Global Overview

The year 2017 was another record-breaking one for renewable energy, characterised by the largest ever increase in renewable power capacity as well as by falling costs, increases in investment and advances in enabling technologies. Many developments during the year affected the deployment of renewable energy, including the lowest ever bids for solar and wind power in tenders in several countries around the world, increasing digitalisation, heightened attention to electrification of transport, a number of jurisdictions pledging to become coal-free, new policies and partnerships on carbon pricing, and new initiatives and goals set by governments at all levels.

Several renewable energy technologies – such as hydropower, bioenergy and geothermal power and heat – have long been established as mainstream and cost-competitive sources of energy. Solar PV and wind power are joining them: both are now competitive with new fossil fuel capacity in an increasing number of locations, and they are coming closer to being competitive with existing fossil fuel and nuclear power generation.1

Growth in renewable energy deployment and output continued in 2017, particularly in the power sector, thanks to several factors, including: increasing access to finance; concerns about energy security, the environment and human health; growing demand for energy in developing and emerging economies; the need for access to electricity and clean cooking facilities; and dedicated policy initiatives and ambitious targets.

Increasingly, sub-national governments are becoming leaders in renewable energy and energy efficiency initiatives, and national governments in some countries are pulling back from leadership roles.2 Many developing and emerging economies are increasing their deployment of and investment in renewable energy technologies and related infrastructure and are becoming renewable energy leaders.3 Renewable energy investment in many developing countries continued to be as high or even higher than that in developed countries when viewed on a per gross domestic product (GDP) basis.4 (→ See Top 5 Countries table.)

Many high-profile announcements and partnerships in 2017 could have important impacts on the renewable energy sector. These include:

In the context of the United Nations Sustainable Development Goals (SDGs), 2017 saw the creation of Sustainability Mobility for All (SUM4ALL), a new strategic global alliance that aims to implement the SDGs in the transport sector, including reducing the sector’s environmental footprint to combat climate change and pollution.5

Sustainable Energy for All (SEforALL) and the Kigali Cooling Efficiency Program launched the Cooling for All initiative aimed at identifying the challenges and opportunities of expanding access to affordable, sustainable cooling solutions through the intersection of the Paris Climate Agreement, the SDGs and the Montreal Protocol’s Kigali Amendment.6

China launched the world’s largest emissions trading scheme, and a coalition of national and sub-national governments launched the Carbon Pricing in the Americas co-operative framework.7

In November 2017, a group of 27 national, provincial, state and city governments launched the Powering Past Coal Alliance, committing to phasing out coal power by 2030; by early 2018, membership had surpassed 60.8

Twenty-five C40 member cities around the world established goals to reach net-zero emissions by 2050, with a focus on improving energy efficiency and increasing the use of renewable energy in urban buildings.9

The European Commission, the Global Covenant of Mayors and R20–Regions of Climate Action created a joint venture to support sub-national authorities in Africa in identifying, structuring and developing bankable low-carbon and climate-resilient infrastructure projects, with a focus on energy access and renewable energy projects.10

A multi-stakeholder group launched the Transport Decarbonisation Alliance, with national governments from Costa Rica, France, the Netherlands and Portugal, as well as the Paris Process on Mobility and Climate, alongside cities, regions, and private companies committed to ambitious action on transport and climate change.11

The global Electric Vehicles Initiative launched the EV30@30 Campaign, setting a collective goal of a 30% market share for electric vehicles (EVs) among all passenger cars, light commercial vehicles, buses and trucks by 2030, a target that can help open up opportunities for greater use of renewable energy in the transport sector.12

While these developments are promising, renewables and the broader energy sector face several challenges. Strong global economic growth led to an estimated 2.1% increase in energy demand in 2017 – more than twice the average increase over the previous five years.13 Energy-related carbon dioxide (CO2) emissions rose – by an estimated 1.4% – in 2017 for the first time in four years.14 In some instances, jurisdictions moving away from coal have switched to natural gas rather than to renewables.15

Although renewables continue to gain ground globally, progress is uneven across sectors and regions. In many developing countries, particularly in sub-Saharan Africa, energy access rates remain low, but rates are improving steadily in Asia. Approximately 1.06 billion people worldwide lived without electricity in 2016 (latest data availablei), while about 2.8 billion people lack access to clean cooking facilities.16 Despite rapid expansion of renewable energy capacity and output, particularly of solar photovoltaic (PV) and wind power, fossil fuels continue to make up the overwhelming majority of global total final energy consumption (TFEC).17

As of 2016, modern renewables (not including traditional use of biomass) accounted for approximately 10.4% of TFEC, a slight increase compared to 2015.18 (→ See Figure 1.) The greatest portion of the modern renewable share was renewable electricity (accounting for 5.4% of TFEC), most of which was generated by hydropower (3.7%).19 It was followed by renewable thermal energy (an estimated 4.1% of TFEC) and transport biofuels (about 0.9%).20 Traditional use of biomass, primarily for cooking and heating in developing countries, accounted for an additional 7.8%.21 Combined renewable energy accounted for an estimated 18.2% of TFEC.22

The overall share of renewable energy in TFEC has increased only modestly in recent years, despite tremendous growth in some renewable sectors.23 (→ See Figure 2.) A primary reason for this modest rise is the continued growth in overall energy demand (except for a decline in 2009 following the global economic recession), which counteracts the strong forward momentum of modern renewable energy technologies.24 In addition, the traditional use of biomass has grown slowly on a global basis and has even declined in some countries. Although this is a positive development, it is slowing the growth of the total global renewable energy share.

Progress in the renewable heating and coolingii and transport sectors continues to be relatively slow, despite a number of initiatives to boost the role of renewables and the electrification of heating and transport.25 Renewable heating and cooling has received much less attention from policy makers than renewable power generation and has been identified as the “sleeping giant of renewable energy potential” for the past decade.26 The supply of modern renewable heat increased 20.5% in the period from 2007 to 2015, whereas renewable electricity generation increased 56.6% during this period.27

In the area of transport, the vast majority of global energy needs within the sector are still met by oil (92%), with small proportions met by biofuels (2.8%) and electricity (1.3%).28 As of 2015, modern bioenergy (excluding traditional use of biomass) remained the leader by far in the contribution of renewable energy to transport, and accounted for the majority of renewable heat.29 However, the lack of advancement and attention in these sectors does not reflect relative importance: as of 2015, heating and cooling accounted for 48% of TFEC, followed by transport (32%) and electricity consumption (20%).30 (→ See Figure 3.)

Strong growth continued in the renewable power sector in 2017. Solar PV capacity installations were remarkable — nearly double those of wind power (in second place) – adding more net capacity than coal, natural gas and nuclear power combined.31 Growth has been uneven among renewable energy technologies, with the vast majority of capacity added being solar PV, wind power and hydropower. (→ See Market and Industry chapter.)

Sector coupling – the interconnection of the power, heating, cooling and transport sectors in order to integrate higher shares of renewable energy – gained increased attention during the year.32 Electrification of heating and transport, although currently small (particularly in transport) is seen as providing a pathway to the expansion of renewable energy (and an accompanying reduction in carbon emissions), and specifically to assist with integration of large shares of variable renewable energy (VRE).33 China, for example, is encouraging the electrification of residential heating, manufacturing and transport in regions that have high concentrations of renewable power to reduce curtailment of wind power, solar PV and hydropower, as well as to combat air pollution.34 A number of US states are examining options for electrification of the transport, industrial, residential and commercial end-use sectors to allow for increasing the overall renewable energy share.35

Global investment in renewable power and fuels in 2017 totalled USD 279.8 billion (excluding hydropower plants larger than 50 megawatts (MW)), up 2% from 2016 but 13% below the all-time high in 2015.36 Nearly all of the investment was in solar PV (57%) and wind power (38%).37 The costs of these rapidly growing technologies have fallen so quickly that renewable energy capacity installations in 2017 exceeded those in 2016 despite lower absolute investment, as each dollar represents more capacity on the ground.38 Developing and emerging economies accounted for 63% of total renewable energy investment, a higher share than developed countries for the third year in a row, with China alone accounting for 45% of global investment.39 Investment in 2017 held steady or trended upwards in Latin America and the United States but fell 30% in Europe, where it has been in decline since about 2010.40 (→ See Investment chapter.)

Private sector investment and procurement decisions are playing a key role in driving renewable energy deployment. As of early 2017, 48% of the US-based Fortune 500 companies had targets for emissions reduction, energy efficiency or renewable energy (or combinations thereof); 10% of companies had a specific renewable energy target, and 23 companies had a target for 100% renewable energy.41 Such targets have led to the expansion of corporate power purchase agreements (PPAs): during 2017, corporate entities worldwide contracted an estimated 5.4 gigawatts (GW) of new renewable power generating capacity, up 26% from 2016.42

Although US and European markets continued to account for the bulk of corporate renewable energy sourcing, corporate sourcing of renewable electricity has spread to regions around the world, in countries as diverse as Burkina Faso, Chile, China, Egypt, Ghana, India, Japan, Mexico, Namibia and Thailand.43 By early 2018, more than 130 leading global corporations had joined the RE100 initiative – a network of corporations committed to using 100% renewable electricity – up from 87 corporations in 2016.44 (→ See Feature chapter.)

Shareholder pressure and the rising competitiveness of the renewables sector also has resulted in increased investment in renewable energy by the fossil fuel industry.45 Large oil corporations more than doubled their number of acquisitions, project investments and venture capital stakes in renewable energy in 2016 relative to 2015, and 49% of all deals over the past 15 years involved renewable energy, the majority of which included solar PV.46 However these companies' investment in renewables remains limited compared to their spending on fossil fuels.47

Some oil companies and many other energy companies also have started investing in distributed renewables for energy access (DREAiii) systems in developing and emerging economies.48 DREA systems continued to play an important role in providing electricity access to households in remote areas in 2017 and to increasing access to clean cooking. Renewable energy stand-alone and mini-grid systems accounted for some 6% of new electricity connections worldwide between 2012 and 2016.49 Additionally, the number of clean cook stoves distributed more than tripled in 2016 compared to 2015, although the majority (71%) of these were liquefied petroleum gas, followed distantly by wood and charcoal (23%), with modern renewables making up the remainder.50 The synergies between energy efficiency and renewable energy are particularly salient for improving access to modern energy services at least cost, as integrating super-efficient appliances, for example, can reduce the annualised system cost by up to 30%, despite higher upfront appliance costs.51 (→ See Distributed Renewables chapter.)

In all sectors, renewable energy support policies continued to play a crucial role. The number of countries with renewable energy targets and support policies increased again in 2017; targets were in place in 179 countries at the national and/or sub-national level (up from 176 countries in 2016), and several jurisdictions made their existing targets more ambitious.52 However, policy support continues to lag in the renewable heating and cooling and transport sectors. (→ See Policy Landscape chapter and Reference Tables R3-R11.)

Sub-national governments contributed significantly to renewable energy deployment in 2017: an increasing number of communities, cities and regions introduced 100% renewable energy targets during the year. Further, the number of cities powered by at least 70% renewable electricity more than doubled between 2015 and 2017, from 42 to 101, including Auckland, Brasilia, Nairobi and Oslo.53

At the global level, international climate negotiations continued to intersect with renewable energy policy. Of the 168 parties that had submitted Nationally Determined Contributions (NDCs) under the Paris Agreement by the end of October 2017, 109 of these included quantified renewable energy targets, and a further 36 referred to renewable energy action.54 However, during climate negotiationsiv in Bonn, Germany in 2017, parties did not yet agree on how NDCs should be organised, delivered and updated, leaving uncertainty on how national renewable energy commitments would be ramped up.55

Carbon pricing policies, if well designed, may incentivise the deployment of renewable energy technologies by increasing the comparative cost of higher-emission fuels and technologies through the inclusion of at least some externalities.56 The number of jurisdictions worldwide with carbon pricing policies in place stood at 64 by year’s end, up from 61 in 2016.57 (→ See Figure 4.) As of April 2018, between 20% and 25% of global greenhouse gas emissions were covered by an explicit carbon price, up from 13% at the end of 2016, with the increase due mainly to the entry into force of China’s scheme.58

The Chinese policy includes carbon taxes, as well as emissions trading, among some 1,700 power companies that collectively emit more than 3 billion tonnes of carbon dioxide (CO2) annually.59 For comparison, in 2016, the European Union’s Emissions Trading Scheme (EU ETS) covered around 1.7 billion tonnes of CO2.60 In late 2017, EU members reached agreement on EU ETS reforms to increase the scheme’s impact; these included an agreement to reduce the number of emissions certificates issued and to accelerate the cancellation of surplus certificates.61 The Carbon Pricing in the Americas initiative, launched in 2017, includes members from North, Central and South America and aims to strengthen the implementation of carbon pricing as a central policy instrument in order to advance action on climate change, the shift to “clean” energy, innovation and the promotion of sustainable economic development.62

Developments in the wider energy landscape in 2017 have affected the context in which renewable energy is developing. Low fossil fuel prices continued to pose a challenge to renewable energy markets during the year, especially in the heating and transport sectors.63 The Brent crude oil price averaged around USD 54 per barrel in 2017, which was about half the average price of the 2011-2014 period but still nearly double the average price during the 1996-2005 period.64 Natural gas prices also have been relatively low in Europe, Japan and the United States in recent years.65

Global coal consumption increased an estimated 1% in 2017, reversing a two-year decline.66 This was due almost entirely to an increase in coal-fired electricity generation, and would have been even higher if not for a reduction in coal use in industry and buildings.67 Constructing a new coal-fired power plant, with a lifetime of approximately 40 years, can both lock in carbon-intensive generation and lock out renewable power. Globally, 654 GW of new coal plants are in development throughout the world.68

Direct global subsidies to fossil fuels were estimated to be at least USD 360 billion in 2016, a 15% reduction from 2015 but more than double the estimated subsidies to renewable power generation, at USD 140 billion.69 In 2017, the Group of Twenty (G20) reaffirmed its 2009 commitment to phasing out “inefficient fossil fuel subsidies”, yet progress is slow and large investors, insurers and civil society have called for both increased transparency and acceleration of the process.70 The main obstacles identified include the lack of a clear definition for “inefficient subsidies”, the absence of mandatory reporting and the lack of timelines for the phase-out commitments.71

At the same time, however, an increasing number of companies that own, develop or operate coal power plants shifted away from the coal business during 2017.72 Utilities in Africa, Australia, China, Europe, India and the United States have signalled their intention to move out of fossil fuel generation and into large-scale renewables, and some are already doing so.73 For example, the French-owned utility ENGIE sold off coal and natural gas assets worth EUR 15 billion (USD 18 billion) between the start of 2016 and the end of 2017, and will re-invest EUR 22 billion (USD 26 billion) by the end of 2018 in energy efficiency and renewables.74 Enel (Italy) moved from 25% renewable energy capacity in 2010 to 43% at the end of 2016, and electric utilities in 26 out of the 28 EU member states agreed to build no more coal-fired power plants from 2020 onwards and to decarbonise Europe’s electricity supply by 2050.75 The Port of Amsterdam, which handles some 16 million tonnes of coal per year, also announced plans to stop processing coal by 2030.76

The following sections discuss key developments and trends in renewable energy in 2017 by sector.