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GSR 2015 Key Findings - MARKET AND INDUSTRY TRENDS

RENEWABLES 2015 GLOBAL STATUS REPORT KEY FINDINGS

8 MARKET AND INDUSTRY TRENDS Markets for all renewable energy technologies advanced in 2014, with wind power and solar PV taking the lead for capacity additions. BIOMASS ENERGY: BIOMASS FOR HEAT, POWER, AND TRANSPORT Bio-heat production remained stable in 2014, increasing 1% over 2013. Composition of bio-heat portfolios continued to vary widely by region, ranging from large-scale production in industry (e.g., in the United States) to vast numbers of residential-scale bio-digesters (e.g., in China). Global bio-power production increased approximately 9%, with China, Brazil, and Japan leading for capacity additions, and the United States and Germany leading for generation (despite comparatively smaller capacity additions). Liquid biofuel production was up 9% in 2014, reaching its highest level to date. Although the United States and Brazil dominated overall volume, Asia experienced particularly high production growth rates. Policy positively influenced biofuel markets where blending mandates increased demand, but policy uncertainty, particularly in Europe, the United States and Australia, had negative effects on industry. Low oil prices in the second half of the year had some positive effects, particularly in feedstock production,butreducedturnoverforsomebioenergybusinesses. Trade patterns in both solid and liquid fuels saw some shifts in 2014, with a considerable share of North American wood pellets flowing to Asia, reducing the domination of flows to European markets. The share of traded biofuels destined for Europe declined slightly, while new markets (particularly for fuel ethanol) expanded in other regions. GEOTHERMAL ENERGY: SLOW BUT STEADY GROWTH About 640 megawatts (MW) of new geothermal power generating capacity came on line, for a total approaching 12.8 gigawatts (GW), producing an estimated 74 terawatt-hours (TWh) in 2014. The largest share of new geothermal power capacity came on line in Kenya, underscoring the growing emphasis on geothermal energy in East Africa. An estimated 1.1 gigawatts-thermal (GWth) of geothermal direct use (heat) capacity was added in 2014 for a total of 20.4 GWth; output was an estimated 263 petajoules (PJ) in 2014 (73 TWh). Over the past five years, total power capacity has grown at an average annual rate of 3.6%, and heat capacity at an estimated 5.9%. The geothermal industry continues to face significant project development risk; various efforts are under way to ameliorate such risks in developed and developing countries. HYDROPOWER: STILL GIANT AMONG ITS PEERS An estimated 37 GW of new hydropower capacity was commissioned in 2014, bringing total global capacity to approximately 1,055 GW. Generation in 2014 is estimated at 3,900TWh.China(22GW)installedthemostcapacitybyfar,with significant capacity also added in Brazil, Canada, Turkey, India, and Russia. The industry continued innovation towards ever- more flexible, efficient, and reliable facilities. Demand for greater efficiency and lower generating costs have contributed to ever- larger generating units, including some 800 MW turbines. There also is significant demand for refurbishment of existing plants to improve the efficiency of output, as well as environmental performance in the face of new regulatory requirements. Innovations also include variable speed technology for new and refurbished pumped storage plants, which assist in further integration of variable renewable resources. OCEAN ENERGY: TEMPERED PROGRESS BUT FULL OF PROMISE Ocean energy capacity, mostly tidal power generation, remained at about 530 MW in 2014. Virtually all new installations were in someformofpilotordemonstrationprojects.Twoprominentwave energy development companies faced strong headwinds. The EU Ocean Energy Forum was launched with the aim of bringing together stakeholders for problem solving and co-operation on ocean energy. Technology development continued in various test sites, with tidal and wave energy devices having advanced the most of all ocean energy technologies to date. SOLAR PV: RAPID SPREAD TO NEW MARKETS Solar PV is starting to play a substantial role in electricity generation in some countries as rapidly falling costs have made unsubsidised solar PV-generated electricity cost-competitive with fossil fuels in an increasing number of locations around the world. In 2014, solar PV marked another record year for growth, with an estimated 40 GW installed for a total global capacity of about 177 GW. China, Japan, and the United States accounted for the vast majority of new capacity. Even so, the distribution of new installations continued to broaden, with Latin America seeing rapid growth, significant new capacity added in several African countries, and new markets picking up in the Middle East. Although most EU markets declined for the third consecutive year, the region—particularly Germany—continued to lead the world in terms of total solar PV capacity and contribution to the electricity supply. The solar PV industry recovery that began in 2013 continued in 2014, thanks to a strong global market. Consolidation among manufacturers continued, although the flood of bankruptcies seen over the past few years slowed to a trickle. To meet the rising demand, new cell and module production facilities opened (or were announced) around the world. CONCENTRATING SOLAR THERMAL POWER (CSP): DIVERSIFYING TECHNOLOGIES AND APPLICATIONS The CSP market remains less established than most other renewable energy markets. Nonetheless, the sector continued its near-decade of strong growth with total capacity increasing 27% to 4.4 GW. Although parabolic trough plants continued to represent the bulk of existing capacity, 2014 was notable for the diversification of technologies in operation, with the world’s largest linear Fresnel and tower plants coming on line. Only the United States and India added CSP facilities to their grids in 2014. However, CSP activity continued in most regions, with South Africa and Morocco the most active markets in terms of construction and planning. Spain remained the global leader in existing capacity. Stagnation of the Spanish market and an expected deceleration of the US market after a bumper year fuelled further industry consolidation. However, costs are declining, particularly in the global sunbelt, a large variety of technologies are under development, and thermal energy storage (TES) is becoming increasingly important and remains the focus of extensive research and development (R&D).

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