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Renew | October 2016

Renewables 2016 | Global Status Report

The world now adds more renewable power capacity annually than it adds (net) capacity from all fossil fuels combined. Wind and solar PV had record additions for the second consecutive year, while hydro power represented most of the remainder. The power sector experienced its largest annual increase in capacity ever, with significant growth in all regions. By the end of 2015, renewable capacity in place was enough to supply an estimated 23.7 per cent of global electricity, with hydro power providing about 16.6 per cent. Globally, renewable electricity production in 2015 continued to be dominated by large generators that are owned by utilities or large investors. At the same time, there are 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 are seeing rapid expansion of small-scale renewable systems, including renewable-based mini-grids, to provide electricity for people living far from the grid. Developed countries and regions have seen significant growth in numbers of residential and industrial electricity customers who produce their own power.

Generation Capacity
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 per cent over 2014, to an estimated 1,849 GW at year´s end. Wind and solar PV both saw record additions for the second consecutive year, together making up about 77 per cent of all renewable power capacity added in 2015. Hydro power capacity rose by 2.7 per cent to an estimated 1,064 GW, accounting for approximately 19 per cent of additions.

The world now adds more renewable power capacity annually than it adds (net) capacity from all fossil fuels combined. In 2015, renewables accounted for an estimated more than 60 per cent of net additions to global power generating capacity, and for far higher shares of capacity added in several countries around the world. By year´s end, renewables comprised an estimated 28.9 per cent of the world´s power generating capacity - enough to supply an estimated 23.7 per cent of global electricity, with hydro power providing about 16.6 per cent.

Technological advances, expansion into new markets with better resources, and improved financing conditions have reduced costs, particularly for wind and solar PV. 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. 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. However, the economic competitiveness of renewable technologies still depends on regulatory framework and market design.

Noteworthy Developments
Of all regions, Asia installed the most renewable power generating capacity during 2015. China again led the world in additions of hydro power 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. 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. Turkey ranked first globally for new geothermal power capacity, third for new hydro and tenth for wind power capacity additions. 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.

Europe: Renewables accounted for the majority (77 per cent) of new EU generating capacity for the eighth consecutive year, and the region continued to decommission more capacity from conventional sources than it installed. Between 2000 and 2015, the share of renewables in the EU´s total power capacity increased from 24 per cent to 44 per cent, and, as of 2015, renewables were Europe´s largest source of electricity. 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. In Germany, renewable power output increased by 20 per cent in 2015, and the share of renewables in electricity consumption was 32.6 per cent (up from 27.4 per cent in 2014). 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.

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). Renewables accounted for nearly 13.7 per cent of electricity generation (up from 13.4 per cent in 2014), despite a 3.2 per cent drop in hydro power output.101 Canada continued to be a leader in hydro power development and ranked sixth globally for wind power capacity additions.

Latin America and the Caribbean: Countries across the region achieved high shares of their electricity generation with renewables: for example, Costa Rica generated 99 per cent of its electricity with renewable sources, Uruguay generated 92.8 per cent and Chile has quickly surpassed several long-term targets. 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 hydro power and fourth for new wind power capacity (although the country has been challenged by lack of transmission 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. 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.

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 hydro power facilities online. 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. Across Africa, renewable power projects and technology manufacturing facilities were being planned or were under construction.

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. Renewables accounted for about 14.6 per cent of Australia´s electricity generation (up from 13.5 per cent in 2014), despite a significant drop in hydro power generation. Elsewhere in the region, Samoa installed its first wind farm, and Fiji saw the inauguration of some solar PV micro-grid projects.

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. 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.

The rapid growth of renewable power generation created both challenges and opportunities in 2015. 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. In response to this competition, some are pushing back while others are repositioning by acquiring significant renewable energy assets and decreasing their fossil fuel investments in their generation portfolios and moving into new markets. Around the world, technical, economic and market transformation of the electric power sector continued to accelerate in 2015. 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. Several jurisdictions- including Denmark, Germany, the state of South Australia and some US states - already have successfully integrated high shares of variable renewables. Electric utilities also have successfully integrated very large shares over short time periods.

Dispatchable renewable energy plants - including reservoir hydro, biomass and geothermal power (and CSP with storage) contributed to flexibility. System balancing is served by new and upgraded transmission interconnections. Innovative hybrid systems have emerged, and advancements in inverter technologies are enabling solar and wind power to provide a range of balancing services.

In addition, stationary battery storage continues to advance and costs are trending downwards. The behind-the-meter storage also took a great step forward in 2015. As such, innovative business and deployment models for integrating renewables and on-grid storage continued to emerge. 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. 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.

Globally, renewable electricity production in 2015 continued to be dominated by large (e.g. MW-scale and up) generators that are owned by utilities or large investors. Towards the end of 2015, more than half of global solar PV capacity was in projects of 4 MW and larger. CSP and wind energy projects also are growing, as are wind turbines, while the hydro power industry is using ever-larger units.

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 are seeing rapid expansion of small-scale renewable technologies for remote uses. Developed countries too have seen significant growth in numbers of residential electricity customers who produce their own power.

Industrial auto-producers across countries also generated significant amounts of renewable electricity (and heat) on site in 2015, particularly with waste biomass associated with forestry and agriculture. 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. These may be isolated or connected to a wider grid. Besides these, community and co-operative ownership of renewable power capacity also expanded in 2015.

People Involvement
Major corporations and institutions around the world made large commitments in 2015 to purchase renewable electricity. Here, in addition to PPAs and leases, some major companies are developing their own large-scale projects in the United States, Europe, Asia etc. 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. Other big purchasers included municipalities, the US military and mining companies from Australia to Chile to South Africa. 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. Several cities, states and countries made new commitments to 100 per cent renewable power in 2015, while others reached their targets.

Author: This report was commissioned by REN21 and produced in collaboration with a global network of research partners. A large share of the research for this report was conducted on a voluntary basis.

Renewable Energy Transport Policies
Slow development and shifting support to second generation biofuels - Nearly all policies adopted in the renewable transport sector in 2015, as in past years, were directed at road transport through support for biofuels production and use. Policies to promote the integration of renewable energy and electric vehicles, as well as the use of renewables in aviation, rail or shipping, have been slow to develop. As of year-end 2015, biofuel mandates were in place in 66 countries at the national or state/provincial level. Support has shifted increasingly towards the promotion of advanced biofuels, although, globally, most policies adopted to date focus primarily on first-generation biofuels.

Trends in Solar PV
Record deployment and rapid expansion into new markets The solar PV market was up 25% over 2014 to a record 50 GW, lifting the global total to 227 GW. The annual market in 2015 was nearly 10 times the world´s cumulative solar PV capacity of a decade earlier. China, Japan and the United States again accounted for the majority of capacity added, but emerging markets on all continents contributed significantly to global growth, driven largely by the increasing cost-competitiveness of solar PV. An estimated 22 countries had enough capacity at end-2015 to meet more than 1% of their electricity demand, with far higher shares in some countries (e.g., Italy 7.8%, Greece 6.5% and Germany 6.4%). China achieved 100% electrification, in part because of significant off-grid solar PV installed since 2012; on-grid, however, curtailment of solar generation started to become a serious challenge for China´s solar PV sector.

The industry recovery of recent years strengthened further due to the rise of new markets and strong global demand, and most top-tier companies were back on their feet in 2015. Record-low bids for large-scale solar PV projects were seen in tenders from Latin America to the Middle East to India. Distributed rooftop solar PV remains more expensive than large-scale projects but has followed similar price trajectories and is competitive with retail prices in many locations.

Trends in Wind Power:
Largest source of new renewable power capacity; growing role in meeting electricity demand Wind power was the leading source of new power generating capacity in Europe and the United States in 2015, and the second largest in China. Globally, a record 63 GW was added for a total of about 433 GW. Non-OECD countries were responsible for the majority of installations, led by China, and new markets emerged across Africa, Asia and Latin America. Corporations and other private entities continued turning to wind energy for reliable and low-cost power, while many large investors were drawn by its stable returns.

The offshore sector had a strong year with an estimated 3.4 GW connected to grids, mostly in Europe, for a world total exceeding 12 GW. Wind power is playing a major role in meeting electricity demand in an increasing number of countries, including Denmark (42% of demand in 2015), Germany (more than 60% in four states) and Uruguay (15.5%).

The industry had another strong year, and most top turbine manufacturers broke their own annual installation records. To meet rising demand, new factories opened or were under construction around the world. Challenges included lack of transmission infrastructure and curtailment of wind generation (particularly in China).

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