The State of the Global Renewable Energy Transition

The REN21 Renewables 2018 Global Status Report (GSR) portrays a dynamic renewable power sector characterised by falling costs, increased investment, record-setting installation and new, innovative business models that are creating rapid change. Thanks to years of active policy support and driven by technology advances, rapid growth and dramatic reductions in costs of solar photovoltaics (PV) and wind, renewable electricity is now less expensive than newly installed fossil and nuclear energy generation in many parts of the world; in some places it is less expensive even than operating existing conventional power plants.

But these positive developments tell only part of the story. The global energy transition is only fully underway for the power sector; for other sectors it has barely begun. The power sector on its own will not deliver the emissions reductions demanded by the Paris climate agreement or the aspirations of Sustainable Development Goal 7 (SDG 7) to ensure access to affordable, reliable, sustainable and modern energy for all. The heating and cooling and transport sectors, which together account for about 80% of global total final energy demand, are lagging behind.

In 2017, China, Europe and the United States accounted for nearly 75% of the global investment in renewable power and fuels. While investment in these major markets is impressive and needs to continue, there are also examples of significant investment in developing country markets. China had a high level of investment – an increase of 30.7% from the previous year. However, when measured per unit of gross domestic product (GDP), the Marshall Islands, Rwanda, the Solomon Islands, Guinea-Bissau, and many other developing countries are investing as much as or more in renewables than developed and emerging economies. These positive trends need to be scaled up for a global energy transition.

Furthermore, a booming global economy combined with weaker improvements in energy intensity led to an increase in energy demand of an estimated 2.1% in 2017 (more than twice the average increase over the previous five years). Energy-related carbon dioxide (CO2) emissions rose – by an estimated 1.4% – for the first time in four years, at a time when climate scientists say that emissions need to be in steep decline.

There is uneven progress between the sectors and between the different geographical regions, and a fundamental disconnect between commitments and real action on the ground. Simply put, the global renewable energy transition is progressing far too slowly.

Positive developments demonstrate the central role that renewables can play in the overall energy system:

The share of modern renewable energy in the total global energy supply is on the rise. The share of renewables in final energy consumption con-tinues to grow globally with some technologies growing very rapidly. Despite impressive uptake in sources such as PV and wind, growth in renewables had difficulty keeping up with rapidly rising demand. In addition, in some countries traditional biomass use has fallen, which, although a positive development, is slowing down the growth of the total renewable energy share globally. Because of this, many countries have seen the share of renewable energy in their total final demand fall since 2010. (→ See Figure 2.)

Renewable electricity saw record global growth in solar PV and continued acceleration of wind power.Solar PV was the star performer for the second year in a row, with newly installed capacity increasing by about 33% (at least 98 gigawatts, GW) over the record-setting additions in 2016. Approximately 402 GW of solar PV was up and running worldwide by the end of 2017.

About 52 GW of wind power was added globally in 2017, bringing the cumulative total installed capacity to around 539 GW – an increase of nearly 11% over 2016. The global offshore wind market grew 30%.

Taken together, renewables accounted for an estimated 70% of net additions to global power generation capacity, up from 63% in 2016.

Defying sceptics, higher shares of variable renewable energy (VRE) are being successfully integrated into electricity systems across the globe, without affecting grid stability. Penetration reached significant levels in many regions in 2017. As shown in Figure 2, the countries leading in wind and solar PV penetration are Denmark (52.9%), Uruguay (28.1%), Germany (26%) and Ireland (25.2%).

Several countries and regions integrated even higher shares of VRE into their power systems over short periods in 2017. South Australia generated more than 100% of its electricity demand (load) from wind power alone on one occasion, and 44% from solar PV alone on another. Other examples include Germany (66% of load; wind and solar combined), the US state of Texas (54% of load; wind alone) and Ireland (60% of load; wind alone).

Integrating high shares of VRE into the power system requires a conceptual shift: policy makers and planners are increasingly looking beyond the confines of a single grid, a single country, a single city or a single sector and are integrating both supply- and demand-side solutions across sectors and across borders.

China, for example, is specifically encouraging the electrification of heating, manufacturing and transport in parts of the country where large renewable power capacity exists, as it helps to reduce curtailment (the powering down of generation to maintain the balance between supply and demand).

The European Union (EU) is providing funding to support the construction of four major transmission lines across Europe, enabling surpluses in one area to be used or stored in another. Having this flexibility will reduce costs and allow for greater shares of VRE in the total mix.

The costs of solar PV and wind continued to fall due to technological innovations, changes in markets, effective policies and new business models. Solar PV tenders resulted in record-low bids in a number of countries. In Germany, for example, winning bids were on average nearly 50% lower than those over the last two years, to below EUR 50 per megawatt-hour (MWh) (USD 60 per MWh). In the United States, the country’s least expensive ever solar power purchase agreement was awarded for a 150 megawatt (MW) project in Texas, with prices potentially as low as USD 21 per MWh.

In markets as diverse as Canada, India, Mexico and Morocco, the prices bid for onshore wind power came down to about USD 30 per MWh. A Mexican tender late in the year saw prices below USD 20 per MWh – a world record low and down 40-50% relative to Mexico’s tenders in 2016. Germany also saw a national record low of EUR 38 per MWh (around USD 45 per MWh).

For offshore wind, tenders in Germany and the Netherlands attracted zero-subsidy bids (that is, producers will be paid market prices only, although governments will provide grid connection and other support) for projects due to come online in 2024 and 2022, respectively. This would have been unthinkable even just a few years ago.

1 Investment data are from Bloomberg New Energy Finance and include all biomass, geothermal and wind power projects of more than 1 MW; all hydropower projects of between 1 and 50 MW; all solar power projects, with those less than 1 MW estimated separately; all ocean energy projects; and all biofuel projects with an annual production capacity of 1 million litres or more.

2 The GSR strives to exclude pure pumped storage capacity from hydropower capacity data.

3 Solar PV data are provided in direct current (DC). See Methodological Notes in this report for more information.

4 Solar hot water capacity data include water collectors only. The number for 2017 is a preliminary estimate.

5 A country is counted a single time if it has at least one national or state/provincial target.

6 Biofuel policies include policies listed both under the biofuel obligation/mandate column in Table 2 (Renewable Energy Support Policies)and in Table R7 (Renewable Transport Mandates at the National/State/Provincial Levels, End-2017.)

7 Data for tendering reflect all countries that have held tenders at any time up through the year of focus.

Note: All values are rounded to whole numbers except for numbers <15, biofuels and investment, which are rounded to one decimal point.Where totals do not add up, the difference is due to rounding.

FAME = fatty acid methyl esters; HVO = hydrotreated vegetable oil.

New market players emerged as costs decreased, but traditional utilities also are changing their business models. By early 2018, more than 130 leading global corporations had joined the RE100 initiative, a network of corporations committed to using 100% renewable power, up from 87 corporations in 2016. Corporate sourcing of renewable power has spread from the United States and Europe to regions around the world, in countries as diverse as Burkina Faso, Chile, China, Egypt, Ghana, India, Japan, Mexico, Namibia and Thailand.

Some utilities have announced that they will disengage from fossil fuel generation and move into large-scale renewable energy generation. Examples include utilities in Africa, Australia, China, Europe, India and the United States. The French utility company Engie, for example, sold off coal and gas assets worth EUR 15 billion (USD 18 billion) during 2016 and 2017 and will reinvest EUR 22 billion (USD 26 billion) by the end of 2018 in energy efficiency and renewables.

Distributed small-scale generation is also gaining ground, and digitalisation is helping to convert consumers to prosumers.i Peer-to-peer micro-trading among solar power prosumers in virtual marketplaces has started to occur in Australia, Denmark, France, Japan, the Republic of Korea and the United States.

Progress, albeit slow, continued towards increasing energy access in developing countries, particularly those in sub-Saharan Africa. Approximately 1.06 billion people (about 14% of the global population) lived without electricity in 2016, about 125 million fewer people than in 2014. In the developing and emerging countries of Asia, the number of people without access to electricity decreased from over 1 billion in 2000 to 0.44 billion in 2016, with significant progress particularly in Bangladesh, China, India and Indonesia.

Distributed renewables for energy access (DREA) systems play a very important role in improving energy access. They continue to provide cost-effective alternatives to extending or improving the grid and were serving an estimated 300 million people by the end of 2016. Off-grid solar devices such as solar lanterns and solar home systems experienced 60% annual growth rates between 2010 and 2017. The pay-as-you-go (PAYG) model, enabled by the emergence of mobile technology, has become the dominant means of rolling out DREA systems around the world. In East and West Africa, PAYG companies raised about USD 263 million in capital – up 19% from 2016 – and served more than 700,000 customers.

The market for clean cooking solutions continued to thrive in 2016 (latest data available), with clean cook stoves making up 83% (30.8 million) of the 37 million cook stoves distributed. The number of clean cook stoves distributed more than tripled in 2016 compared to 2015. However, most of the 30.8 million clean cook stoves distributed in 2016 use liquified petroleum gas; only an estimated 5.9% use modern renewable fuels. Furthermore, the overall number of people without access to clean cooking facilities has increased due to population growth. About 2.8 billion people (38% of the global population, and about 50% of the population in developing countries) live without clean cooking facilities.

Pledges to phase out coal power are on the rise. In 2017, more than 20 countries launched the Powering Past Coal Alliance that is committed to phasing out coal power by 2030, with new pledges from Angola, Denmark, Italy, Mexico, New Zealand and the United Kingdom. An increasing number of companies that owned, developed or operated coal-fired power plants moved away from the coal business. And utilities in 26 out of 28 EU member states signed an agreement not to build any more coal-fired power plants from 2020 onwards.

1 Countries considered include only those covered by Bloomberg New Energy Finance (BNEF); GDP (at purchasers’ prices) data for 2016 from World Bank. BNEF data include the following: all biomass, geothermal and wind power projects of more than 1 MW; all hydropower projects of between 1 and 50 MW; all solar power projects with those less than 1 MW (small-scale capacity) estimated separately; all ocean energy projects; and all biofuel projects with an annual production capacity of 1 million litres or more. Small-scale capacity data used to help calculate investment per unit of GDP cover only those countries investing USD 200 million or more.

2 Only one country brought CSP capacity online in 2017, which is why no countries are listed in places 2, 3, 4 and 5.

3 Per capita renewable power capacity (not including hydropower) ranking based on data gathered from various sources for more than 70 countries and on 2016 population data from the World Bank.

4 Country rankings for hydropower capacity and generation differ because some countries rely on hydropower for baseload supply whereas others use it more to follow the electric load to match peaks in demand.

5 Solar water heating collector rankings for total capacity and per capita are for year-end 2016 and are based on capacity of water (glazed and unglazed) collectors only. Data from International Energy Agency Solar Heating and Cooling Programme. Total capacity rankings are estimated to remain unchanged for year-end 2017.

6 Not including heat pumps.

Note: Most rankings are based on absolute amounts of investment, power generation capacity or output, or biofuels production; if done on a basis of per capita, national GDP or other, the rankings would be different for many categories (as seen with per capita rankings for renewable power not including hydropower, solar PV, wind power and solar water heating collector capacity).