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© OECD/IEA 2012 Medium-Term Renewable Energy Market Report 2012 Paolo Frankl Head, Renewable Energy Division Brussels, 18 July 2012
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© OECD/IEA 2012
Medium-Term Renewable Energy Market Report 2012 Paolo Frankl Head, Renewable Energy Division
Brussels, 18 July 2012
© OECD/IEA 2012
Objective and scope
With the increasing role of a portfolio of maturing renewable technologies in the power mix…
The IEA is publishing its first medium-term report focused on renewable energy Bottom-up, global renewable forecast of renewable electricity
capacity and generation over the next 5 years
Detailed analysis of 12 OECD countries (Austria, Denmark, France,
Germany, Italy, Japan, Norway, Spain, Sweden, Turkey, UK, US) and China, India, Brazil (~80% of world renewable electricity)
For 2012 edition, focus on 8 technologies in power sector with some analysis on solar thermal heating
Completes slate of IEA MT forecasts: oil, gas, coal
Methodology consistent with other MT reports
© OECD/IEA 2012
Analytical framework – Japan example
Generation and capacity forecast based on - Power demand
Power sector structure
Grid and system integration
Economic attractiveness
Financing
Policy framework robustness
Identify drivers and
challenges for
renewable
deployment
-8%
-4%
0%
4%
8%
900
950
1 000
1 050
1 100
2005 2008 2011 2014 2017
Y-o-YChg
TWh Power demand vs GDP
Demand Demand, Y-o-Y (RHS)
GDP, Y-o-Y (RHS)Sour
0
400
800
1 200
2005 2006 2007 2008 2009 2010 2011
TWhPower generation
Coal Oil Natural gas
Nuclear Hydro Bioenergy
Wind Solar PV Geothermal
© OECD/IEA 2012
Global Overview
© OECD/IEA 2012
Growth in renewable power is forecast to accelerate Hydropower remains the main renewable power source (+3.1% p.a.)
Non-hydro renewable sources grow at double-digit annual percentage rates (+14.3% p.a.)
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Global renewable electricity production and forecast
Hydropower Wind onshore Bioenergy Solar PV
Geothermal Wind offshore CSP Ocean
TWh
© OECD/IEA 2012
Growth is led by non-OECD countries Non-OECD accounts for two-thirds of the overall growth
China, Brazil, India lead; others grow significantly as well
OECD growth still largely driven by Europe but Americas and Asia-Oceania make significant contributions
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TWh Global renewable electricity production and forecast
OECD Americas OECD Asia-Oceania OECD Europe
China Brazil India Rest of non-OECD
© OECD/IEA 2012
Non-hydro technology deployment spreads out Number of countries with cumulative capacity larger than 100MW
(can cover consumption of 100k households) increases significantly
Growth areas include Asia, Africa, Latin America and the Middle East
0
20
40
60
80
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
Onshore wind
Offshore wind
Bioenergy Solar PV CSP Geothermal Ocean
Number of countries with installedcapacity above 100 MW
Non-OECD
OECD
© OECD/IEA 2012
Generation additions over 2011-17 differ across regions and technology portfolios
OECD Americas (+179 TWh)
Wind onshore
Bioenergy
Solar PV
Other technologies
OECD Asia-Oceania (+77 TWh)
Wind onshore
Bioenergy
Solar PV
Other technologies
OECD Europe (+365 TWh)
Hydropower
Wind onshore
Bioenergy
Solar PV
Other technologies
Non-OECD (+1 220 TWh)
Hydropower
Wind onshore
Bioenergy
Solar PV
Other technologies
© OECD/IEA 2012
Annual growth patterns for non-hydro technologies vary significantly
China becomes deployment leader
OECD Europe deployment growth slows
OECD Americas growth reflects US policy uncertainties
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014 2015 2016 2017
GW Annual capacity additions , non-hydro technologies
OECD AO OECD AM OECD EUR China Rest of non-OECD
© OECD/IEA 2012
Progress tracked on different scales
Incremental TWh (2011-17)
1. China + 700
2. USA + 85
3. Brazil + 80
4. India + 80
5. Germany + 58
RE share growth (2011-17)
1. Denmark + 20.3% (tot 61%)
2. Austria + 18.5% (tot 87%)
3. UK + 11.5% (tot 22%)
4. Turkey + 10.1% (tot 36%)
5. Italy + 9.5% (tot 35%)
Avg annual growth (2011-17)
1. UK + 14.2%
2. China + 10.6%
3. Turkey + 9.8%
4. France + 8.3%
5. Denmark + 7.8%
Detailed reporting only on 15 focus countries
Other countries also show very significant progress (e.g. Kenya)
© OECD/IEA 2012
Country and Regional Outlooks
© OECD/IEA 2012
China accounts for 40% of global growth
Drivers: Growing energy needs
Diversification
Government targets
Ample low-cost finance
Robust manufacturing
Challenges: Pricing framework
Priority dispatch
Grid upgrades
Prohibitive licensing for small-scale systems
0
300
600
900
1 200
1 500
1 800
2011 2012 2013 2014 2015 2016 2017
China forecast renewable generation
Hydropower Wind onshore Bioenergy Solar PV Wind offshore CSP
TWh
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
2 000
4 000
6 000
8 000
2005 2008 2011 2014 2017
Y-o-YChg
TWh China power demand vs GDP growth
Demand Demand, Y-o-Y (RHS) GDP, Y-o-Y (RHS)
Source:
Challenges: Pricing framework
Priority dispatch
Grid upgrades
Prohibitive licensing for small-scale systems
© OECD/IEA 2012
State mandates drive the US picture but uncertainties persist over some federal policies
Drivers: State level RPSs
Federal incentives levels
Ample grid capacity
Innovative financing
Challenges: Duration of federal
incentives
Competition with natural gas
Cost and availability of tax equity finance
0
100
200
300
400
500
600
700
2011 2012 2013 2014 2015 2016 2017
United States forecast renewable generation
Hydropower Wind onshore Bioenergy Solar PV
Geothermal CSP Wind offshore
TWh
US is 50% of OECD/AM generation growth
0
2
4
6
8
10
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
GW US wind capacity growth
Forecast based on expiration of PTC at end-2012
Expiration of federal PTC
© OECD/IEA 2012
OECD Europe growth slows with policy adjustments and the macroeconomic situation Germany, UK and Turkey are largest growers
Nordic countries grow steadily
Economic conditions and overcapacity challenge Italy, Spain
Eastern Europe growing despite crisis and has a long way to go to fulfill EU 2020 goals
0
200
400
600
800
1 000
1 200
1 400
2011 2012 2013 2014 2015 2016 2017
OECD Europe forecast renewable generation
Hydropower Wind onshore Bioenergy Solar PV
Geothermal Wind offshore CSP Ocean
TWh
© OECD/IEA 2012
OECD Europe – Capacity Additions
Growth slows down, particularly for solar PV
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014 2015 2016 2017
An
nu
al
cap
acit
y a
dd
itio
ns (
GW
)
Ocean
Geothermal
Bioenergy
Wind offshore
Wind onshore
CSP
PV
Hydro
© OECD/IEA 2012
Germany shows the largest absolute growth in Europe
Drivers: Robust policy framework
Need to compensate for nuclear phase-out
Ample availability of low cost financing
Challenges: Maintaining dynamic
approach FIT adjustments
Grid upgrades needed
Technical and supply chain bottlenecks for offshore wind
0
20
40
60
80
100
120
140
160
180
200
2011 2012 2013 2014 2015 2016 2017
Germany forecast renewable generation
Hydropower Solar PV Wind onshore Bioenergy
Geothermal CSP Wind offshore
TWh
14%
4 large utilities 7%
Other utilities 7%
Funds/ banks 11%
9%
Others 2% Farmers 11%
40%
Ownership shares of renewable generation, Oct 2011
Commercial
Individuals
Project developers
© OECD/IEA 2012
In Italy weakening economy and rising financing costs weigh upon deployment
Drivers: Policy commitment to
renewable deployment
Increase of targets
Improved renewable competitiveness in good resource areas
Challenges: Policy costs for solar PV
Overcapacity of power system
Cost and availability of finance
Grid upgrades
0
40
80
120
2005 2006 2007 2008 2009 2010
Italy power capacity vs. peak load (GW)
Hydropower Combustible fuels
Geothermal Solar
Wind Peak load
0
20
40
60
80
100
120
140
2011 2012 2013 2014 2015 2016 2017
Italy forecast renewable generation
Hydropower Solar PV Wind onshore Bioenergy Geothermal
TWh
© OECD/IEA 2012
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Turkey historical and projected renewable generation
Hydropower Wind onshore Bioenergy Solar PV
Geothermal Wind offshore CSP Ocean
TWh
Renewable electricity will continue to rise in Turkey
Generation from hydropower and wind expected to grow strongly
© OECD/IEA 2012
Renewable Energy Financing
© OECD/IEA 2012
Investment in renewable electricity Annual investment topped USD 250 billion in 2011
Most recent quarterly data suggest some slowing
Economic and credit risks weigh on medium-term picture European bank project finance and utility finance more strained
Other sources/structures of finance play increasing role Development banks
New institutional and non-traditional corporate investors
Smaller scale financial innovation for small distributed capacity
Ultimately, cost and availability of financing to depend most on prevailing policy and technology environments
© OECD/IEA 2012
Quarterly investment trend slowing (?)
Macroeconomic and credit concerns
Short-term policy uncertainty in some countries
Still, dip may partly cost reductions; and quarterly data do not account for small distributed capacity
0
5
10
15
20
25
30
35
40
45
50
1Q2004 1Q2005 1Q2006 1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012
USD billionNew investment in renewable electricty capacity
Wind Solar Biomass and waste Geothermal Small hydro Marine
Note: investment volumes include new build asset finance, new investment by VC/PE investors in renewable
energy companies, and new equity raised by renewable energy companies on the public markets. Estimates
for corporate R&D, government R&D and small distributed capacity are not included here. There is no
adjustment for re-invested equity. Data excludes large hydropower.
Source: Bloomberg New Energy Finance (2012).
© OECD/IEA 2012
Conclusions
© OECD/IEA 2012
Key trends As a portfolio of renewable technologies matures, global
renewable power generation is forecast to rise 40% Supported by policy/market frameworks and economic
attractiveness in increasing range of countries and circumstances
Technology cost developments, grid/system integration, cost/availability of financing also weigh as key variables
High level of economic/policy uncertainty in some countries
This projected growth is an acceleration vs previous period Growth is 60% higher over 2011-17 versus 2005-11
Renewable deployment is projected to spread out geographically, with increased activity in emerging markets Deployment spurring economies of scale in some technologies -
virtuous cycle of improved competition and cost reductions
© OECD/IEA 2012
Thank You &
Questions
