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GSR 2015 - Power Sector

30 01 GLOBAL OVERVIEW As costs fall, renewable energy markets continue to diversify geographically.22 While Europe remained an important regional market and a centre for innovation, activity continued to shift towardsotherregions.Chinaagainledtheworldinnewrenewable power capacity installations in 2014, and Brazil, India, and South Africa accounted for a large share of the capacity added in their respective regions.23 (p See Sidebar 1.) At the same time, the number of developing countries across Asia, Africa, and Latin America that were manufacturing and deploying renewable energy technologies continued to expand.24 Global investment in renewable power and fuels rebounded in 2014, with increased investment in all regions of the world. Renewables outpaced fossil fuels for the fifth year running in terms of net investment in power capacity additions, due almost entirely to increased investment in solar and wind power.25 (p See Investment Flows section.) Bydollarsspent,theleadingcountriesforinvestmentwereChina, the United States, Japan, the United Kingdom, and Germany. However, considering investments made in new renewable power and fuels relative to annual GDP, top countries included Burundi, Kenya, Honduras, Jordan, and Uruguay.i The leading countries for investment per inhabitant were the Netherlands, Japan, Uruguay, the United Kingdom and Ireland and Canada (both about even).26 New investment vehicles for renewables—such as green bonds, yieldcosii , and securitisation—also expanded, as did the number and variety of crowdfunding platforms for renewable energy in developed and developing countries.27 (p See Distributed Renewable Energy section.) These innovations attract new classes of capital providers (e.g., institutional and retail investors) and help to reduce the cost of capital for financing renewable energy projects, which, in turn, further improves the competitiveness of renewable energy. In parallel with growth in renewable energy markets, 2014 saw significant advances in the development and deployment of storage systems across all energy sectors. Energy storage (via pumped storage, batteries, thermal storage, and other means) is used primarily to provide peak shifting and frequency regulation services in the power sector, with very small but growing markets for the use of batteries for electric vehicle propulsion in the transportation sector, and for thermal energy storage in the heating and cooling sector.28 Although batteries comprise only a small part of global storage capacity, several trends may signal future market ramp-up.29 For example, innovative business and deployment models that integrate renewables and on-grid storage expanded in 2014, and massive manufacturing plants for the production of lithium-ion batteries were announced in China and the United States.30 Another trend that continued to emerge in 2014 is the increasing electrification of transportation and heating applications, highlighting the potential for further overlap among the sectors in the future. 31 The increasing electrification of personal vehicles and heating systems likely will require greater amounts of renewable capacity in order to meet existing power sector targets (e.g., RPS). At the same time, electric transportation and heating can be used to balance variable renewable power generation. Electric heating, for example, is being used for balancing both at the system level (e.g., using electricity from the grid to feed heat into district heating networks) and at the consumer level (e.g., the combination of solar PV and heat pumps). ■■ POWER SECTOR The most significant renewables growth in 2014 occurred in the power sector, with global renewable power capacity reaching an estimated 1,712 GW at year’s end, an increase of 8.5% over 2013.32 Hydropower capacity rose by 3.6% to approximately 1,055 GW, while other renewables collectively grew nearly 18% to an estimated total approaching 660 GW.33 Globally, wind and solar PV each saw record capacity additions, each surpassing hydropower and together they accounted for more than 90% of non-hydro installations in 2014.34 (RSee Reference Table R1.). In 2014, renewables made up an estimated 58.5% of net additions to global power capacity and represented far higher shares of capacity added in several countries around the world.35 By year’s end, renewables comprised an estimated 27.7% of the world’s power generating capacity.36 This was enough to supply an estimated 22.8% of global electricity, with hydropower providing about 16.6%.37 (p See Figure 3.) Over the period 2007–2012, renewable power generation grew at an average rate of 5.9% per year.38 In contrast, global electricity consumption increased by an annual average rate of 2.7% in the same period, with electricity consumption in non-OECD countries growing twice as rapidly.39 Variable renewables are achieving high levels of penetration in several countries. For example, throughout 2014, wind power met 39.1% of electricity demand in Denmark, 27% in Portugal, and 21% in Nicaragua; solar PV capacity in operation at the end of 2014 was enough to meet an estimated 7.9% of electricity demand in Italy, 7.6% in Greece, and 7% in Germany.40 By the end of 2014, China, the United States, Brazil, Germany, and Canada remained the top countries for total installed renewable electric capacity.41 China was home to approximately one-fourth of the world’s renewable power capacity, including about 280 GW of hydropower.42 The top countries for non- hydro capacity were China, the United States, and Germany; they were followed by Italy, Spain, Japan, and India, which all ended the year with similar capacity levels.43 (p See Figure 4 and Reference Table R2.) Among the world’s top 20 countries for non-hydro renewable power capacity, those with the highest capacity amounts per inhabitant were all in Europe. Denmark had a clear lead and was followed by Germany, Sweden, Spain, and Portugal.iii 44 ◾◾ Regionally, Asia installed the most generating capacity–led by China, which added the most wind power, solar PV, and hydropower capacity of any country in the world.45 There i - Note that investments funds may have been sourced from outside of these countries. Others among the top 10 are Panama, Costa Rica, China, Fiji, and the Netherlands. ii - A yield company is a corporate entity created specifically to hold high-yielding investments in operating-stage projects. Securitisation refers to the process of pooling assets with similar characteristics (e.g., solar PV systems) to reach scale sufficient for issuing a series of securities with different claim priorities on those assets, and selling the securities to investors. iii - 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, 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 R13 for country shares of electricity from renewable sources.)

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