IEEJ：October 2017 © IEEJ2017

Renewables 2017
Heymi Bahar
IEEJ, Tokyo – 31 October 2017

IEEJ：October 2017 © IEEJ2017

Context
 Three numbers and three core global energy challenges:
 6.5 million premature deaths each year can be attributed to airpollution
 2.7 degrees is the temperature increase under current climate pledges
 1.2 billion people don’t have access to electricity and universal accessto modern energy remains a distant goal Renewables contribute to meeting all these challenges© IEA 2017

IEEJ：October 2017 © IEEJ2017

2016 – Renewables hitting new records driven by solar PV
Power capacity additions by fuel 2016
Coal

Solar PVRetirements

WindGasRenewables
050

100Additions (GW)

150200

Renewables breaking an all-time record accounting for two thirds of global net capacity additions;
For the first time solar PV becoming the global leader in net capacity growth© IEA 2017

IEEJ：October 2017 © IEEJ2017

Renewable policies spurring more competition
Renewable capacity growth by type of policy defining remuneration levels
100%
90%
80%
Competitively set

70%
60%
50%
40%

Administratively set

30%
20%10%0%2016

2017-222017-22 (excluding China)

Competitive tenders with long-term contracts will drive almost half of new capacity growth globally;
the timing of policy transition in China may accelerate further this trend© IEA 2017

IEEJ：October 2017 © IEEJ2017

Competition driving costs downWind and solar PV average LCOEs and auction results by commissioning date
USD 2016/MWh400

Onshore wind average
auction price

350
300

Solar PV average auction
price

250

Solar PV - utility scale LCOE

200
150

Onshore wind LCOE

1005002008

Japan FIT - PV-utility
2010

2012

2014

2016201820202022

Price discovery through competitive auctions effectively reduces costs along the entire value chain© IEA 2017

IEEJ：October 2017 © IEEJ2017

Offshore wind: bigger turbines, fewer foundations = lower generation costs
Offshore wind average turbine size andfoundation per MW installed

Offshore wind auction results

EUR 2016/MWh

MW

80.60

70.50

60.40

540.30

30.20

20.10

102002

2006
Turbine size0.00
2010
2014
2018
2022
Foundation per MW installed (right axis)

Denmark(contract price)

180
160

140

Netherlands(contract price)

12010080

Germany(contract price)

6040
2002013

2015

2017

2019

2021

2023

2025

UnitedKingdom(contract price)

Offshore wind generation costs to decline by a third on average in just five years© IEA 2017

IEEJ：October 2017 © IEEJ2017

Renewables growth more and more dependent on wind and solar
Renewable electricity capacity growth by technology
Capacity growth (GW)

1 200

90%
80%

1 000

70%

800

60%

Other renewables
Hydropower

50%

600
400

40%

Solar PV

30%

Wind

20%

200
0

Additional accelearated case10%
1999-2004

2005-10

2011-162017-220%% from wind andsolar PV (right axis)

PV enters a new era, becoming the undisputed leader in renewable power capacity growth; growth could be
27% higher led by PV (60%) with enhanced policies addressing regulatory uncertainties and grid integration© IEA 2017

IEEJ：October 2017 © IEEJ2017

China continues to lead growth while India overtakes the EU
Renewable capacity growth by country/region
Capacity growth (GW)
400
350
300
250
200
150
100500ChinaUnited StatesEU

2011-16

IndiaJapanBrazil

Africa & Middle East

2017-22 main case

The forecast is 12% more optimistic vs. last year mainly due to solar PV revisions in China and India© IEA 2017

IEEJ：October 2017 © IEEJ2017

China holds the key to the new solar PV era
China’s share in global solar PV manufacturing and demand
60%
50%
40%

30%
20%
10%0%

2006

2007

2008

2009

2010

% of China in total manufacturing

2011

2012

2013

2014

2015

2016

% of China in global annual additions

China influences the global market volumes and prices of solar PV© IEA 2017

IEEJ：October 2017 © IEEJ2017

Solar PV to lead China’s renewable expansion
China cumulative renewable capacity by technology in 2016 and 2022450400350300250200150100500GW

2016

2022

Hydropower

20162022
WindMain case20162022

Solar PV

2016

2022

Other renewables

Additional in accelerated case

Hydropower growth slows due to social and environmental concerns; wind expansion is stable despite
integration challenges while solar PV growth slowly shifts to distributed generation© IEA 2017

IEEJ：October 2017 © IEEJ2017

India: Policy improvements drive more optimistic outlook
India annual renewable capacity additions
GW
3025201510502016
2017
Hydropower
Solar PV - commercial2018
20192020
Bioenergy
Onshore wind
Solar PV - residential
Accelerated case20212022
Solar PV - utility

UDAY scheme improving financial health of distribution companies and auctions lead to competitiveprices; grid integration, further implementation of RPOs and distributed generation remain challenges© IEA 2017

IEEJ：October 2017 © IEEJ2017

Japan’s FIT revision: an important forecast uncertainty for PV
Japan’s FIT revision impact on solar PV installations
100GWAC

7550

250

CertificatedOperational

Possible cancellation; Possible cancellation; Possible installation
Grid agreement
Project plan

More than half of all previously approved but non-operational PV projects to be cancelled after METI’s
review while the pace of new approvals remain a forecast uncertainty© IEA 2017

IEEJ：October 2017 © IEEJ2017

Solar PV and bioenergy lead Japan’s new renewable additions
Japan renewable capacity additions
5045403530252015
1050GW

2011-16

Hydropower
PV - utility
Other renewables

2017-22

Bioenergy
PV - commercial
Additional in accelerated case

WindPV - residential

PV accounts for 80% of renewable growth with 21 GW expected in the next five years to reach 63 GWby 2022 but if FIT cancellations remain minimal PV capacity could be 16 GW higher© IEA 2017

IEEJ：October 2017 © IEEJ2017

ASEAN’s non-hydro renewable capacity to double by 2022
Cumulative renewable capacity in selected countries in ASEAN in 2016 and 2022
GW
25
20
15
10

50

2016

2022

Indonesia
Hydropower

2016

2022

2016

Thailand
Bioenergy

2022

Viet NamWind

Solar PV2016

2022

Philippines
Geothermal

Energy diversification needs and growing power demand drive renewable capacity growth in ASEAN
but grid integration, policy and regulatory uncertainties remain important challenges© IEA 2017

IEEJ：October 2017 © IEEJ2017

US tax incentives, RPSs and other state-level incentives remain strong drivers
United States annual capacity additions for solar and wind by technology

Annual additions (GW)

16161414121210108866442202015 2016 2017 2018 2019 2020 2021 2022
Wind02015 2016 2017 2018 2019 2020 2021 2022
PV - utility

PV - commercial

PV - residential

Annual additions trend for solar and wind affected by tax phase-out schedules but announced policies
on trade and tax reform remain important forecast uncertainties.
© IEA 2017

IEEJ：October 2017 © IEEJ2017

Europe’s deployment reflects policy transition
Europe renewable capacity growth 2017-22
60GW504030
20100

2011-162017-222011-16

GermanyHydropower

2017-22
FranceWind

2011-162017-22

United Kingdom

Solar PV

Other renewables

Europe’s renewable capacity is forecast to increase by over one-fifth in 2022, led by Germany, France
and the UK, with the pace of growth gradually dictated by auction schedules with fixed volumes.
© IEA 2017

IEEJ：October 2017 © IEEJ2017

SSA and MENA to benefit from wind and PV cost reductions
SSA and MENA renewable energy capacity

SSAGW

8080
Otherrenewables
Solar PV60Wind40MENA

GW6040Hydropower
2020020162017-22 additions Accelerated casemain case02016

2017-22 additions Accelerated casemain caseDemand and diversification drive renewable growth in MENA and sub-Saharan Africa; expansion could
be faster with policy and regulatory clarifications, access to low-cost financing and faster grid upgrades© IEA 2017

IEEJ：October 2017 © IEEJ2017

Renewables closing the gap with coal
Electricity generation by fuelGeneration (TWh)
12 000
10 000Coal

8 000

Natural gas
6 000Nuclear

4 000

Renewables

2 00002002

2006

2010

2014

2018

2022

Renewable generation to expand by over a third with its share increasing from 24% in 2016 to 30% in2022, rapidly closing the gap with coal© IEA 2017

IEEJ：October 2017 © IEEJ2017

Wind and solar transforming power sector - system integration becomes key
VRE share in annual electricity generation 2016-22
Denmark
IrelandSpain
Germany
United Kingdom
Italy
Australia
United States
China
India
BrazilJapan

PV share in 2016

Wind share in 2016

Additional PV sharein 2022
Additional wind sharein 2022
0%

10%

20%

30%

40%50%60%70%

80%% of total generation

More flexible power systems, adapted market design and policies will have to play a key rolein integrating larger shares of wind and solar in a secure and cost-effective way© IEA 2017

IEEJ：October 2017 © IEEJ2017

Asia and Brazil drive biofuels production growth
Forecast conventional biofuel production growth 2017-22 in key countries and regions

7Billion L

65432

10

Ethanol

Biodiesel

United States

Ethanol

Biodiesel

EuropeEthanol

Biodiesel

BrazilEthanol

Biodiesel

Asia

Global conventional biofuel production is forecast to grow for 136 billion L to 159 billion L by 2022;
advanced biofuels output to increase sevenfold but represent only 1% of total biofuel production© IEA 2017

IEEJ：October 2017 © IEEJ2017

Renewables to supply almost a third of EV demand in 2022
Global electricity consumption by EVs and share of renewable consumption in 2016 and forecast for 2022
TWh
400

40%

350

35%

300

30%

250

25%

200

20%

150

15%

100

10%

50

5%

0

2016
EV-2/3 wheels

2022
EV-cars

EV-buses

0%Renewable
share of consumption

China accounts for almost 90% of global EV electricity consumption in 2022, mostly from 2/3 wheelers,
and remains the largest electric car market, followed by Europe and the United States.
© IEA 2017

IEEJ：October 2017 © IEEJ2017

Surging EVs to complement biofuels in renewable transport
Biofuels and electric vehicles contribution to renewable energy consumption in road transport

2022

2016

Biofuels
4%7%
EV 2/3wheelers

Electrc carsand buses

Share of renewables in road transport increases from 4% in 2016 to almost 5% in 2022, with biofuels representing 80% ofthe growth led by Asia & Brazil; EV electricity consumption doubles by 2022, with renewables providing 30% of demand© IEA 2017

IEEJ：October 2017 © IEEJ2017

Renewable heat – slower but steady growth
Global final renewable heat consumption 2015 and 2022
25EJ

20+24%

1510502015
Modern bioenergy

Solar thermal2022
Geothermal

Renewable district heat

Renewable electricity

Bioenergy will dominate growth in absolute terms; electricity accounts for 6% of heat consumption andrenewable electricity used for heat is expected to almost double.
© IEA 2017

IEEJ：October 2017 © IEEJ2017

Progress in renewable heat depends on strong policies
Share of renewables in heat consumption by selected countries% of renewables

25%

European Union

20%

USA

15%
10%

India

5%

China0%2010

20122014

2016

2018

20202022

Renewables share in heat consumption rises from 9% in 2016 to 11% in 2022. China leads absolute growth with newtargets; EU remains the largest renewable heat consumer while total heat demand outpaces renewables growth in India© IEA 2017

IEEJ：October 2017 © IEEJ2017

Concluding remarks
 Renewables rise by 1,000 GW to 2022, equal to half of current total coal capacity Renewables generation exceeds 8,000 TWh by 2022, equal to total electricity
consumption of China, India & Germany combined
 Solar PV enters a new era leading the growth in renewables, driven by a rapid
expansion in deployment & manufacturing capacity in China
 Despite rapid growth in EVs, decarbonisation of transport is a long way offOnly 30% of electricity used by EVs is sourced from renewables



Advanced biofuels require specific incentives to bolster deployment

 Policymakers have to turn their focus to system integration & expanding the use ofrenewables for heating & cooling© IEA 2017

IEEJ：October 2017 © IEEJ2017

Thank youRenewables 2017 Team
Yasmina Abdelilah
Heymi Bahar
Emanuele Bianco
Ute Collier

Karolina Daszkiewicz
Pharoah Le Feuvre
Megan Mercer

Yasuhiro Sakuma
Questions and comments: IEA-REMR@iea.org
Contact :report@tky.ieej.or.jp© IEA 2017