United States, wind (8.6 GW) and solar (7.4 GW, solar PV and CSP) were the leading sources of new power capacity in 2015, exceeding natural gas capacity additions (about 6 GW).100 Renewables accounted for nearly 13.7% of electricity generation (up from 13.4% in 2014), despite a 3.2% drop in hydropower output.101 Canada continued to be a leader in hydropower development and ranked sixth globally for wind power capacity additions.102
Latin America and the Caribbean: Countries across the region achieved high shares of their electricity generation with renewables: for example, Costa Rica generated 99% of its electricity with renewable sources, Uruguay generated 92.8% and Chile has quickly surpassed several long-term targets.103 Latin America remained one of the fastest growing markets for wind energy and solar PV in 2015, albeit from a small base. Brazil was second globally for new hydropower and fourth for new wind power capacity (although transmission capacity has been unable to keep pace with wind power capacity); Guatemala brought its first wind power plant online, and Mexico was one of the few countries worldwide to add geothermal power capacity in 2015.104 Several countries – including Chile, Mexico and Peru – held successful tenders in 2015 and early 2016, resulting in some of the world’s lowest bid prices, due in part to the region’s vast renewable energy resources.105
Africa: Many countries throughout Africa increased their policy commitments in the power sector during 2015. All renewable power generating technologies except ocean energy are being deployed across the continent, with significant markets on-grid as well as off-grid (for solar PV in particular). In 2015, several countries (including Ethiopia, Guinea and Zambia) brought new hydropower facilities online.106 Morocco was the world’s largest CSP market, South Africa was the first country on the continent to achieve 1 GW of solar PV and helped push the continent’s wind power capacity above the 3 GW mark, and Kenya ranked fourth globally for new geothermal power capacity.107 Across Africa, renewable power projects and technology manufacturing facilities were being planned or were under construction.108
Pacific: Australia led the region in 2015 and was among the top 10 countries for newly installed solar PV, ending the year with the equivalent of one solar panel per inhabitant.109 Renewables accounted for about 14.6% of Australia’s electricity generation (up from 13.5% in 2014), despite a significant drop in hydropower generation.110 Elsewhere in the region, Samoa installed its first wind farm, and Fiji saw the inauguration of some solar PV micro-grid projects.111
Middle East: Relatively little renewable power capacity has been deployed in most countries of the region, but interest in CSP and solar PV, in particular, is growing rapidly.112 Iraq, Jordan and the United Arab Emirates all held tenders for renewable power in 2015. Jordan brought its first utility-scale wind farm online, Israel led the region for solar PV capacity additions, and significant steps were taken towards domestic manufacturing of solar technologies in several countries, including Saudi Arabia.113
i Distinction of non-hydro capacity is made because hydropower remains the largest single component by far of renewable power capacity and output.
ii While there are other countries with high per capita amounts of renewable capacity and high shares of renewable electricity, the GSR focuses here on the top 20 countries for total installed capacity of non-hydro renewables. Several other countries, including Austria, Finland, Greece, Ireland and New Zealand, also have high per capita levels of non-hydro renewable power capacity, with Iceland likely the leader among all countries. (→See Reference Table R17 for country shares of electricity from renewable sources.)
The rapid growth of renewable power generation created both challenges and opportunities in 2015. In countries where electricity consumption is expanding, both renewable energy and fossil fuel generation are being deployed to meet growing demand. In countries with slow or negative growth in electricity consumption (e.g., several OECD countries), renewable energy is increasingly displacing existing generation and disrupting traditional energy markets and business models.114 In response to this competition, some incumbents are pushing back against supportive renewable power policies or adapting their business models by restructuring, consolidating or splitting.115 Other utilities and electricity suppliers are repositioning by acquiring significant renewable energy assets, decreasing their fossil fuel investments, acquiring other utilities that already have significant amounts of renewable energy in their generation portfolios and moving into new markets.116
Around the world, technical, economic and market transformation of the electric power sector continued to accelerate in 2015.117 Several factors are driving a transformation from centralised systems to more-complex systems that encompass a growing number of decentralised generating assets.118 These factors include technological advances, social change, policy goals and, in particular, declining costs and increasing shares of variable wind and solar PV.119 A key challenge is adapting the power grid to integrate rising shares of renewable generation, developing more-flexible systems to balance variable resources (on both the supply and demand sides) while minimising costs.120
Several jurisdictions – including Denmark, Germany, the state of South Australia and some US states – already have successfully integrated high shares of variable renewables.121 Throughout 2015, variable renewables achieved high penetration levels in several countries: for example, wind power met 42% of electricity demand in Denmark, 23.2% in Portugal and 15.5% in Uruguay; and solar PV accounted for 7.8% of electricity demand in Italy, 6.5% in Greece and 6.4% in Germany.122 Electric utilities also have successfully integrated very large shares over short time periods: for example, variable renewable generation reached new highs in Denmark, Germany and parts of the United States during the year.123
Many developed countries and some developing countries have begun to respond to the challenge of grid integration.124 Strategies in 2015 included various combinations of: increased flexibility on the demand side and on the supply side (e.g., innovations in flexible fossil power plants; energy storage, particularly pumped storage; active power controls at wind and solar power plants); construction of new transmission networks; development of smarter grids; interconnection and co-ordination with neighbouring grids; advanced resource forecasting; integrated heating and cooling systems; and innovative market designs.125
Dispatchable renewable energy plants – including reservoir hydro, biomass and geothermal power (and CSP with storage) contributed to flexibility. System balancing also is served by new and upgraded transmission interconnections, such as the Skagerrak 4 interconnector between Norway and Denmark, which became operational in 2015. The interconnector was built to help balance Denmark’s wind and thermal power and Norway’s hydropower.126 Innovative hybrid systems have emerged, such as the Longyangxia station in China, where 1,280 megawatts (MW) of hydropower is linked to a massive solar PV facility (850 MW upon completion).127 Further, advancements in inverter technologies are enabling solar and wind power to provide a range of balancing services.128
In addition, stationary battery storage continues to advance and costs are trending downwards.129 Utility-scale storage in the power sector, not including pumped storage and lead-acid batteries, increased by a record 250 MW in 2015 (compared with an estimated 160 MW in 2014), and projects announced by the year’s end totalled more than 1.2 GW.130 Although tiny compared with up to 145 GW of pumped storage hydropower capacity – which accounts for about 97% of global storage capacity and continued to expand in 2015 – the market is growing quickly.131 Most of the capacity is being installed in the developed world, but storage projects also are under way in developing countries, particularly in conjunction with mini-grids.132
The behind-the-meter storage (batteries) sector also took a great step forward in 2015 with some high-profile announcements and a host of companies competing for this small but rapidly growing market.133 Such markets are developing in Australia, Germany, Japan, parts of the United States and elsewhere, particularly in combination with small-scale solar PV.134 Innovative business and deployment models for integrating renewables and on-grid storage continued to emerge.135
Even so, in a growing number of regions and countries additional increases in variable renewable penetration will require changes to the grid system, regulations and market design.136 To address such challenges in the EU, several initiatives are under way to advance grid integration in the region, including changes in electricity market designs.137 In 2015, the German government issued a “white paper” proposing changes to the national electricity law and market.138 In the United States, California continued development of a flexible ramping product (due to be launched in 2016), which aims to shift generation as-needed through a new market mechanism that allocates the extra costs of flexibility.139
Globally, renewable electricity production in 2015 continued to be dominated by large (e.g., megawatt-scale and up) generators that are owned by utilities or large investors.140 Towards the end of 2015, more than half of global solar PV capacity was in projects of 4 MW and larger; the world’s 50 largest solar PV plants in operation by early 2016 had a combined capacity exceeding 13.5 GW, and at least 33 of these facilities came online (or achieved full capacity) in 2015 and early 2016.141 CSP and wind energy projects also are growing, as are wind turbines – the average-size turbine delivered to market in 2015 was 2 MW.142 The hydropower industry is using ever-larger units; the single largest hydropower turbine under development by early 2016 has a capacity of 1 GW.143
At the same time, there are some markets where distributed, small-scale generation has taken off, or is starting to do so. Bangladesh is the world’s largest market for solar home systems, and other developing countries (e.g., Kenya, Uganda and Tanzania in Africa; China, India and Nepal in Asia; Brazil and Guyana in Latin America) are seeing rapid expansion of small-scale renewable technologies for remote uses.144Developed countries and regions – including Australia, Europe, Japan and North America – have seen significant growth in numbers of residential electricity customers who produce their own power.145
Industrial auto-producers in developed and developing countries also generated significant amounts of renewable electricity (and heat) on site in 2015, particularly with waste biomass associated with forestry and agriculture.146 A European Commission-funded effort was launched in 2015 to develop innovative business models and regulations to increase the flexibility of electricity demand by energy-intensive industries in order to facilitate the growth and integration of variable renewable energy, while reducing industrial electricity costs.147
In addition, mini- and micro-grids, increasingly driven by renewable systems, are being employed in island and other remote communities to replace diesel generators or to provide electricity access for the first time (e.g., in the US state of Alaska and parts of Australia, island communities in Malaysia, remote areas of India and southern Africa) or to achieve energy independence and a more-secure and -resilient electricity supply (e.g., in the US northeast in the wake of natural disasters such as Hurricane Sandy).148These may be isolated or connected to a wider grid.
Community and co-operative ownership of renewable power capacity also expanded in 2015.149 Japan has seen a significant increase in community power projects since March 2011, interest in Australia is patchy but growing rapidly, and, in the United States, Community Choice Aggregation (which enables communities to contract with producers to tailor their own energy supply) is spreading beyond California.150 In Europe, citizens in Croatia, France, Greece and Spain have started to invest in renewable energy co-operatives, but they lag behind northern European countries due to different legal contexts and lack of support mechanisms.151 Denmark and Germany, in particular, have long traditions of community and local ownership of renewable energy systems, although Germany experienced a significant slowdown in 2015 due to policy revisions.152
Major corporations and institutions around the world made large commitments in 2015 to purchase renewable electricity.153 It was a record-setting year in the United States, where large corporate buyers are helping to drive the market for renewable power and represent a rising share of renewable energy power purchase agreements (PPAs).154 In addition to PPAs and leases, some major companies are developing their own large-scale projects in the United States, Europe, Asia and elsewhere.155 In early 2016, the world’s biggest government contractor concluded a deal to buy solar power, joining a growing list of leading corporations (now also including industrial and manufacturing companies) signing deals for the first time in 2015 and early 2016.156 Other big purchasers included municipalities (→), the US military and mining companies from Australia to Chile to South Africa.157
Voluntary purchases of renewable energy from traditional utilities also continued in some countries, including several countries in Europe as well as Australia and the United States.158 In 2014 (latest available data), US voluntary retail green power sales totalled 74 terawatt-hours (TWh), up 10% over 2013, and represented about 2% of total US electricity sales.159
Through green purchasing, local ownership, and other means, increasing numbers of jurisdictions around the world aim to meet all of their electricity demand with renewable sources (the most common 100% target).160 Several cities, states and countries made new commitments to 100% renewable power in 2015, while others reached their targets.161 (→) For example, Austria’s largest state, Lower Austria, achieved its 100% goal, providing electricity for 1.65 million people with hydro, wind, biomass and solar power.162 The German state of Schleswig-Holstein reached 100% net electricity from renewables during the year, as did several communities around the world.163
Heating and Cooling Sector
Energy use for heat accounted for about half of total world final energy consumption in 2015.164 Global consumption of heat energy grew at an average annual rate of less than 1% in recent years.165 Cooling demand also continued to increase in 2015 as a result of improved energy access and rising average global temperatures.166
Renewable energy is used to meet heating and cooling demands by means of solar, geothermal, aerothermal or hydrothermali, or biomass resources in solid, liquid and gaseous forms. Renewable technologies also can supply electricity that can be converted to heat. Because of an oversupply of electricity on the market at peak renewable energy production times, electrification of heat has received increasing attention, especially in Europe, although there were few concrete steps in this direction in 2015.167
In 2015, renewable energy’s share of final energy use in the heat sector was 25%; of this share, more than two-thirds was traditional biomass, predominantly in the developing world.168 Modern renewable energy supplied the remaining third – or approximately 8%.169 Although the total amount of deployed renewable heating and cooling technologies is growing worldwide, annual growth rates are falling.170 Low global oil prices resulted in a slowdown in investment in renewable energy heating and cooling during 2015.171
In the buildings sector, biomass and solar thermal energy account for the vast majority of modern renewable heat (with most recent estimates ranging from 7% to 10% of total heat demand combined). In the industry sector, bioenergy dominates renewable heat production (accounting for roughly 10% of total heat demand).172Trends in the use of renewable energy for heating vary by technology, although relative shares have remained stable in the past few years.
Bioenergy accounted for over 90% of modern renewable heat generation in 2015.173 In some regions – especially in European countries that import solid biomass – an ongoing discussion on the use of biomass for heat was spurred by the sustainability debate in the transport sector.174
Solar thermal accounted for roughly 8% of modern renewable energy heat output. The year 2015 saw increasing interest in and deployment of large-scale solar systems in district heating networks; markets also expanded for solar process heat in industry (such as food and beverage as well as the copper industry, which has substantial demand for low-temperature heat).175 However, most residential-scale solar thermal markets stagnated or declined due to low oil prices, a comparative dip in building construction in some regions and the low price of solar PV systems; exceptions included Denmark, Israel, Mexico, Poland and Turkey.176
Geothermal heat represented the remaining 2% share of modern renewable heat generation. Over the past few years, direct use of geothermal heat, excluding heat pumps, has grown by over 3% annually on average, with geothermal space heating growing around 7% annually. China, Turkey, Japan and Iceland lead in terms of heat energy generated by direct use of geothermal.177
There are important differences in renewable heating trends at the regional level:
Asia: China continued to lead the world in installed capacity of solar thermal, geothermal and biogas-fuelled heating systems in 2015. The country saw declining investment in solar thermal collectors for the second consecutive year, although demand increased in some market segments (e.g., multi-family residences).178 Elsewhere in Asia, modern biomass for residential heat markets has grown, especially in Japan and the Republic of Korea, where strict efficiency requirements have influenced the development of globally competitive biomass boilers.179 Some Asian countries, such as India, continued to use substantial shares of bioenergy for heat production in industry.180 Renewable energy use in clean cook stoves – dominated by biogas – also has been on the rise, in particular in China and India and to a lesser extent in Bangladesh and Cambodia.181
Europe: Renewable energy accounted for an estimated 18% of the EU’s total heating and cooling consumption; in industry, the overall share was 13%.182 Europe has experienced the strongest growth in renewable energy use for heat of any region, with average annual increases of almost 5% since 2008.183 Nonetheless, market growth slowed in 2015 due to the economic crisis, a downturn in the building sector and low oil prices.184 Despite the slowdown for some renewable heat technologies, residential-scale biomass boilers began to show signs of recovery in 2015, and geothermal-based district heat has expanded, especially where resources are optimal and where building construction has continued – as in Paris, Munich (Germany) and Gyor (Hungary).185 The market for heat pumps has continued to grow, especially in France and Finland (both with supportive government policies) and in Poland.186
North America: Renewable energy accounted for roughly 13% of final energy for heat in North America. Much of this was used in industry: in the United States, biomass contributes approximately 17% of industrial heat production.187 Growth rates in renewable energy use for heat have been comparatively slow (0.6%), due in part to reduced industrial output.188 Residential heating with wood pellets declined in 2015 as low oil prices reduced the cost-competitiveness of renewable heat, and solar thermal markets also continued to stall.189
Latin America: Biomass-based heat accounts for almost a third of industrial heat production in Latin America.190 Solar thermal markets are growing in Brazil’s residential sector, where demand for domestic hot water is accompanied by a lack of sufficient gas infrastructure and an over-burdened electric grid, and the technology is supported by social housing programmes.191 In Mexico, solar thermal installations increased 8% in 2015, thanks in part to mandates at the state and city level.192 Several countries throughout the region – including Argentina, Brazil, Costa Rica, Mexico and Uruguay – are working together to implement standards for solar hot water equipment that would support market development.193
Africa: Biomass supplies a substantial share (roughly a third) of Africa’s industrial-based heat.194 South Africa’s solar thermal market has grown relatively quickly, although it dropped in 2015 due to a delay in government tenders linked to an improved solar hot water programme.195 During the year Lesotho, Mozambique and Zimbabwe formulated new policies to support solar hot water.196 Countries in the Great Rift Valley, where there are significant geothermal resources (as in Kenya), have begun to tap direct geothermal heat for use in greenhouses, for example (as well as for electricity).197 Clean cook stoves, many of which use biogas as a source, are used increasingly in Africa, notably in Ethiopia, Kenya and, to a lesser extent, in Nigeria and Rwanda.198
Middle East: Counter to global trends, solar thermal markets grew in the Middle East during 2015.199 Oman, for example, announced plans to host the world’s largest solar thermal facility (>1 GW), which will produce steam for the oil industry.200 In addition, mandatory green building certifications (in the United Arab Emirates, for example) have helped spur solar cooling markets in the region.201
i Heat pumps utilise the ground, ambient air or water bodies for heating and cooling. The total share of renewable energy delivered by a heat pump on a primary energy basis depends not only on the efficiency of the heat pump and its operating conditions, but also on the composition of the energy used to drive the heat pump. (→See Sidebar 4 in GSR 2014.)
In 2015, several trends continued that facilitate increases in renewable energy in the heating and cooling sector: the number of net-zero-energy buildings continued to rise, and improvements continued in the efficiency of industrial processes, building materials and heating and cooling systems. (→) In addition, although policies supporting energy efficiency and renewable energy generally are treated as separate policy pillars, there were examples in 2015 of policies that worked towards their integration. Notable are the EU labelling requirements for heating devices, which permit only those space and water heating systems that include renewable energy to achieve the best efficiency class rating.202
The expansion of district heating systems also may provide increased opportunities for renewable heating. The year 2015 saw an increasing use of solar heat for district heating systems, in both new and expanded systems, with Denmark (which now supplies 53% of its heat in district heating systems with renewables, waste incineration or industrial surplus heat) as an especially noteworthy mover.203 There also were a number of announcements to expand or develop biomass- and geothermal-based district heating systems – for example, in Scotland (biomass), Sweden (biomass) and France (geothermal).204 In China’s Inner Mongolia Autonomous Region, progress continued on the implementation of a district heating system that will be powered by surplus wind energy.205
Seasonal storage of heat generated by renewable energy for district heating systems (heat is fed in the summer, taken out in winter) also has been deployed in a number of cases.206 Borehole thermal storage from solar collectors has been implemented in Canada, Germany, Italy, the Netherlands and Sweden, and a number of demonstration projects have been implemented in Australia, China and France.207 On a smaller scale, solar PV is being combined with heat pump systems, which provide storage and enable increased on-site consumption of the renewable energy generated.208
Solar technologies have accounted for the majority of renewable energy used to meet cooling demand in recent years. The growth rate of the global solar cooling market has fluctuated, averaging approximately 6% between 2010 and 2014.209 Although there is a niche market for medium-sized capacity installations (e.g., in hotels and hospitals, especially on islands where fuel must be imported), widespread deployment has stagnated due to relatively high system costs, space requirements and the complexity of solar thermal-based cooling, especially for small-capacity systems.210 Solar-based cooling discussions are shifting increasingly to integrated solar PV-driven systems, as the technology progresses in the research and development (R&D) stage.211 Bioenergy-based cooling – for example, via connection to adsorption chillers – remains in the R&D stage, with very little practical implementation due to high comparative cost.212
There also is growing interest in district cooling systems, spurred by an increasing demand for cooling.213 Growth in district cooling in the Middle East, namely in the United Arab Emirates, Qatar and Saudi Arabia, has surpassed other world regions. There was, however, also noteworthy development in Australia, the Republic of Korea and Singapore in 2015.214 Such systems offer opportunities for integration of renewable energy, although their deployment is as yet rare.215
In general, deployment of renewable technologies in the heating and cooling markets continued to be constrained by a limited awareness of the technologies, the distributed nature of consumption and fragmentation of the heating market, comparatively low fossil fuel prices, ongoing fossil fuel subsidies and a comparative lack of policy support.216
Despite challenges to renewable heating and cooling markets in 2015, there were international signals that awareness and political support for related technologies may be growing. A number of INDCs delivered to the UNFCCC for COP21 specifically mention goals to expand the use and manufacture of renewable heating technologies.217 In addition, the European Commission continued to develop its first strategy for heating and cooling in 2015 (launched in early 2016) with plans to boost energy efficiency in buildings and increase the use of renewable energy in the heating and cooling sector.218 The development of this strategy – one of the first of its kind – demonstrates a growing awareness of the potential of renewable heating and cooling.
Global consumption of energy in transport has increased by an average of 2% annually since 2000 and accounts for about 28% of overall energy consumption.219 Most of the total transport energy demand (around 60%) is for passenger transport, a majority of which is for passenger cars.220 Road transport also accounts for a majority (around 67%) of freight transport, with shipping (23%) and rail (4%) accounting for smaller shares.221 Renewable energy accounted for an estimated 4% of global road transport fuel in 2015.222
There are three main entry points for renewable energy in the transport sector: the use of 100% liquid biofuels or biofuels blended with conventional fuels; the growing role of natural gas vehicles and infrastructure that can be fuelled with gaseous biofuels; and the increasing electrification of transportation.
Renewable energy use in transport received increasing international attention in 2015. Many countries pledged in their INDCs to “decarbonise fuel”, focusing largely on passenger transport.223 (→) The Partnership for Sustainable Low Carbon Transport, a multi-stakeholder partnership of more than 90 organisations, and the Global Fuel Economy Initiative continued work towards low-carbon (including renewable), efficient transport in 2015.224
Liquid biofuels (ethanol and biodiesel) represent the vast majority of the renewable share of global energy demand for transport. In 2015, ethanol production increased 4%, whereas global biodiesel production fell slightly (less than 1%).225 Although low oil prices negatively affected some sectors in 2015 (particularly heating and cooling), liquid biofuel markets were somewhat sheltered in many countries thanks to blending mandates.226 () Regional trends include:
North America: In the United States, the world’s largest biofuel producer, after long delays and lapses the biofuel industry received positive signals from policy makers in 2015. Ethanol production (based largely on maize) rose, and biodiesel production (based largely on soya oil) decreased slightly relative to 2014 levels.227 To the north, Canada, a leader in fuel ethanol production in past years, saw production fall in 2015.
Latin America: Brazil, the world’s second largest biofuel producer, increased both ethanol and biodiesel production during 2015, due to good sugarcane harvests and blending mandates. However, in Argentina, a leading producer in years past, output fell by 20% due to constrained export markets. Colombia, the region’s third largest biofuel producer, raised its ethanol production by almost 12% over 2014 levels, but its biodiesel production decreased slightly.228
Europe: In the EU, new rules came into force, amending existing legislation to limit to 7% the share of biofuels in transport from crops grown on agricultural land.229 Against this background, biofuel production in the region remained largely stable.
Asia: As fuel ethanol continued to grow in Asia, led by increases in China and Thailand, biodiesel production fell sharply. Indonesia, previously one of the top biodiesel producers worldwide, saw production decrease by roughly 60%. China’s biodiesel production increased, almost overtaking Indonesia’s 2015 levels.
Africa: Although biofuel production levels in Africa remained comparatively very low, the continent saw substantial growth in ethanol production in 2015.
Biofuels saw continued advances in new markets and applications during 2015. In Egypt, Japan, Mexico, the Netherlands and the United States, there were announcements of aviation biofuel supply agreements or plans to integrate aviation biofuel into future flights.230 United Airlines became the first US airline to move beyond demonstration to regular operations using biofuels.231 In addition, 2015 brought announcements of several feedstock-related innovations for aviation fuels, including drop-in fuels produced with woody biomass and efforts to convert municipal solid waste (MSW) into jet fuel.232 There also were announcements of fully renewable transatlantic flights based on a combination of algae-based biomass and solar energy, as well as an around-the-world flight powered solely by solar PV.233
Developments associated with gaseous fuels and electricity continued to create pathways for integrating renewables into transportation. The number of compressed natural gas (CNG) vehicles and fuelling stations continued to expand in 2015 – with notable development in the United States (which had reached more than 900 CNG stations in early 2016), India, Iran and the Netherlands – creating parallel opportunities for gaseous biofuels such as biomethane.234 Although biomethane production is concentrated primarily in Europe, early steps were taken to introduce the fuel in Latin America in 2015. For example, Brazil set new specifications for the production and sale of biomethane and launched its first biomethane-powered city bus.235
Electrification of the transport sector expanded during the year, enabling greater integration of renewable energy in the form of electricity for trains, light rail, trams as well as two- and four-wheeled electric vehicles.
The number of electric passenger vehicles (EVs) on the road increased again in 2015; key markets are in China, Northern Europe and the United States. Manufacturers announced several new models of light-duty EVs with longer ranges (300 kilometres) that are expected to be available at more-affordable prices in the coming years.236 The year 2015 also saw substantial developments in R&D for electrification of heavy-duty vehicles, broadening the scope beyond a focus almost exclusively on light-duty vehicles.237
Exploration of methods to integrate renewable energy into charging stations for electric cars expanded in 2015, although many projects are pilot or demonstration and integration remains relatively small-scale. Some companies also worked to expand charging networks worldwide, including stations powered by solar PV.238 China launched its largest solar PV charging station in 2015 (capable of charging 80 EVs per day) and launched a pilot project in Shanghai to test the ability of EVs to support the integration of renewable energy into the electric grid.239 Japan also announced implementation of solar-powered recharging stations in 2015.240 In the United States, innovators began demonstration of off-grid 100% solar carports for charging EVs – mobile charging stations that fit in standard parking spaces.241 For more-traditional, grid-tied charging stations, utilities in southern California began to explore innovative incentives to encourage customers to charge their vehicles when renewable energy is plentiful.242
The year 2015 also brought progress towards integrating renewable energy into EV charging infrastructure where markets are smaller or nascent. In the Middle East, for example, Jordanian officials signed letters of commitment to build 3,000 solar-powered electric charging stations over the next decade.243 In the Pacific, plans were announced to test the concept of solar-powered charging stations for a small fleet of electric cars in the Marshall Islands.244
In the shipping sector, integration of renewable energy stagnated in 2015, inhibited by low oil prices, a lack of supportive policies (very few national policies exist for renewables in shipping – the Marshall Islands is one noteworthy exception) and international regulation, and lock-in of shipping fleets.245Despite the lack of progress in renewable energy deployment, R&D continued in 2015, with Korean innovation in wind energy-supported ships; German developments of a 60-metre renewable-powered research freighter; and several pilot projects of biomethane application in ships that operate on liquefied natural gas (LNG).246 In addition, developments in battery-powered ferries in Northern Europe may enable further integration of renewable energy in the form of electricity.247
Several concrete strides were taken in the rail sector towards achieving existing goals to supply increasing shares of electricity demand with renewable energy, and new goals were announced during the year. In the Netherlands, to build on its goals established in 2014, the Dutch rail network completed a contract to source wind energy to meet up to 100% of the power needed to propel its trains by 2018; nearly half of the power for the network was supplied by wind power in 2015.248 In Australia, Canberra announced a new light rail project that requires an initial minimum of 10% renewables use, with a target to increase the share to 90% by 2020 and New South Wales announced a tender to supply the Sydney metro with renewable energy.249