RenewableS
GLOBAL FUTURES REPORT2013

REN21 – Renewable Energy Policy
Network for the 21st Century

ISEP – Institute for Sustainable Energy
Policies

REN21 is a global multi-stakeholder network that connects
a wide range of key actors from governments, internationalorganizations, industry associations, science and academia as
well as civil society to facilitate knowledge exchange, policy
development, and joint action towards a rapid global transition
to renewable energy. REN21 promotes renewable energy tomeet the needs of both industrialized and developing countries
that are driven by climate change, energy security, economic
development, and poverty alleviation.

The Institute for Sustainable Energy Policies (ISEP) is an independent, non-profit research organization located in Tokyo,
Japan. ISEP was founded in 2000, and since then has becomea strong voice and source of innovative research in Japan andworldwide. At its core, ISEP aims to provide the resources andservices necessary for policymaking towards a sustainableenergy future. Three focal areas are promotion of renewableenergy, improvement of energy efficiency, and restructuring
energy markets.

REN21 is committed to providing policy-relevant information
and research-based analysis on renewable energy to decision
makers from both public and private sectors to catalyze policychange. REN21 also provides a platform for interconnection
between multi-stakeholder actors working in the renewableenergy field, and works to bridge existing gaps to increase thedeployment of renewable energy worldwide.

In Japan, ISEP engages in a wide range of programs and activities, including policy recommendations on renewable energy andenergy efficiency to the Japanese government, guidance andadvice to local municipalities, and public events, conferences,and symposia. In addition, ISEP facilitates community-level
renewable energy projects through a "Citizens' Fund" andthrough a cooperating program with the Japanese Ministry ofEnvironment.

REN21 was launched in June 2005 as a result of discussion held
the previous year at the International Conference for Renewable
Energies in Bonn, Germany, and has evolved since then into
an inclusive multi-stakeholder network with the mission toadvance renewable energy worldwide. REN21 is guided by adistinguished Steering Committee of experts engaged in policy,
business, advocacy, research, and economic development. For
more information, see http://www.ren21.net.

Internationally, ISEP has worked with many organizations in
Europe, the United States, and Asia to promote knowledge
exchange and foster international collaboration related tosustainable energy policies. ISEP has played an active andcontributing role with REN21 since its inception in 2005, andco-produced this Renewables Global Futures Report in a uniquepartnership with REN21 during 2011–2012.

foreword
When REN21 was founded in 2004, the future of renewable energy
looked very different than it does today. No one imagined then that
70% of new power capacity added in Europe would be renewable,
which is what happened in 2011. No one imagined that tens of
millions of homes and businesses in several countries would addsolar power on their rooftops so rapidly. No one imagined that China
would go from minor player to global leader in just six years, or thatdeveloping countries as a group would become home to more than
one-third of global wind power capacity. And many scenario projections made in the years prior to 2004 showed levels of renewables
by 2020 that were already exceeded by 2010.
The evolution of policies and markets for renewable energy has
been absolutely remarkable over the past decade. The annual
REN21 Renewables Global Status Report provides evidence of this
rapid development. In 2011, over $260 billion was invested in new
renewable energy capacity, more than for fossil fuel and nuclear
power combined. This is up from just $40 billion in 2004. In 2011,
some 120 countries around the world had policies to support renewable energy; most are now developing countries. In 2004, countries
with support policies numbered about 50, then mostly developed
countries. In 2011, the annual solar photovoltaic (PV) market was
30-fold greater than in 2004. And in many other respects, policies
combined with technology cost reductions have driven markets in
unprecedented ways.
With the trends of the past 10 years behind us, and with the dynamic
nature of renewable energy markets, technologies, and cost reductions continuing, we can look to the future with a very different
perspective than in 2004.
The purpose of this report is to show the range of credible possibilities for the future of renewable energy. It does not present just one
vision of the future, but rather a full and objective range of visions,based on the collective and contemporary thinking of many.
This report combines a unique array of interviews with 170 experts
from around the world, along with over 50 recently publishedscenarios. These interviews and scenarios are blended into a“mosaic” of thinking about the future. Persons interviewed included
industry and finance experts, CEOs and business managers,
researchers and academics, policymakers and parliamentarians,and public advocates and visionaries, among many others. Views ofexisting energy companies are also included.
Of course, the economic difficulties reaching around the globe at theend of 2012 will profoundly affect the future as well, in ways that
we cannot foresee. Yet in focusing on the long term, 2020 through2050, this report encourages us to look at the possibilities that lie
well beyond these difficulties.

The REN21 Renewables Global Futures Report is a sister publication
to the annual REN21 Renewables Global Status Report. By design,
the Status Report covers only the present situation worldwide, notprojections about the future. So the two reports are very complementary. Futures Report author Eric Martinot served as lead author
for the Status Report from 2005 to 2010, and is well grounded in
the present situation. He uses present status as a starting point forvisions of the future, creating an innovative blend of present andfuture.
REN21 intends to use this report to facilitate dialogues and discussions about the future of renewable energy among a wide rangeof stakeholders, and especially with a view to future policymaking.
Although the report is careful not to provide policy recommendations, as that was not its purpose, it offers much insight to thoseformulating such recommendations. A series of “Great Debates”
located throughout the report are a special element, and frame
contemporary issues for discussion and understanding.
This report was made possible through a two-year collaboration
with the Institute for Sustainable Energy Policies (ISEP) and theenterprising efforts of ISEP executive director Tetsunari Iida. On
behalf of the REN21 Steering Committee, I would like to thank both
ISEP and the German government for major financial support, alongwith the support of project co-sponsors. And a heartfelt thanks toreport author Eric Martinot for his hard work over the past two years
to provide such a remarkable synthesis of the world’s thinking on
the future of renewables.
The dedicated staff of the REN21 Secretariat, under the leadershipof Christine Lins, supported the project, especially policy advisor
Lily Riahi, who assisted in all aspects from initial concepts to final
research. And finally, my sincere appreciation goes to all the interviewees, contributors, and reviewers for giving of their time andexpertise.
Anyone who reads this report cannot help but have her/his own
thinking affected by the multitude of viewpoints presented here.
And they will likely discover new, imaginative, and forward-looking
ways to think about the future. I encourage everyone to sharethose views and to engage with others in forging a sustainable andrenewable energy future.
Mohamed El-Ashry
REN21 Chairman
January 2013

Table of contents
Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

01

01 How Much Renewables?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(Total Energy Shares, Electricity Shares, Heating/Cooling Shares, and Transport Shares)

02

02 Integrated Futures: Challenges and Possibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22(Utility Power Grids, Buildings, Industry, and Transport)

03

03 Investment Futures: Flows, Investors, and Business Models. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(Amounts and Sources of Investment and Business Model Possibilities)

04

04 Futures at the Local/City Level: Initiative, Planning and Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38(Urban Planning and Built-Infrastructure, Urban Mobility, and 100% Renewable Communities)

05

05 Futures at the National and EU Levels: Market Growth and Policy Support. . . . . . . . . . . . . . . . . . .  44(Europe, United States, Japan, China, India, and Other Developing Countries)

06

06 Evolution of Technologies, Costs, and Global Market Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52(Wind, Solar PV, Solar Thermal Power (CSP), Biomass, Hydro, Geothermal, Ocean, and Biofuels)
Conclusion: Transformational Change?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Epilogue: Speaking Personally (Views of the Author). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  63

Annex 1: List of Interviews. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Annex 2: List of Scenarios Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Annex 3: Scenarios, Models, and Variables Influencing Renewable Energy Futures. . . . . . . . . . . . . . . . . . . . 69
Annex 4: Great Debates and Topical Discussion Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

REN21 Steering Committee 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  75* Glossary and Basic Energy Concepts* Endnotes* Bibliography and Topical Readings* Topical Discussion Report* Scenario Profiles Report(*) These items are available online at http://www.ren21.net/gfr
Suggested Citation: REN21. 2013. Renewables Global Futures Report (Paris: REN21).
Copyright © 2013 REN21 Renewable Energy Policy Network for the 21st Century and Institutefor Sustainable Energy Policies. All rights reserved.

4

List of Tables
Table 1: Sectoral Shares of Renewable Energy in Recent Global Scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table 2: Electricity Shares of Renewable Energy in Recent National and Regional Scenarios . . . . . . . . . .  20
Table 3: U.S. Renewable Power Capacity by 2030–2035 and 2050 in Recent Scenarios. . . . . . . . . . . . . .  46
Table 4: Global Renewable Power Capacity by 2030 in Recent Scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . .  53
List of Figures
Figure 1: Conservative, Moderate, and High-Renewables Scenarios to 2050. . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 2: National and EU Electricity Shares from Renewables, 2010–2030. . . . . . . . . . . . . . . . . . . . . . . . . 19
Figure 3: Global Share of Transport Fuel to 2050. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Figure 4: Buildings: Integration Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Figure 5: Annual Investment Flows to Renewable Energy in Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
List of Boxes
Box 1: Detractors of Renewable Energy and Future Outlooks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Box 2: Renewable Energy in Global Energy and Climate Scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Box 3: UN “Sustainable Energy for All”: Doubling the Global Renewables Share. . . . . . . . . . . . . . . . . . . . . . . 17
Box 4: Hybrid Fossil Fuel/Renewable Power Plants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Box 5: Utility Business Models for Solar PV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Box 6: Emerging “Smart Cities” Paradigms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Box 7: State-Provincial Markets and Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Box 8: Brazil and South Africa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  50
Box 9: Solar PV for Rural (Off-Grid) Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Great Debates (see also Annex 4)
Great Debate 1: Is Renewable Energy More Expensive Than Conventional Energy?. . . . . . . . . . . . . . . . . . . . 12
Great Debate 2: What Is the Future Role of Policy?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Great Debate 3: Is Energy Storage Necessary for High Levels of Renewables?. . . . . . . . . . . . . . . . . . . . . . . . 25
Great Debate 4: Is the Concept of “Base Load” Meaningful for Future Energy Systems?. . . . . . . . . . . . . . . 25
Great Debate 5: Centralized or Decentralized Power Grids?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Great Debate 6: Will Utilities Lead, Follow, Push Back, or Perish?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
Great Debate 7: What Roles Will Oil and Gas Companies Play?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Great Debate 8: Will Green Power Purchasing Scale Up Like Organic Food Has?. . . . . . . . . . . . . . . . . . . . . . 37
Great Debate 9: How Will Feed-in Tariffs Evolve?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Great Debate 10: What Is the Future of Coal Power in India Relative to Renewables?. . . . . . . . . . . . . . . . . . 49
Great Debate 11: What Are the Pros and Cons of Offshore Wind Power?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Great Debate 12: How Sustainable Can Biofuels Become in the Long Term?. . . . . . . . . . . . . . . . . . . . . . . . .  60
PHOTO CREDITS
Page 29 Modern house, James C Pruitt
Page 30 Electric cars, Yokohama, Japan,
istockphoto
Page 31 Triple biofuels dispenser,
Santa Fe, New Mexico, USA,
courtesy of DOE/NRELPage 39 Williams Building, Boston,
Massachusetts, USA,
courtesy of DOE/NRELPage 40 Rooftop solar hot water systems
in Kunming, Yunnan Province, China,
courtesy of DOE/NRELPage 41 Electric car, Fort Bliss, Texas, USA,
courtesy of DOE/NRELPage 43 Biodiesel bus, Boulder, Colorado,
USA, courtesy of DOE/NRELPage 54 Wind power, istockphoto
Page 55 Offshore wind farm, istockphoto

Page 56 Rooftop solar PV, istockphoto
Page 57 CSP plant, istockphoto
Page 58 Wood pellets, istockphoto
Page 59 Srinagcrarin Dam, Thailand,
istockphoto
Page 59 Ocean energy, Dr. I.J. Stevenson
Page 60 Hop vines and leaves, istockphoto5

AcknowledgmentS
Sponsors and Co-Sponsors
Primary funding for this report was provided by the German Federal Ministry for Economic Cooperation and Development (BMZ)
and the German Federal Ministry for Environment, Nature Protection and Nuclear Safety (BMU). Supplemental funding was also
provided by the American Council on Renewable Energy, the Public Power Corporation of Greece, the South African National Energy
Development Institute, the United Nations Foundation, and the World Future Council.

Report Author and Research Director
Eric Martinot (Institute for Sustainable Energy Policies)

Assistant to the Research Director
A special thanks to Lily Riahi (REN21 Secretariat) for research,
interviews, workshops, and writing on developing countries andcities topics, for collaborating on conceptual aspects of the report,
and for managing REN21 research.
REN21 Research
Fabiani Appavou and Kanika Chawla (REN21 Secretariat)
ISEP Research
Romain Zissler (ISEP and Paris-Dauphine University); Fuyuko Ujiie,
Noriaki Yamashita, and Shota Furuya (ISEP); Mark Morrison and
Lauryn May (Columbia University); Silvia Tanga (Tufts University)
Additional Project Support
Christine Lins (REN21 Secretariat); Virginia Sonntag-O’Brien(Frankfurt School of Management/UNEP Collaborating Center andformerly REN21 Secretariat); Ernesto Macias Galan (Alliance for
Rural Electrification); Steve Sawyer (Global Wind Energy Council);Stefan Schurig (World Future Council); Dan Bilello and Kelli
Anderson (U.S. National Renewable Energy Laboratory); Tim Cronin(American Council on Renewable Energy); Li Junfeng, Ma Lingjuan,
Liu Ying, and Chang Yu (Chinese Renewable Energy Industries
Association); Leena Srivastava and Amit Kumar (TERI–The Energy
and Resources Institute); Ansgar Kiene (African Renewable Energy
Alliance); and Kevin Nassiep and Karen Surridge-Talbot (South
African National Energy Development Institute).

6Interviewees
Thanks to all 170 persons who agreed to be interviewed for thisreport. (See Annex 1.)

Production
REN21 Secretariat, Paris, France
Editing, Design and Layout
Lisa Mastny, editor
weeks.de Werbeagentur GmbH, design
Original Inspiration
Mike Eckhart (Citigroup and formerly ACORE)
Consulting Reviewers
Morgan Bazilian, Gonzalo Bravo, Dolf Gielen, Rainer HinrichsRahlwes, Hans-Jörgen Koch, Thomas Johansson, ChristineLins, Amory Lovins, Hironao Matsubara, Miquel Muñoz, Wilson
Rickerson, Janet Sawin, Martin Schöpe, and Sven Teske.
Reviewers
Adnan Amin, Mohit Anand, Doug Arent, Alan AtKisson, Roger
Ballentine, Pedro Ballesteros Torres, Ron Benioff, Ralph Chapman,
Mike Cleary, Suani Teixeira Coelho, Luis Crespo, David de Jager, Mike
Eckhart, Jose Etcheverry, Paolo Frankl, Lisa Frantzis, Herbert Girardet,
Chris Greacen, Renata Grisoli, Marie-Christine Gröne, Stefan Gsänger,
Alexander Haack, Karin Haara, Winfried Hoffman, Peter Jørgensen,
Vinod Kala, Tarun Kapoor, Ansgar Kiene, Christian Kjaer, Tracy Lane,
Li Junfeng, Franz Marré, Angus McCrone, Pradeep Monga, Fred
Morse, Kevin Nassiep, Wolfgang Palz, Walt Patterson, Terry Penny,
Emiliano Perezagua Gil, Brian Perusse, Klause-Peter Pischke,
Michaela Pulkert, Mark Radka, Anjan Ray, Keywan Riahi, Dima Rifai,
Steve Sawyer, Annette Schou, Stefan Schurig, Henriette Schweizerhof,
Ralph Sims, Gauri Singh, Scott Sklar, Pil-Bae Song and colleagues,
Virginia Sonntag-O’Brien, Leena Srivastava, V Subramanian,
Wim Turkenburg, Maryke van Staden, and Carl Weinberg.

Preface
What is our current thinking about the future of renewable energy?
What is the range of credible possibilities for that future? As suggested by the cover, this report is a “mosaic” of insight into thesequestions. Most significantly, the report does not provide one preferred vision or position, but rather portrays a range of possibilities
and thinking on the subject—compiled into a simple overview. The
report is intended as a tool for education and discussion, and as an
objective framework for thinking about the future.
To answer these questions, the report author and researchers compiled information from a wide variety of sources. These included:(1) interviews with some 170 industry experts, technology experts,
executives, researchers, visionaries, policymakers, finance experts,
and utility managers in 15 countries; (2) interviews with local city
officials and stakeholders in more than 20 cities; (3) discussion
workshops in three developing countries; (4) more than 50 recently
published scenarios by credible international organizations, energy
companies, and research institutes, covering global, regional, andnational long-term futures to 2020–2050; (5) all existing government policy targets for future shares or amounts of renewableenergy to 2020–2050, including regional, national, state, provincial,
and municipal targets; (6) long-term action plans by local/city governments; (7) corporate annual reports and other publications andcommunications by major energy companies; and (8) a variety of
published articles and references, including the REN21 Renewables
2012 Global Status Report.

as possible, and as varied as possible, into one overall description.
As such, the sources of the individual inputs are less important thanthe overall mosaic of information conveyed. Responsibility for thecredibility and content of the report rests solely with the author.
(See Annex 1 for details and a complete list of interviewee names
and affiliations.)
2. Scenario results are presented with reference to the organization authoring the scenario. A full list of scenarios referenced, alongwith 2–4 page “profile” summaries of each scenario, are provided
in the online supplemental report, “Scenario Profiles Report.” (SeeAnnex 2 for a list of all scenarios used in this report. See Annex 3 formore discussion of scenarios and variables influencing renewables
futures.)
3. Additional views of utility companies, oil and gas companies,
and automakers are included with quotes from specific companies
based on public sources such as corporate reports. (Interviews witha large number of these companies were not possible.)
4. Views of developing country experts and companies are sometimes provided in generic form with reference just to country name,reflecting input from discussion workshops and other publishedmaterials. Interviews were conducted in only a limited number ofdeveloping countries: China, India, Morocco, and South Africa.

This report is not intended to be scientific. It does not convey objective surveys or statistical samples. And it does not offer recommendations. It also is not intended as journalism, although it does makeextensive use of interviews. Rather, the report is intended to provide
an overall mosaic of the range of contemporary thinking.

Source information was compiled into a series of 30 “discussion
topics” that break down renewable energy futures into specific areasof subject matter. These topics are cross-referenced in endnotes
throughout the report, and provide additional information, discussion/debate points, and references for the interested reader. These
topics are available in the online supplement, “Topical Discussion
Report.“ (See further links to topics in Annex 4.)

For those unfamiliar with some of the energy terminology andconcepts found in this report, an online supplement is available,“Glossary and Basic Energy Concepts.” Full references for publishedsources used, along with a list of selected readings on renewableenergy technologies, economics, and policy, are available in the
online supplement, “Bibliography and Topical Readings.”

This report portrays a number of “Great Debates” throughout the
text. Such “debates” emerged from expert interviews and publishedmaterial, when opinions diverged significantly and pointed to areasof controversy. In addition to text boxes, 30 such debates are summarized in Annex 4 and are cross-referenced with topics in the
online supplement, “Topical Discussion Report.”

Brevity was a key consideration in writing the report. Therefore,
the complexities and details of many subjects cannot be covered.
Many explanatory notes and references to other publications arecontained in the endnotes. Many other excellent publications cover
renewable energy; of particular note are four recent works, together
comprising more than 4,000 pages of information: IPCC Special
Report on Renewable Energy (2011), GEA Global Energy Assessment(2012), and IEA Energy Technology Perspectives (2012) and World
Energy Outlook (2012).

All information presented in this report is attributable to sources
other than the author himself, although of course the personalviews of the author, and especially his optimism for the future of
renewable energy, will inevitably color the results. However, theauthor took care to be objective, and to separate his own views,
which are presented uniquely in the “Epilogue: Speaking Personally”
at the end of this report.

This report presents data in four main ways:

Report Author
Tokyo, Japan
January 2013

1. Opinions from people interviewed are presented as comingfrom “industry experts,” “finance experts,” “visionaries,” and othersuch generic titles. All interviewees were granted confidentiality toallow a frank exchange of views. The point of the interviews was not
to ascribe credibility to the specific opinions offered, which would
require attribution, but rather to collect as comprehensive a picture

Eric Martinot

7

Executive Summary
The future of renewable energy is fundamentally a choice, not aforegone conclusion given technology and economic trends. The
context for that choice includes the present situation—high levelsof current investment and more than a decade of dramatic market
growth, proliferation of support policies, and cost reductions forrenewable energy. The context also involves a growing diversityof motivations, such as energy security, climate and environment,
industrial and economic development, financial risk mitigation, flexibility, and resilience.

of electric vehicles for grid balancing purposes is enhanced throughsmart-grid interactions and “vehicle-to-grid” (V2G) and “vehicleto-home” (V2H) concepts. Buildings are designed, constructed, andheated/cooled in a different paradigm. The use of renewablesintegrated building materials becomes ubiquitous, “low energy”
or “passive” buildings with high energy efficiency and low heating
requirements become the standard, and many forms of renewable
heating and cooling are used, including solar thermal, geothermal,
and biomass.

Cost comparisons between renewables, fossil fuels, and nuclear,and the role of future policy for all technologies are of course key
elements of the context for future energy choices. However, choices
also depend on how cost comparisons are made, and on changing
paradigms for energy systems and services, mobility, and buildings.

One common attribute of many high-renewables scenarios is a
future carbon emissions constraint. Such high-renewables carbonconstrained scenarios typically model aggressive energy efficiency
improvements, sometimes model carbon capture and storage forfossil fuels, and typically model little or no nuclear power. Such
scenarios may also include some type of carbon price incorporated
into energy markets.

This report paints a mosaic of the possibilities ahead, groundedin the opinions of 170 leading experts and the projections of 50
recently published scenarios.
Many existing energy companies, especially those with a vested
interest in the status quo, project conservative future shares ofrenewable energy and emphasize cost hurdles and variability challenges. These companies continue to believe that the future will bedominated by fossil fuels. Such “conservative” outlooks project theshare of renewable energy in global energy supply remaining below
20% in the future, not much higher than today.
“Moderate” outlooks by experts and scenarios project renewableenergy shares of 30–45% by 2050, including electricity, heating/cooling, and transport. In such outlooks, renewable electricity is
integrated into power grids at high shares (i.e., 50–80%) using avariety of options such as demand-response, balancing with naturalgas, new market structures for balancing services, and some energy
storage. Transport employs modest but growing amounts of biofuels, along with electric vehicles and plug-in hybrids, partly charged
from renewable electricity, and some modal shifts of freight tomore-electric options.
“High renewables” outlooks project 50–95% energy shares by
2050. Such shares were cited by many experts, and are projected
in several scenarios, typically those of public advocacy organizations, but also in recent scenarios of the International Energy
Agency (IEA), which has traditionally published more conservative
projections. High-renewables projections typically show somecombination of significant and continued renewable energy cost
reductions, along with aggressive and long-term support policies
for renewable energy, and major transformations in energy markets
and infrastructure.

8“High renewables” projections show up to 100% shares of justrenewable electricity alone (not counting heating or transport).
These high shares come from a portfolio of renewable technologies,
along with balancing and grid-strengthening measures, energy storage, and evolved electricity market rules. In transport, large sharesof biofuels and electric vehicles are projected, even for freight transport, such as biodiesel and electric trucks and electric rail. The use

According to some views, the challenges of integrating renewableenergy into utility power grids, buildings, transport, and industry are
not fundamentally a technical issue—although a variety of technical issues certainly need to be worked out. Rather, the challenges
relate to practices, policies, institutions, business models, finance,
aggregation, and cross-sectoral linkages, along with changes in
professional practices, education and training.
The finance challenge is key. Many new sources of finance are possible in the future, such as insurance funds, pension funds, and sovereign wealth funds, along with new mechanisms for financial risk
mitigation. And many new business models are possible for local
energy services, utility services, transport, community and cooperative ownership, and rural energy services.
Some projections of annual investment in renewables by 2020 are
US$400–500 billion, up from $260 billion in 2011. Projections of
average annual investment in the coming decades range between$300 billion and $1 trillion. Public support for renewables, in both
direct and indirect forms, estimated by the IEA at about $90 billion
in 2011, is also projected to increase through the 2020s in a growing
number of countries, although it is also projected to remain much
lower than public support for fossil fuels.
Strong visions for the future of renewable energy are proliferating
at the local/city level. Many regions, cities, and towns around theworld are planning renewable energy futures. In addition to a varietyof planning approaches, specific support policies for renewableenergy can be found in hundreds of cities. Such policies can include
targets, subsidies, public investment, innovative financing, bulk procurement, green power purchasing, building codes, transport fuelmandates, municipal utility regulation, and many others.
Local governments and stakeholders are creating new approaches
to urban planning that incorporate renewables, including lowenergy buildings, heating and cooling infrastructure, district heating networks, “smart” approaches to both electricity and heat, andinnovations in urban mobility that integrate renewables. Growing
numbers of regions, cities, towns, and communities are envisioning“100%” renewable energy futures for themselves in the long term.

At the national level, at least 30 countries around the world alreadyhave shares of renewable energy above 20%. Some 120 countries
have various types of policy targets for long-term shares of renewable energy, including a binding 20% target for the European Union
by 2020. Some countries have long-term policy targets that will putthem squarely in the “high renewables” domain by 2030 or 2050,
such as Denmark (100%) and Germany (60%). Outside of Europe, adiverse group of at least 20 other countries target energy shares in
the 2020–2030 time frame that range from 10% to 50%, including Algeria, China, Indonesia, Jamaica, Jordan, Madagascar, Mali,
Mauritius, Samoa, Senegal, South Africa, Thailand, Turkey, Ukraine,and Vietnam.
National renewable energy markets are projected to grow strongly
in the coming decade and beyond, as shown by current policies
and targets, and by scenario and expert projections. Snapshots ofmarkets and policies in Europe, the United States, Japan, China, andIndia show many emerging and possible developments. For example, Europe’s policy targets, national policies, and EU-level directives
are projected to accelerate heating and transport from renewables
through 2020, as well as continued growth in renewable electricity.
In the United States, state-level policies imply continued markets
even with national policy uncertainty. China’s wind power market
has become a world leader, and projections show the continuationof trends, along with growing markets for solar hot water and solar
photovoltaic (PV). India has ambitious targets for solar power, bothgrid-tied and off-grid, along with aggressive projections for wind
power and rural use of biomass.
Projected markets in a much greater number of developing countries on a bigger scale will create a diverse geographic base forrenewables. Beyond existing “BRICS” leaders Brazil, China, andIndia, experts believed that expansion will accelerate through 2020,
particularly in leading developing countries such as Argentina, Chile,
Colombia, Egypt, Ghana, Indonesia, Jordan, Kenya, Mexico, Nigeria,
the Philippines, South Africa, and Thailand. Beyond 2020, renewables markets will become even broader-based in a larger numberof countries, as developing countries take increasing leadership.
Unique opportunities for renewable energy exist in future development, including new electric power infrastructure, diesel generator
replacement, new settlements, new power-market rules, regional
cooperation frameworks, local manufacturing, and rural (off-grid)energy services.
With the dramatic growth of renewable energy markets over the
past decade, along with manufacturing economies of scale, havecome dramatic technology improvements and cost reductions.
Recent growth rates reflect a “take-off” phase that has seen many
renewable energy technologies become mainstream investments
and undergo dramatic advances in performance, cost, and scale.
Hydropower, geothermal, and biomass power and heat are the mostmature, and most projections show continued growth that reflects
their mature status.
Among other renewables, onshore wind power is closest to commercial maturity, with many examples of unsubsidized wind power
already competitive with conventional energy (in specific locations),

and many projections of further technology and cost evolution.
Offshore wind power is more expensive than onshore, but haslarge (although uncertain) potential for cost reductions, not just for
turbines, but also for logistics and long-term operations and maintenance costs.
Solar PV has seen dramatic cost reductions in recent years.
Projections show continued cost reductions, many possible technology advances, and full competitiveness with retail electricity prices
without subsidies—so-called “grid parity”—occurring in many
jurisdictions soon (and already, according to some), and in many
more places around the world by 2020. Solar thermal power (CSP)
still has a large cost-reduction potential, with future opportunities
for bulk power supply, for dedicated applications such as industrial
heat supply and desalination, and for power grid balancing using
multi-hour and multi-day embedded heat storage.
While debates about the sustainability of so-called “first generation” biofuels continue, many projections show large future markets
for “advanced” biofuels from agricultural and forestry wastes, andfrom crops grown on marginal or otherwise-unproductive lands. A
wide variety of new approaches to using biomass is also projected,
such as growing international commodity markets for wood pellets
and bio-heating oil, greater use of biogas in a variety of applications,
new types of “biorefineries” in agriculture and forestry, and greateruse of biomass in heat supply.
This report suggests that future policies will evolve over time andwill remain an essential part of renewable energy futures. Experts
pointed to a range of future policies to support renewable heating
and cooling in buildings. They also pointed to new policies for electric
power systems integration, including market rules for balancing
services, demand response, net metering, consolidation of gridbalancing regions, transmission planning and access, and others.
Experts also pointed to many other policies for transport, industry,and rural energy that will be key to future integration of renewables.
And finance experts pointed to policies that adopt risk-return perspectives in supporting energy investments, rather than traditional
cost-benefit perspectives.
“Transformational change” is implied by many of the scenarios andexpert opinions presented in this report. Experts made clear thatsuch change is not just about technology and infrastructure, but
about models of social, institutional, business, and policy change.
Transformational change is implied by future needs for technicaland institutional restructuring of power systems, by much-lesshomogeneous transport systems with a multitude of fuel types andvehicle types powered by renewables, and by new building designand construction practices and renewables-integrated building
materials. Ultimately, transformation means more than just renewables fitting into existing energy systems, but rather all energy technologies evolving together, with different roles, into transformedenergy systems.

9Introduction
Renewable energy has been in a multi-decade process of becoming“mainstreamed” among businesses, governments, consumers, andutilities. In interviews, industry experts, CEOs, policymakers, andmany others consistently pointed to this ongoing process, someproclaiming that “mainstreaming” was now achieved, especiallyconsidering that the majority of annual global investment in power
generation was now flowing to renewable energy instead of fossil
fuels and nuclear.1
The growth of renewable energy worldwide began in the 1990s
and accelerated greatly in the 2000s. By 2011, the renewableenergy industry was investing $260 billion annually. Many of thoseinterviewed credited this growth to the proliferation of supportive
government policies, to rising costs of conventional energy, andto dramatic reductions in renewable energy technology costs andeconomies of scale in manufacturing. These experts emphasizedthat policies at the national, state, provincial, and local levels haveplayed a major role in driving renewable energy markets, investments, and industry growth over the past two decades.2
Given the dynamic nature of this growth over the past decade, many
past projections of renewable energy have already fallen short. For
example, the International Energy Agency (IEA) in 2000 projected
34 gigawatts (GW) of wind power globally by 2010, while the actuallevel reached was 200 GW. The World Bank in 1996 projected 9 GWof wind power and 0.5 GW of solar PV in China by 2020, while theactual levels reached in 2011, nine years early, were 62 GW of wind
power and 3 GW of solar PV. The history of energy scenarios is fullof similar projections for renewable energy that proved too low bya factor of 10, or were achieved a decade earlier than expected.3
Many of those interviewed pointed to the increasingly diverse
nature of motivations for renewables as part of the mainstreaming process. Cited motivations that will continue to drive renewable energy development in the future included security of energy
supply, autonomy, resilience, jobs, industrial development, financial
profit, portfolio risk mitigation, price risks of fossil fuels, rural energy
access, climate change, environmental sustainability, and nuclear
accidents and wastes.4
When thinking about the future of renewable energy, experts spokeof the broader context and debates about the future of energy
systems overall. This meant thinking about cost comparisons, technology choices, financial risks and returns, future fuel prices, totalenergy demand, levels of energy efficiency achievable, environmental costs, social acceptance, and the overall shape and characteristics of future energy systems.5
Many experts argued that some forms of renewable energy arecompetitive today with conventional energy (fossil fuels andnuclear) in many places, even in the absence of policy support.
Or, that renewables would already be competitive if “costs” were
defined and counted properly, at both technology and system levels.6(For more on these issues, see “Great Debate 1” on page 12, Box 2
on page 16, costs discussions in Chapter 6, and Annexes 3 and 4.)
10

Experts also made clear that support policies and continued cost
reductions remain central. Many of the “high-renewables” scenarios

presented in this report model strong levels of policy support in the
future together with continued cost reductions. Experts asserted
that policymakers will confront a wide range of choices and considerations in the future, in terms of continuing, updating, and retiringexisting renewable energy policies, and creating new ones.7
As renewables become more integrated with existing infrastructure
and markets, policymakers will confront the need for new policies
to achieve these various forms of integration, as noted throughout
this report. Said one industry expert, “the long-term trajectory of
renewables certainly depends on what happens with policies during
the next ten years, and policy continuity beyond that.”8 (See also
“Great Debate 2” on page 13.)
Yet many experts also believed that technology and cost are nolonger the fundamental issue. Many scenarios referenced in thisreport portray high-renewables futures using only currently existing
technologies. Some scenarios also show total energy system costto be roughly equal for renewables-centric and fossil fuel-centriccases. Thus, experts made clear that renewable energy futures also
depend on finance, risk-return profiles, business models, investment lifetimes, infrastructure integration, social and environmental
factors, and a fundamental rethinking of how energy systems aredesigned, operated, and financed.9
In particular, the theme of “integration” was raised consistently
during interviews. “Integration is in our face over the next five toten years,” said one expert, referring to integration of renewables
in utility power grids, buildings, transport, and industry. “Integration
is not just about hardware, but also about how power markets
function,” said another.10 (See Chapters 2 and 3.)Some experts emphasized the “paradigm-changing” nature of theenergy systems transition ahead (actually a “transformation” inthe words of some; see also the report’s Conclusion). “Technicallyspeaking, we are moving from landlines to cell phones,” offered one
expert as an analogy. And along with this transition, “We will see a
lot of new players coming in, with unknown dynamics and unknown
relationships.” Another said: “We can be almost sure that the future
will not be a linear growth line from today.”One senior electric utility manager put it this way: “What’s happeningis that society is changing the design criteria for energy systems.”
This manager noted that, according to the old criteria, conventional
technologies fit centralized, inflexible, and commodity-like systems.
But according to new criteria, system designers will think in termsof flexibility, modularity, multiple levels of service and reliability, anda balance of centralized and decentralized, with energy becoming
more service-like and less commodity-like.11
Experts also emphasized the long time frames associated withenergy system infrastructure and investment. For example, a typicalcoal power plant might last for 40 years. So high shares of renewables in the longer term imply less fossil fuel construction even in
the shorter term. Some developing country experts were concernedthat the coming years will see large amounts of conventional
generation such as coal power added to utility grids in developing
countries. Such “lock-in” of conventional generation could pre-emptlarger future shares of renewables, some said. In achieving highrenewables futures, some scenarios model an immediate slowdown
in construction of conventional power plants before 2020, particularly in developing countries.12
This report brings together industry and expert opinions with published scenarios to map out the range of possibilities for renewableenergy futures, blended into a unique “mosaic” of viewpoints. The
following chapters explain and explore those possibilities, from theconventional-rooted to the highest projections of renewable energy
and transformational change.
The report follows two main lines of thought. Firstly, according toa credible range of contemporary thinking, how much renewableenergy will exist in the future? This question is addressed in Chapter
1 and throughout the report.
Secondly, according to contemporary thinking, including interviews
with 170 experts, what do renewable energy futures look like? In thefollowing chapters, experts and scenarios paint views of the futurethat reflect the following possibilities, choices, and actions:n The challenges of integrating renewables into electric power
grids, buildings, transport, and industry are met by a variety of
stakeholders such as utilities, builders, planners, manufacturers,
energy-service businesses, and many others. (See Chapter 2.)

n Profitable ways to invest in renewable energy from an expanding range of sources using a wide variety of business models
are pursued by energy consumers, energy companies, investors,
banks, funds, intermediaries, and other types of businesses.
(See Chapter 3.)
n At the local level, possibilities for urban planning, built infrastructure, and transport systems that incorporate renewableenergy are acted upon by local governments, community groups,
residents, businesses, and many other types of local stakeholders. (See Chapter 4.)
n At the national (and EU) level, renewable energy markets growin a diversifying and greater number of countries around theworld—driven by supportive renewable energy policies, influenced by policy targets, and supplied by local renewable energy
industries. (See Chapter 5.)n Globally, technology performance and capabilities evolve, costs
decline, and aggregate global markets grow, through the ongoingwork of manufacturers, researchers, project developers, energy
companies, and other market players. (See Chapter 6.)

Box 1 | Detractors of Renewable Energy and Future Outlooks
Renewable energy has historically had many detractors.
“Renewable energy is too expensive,” many have said over theyears. “Increasing amounts of public subsidies will be required
for a long time,” many have also said, or its variation, “renewableenergy is only developing because there is policy support.” And
many have considered renewable energy technologies relatively
immature and requiring further research.
Such views persist today in the energy industry. For example,
ExxonMobil, in its 2012 Outlook for Energy to 2040, said,“advances in technology will be necessary to make [renewable]
fuels more practical and economic … geothermal and solar willremain relatively expensive.” ENI noted, “the technologies presently available only allow for limited production of energy at highprices.” And Chevron said, “because of major technical hurdles—
such as scalability, performance, and costs—as well as marketbased barriers, broader adoption [of renewables] can’t happen
overnight.”
Renewables advocates reply that conventional cost comparisons
are unfair for a host of reasons, including existing public subsidies for fossil fuels and nuclear, the failure to properly incorporate future fuel-price risks in comparisons, and the failure toadequately count environmental costs. (See “Great Debate 1” onnext page.) They also say that some renewable technologies are
already fully competitive, and that for others, policy support will
not be necessary in the long run, as rapid evolution in markets,
technologies, and costs, driven by past policies, are making more
renewable technologies fully competitive more quickly. Most
scenario projections of renewable energy show lower renewables
costs in the coming decade and beyond. (Some do not, however.

ExxonMobil (2012) forecasts that the price of electricity generated from renewables will be higher than the price of conventional electricity even in 2030, with the exception of onshore wind
power.) (See Chapter 6.)
Another major detraction has been the variability of renewables.
Detractors have said that this variability means high costs becauseof the need for energy storage. “Until better technologies become
available for the storage of electricity, wind farms usually require
back-up from conventional forms of base-load power generation,” said CLP Hong Kong Power. However, many utility experts
pointed to a wide range of options to manage the variability of
renewable energy that do not require storage. Scenarios also exist
that show high shares of renewables using mostly other balancing
options. (See utility power grid integration in Chapter 2.)
Detractors have also called renewables “too diffuse” to meet theneeds of highly concentrated energy uses in modern industrial
society. Some have also believed that, “It’s only applicable in somecountries with good renewable resources or lacking in conventional energy resources.” (See Chapters 1 and 5.)
The range of contemporary thinking by experts, industry players,
published scenarios, and many energy companies themselves, as
portrayed throughout this report, is mostly at odds with the above
thinking of detractors. Although it was not the purpose of thisreport to directly refute such viewpoints, one cannot help but see,after reading the entire report, that such viewpoints face diminishing validity in the future.

Source: See Endnote 13 of the report's Introduction.
11

Great Debate 1 | Is Renewable Energy More Expensive Than Conventional Energy?
In energy scenarios, energy systems are mixes of fossil fuels, renewable energy, and nuclear power, combined with models of
future infrastructure (e.g., power grids, buildings, cars, and factories) and levels of future energy demand (accounting for population,
economic growth and structure, and energy efficiency). Many other factors enter the picture, such as future fossil fuel prices,interest rates, policies, and carbon prices. Scenarios typically model least-cost energy mixes, some with constraints like futurecarbon emissions. (See also Annex 3 and Box 2 on page 16.)
In scenarios and professional debates alike, renewable energy is often portrayed as “competing” with conventional energy(fossil fuels and nuclear). And historically, debates about renewable energy versus conventional energy have revolved around costcomparisons between individual technologies, or “cost competitiveness.” However, experts debated how to make proper costcomparisons. Many noted that it depends on what is counted as “costs.” They pointed to three fundamentally different types ofcomparisons, and posed the question, “What is the right way to make economic decisions and comparisons between competing
technology alternatives, such as between renewables and fossil fuels?”
Levelized cost comparisons
Conventional economic comparisons are typically made on the basis of levelized cost (i.e., cents/kilowatt-hour), accounting for direct
investment costs, fuel costs, and operating and maintenance costs, as well as the cost of capital (interest rates). However, experts
pointed out key deficiencies of the conventional approach, which does not account for some factors, in particular:n Fuel and technology subsidies. Fossil fuel subsidies, direct and indirect, “tilt the playing field” toward fossil fuels and amountto large public expenditures. The IEA WEO (2012) estimates that global subsidies to fossil fuels exceeded US$520 billion in 2011,
compared to roughly US$90 billion in policy support for renewable energy. (See Chapter 3.) Some experts called for eliminationof fossil fuel subsidies, or justified equivalent subsidies to renewable energy. Experts also pointed to existing public subsidies tonuclear power, both direct and indirect (i.e., accident liability).
n Environmental costs. Experts were quick to point out that most environmental costs associated with fossil fuels and nuclear are
not included (“internalized”) in conventional economic comparisons. Some experts also pointed out that many emissions regulations targeting conventional power plants are an attempt to partly internalize environmental costs, but they questioned whether
existing regulations go far enough.
n Fossil fuel price risk. Experts voiced arguments about the manner in which the risks of future fossil fuel price swings is
calculated and incorporated into economic comparisons (and who bears those risks). Analyses have been done on the “hedging
premium” necessary to account for natural gas price volatility and uncertainty; for example, one U.S. expert claimed that between
1 and 3 U.S. cents/kWh should be added to the cost of power from natural gas to account for a hedging premium.
Summing up, one European wind industry expert said, “By 2020, we should see real competition in energy markets for wind powerin Europe; by then, investors will be fully exposed to fuel price risk and carbon costs, and existing subsidies for coal, gas, and nuclear
will be greatly reduced.”
Financial risk-return comparisons
Finance experts pointed to “risk-adjusted spread” as the measure they use to compare alternative investments. This involves thedifference between a project’s internal rate of return and the cost of capital (interest rates), adjusted for the risks of that specifictechnology, market, segment, and supplier. Experts noted that this method can provide different results from levelized costcomparisons because of the inclusion of risk. They noted that the risk profiles of conventional fossil fuel plants in many markets
have increased in recent years. And several experts spoke of “portfolio” approaches to energy investments that minimize the total
risk across an entire portfolio of energy assets, similar to financial portfolio management.
Whole-energy-system comparisonsSome experts emphasized that cost comparisons should be made at the level of whole energy systems, not at the level of individual
technologies. For example, they pointed out that “least cost” in an electric power system depends on configuration, market rules,
types of generation, operation patterns, load profiles, and other factors. And in projecting costs of transport-sector scenarios, IEA
ETP (2012) considers total costs—including vehicles, fuel, and fuel/road infrastructure.
As another example, Lovins/RMI (2011) models four alternative electric power systems: a fossil-fuel-centric system similar to what
exists today, a nuclear and clean coal system, a highly distributed system with a high share of renewables, and a high-renewables
and high-efficiency (low energy demand) system. At the system level, the scenario found that all four options cost about the same,
when some technology innovations and many forms of typically uncounted cost-savings are taken into account. (And it found that ahighly distributed system costs about the same as an all-centralized version, but provides better mitigation of outage risks and othereconomic and environmental shocks.)

Notes and discussion: See Annex 4. Source: See Endnote 14 of the report's Introduction.
12

Great Debate 2 | What Is the Future Role of Policy?
Only a few countries had renewable energy support policies in the 1980s and early 1990s, but many more countries, states,
provinces, and cities began to adopt such policies during the period 1995–2005, and especially during the period 2005–2012.
The number of countries with some type of support policy related to renewable energy more than doubled during this latter period,
from an estimated 55 in early 2005 to some 120 by early 2012.
At the national, state, provincial, and local/city levels, policies have played a major role in driving renewable energy markets, investments, and industry growth. However, not all policies have been equally effective, and success has often rested on detailed design
and implementation. Consequently, governments continue to update and revise policies in response to design and implementation
challenges and in response to advances in technologies and market changes.
These targets and support policies will continue to exert a strong influence on national markets in the years and decades ahead.
In the future, national policymakers will confront a wide range of choices and considerations in continuing, updating, and retiringexisting policies, and creating new ones. As renewables become more integrated with existing infrastructure, policymakers will
confront the need for new policies to achieve these various forms of integration.
In interviews, policy and industry experts offered a wide range of views about the role of policy. For example, some foresaw acascade of new policies for renewable heating and cooling to match existing policies for electricity. And many foresaw the evolutionof policies such as feed-in tariffs, but disagreed about when such evolution would need to take place. Scenarios incorporate a wide
variety of policy mechanisms, taken in various combinations over various time frames. Indeed, policy is one of the main drivers inmoderate and high-renewables scenarios.
Common policies that many experts and scenarios project for the future include:n Legally binding targets for renewables
n Electricity market reforms for power generation and combined heat and power (CHP)n Publicly supported research, development, and commercializationn Feed-in tariffs, quotas, and/or other finance-attracting policy regimes
n Subsidies, tax credits and abatements, and other cost-reduction incentives
n Market aggregation policies
n Energy efficiency standards for equipment, vehicles, and materials
n Building codes and standards (both national codes and local policies)n Emissions trading and cap-and-trade schemes for both power and heat supply
n Carbon taxes
n Industrial policies that target renewable energy for jobs and international competitivenessn Social policies that target renewable energy for its social benefitsn Frameworks for energy prices that reflect the full cost of energy, including environmental and social costsn Phase-outs of subsidies for fossil fuels and nuclear power
Experts questioned how strong such policies need to be in the future, or how much political will exists to enact new policies ormaintain existing ones. Experts were also concerned about whether existing policies would continue in specific countries, and somewondered how Japan’s Fukushima accident would affect policies in Japan and elsewhere. And developing country experts noted
many energy and development issues for policymakers in the future. (See Chapter 5.)
Finance experts questioned how future energy policy could become more consistent with financial risk-return perspectives.
They suggested that policymaking will move beyond traditional cost-benefit perspectives, such that in the future, policymakers will
ask, “what are the highest-return and lowest-risk energy options and portfolios, and how do we support those?” rather than thehistorical question of, “what is the cost of renewables compared to the cost of other energy sources?”
Finance experts also wondered about future carbon policies and how such policies would affect renewable energy. Many highrenewables scenarios incorporate some type of carbon policy, such as carbon taxes and emissions trading schemes. ExxonMobil,in its 2012 Outlook for Energy, noted: “Because of emerging policies that will seek to curb emissions by imposing a cost on highercarbon fuels, use of renewable energy … will grow significantly.”
Many experts pointed to policies for power grid integration as a key area for policymaking in the future, as do most scenarios.
For example, the IEA WEO (2010) says that: “policies to facilitate the integration of variable renewables (such as wind power) into
networks are important. Such policies can range from better planning for transmission projects to the development of smart grids,
the creation of demand response mechanisms and the promotion of storage technologies.”

Notes and discussion: See Annex 4. Source: See Endnote 15 of the report's Introduction.
13

RENEWABLES GLOBAL FUTURES REPORT 01 how much renewables?

01

HOW MUCH
RENEWABLES?
Future renewable energy shares are in therange of 15–20% in conservative scenarios,
30–45% in moderate scenarios, and 50–95%
in high-renewables scenarios. Attaining highshares of electricity is considered easiest,high shares of heating/cooling most difficult,and high shares of transport energy mostuncertain.

14

scenario by the Shell oil company that showed 50% of global
energy from renewables by 2050, a figure that shocked manyat the time. The IEA also released a report, Energy to 2050:
Scenarios for a Sustainable Future, that outlined a “Sustainable
Development” scenario with a 35% share from renewables.3
By the mid-2000s, a larger number of scenarios emerged showing
30–50% shares. Prominent among these was the first (2006)
edition of the IEA Energy Technology Perspectives (ETP), which gave
a set of “Accelerated Technology” scenarios for 2050. In these scenarios, an intermediate case showed a 24% share, and the highest
case showed a 30% share. A few years earlier, the German Advisory
Council on Global Change (2004) had published its “Exemplary Path”
scenario that projected a 50% share by 2050. And in 2007, the firstedition of the Energy [R]evolution scenario by Greenpeace and theEuropean Renewable Energy Council (EREC) likewise projected a
50% share by 2050.4

In 2011, about 30 countries were getting 20% or more of their totalenergy from renewables, and some as high as 50%.c (The “totalenergy” metric counts electricity, heating/cooling, and transport.)
Countries in this category include Austria, Brazil, Chile, Denmark,Finland, Iceland, New Zealand, Norway, Peru, the Philippines,
Portugal, Romania, Sweden, Uganda, and Uruguay. The European
Union (EU) as a whole and the United States both stood at 12%.
France, Germany, Italy, Spain, and several other countries wereabove 10%, and Japan was at 6%. Furthermore, in 2011, about
half of all new electric power capacity added worldwide wasrenewable—as much capacity as fossil and nuclear combined. Ininterviews, industry experts emphasized that historical thinking andprojections about renewable energy remaining a “fringe” technology no longer make sense.2

The most recent scenarios, published in 2010–2012, could beviewed in three main groups: “conservative,” “moderate,” and “highrenewables.”5 See Figure 1 for the wide variation between groups.
(See Annex 2 for a list of the recent global, regional, and national
scenarios covered in this report, including full citations corresponding to scenario abbreviations used throughout the text, and see theonline supplement, “Scenario Profiles Report,” for summaries ofthese scenarios.)

During the late 1990s and early 2000s, as renewable energy
started to grow more rapidly than many had predicted, new scenarios emerged that showed much higher long-term shares ofrenewables. Notable among these was a “Sustained Growth”

Conservative scenarios in the 15–20% range can be found published by oil companies, some industry groups, the IEA, and the U.S.
Energy Information Administration (EIA). For example, BP’s Energy
Outlook 2030 (2012) and ExxonMobil’s Outlook for Energy: A View

01

The world gets about 17–18% of its energy from renewables,
including about 9% from “traditional biomass” and about 8% from“modern renewables.”a, b The “traditional” share has been relatively
stable for many years, while the “modern” share has grown rapidly since the late 1990s. During the 1990s, projections of renewable energy that were considered most credible, for example by
the International Energy Agency (IEA), foresaw shares of modern
renewables reaching no more than 5–10% into the far future, given
the policies and technologies existing at the time. As a result of themarket, policy, and technology developments of the past 15 years,
those early projections have already been reached.1

Share of Total Global Energy (Percent)Figure 1: Conservative, Moderate, and High-Renewables Scenarios to 2050
100
90Greenpeace(2012)High renewables
Moderate
Conservative

80
70

GEA (2012)"Efficiency"(highest)

60
50

IEA ETP (2012)
"2DS"

40
30
20

IEA WEO (2012)"New Policies"
ExxonMobil (2012)

10
0
2020

2030

2040

2050

Source: See Annex 2 for full scenario names and citations.
a) These figures are final energy shares; see Endnote 1 for full explanation of the differences between final and primary energy shares and sources of data.
Energy shares in this report are primary energy unless noted. “Traditional biomass” is commonly defined as unprocessed solid biomass, including agricultural residues, animal dung, forest products, and gathered fuel wood, that is typically combusted in stoves, furnaces, or open fires for cooking, heating, andagricultural/industrial processing in rural areas. “Modern renewables” includes all other renewables such as hydro, biomass power and heat, wind, solar, andgeothermal.
b) Many endnotes provide further explanations or clarifications not possible in the text. All data about the current status of renewable energy, typically statistics
for 2011, come from the REN21 Renewables 2012 Global Status Report unless noted.
c) “Total energy” means either primary or final share depending on source; see Endnote 2. Throughout this report, “energy share” means total energy counting
electricity, heating/cooling, and transport.

15

RENEWABLES GLOBAL FUTURES REPORT 01 how much renewables?

Box 2 | Renewable Energy in Global Energy and Climate Scenarios
All energy scenarios portray a mixture of energy supply technologies combined with energy demand growth and energy efficiency
improvements. For example, ExxonMobil (2012) shows 77% fossil
fuels, 15% renewables, and 8% nuclear by 2040. The IEA ETP(2012) “2DS” case shows 46% fossil fuels, 41% renewables, and
12% nuclear by 2050. And Greenpeace (2012) shows 18% fossil
fuels, 82% renewables, and no nuclear by 2050. (For elaborationof information in this box, see Annex 3 and its references.)
Many scenarios that portray carbon mitigation objectives or
results (see below) also split out fossil fuels into sub-shares forfossil fuels with carbon capture and storage (CCS). For example,
in the GEA (2012) “Supply” case, all coal power plants and somenatural gas plants have CCS by 2050.
The degree of energy efficiency improvements and energydemand reductions deemed possible and projected into the
future is a key determinant of the absolute amounts of renewables and the shares attained in scenarios. As many scenarios
note, if total energy demand in the future is reduced substantially,
relative to what it otherwise would be (i.e., a baseline or reference case), then it is easier to meet that reduced demand withhigher shares of renewables. For example, the IEA WEO (2012)“450” case shows 21% less energy demand in 2035 than thereference case. Similarly, IEA ETP (2012) “2DS” shows 26% lessenergy demand in 2050 compared to a reference case, and the
GEA (2012) “Efficiency” case shows 33% less energy demand by
2050 compared to a supply-intensive case.
For scenarios with high levels of energy efficiency, the absoluteincrease in renewable energy can be modest and still provide
high future shares of renewables. For example, Greenpeace,in projecting 40% less energy demand in 2050 due to energy
efficiency (relative to a 2050 reference case), shows that global
energy demand in 2050 is just about the same as energy demand
today. And according to Greenpeace, achieving an 82% share of
renewables in that situation only means a 6-fold increase in theabsolute amount of renewable energy between now and 2050.
In contrast, both IEA WEO (2012) “450” and BP (2012) scenarios
show a roughly 2.3-fold increase in the absolute amount of
renewables by 2030–2035, but they show much lower renewable

to 2040 (2012) both show an under-15% share by 2030–2040.
The EIA (2011) shows 14% by 2035, and the IEA’s World Energy
Outlook (WEO, 2012), in its “New Policies” scenario, shows 18% by2035. Conservative viewpoints by oil and gas companies mirror suchconservative scenarios. These companies continue to make statements such as “fossil fuels will continue to provide the majority of
the world’s energy supplies for decades to come” (Chevron), and“oil’s preeminence in the global energy mix will remain unchallenged
in the foreseeable future” (Total).6

16

Moderate scenarios show long-term renewable energy shares in the
25–40% range. Two IEA examples are the IEA WEO (2012) “450”carbon-stabilization scenario, which shows a 27% renewable energy
share by 2035, and the IEA ETP (2012) “2DS” scenario, which showsenergy shares—15% for BP and 27% for IEA—due to much
lower levels of energy efficiency improvements. And some of the
160 scenarios surveyed by IPCC (2011) show more than a 6-foldincrease in absolute renewables by 2050 but still a lower sharethan Greenpeace.
Carbon mitigation motivations are an explicit driver or goal of many
published scenarios. Such scenarios are typically called “carbonconstrained” or “back-casts,” which means they work backwardfrom some defined future goal or constraint, such as stabilization of annual carbon emissions at a given level, or stabilizationof atmospheric concentration of greenhouse gases. Scenariosthen project what mix of energy technologies and what energy
system characteristics will meet the chosen constraint, within thebounds of economic competitiveness and technological feasibility.
Carbon-constrained scenarios typically show trade-offs between
renewables, energy efficiency, nuclear power, and CCS technologies for fossil fuel plants in achieving carbon reduction goals.
The IPCC (2011) surveyed over 160 climate-mitigation scenarioswith climate goals by 2100, organized into ranges based on thestabilized atmospheric concentration of CO2: one range higher
than 600 parts per million (ppm), three ranges 400–600 ppm,
and one range below 400 ppm. Renewable shares were above
50% for a majority of scenarios around 450 ppm, and up to 77%
for some lower concentrations.
Other examples of carbon goals or constraints in global scenarios
include IEA RETD (2010), which is based on stabilization at 400
ppm by 2100 and shows a 56% share of renewables, and IEA
WEO (2012), which is based on 450 ppm and shows a 27% shareof renewables (along with nuclear and CCS). Other scenarios target emissions reductions rather than stabilization levels, such asGreenpeace (2012), which results in 85% lower energy-related
CO2 emissions by 2050 (relative to 1990 base year), and the rangeof GEA (2012) scenarios, which result in 30–70% lower emissions
by 2050 (relative to 2000 base year).

For more on scenarios and variables that affect renewable energy
futures, see Annex 3.
Source: See Endnote 7 for this chapter.

a 41% share by 2050. The IPCC Special Report on Renewable Energy(2011) synthesized the results of over 160 climate-mitigation scenarios (most from 2009–2010) and found that over half of themproject shares above 27% by 2050—a large group in the “moderate”
category.7 (And many show very high absolute amounts of renewables, too, under high global energy demand scenarios; see Box 2.)
High-renewables scenarios project 50–95% energy shares ofrenewables by 2050. For example, the GEA Global Energy Assessment(2012) shows up to 75% in the highest of its “Efficiency” cases anda median share of 55%. The “ACES” scenario by the IEA multilateralprogram Renewable Energy Technology Deployment (2010) shows
55%. And among the group of 160 scenarios surveyed by the IPCC
(2011), there are a number in the range of 50–80%. The biennial

The credibility of such high-renewables scenarios has increased
over the years, following a long tradition of “100%” scenarios datingback to the 1970s by renewable energy advocates and visionaries.
The difference is that now, given the scope of government policy
targets and market growth in recent years, such high-renewablesscenarios are grounded in growing present-day markets.9 (SeeEndnote 9 for further discussion of “credibility” in the context of
scenarios.)
In interviews, most industry experts believed that the world could
reach at least 30–50% shares of renewables in the long term. (Seealso Box 3 for a recent global goal of 30–35%.) And some experts
advocated for 100% or near-100% futures. European experts citedconsiderably higher shares just for Europe (see following section),with many saying that Europe could attain 50–70% shares.10 (Alsosee following sections for more expert opinions based on individual
sectors.)

National and EU Shares
Many moderate and high-renewables scenarios, both for individual countries and for the EU, exist for energy share by 2050.
For Europe, two high-renewables scenarios are the EREC (2010)
RE-thinking 2050 scenario, which shows almost 100%, and theEuropean Commission (2011) “Energy Roadmap 2050,” whose “High
Renewables” scenario shows 75%. For India, Greenpeace (2012)shows 81%. For China, the Lawrence Berkeley National Laboratory(2011) shows 17–32% by 2050 (including nuclear).11 (For more on
national and EU targets and market projections, see Chapter 5.)
Conservative national and EU scenarios project 10–20% sharesin the longer term. Examples include 11% by 2035 for the UnitedStates (U.S. Department of Energy, Annual Energy Outlook, 2012);
13% by 2030 for Japan (Ministry of Economics, Trade and Industry,“National Energy Plan,” 2010; pre-Fukushima); 20% by 2030 for
China (Xiliang et al., 2010); 13% by 2030 for Asia and the Pacific,
excluding hydro (APEC/ADB, Energy Outlook for Asia and the Pacific,
2009); and 22% by 2030 for Europe (EC, 2009, reference case).12
Beyond such scenarios, national governments are projecting theirenergy supply mix into the future and enacting actual policy targets(goals) for future shares of renewable energy to 2020, 2030, andeven 2050. At least 118 countries had policy targets for renewableenergy by 2011, a dramatic increase from 49 countries in 2005.
The EU as a whole targets 20% by 2020, and all EU members haveindividual targets for 2020 that collectively achieve the 20% target.
Germany, long the renewable energy leader in Europe, and one of
the earliest policy pioneers in the 1990s, has a comprehensive set oftargets that provide for a step-wise progression every decade, from
18% in 2020 to 60% in 2050. Denmark, also an early policy pioneer,is the only EU country to target 100% renewables in the long term
(2050), starting with 35% in 2020.13

Box 3 | UN “Sustainable Energy for All”:
Doubling the Global Renewables Share
In 2012, the United Nations launched a global goal forrenewable energy—a doubling of global energy share fromrenewables by 2030. This goal is an interlinked part of the
UN’s “Sustainable Energy for All” initiative, which also aims todouble the global rate of improvement in energy efficiency andto ensure universal access to modern energy services. Reachingthese goals would mean achieving a roughly 30–35% share of
renewables, and a tripling of modern renewables if the share of
traditional biomass remains constant.

01

Greenpeace Energy [R]evolution scenario, which has become themost widely recognized and thorough projection made by renewable energy advocates, shows 82%.a At the highest end, WWF (2011)shows a 95% share.8

Source: See Endnote 10 for this chapter.

Outside of Europe, a diverse group of at least 20 other countries
target energy shares in the 2020–2030 time frame that range
from 10% to 50%, including Algeria, China, Indonesia, Jamaica,
Jordan, Madagascar, Mali, Mauritius, Samoa, Senegal, South Korea,
Thailand, Turkey, Ukraine, and Vietnam. To give a few specific examples, Algeria targets 37% from solar power (both solar PV and CSPb)
and 3% from wind power by 2030; Indonesia targets individual
renewable technologies that collectively add up to 18% by 2025;
and Ukraine targets 19% by 2030 (compared to 1% in 2010). OECD
countries Australia, Canada, Japan, and the United States do nothave total energy share targets, but do have other types of nationaltargets (see the following sections).14
China targets 15% from renewables and nuclear combined by 2020.
(For comparison, renewables were about 9% and nuclear was about
1% in 2010, and thus this target represents a roughly 50% increase
in renewable energy over 2010 levels.) Chinese experts offered a
range of views about long-term shares beyond 2020. Some envisioned that this share could reach as high as 50%, while others
believed that the 15% reached in 2020 would be the limit, andrenewables would then grow at the same rates as other technologies. Most experts believed that a 35% share by 2040–2050 was
reasonable. Others cited uncertainty about nuclear and shale gas,and stressed that if shale gas were to materialize in large quantities,
this would displace some of the drive and need for renewables.15(See Annex 3 for further discussion of competing fuels.)

Sectoral Shares:
Electricity, Heating/Cooling, and Transport
The previous discussion was focused on shares of total energy.
However, many targets and scenarios also exist that project
renewables separately in individual sectors: electricity, heating/cooling, and transport. These sectoral shares provide greater
insight into the future because the challenges, opportunities, andtechnologies are very different in each sector. In particular, there
was strong expert agreement in interviews that high shares ofelectricity from renewables will be the easiest to attain. Anda) The Greenpeace scenario is a joint publication of Greenpeace International, the European Renewable Energy Council (EREC), and the Global Wind Energy Council(GWEC). GWEC became a co-author in 2012. Throughout this report, this scenario is cited as simply Greenpeace for brevity.
b) See online supplement “Glossary and Basic Energy Concepts” for all technical terminology. PV stands for photovoltaic and CSP stands for concentrating solar
thermal power.

17

RENEWABLES GLOBAL FUTURES REPORT 01 how much renewables?

many countries already have targets for shares of electricity.16(See Chapter 5 for further country-specific information on electricity
projections.)
Heating and cooling from renewables will be much more difficult toattain in large shares, many experts said, and published scenarios
support this view. Although heating and cooling technologies are
fairly well understood and established, policies for heating are notas evolved or widespread as for electricity, and many challenges
persist in terms of integration into the built environment. There arefar fewer scenarios projecting heating and cooling shares relative tothose projecting electricity shares, and only a handful of countries
have policy targets or national-level policies for renewable heating
and cooling.17 (See also buildings integration in Chapter 2 and heating and cooling at the city/local level in Chapter 4.)
Long-term transport shares are the most challenging to project,
and the most uncertain, because the range of possible vehicle
technologies and fuel types in the future is very broad, future
oil prices are uncertain, and technology progress for many elements, from vehicle batteries to advanced biofuels, remains
unpredictable. These factors create uncertainty about what futuretransport systems look like. Fewer scenarios project shares oftransport fuels, and in those that do, projections vary widely.
However, quite a number of countries do have blending mandates and/or targets for future shares of biofuels in transport.18(See also transport integration in Chapter 2 and biofuels in Chapter
6. For more details on current biofuels mandates, see annual editions of the REN21 Renewables Global Status Report.)
Table 1 shows global sectoral-share projections for the years 2030
to 2050 from several scenarios. These include two conservative
scenarios by oil companies, two moderate scenarios by the IEA(WEO “New Policies” and “450”), and four high-renewables scenarios
by IEA ETP, GEA, Greenpeace, and WWF. Beyond these global shares,
examples of country-specific policy targets and projections are
given in the following sections.19
n Electricity Shares
The global share of electricity from renewables in 2011 was 20%. In
the EU, the share was 21%. A number of countries already produce
very high shares of electricity from renewables, mainly from hydropower in most countries. To illustrate the breadth of such countries,
a list of countries with shares above 30% includes: Argentina (31%),
Austria (68%), Brazil (85%), Cameroon (88%), Columbia (70%),
Costa Rica (94%), Croatia (61%), Denmark (32%), El Salvador (65%),
Ethiopia (89%), Finland (30%), Guatemala (63%), Iceland (100%),
Latvia (55%), Madagascar (57%), New Zealand (73%), Norway(96%), Panama (59%), Paraguay (100%), Portugal (53%), Romania(34%), Slovenia (30%), Spain (34%), Sudan (81%), Sweden (55%),
Switzerland (58%), Uganda (54%), and Venezuela (66%).20
At least 48 countries have targets for shares of electricity fromrenewables in the 2020–2030 time frame. Many of these targets
represent a doubling or tripling of current shares. Examples oftargets for 2020 include: Egypt (20%), Ireland (40%), Madagascar(75%), Philippines (40%), and Thailand (14%). A few targets
extend to 2030, such as Kuwait (15%), South Africa (42%), andTunisia (40%). And targets for three countries extend all the way
to 2050: Denmark (100%), Germany (80%), and Malaysia (24%).a
In late 2012, the Japanese government was expected to announcea target for a 30–35% share by 2030, as part of its new postFukushima energy strategy.21

Table 1: Sectoral Shares of Renewable Energy in Recent Global Scenarios
Scenario

By YearElectricity

Heat

Transport

By 2030–2040
ExxonMobil Outlook for Energy: A View to 2040 (2012)

2040

16%

—

—

BP Energy Outlook 2030 (2012)

2030

25%

—

7%

IEA World Energy Outlook (2012) “New Policies”

2035

31%

14%

6%

IEA World Energy Outlook (2012) “450”

2035

48%

19%

14%

Greenpeace (2012) Energy [R]evolution

2030

61%

51%

17%

IEA Energy Technology Perspectives (2012) “2DS”

2050

57%

—

39%

GEA Global Energy Assessment (2012)

2050

62%

—

30%

By 2050IEA Energy Technology Perspectives (2012) “2DS High Renewables”

2050

71%

—

—

Greenpeace (2012) Energy [R]evolution

2050

94%

91%

72%

WWF (2011) Ecofys Energy Scenario

2050

100%

85%

100%

Sources: See Endnote 19 for this chapter and Annex 2.
Notes: Transport shares for IEA WEO, IEA ETP, and BP are only for biofuels; transport share for Greenpeace includes electric vehicles; transportshare for WWF is entirely biofuels. Heat share for WWF is only industry and buildings. Electricity share for BP is estimated from graphics.
Electricity share for GEA is based on the central "Efficiency" case.
18a) Germany's 80% share is reached through step-wise targets for each decade starting with 35% in 2020, and is part of its Energiewend movement tocompletely eliminate fossil fuels and nuclear.

Many states, provinces, and sub-national regions also haveelectricity-share targets. For example, Scotland targets 100% by
2020, Upper Austria 100% by 2030, South Australia 33% by 2020,
and Abu Dhabi 7% by 2020. In the United States, 30 states haveRenewable Portfolio Standard (RPS) policies that mandate future
shares of electricity and thus represent a form of de facto target,
typically in the 10–30% range, and 10 more states have other typesof policy targets. In Canada, four provinces have RPS policies, andanother five have other types of policy/planning. In India, at least
15 states have RPS policies and other states have policy targets.23(See also Box 6 on page 42, and Chapter 4 for city and local targets.)
Many experts during interviews thought that a 40–50% global
electricity share by 2030 was feasible if national policies remain
aggressive. Many European experts believed that Europe would
reach even higher shares of electricity, up to 70–100% in the longterm. Several experts were similarly optimistic about such levels on
a global scale, and one asserted that, “we can achieve a global electricity share of 80% from renewables in the next 20–30 years.”24, b
Table 2 shows electricity shares for Europe, the United States,
Japan, China, India, other Asia, Latin America, and Africa fromrecent scenarios.25 (See also Figure 2 for targets and projections forselected countries.)n Heating and Cooling Shares
Very few countries outside of Europe have policy targets for sharesof heating from renewables. For the EU, national renewable energyplans collectively imply about 20% of heating by 2020. Germany’s
Renewable Energies Heating Law, effective in 2009, requires all new
residential buildings to obtain at least 20% of household heatingand hot water energy from renewables, with an overall goal of 14%
of total heating energy to come from renewables by 2020, including
district heating systems.26

01

Some countries have targets for amounts of annual electricity
generation from renewables rather than shares. For example, by
2020 or 2030, Algeria targets 41 terawatt hours (TWh), Australia targets 45 TWh, and South Korea targets 40 TWh.22 (For power capacity
targets in gigawatts (GW), for selected countries, see Chapter 5.) a

Other targets for share of heating (and cooling) from renewables
by 2020 by EU members include Belgium (12%), Denmark (40%),
France (33%), Greece (20%), Lithuania (39%), Romania (22%),
Spain (19%), and the United Kingdom (12%). Beyond 2020, EU-wide
scenarios for 2030 project 20–25% on the low end (EC 2009),
and 45–55% on the high end (EREC 2010 and Greenpeace 2012).
For 2050, some projections reach 60–100% (EREC 2010 and SEI2009).27 (See also Chapter 4 for city and local targets for heating
and cooling shares, and more on national heating policies and markets in Chapter 5.)
Industry experts offered widely differing opinions about future
heating/cooling shares, and some found it difficult to offer an opinion. Many believed that it would be difficult to go beyond 25–30%
shares in many regions of the world without major transformationsin the energy efficiency of new building designs, along with retrofits
to existing buildings. (See buildings integration in Chapter 2.) Views
on Europe were more optimistic than this level, partly because ofadvanced policies, building designs, and use of biomass, especiallyin northern Europe. The possibilities for higher shares also dependon climatic zone and renewable resource availability, said experts.28

Figure 2: National and EU Electricity Shares from Renewables, 2010–2030

Germany

20

Greenpeace (2011)

EU

30

Actual 2010–2011
Target 2020
Projection for 2030–2035

CREIA (2012)
LBNL (2011)
Greenpeace(2012)40

ISEP (2011)50

METI (2010)60

UCS (2009)70

DOE (2012)

80

Greenpeace(2012)

2050 target

90

2020 target
2030 target

100
EC (2009)
IEA WEO (2012)
EREC (2010)

Share of Electricity (Percent)(2010 Actual, 2020 Targets, and 2030–2035 Projections)100
United States

Japan

China

Egypt

Philippines

BrazilSource: See Endnote 25 for this chapter.
a) TWh units are used for annual amounts of electricity generation; GW units are used for physically existing power capacity. See Table 4 on page 53,
and see the online supplement “Glossary and Basic Energy Concepts” for more on energy units.
b) All quotations from experts interviewed for this report are anonymous; see Annex 1. Other quotations from published sources or energy companies are citedwith the publication author and year or company name, and detailed citations are provided in endnotes.

19

RENEWABLES GLOBAL FUTURES REPORT 01 how much renewables?

Table 2: Electricity Shares of Renewable Energy in Recent National and Regional Scenarios
Country/Region
and Current Share

Scenario

By YearElectricity
Share

Europe(21%)

EC (2009) “Energy Trends 2030”

2030

36%

IEA WEO (2012) “New Policies”

2035

43%

EREC (2010) RE-thinking 2050

2030

65%

SEI (2009) Europe’s Share of the Climate Challenge

2030

75%

EC (2011) “Energy Roadmap 2050” “High Renewables”

2050

97%

EREC (2010) RE-thinking 2050

2050

100%

DOE EIA (2012) Annual Energy Outlook

2035

15%

IEA WEO (2012) “New Policies”

2035

23%

UCS (2009) Clean Energy Blueprint

2030

40%

Greenpeace (2012) “Advanced Revolution”

2030

71%

United States
(11%)

Japan
(10%)

China
(18%)

India (31%)/Other Asia

Latin America

Africa20

Lovins/RMI (2012) Reinventing Fire “Renew”

2050

80%

NREL (2012) Electricity Futures Study

2050

30–90%METI (2010) “National Energy Plan”

2030

20%

ISEP (2011) “Energy Shift”

2030

50%

Greenpeace Japan (2011) Energy [R]evolution

2030

57%

Greenpeace Japan (2011) Energy [R]evolution

2050

85%

ISEP (2011) “Energy Shift”

2050

100%

WWF Japan (2011) “100%”

2050

100%

CREIA (2012) “Study of High-Share Renewable Energy”

2030

25%

BNEF (2012) “Global Renewable Energy Market Outlook”

2030

28%

LBNL (2011) “Accelerated”

2030

29%

Greenpeace (2012) Energy [R]evolution

2030

43%

IEA ETP (2012) “2DS”

2050

50%

Greenpeace (2012) Energy [R]evolution

2050

92%

Greenpeace (2012) Energy [R]evolution (India)

2030

62%

GEA (2012) Global Energy Assessment (South Asia)

2050

27–86%

Greacen (2012) (Thailand)

2030

30%

APEC and ADB (2009) "Energy Outlook for Asia and the Pacific"

2030

16%

World Bank (2011) (Latin America/Caribbean)

2030

54%

Greenpeace (2012) Energy [R]evolution

2030

86%

GEA (2012) Global Energy Assessment

2050

60–100%

Greenpeace (2011) Energy [R]evolution (South Africa only)

2030

50%

IRENA (2012) “Renewables” (all Africa)

2030

50%

IRENA (2012) “Renewables” (all Africa)

2050

73%

Greenpeace (2012) Energy [R]evolution (all Africa)

2050

92%

GEA (2012) Global Energy Assessment (sub-Saharan Africa)

2050

34–92%

Sources: See Annex 2 for full scenario names and citations, and online supplement “Scenario Profiles Report” for scenario summaries.
IEA ETP figure for China is given as "almost 50%." Current shares and other notes from Endnote 25 for this chapter.

n Transport Shares
About 107 billion liters of biofuels were produced globally in 2011,
representing about 3% of global road transport fuel demand.
A handful of national and regional policy targets exist for futuretransport shares from renewables. An EU-wide target of 10% by
2020 includes both sustainable biofuels and electric vehicles. A few
individual EU member countries also have their own transport fueltargets for 2020. Most notable is Sweden, which targets a complete
phase-out of fossil fuels in transport by 2030. The United States has
a Renewable Fuels Standard, which requires 36 billion gallons (135billion liters) of biofuels to be blended annually with other transport fuels by 2022. In addition, in 2011, at least 24 countries and
26 states/provinces around the world had mandates for blending
biofuels in gasoline and/or diesel, typically at 5–10% blends, withsome biodiesel blends up to 20%.30“New Policies” and “450” scenarios are an exception, and projectthat biofuels grow by a factor of 3–6 between 2010 and 2035,
which would mean consumption of roughly 350–700 billion litersof biofuels in 2035. This represents a 6–14% share of transportenergy by 2035. The IEA sees the increases driven by advanced
biofuels in the longer term (which the IEA assumes will becomecommercially available by 2020, although not yet competitive withconventional fuels). More conservatively, BP (2012) projects a 7%
share by 2030.31 (See also biofuels in Chapter 6.a)01

Globally, the IEA WEO (2012) “New Policies” scenario projects
that heat from modern renewables almost doubles from 2010 to2035. The IEA says: “production of heat from modern renewables
continues to be dominated by bioenergy throughout the projection
period … This heat is used mainly by industry (where biomass isused to produce steam, in co-generation and in steel production)
but also by households (primarily for space and water heating).”
The IEA projects that, by 2035, bioenergy use for heating grows
by more than 60%, geothermal heat increases 6-fold, and solar
heating increases more than 3-fold. Greenpeace (2012) shows a
50% share of global heating from renewables by 2030 and a 90%
share by 2050. Greenpeace projects that through 2020, biomass will
represent a large share of renewables heating growth, while beyond
2020, the continued growth of solar collectors, and growing sharesof geothermal heating and heat pumps, will occur.29

For 2050, IEA RETD (2010) projects that advanced biofuels make up
one-third of global transport fuel by 2050. The GEA (2012) “Supply”
case shows about 20% of energy from biofuels, and the “Efficiency”
case shows about 16% from biofuels plus 21% from electricity, fora 37% total share. WWF (2011) projects that the transport sector
will become 100% powered from renewables by 2050, including a
combination of electricity, biofuels, and hydrogen. For Europe alone,
EREC (2010) projects over 80% by 2050, from high shares of bothrenewable electricity and biofuels. SEI (2009) also projects a transition to electric vehicles, such that virtually all passenger vehicles areelectric in Europe by 2050, along with half of all freight vehicles.32(See also transport integration in Chapter 2.)
Industry expert opinions on the future of liquid biofuels for transportation were wide-ranging. Some thought that as much as halfof all transportation fuel by 2050 could come from biofuels, whileothers projected much less.33

Virtually all scenarios project an increase in biofuels, but most projections are quite modest relative to the large gains in electricity
shares in the same scenarios. (See Figure 3.) The IEA WEO (2012)

Percent

Figure 3: Global Share of Transport Fuel to 2050
80
Greenpeace(2012)

70
60
50
40

IEA RETD(2010)"ACES"

30
20
IEA WEO (2012) "450"10BP (2012)

0
2020

2030

2040

2050

Source: See Annex 2 for full scenario names and citations.

a) See biofuels in Chapter 6 for endnotes relating to food security, sustainability, and resources, issues that experts mentioned in connection with biofuels fortransport.

21

RENEWABLES GLOBAL FUTURES REPORT 02 INTEGRATED FUTURES: CHALLENGES AND POSSIBILITIES02

INTEGRATED
FUTURES:CHALLENGESAND POSSIBILITIESMany policymakers, utilities, builders,automakers, and industries recognize thatstronger integration of renewable energy is
the next “frontier.” This means new andflexible ways to manage variability on power
grids, to think about building design andconstruction, to fuel industry, and to provide
mobility with renewable energy.

Experts stressed that integration may often require new policies andplanning approaches, as well as new power market rules (see also
Chapter 5). And they pointed to many local government actions androles for integration at local levels, such as building codes and urban
planning for renewables and electric vehicles (see also Chapter
4). They also pointed to integration of renewable energy into newenergy-service business models and investment mechanisms (seeChapter 3). This chapter looks at future integration in four basic
categories: utility power grids, buildings, industry, and transport.2

Utility Power Grids
Electricity generation from some renewable technologies has awell-known variable nature. This is particularly true for wind powerand solar photovoltaics (PV), and to a lesser extent for solar thermal
power (CSP).b As these sources are integrated into existing power
grids in large quantities, this variable nature becomes one of themain technical challenges. As the share of renewables on power
grids increases, electric utilities must respond to the challenge ofbalancing large shares of variable renewables, in order to maintaingrid balance and stability according to technical and regulatory
tolerances.3, cUtility experts pointed out that managing variability is nothing new:utilities have contended with variability since the dawn of centralized power networks, although mostly in terms of demand variability rather than supply variability. Experts also noted that utilities inmany jurisdictions are already managing variability for large sharesof renewables, for example in California (USA), Denmark, Germany,
Ireland, South Australia, and Spain.4
Many other jurisdictions are facing imminent scale-up of this integration challenge. Said one European expert: “European utilities inparticular are facing trouble right now because they have to invest
in the grids themselves and put increased attention on grid balancing, both at centralized and distributed levels, in order to accommodate renewable energy policy goals and targets to be fulfilled in thenext 5–10 years. And this integration is not just about hardware,
but also about how power markets function.”5
Published sources and interviews show that more than a dozen
different options are available to utilities to balance variable
renewables. These options encompass technical, planning, andmarket-regulatory changes. Utility experts pointed out that some ofthese options are already widely used even without the presence of
renewables. Experts also emphasized that each grid is unique, andsolutions will be diverse.6

Sources point to a range of planning and market-regulatory changes
that will be important in the future, such as: (1) new power market
designs that support greater flexibility; (2) expanded diversity ofresources within geographic grid “balancing areas”; (3) coordination
or merging of balancing areas under central balancing authorities(grid operators); (4) faster balancing response times through market
and operational mechanisms; and (5) new types of system optimizations. One operational change that some utilities are already
implementing is to use power dispatch models that incorporate
day-ahead weather forecasts for wind speeds and solar insolation.7
In conjunction with these options, utility experts pointed to six key
technical-operational measures: controlled curtailment, demandresponse, gas turbines, energy storage, strengthened transmission
capacity and interconnection, and ramping and cycling of conventional power plants. These are described below.8

02

Industry and utility experts consistently pointed to “integration”
as a critical part of reaching the higher levels of renewable energy
portrayed in Chapter 1.a Experts stressed the need to think beyond
renewable energy technologies themselves. Rather, the thinking
about future energy systems needs to focus on how renewable
technologies will be integrated into existing infrastructure: utility
power grids, buildings, industry, and transport.1

n Controlled curtailment of renewables. “Curtailment” is theprevailing strategy today by many utilities to deal with surplus
amounts of wind power during periods of insufficient demand or
un-curtailable generation from conventional power plants. Spain isperhaps the most advanced in this measure, the result of a dedicatedrenewable energy power control center (CECRE) that it establishedin 2006. The power center allows the grid operator Red Eléctrica
to monitor and control, in real time, renewable power generation
around the country. “Necessity was the mother of invention,” said
one Spanish expert in explaining the basis for the center. In 2012,
Spain averaged about 18% of its power generation from wind, withmuch higher peaks during some time periods, including an historicpeak of 61% of total national power output on the morning of April
19, 2012.9
n Demand response. “Demand response” is a phrase that covers
a wide range of actions by utilities and their customers to reduce
power demand at specific times. It includes contracted load curtailment that is controllable by the utility within pre-establishedparameters, and can also include time-of-use-based market prices
to influence consumption decisions. Utility experts emphasized
many possible forms of demand response in the future, particularly
in industry. For example, demand-response in the chemical andmetals industries could be integrated with process engineering,based on allowable ranges of process temperatures. Other examples are water pumping, air conditioning, and freezing, all of which
can offer options for shifting demand when integrated with storage
ranges and limits (i.e., water or thermal).10
Demand response can contribute to peak shaving, contingency
reserves, and regulatory reserves. Indeed, the grid operator for mostof the U.S. state of Texas, ERCOT, now supplies 50% of its regulatory reserves through demand response. Many experts considered
demand-response to be one of the primary and most cost-effective
mechanisms in the future to manage variability, beyond others discussed in this section, and some scenarios likewise model demandresponse as the primary response to variability.11a) Some experts disliked the “integration” concept, and instead preferred to think of coming “transformations” of both local and national energy systems.
See also the report's Conclusion.
b) The variability of CSP plants depends partly on the degree of embedded thermal storage. Some forms of ocean energy are also variable.
c) The term “electric utility” is used generically in this report to denote a variety of companies in the power sector. In many countries, power grid functions havebeen “unbundled” into various classes of power generators, distribution utilities, and transmission system (grid) operators.

23

RENEWABLES GLOBAL FUTURES REPORT 02 INTEGRATED FUTURES: CHALLENGES AND POSSIBILITIESn Gas turbines (peaking and non-peaking). Many scenarios callnatural gas a “bridging” or “transitional” fuel toward high-renewables futures. Experts envisioned growing use of combined-cycle
and simple-cycle gas turbines for balancing grids, particularly forcomplementing wind power. However, experts pointed out thatmost combined-cycle plants that exist today were not planned nor
designed to operate on a variable regime. Constant ramping up
and down creates excessive wear and tear, lowering lifetimes andincreasing maintenance costs. Simple-cycle turbines make betterpeaking plants but are significantly less efficient. Spanish experts
noted that Spain had planned to add simple-cycle turbines on to thegrid for balancing high shares of wind power; however, these plans
were shelved due to underutilization of already-existing combinedcycle gas plants.12
n Strengthened transmission capacity and interconnection.
Utility experts pointed to stronger transmission capacity as animportant means to balance power flows and variable sources
within a region, as well as to deliver renewable generation fromremote locations. The extreme end-point cited by some experts is atheoretical “copper plate” in which unlimited interconnection exists.
However, experts questioned the degree to which networks can be
expanded given environmental and social issues, as well as levels
of investment required (particularly in developing countries). Manyemphasized the difficulties in terms of transmission planning andsocial acceptance of new overhead transmission. Some countries
may turn to buried underground transmission to achieve a stronger
balancing capability while mitigating social issues, although underground transmission is more costly. Denmark has already mandated
that all new transmission be buried underground.13
Experts also pointed to stronger cross-border interconnections totransfer renewable power generated in one country to neighboring countries. They envisioned future possibilities like Bhutan hydroand Sri Lanka wind power flowing to India; Mozambique hydro andNamibia wind power flowing to South Africa; and renewable powertransferred among China, Mongolia, Japan, South Korea, and other
Asian countries through an “Asian super grid.” European experts
envisioned “Desertec” transfers of renewable power from northern
Africa to Europe, as well as a Europe-wide “super grid.”14n Energy storage. Hydropower has been a traditional form oflarge-scale energy storage on power grids, in the form of bothconventional and pumped hydro. (See hydropower in Chapter 6.)
In recent years, grid-tied battery storage has made inroads andshows much promise for the future, according to storage experts.
Until more recently, grid-tied battery storage has been perceived
as expensive and the province mainly of demonstration projects.
However, an increasing number of commercial battery storage
projects today are dispelling that perception, particularly in “niche”
applications that are profitable under current conditions. Some ofthese are for centralized grid support and others are much more
decentralized. Storage experts cited many examples of present-day
commercial storage projects using batteries, as well as an increasing proliferation of distributed batteries at points of customer
end-use.15

24

Beyond hydro and batteries, solar thermal power (CSP) plants alsooffer storage capabilities using embedded thermal storage. Many
currently operating CSP plants typically have 4–8 hours of thermal storage that allows evening operation and can provide firm

dispatchable power for spinning reserve, balancing, and ancillary
services. CSP experts envisioned thermal storage capacity increasing to 24 hours in the longer term. Storage experts also cited otherpossible technologies for the future. From a grid stability perspective, different storage technologies are suited for different balancing time frames, ranging from minutes to hours, and even to days
or weeks.16
n Ramping and cycling of conventional plants. Conventionalhydropower plants (even without pumped storage) are routinely
used to ramp and cycle. For other types of conventional power
plants, however, ramping and cycling on a daily or hourly basis canbe controversial, said experts, who noted that a major paradigm
shift is implied. In particular, existing coal plants can be modified toallow ramping and cycling beyond original design parameters, andoperated to provide more flexibility, although not without additionalcosts in terms of reduced equipment lifetime, higher maintenancecosts, and stability of emissions equipment. Although ramping andcycling costs are not well known, and utilities resist such operation,some utilities have indeed converted coal plants to ramp and cycle.17
Nuclear plants can also ramp and cycle, and in some countries today,
nuclear plant output is routinely cycled on a daily or weekly basis tohandle grid conditions. A 2011 OECD study concluded that, “modern
nuclear plants with light water reactors have strong maneuvering
capabilities [to operate in load following mode].” The report notes
that, “in Germany, load-following became important in recent years
when a large share of intermittent sources of electricity generation (e.g. wind) was introduced to the national mix.” The report also
notes that ramping and cycling costs for most existing nuclear
plants—beyond lost revenue from lower output—are confined tominor increases in maintenance costs.18
Beyond the six measures just described, other balancing options
that are less commonly cited but still considered important by someexperts include: (1) using biomass combined heat and power (CHP)
plants with heat storage embedded in the CHP plants or locally with
end-users, to allow variable operation of the power generation side of
the CHP plant; (2) generating synthetic gas or hydrogen from surplus
renewable electricity for injection into the natural gas grid as a meansof absorbing excess generation on-demand; and (3) aggregating thecharging/discharging of large numbers of electric vehicles throughcentralized “smart grid” mechanisms (see also the following section
on transport integration).19
Over the past decade, there has been much debate and controversy about the level of variability from renewables that power
grids will be able to cost-effectively support and integrate. Muchof this discussion has revolved around what percentage (share) is
a technical “upper limit” to integration, with conservative numbers
such as 10% or 20% often cited. A number of studies show difficulties above these levels without aggressive balancing measures.
But other studies show the potential to reach higher shares with
sufficient use of the balancing measures discussed earlier.20
For example, GEA (2012) concluded that up to 50% shares of variable renewables can be accommodated in most existing systems
with investments in grid flexibility, gas turbines, energy storage,
and demand management. NREL’s (2012) Electricity Futures Study
analyzes a range of U.S. cases from 30% to 90% shares by 2050,
and concludes that it would be possible to attain a high share(80%) from technologies that are commercially available today,Great Debate 3 | Is Energy Storage Necessary for High Levels of Renewables?

Many experts believed that storage will indeed be needed before 2030, but for now, “the immediate need is not that great; we canmanage fine with pumped hydro and gas, even up to high levels,” said one. Another utility expert noted: “storage has to come down
to one-tenth the cost of generation for us to use it in a big way. We really don’t need it as much as we think. It’s cheaper just to
add more generation to compensate for variability than it is to have lots of storage.” And another said, “We don’t need any storage
breakthroughs over the next 15–20 years, so we have something of a ‘15-year reprieve’ from needing storage because we canaccomplish grid stability with other options, foremost among them demand-response.”02

As noted in this chapter, the conventional view persists that high shares of renewable energy will require expensive storage technologies that must await further development. Many experts disputed this view, saying that the wide range of other options to manage
variability mean that high shares are possible without storage. “We think little or no storage will be needed, at least in the UnitedStates,” said one U.S. energy expert, who believed that in most cases, storage can be confined to distributed applications, notably inelectric vehicles (see following section on transport).

Notes and discussion: See Annex 4.

in combination with a more flexible electricity system. In the 80%
cases, variable renewables (solar PV, wind, and ocean) supply 40%
of all U.S. electricity.21
The NREL study incorporates several forms of flexibility, including
demand response, flexibility of conventional fossil fuel power plants,
and energy storage (100–150 GW of storage in the 80% cases).
Attaining higher flexibility would require new grid management
practices, electricity market rules, business models, system planning, and more highly interconnected transmission infrastructure,according to the study. The Lovins/RMI (2011) “Renew” scenario
shows 100 GW of storage. And Greenpeace (2012) projects a high(31%) share of variable renewables by 2030, based on smart grids,
demand-response, and storage.22
The variability of renewables connected to a power grid has historically been a major reason why utilities have considered renewableenergy “inferior” to conventional power generation and resisted its
introduction. That is, the integration challenge is not just technical, but one of utility perception, willingness to change and innovate, and the institutional and regulatory frameworks that govern
utility decisions. The IEA, in its 2011 book Harnessing Variable
Renewables, puts it this way: “The extent of the challenge [of managing variability of renewables] is one of the most disputed aspectsof sustainable-energy supply; detractors claim that variable renewable energy technologies, at high levels of deployment, introduce alevel of uncertainty into the system that makes it just too difficult
to meet the moment-by-moment challenge of balancing supply anddemand for electricity across a power system.”23

Utilities today still consider variability to be a major issue, but somehave taken softer tones in recent years when discussing large
renewables shares: “[Without] electricity storage breakthroughs …
intermittent energy sources will be complementary and not competitors of traditional base load plants,” said EDF. “To increase theproportion of wind and solar energy in our power generation mix
as planned—and to ensure economic viability and supply security
at the same time—we require energy storage and conventional
power plants as a complement,” said E.ON. “Until better technologies become available for the storage of electricity, wind farms usually require back-up from conventional forms of base-load power
generation,” said CLP Hong Kong Power. “[Variable renewables]
mean that additional base load generation (traditional fuel sources)
still must be built and interconnected to protect the system against
unexpected generation swings” from renewables, said AEP.24
Oil companies as well use the variability issue to position renewables
as merely an adjunct to fossil fuels. Said ExxonMobil, “intermittent
sources such as wind and solar … must be integrated with otheron-demand or “dispatchable” sources such as natural gas, coal, andnuclear.”25
These traditional utility statements reflect historic views on thecontinued need for “base load” fossil and nuclear, and the perceived
dependence of renewables on future energy storage technologies.
Given many prevailing utility views that storage technologies areat least 20 years away, these utilities likewise see high levels ofvariable renewables 20 years in the future. In the shorter term,

Great Debate 4 | Is the Concept of “Base Load” Meaningful for Future Energy Systems?
Historically, as noted in this section, utilities have claimed that renewables are not “base load” and are thus inferior to conventional
fossil fuels and nuclear. This claim was disputed by many experts, who pointed out that several different definitions of “base load”
exist, some mutually inconsistent. Experts noted that meanings can be technical, economic, or institutional in nature, and that
according to some meanings, renewables themselves would be defined as “base load.” Thus, experts raised the question of whether
the concept itself was meaningful in discussing future energy systems, or whether other concepts, many of them pointed to in thissection, would better serve future thinking.

Notes and discussion: See Annex 4.
25

RENEWABLES GLOBAL FUTURES REPORT 02 INTEGRATED FUTURES: CHALLENGES AND POSSIBILITIES

many utilities have focused on flexible use of natural gas. And
indeed, gas companies themselves are projecting greater demand
for natural gas in the future, driven by the need to balance variable
renewables.26
Some utilities go further, to more controversial options: “Importantresearch areas include … increasing the flexibility of lignite power
plants,” said Vattenfall. “When solar and wind [output declines],
the base load is best balanced through flexible conventional power
plants capable of ramping up and shutting down again quickly,” said
E.ON.27
Notwithstanding historic and current resistance by utilities to theintegration challenge, it was clear to virtually all industry expertsthat utilities will eventually employ these options in increasingly
creative, extensive, and broad-based ways to manage the variability of renewables and ensure stability. However, the manner,time frames, and extent of employing each of these options is stillquite uncertain, said experts. Many expected to see these measures
employed by utilities and grid operators to increasing degrees in
the future, although perhaps over a relatively long span of 15–25
years. One utility manager from a Danish grid operator foresaw
many flexibility measures implemented in the 2020–2030 timeframe, including demand-response aggregation of many individual
customers, competitive balancing-services markets, and additionof less-variable resources like CSP with embedded storage andoffshore wind. Experts also expected to see new market rules andstructures that recognize and place value on flexibility.28
Interconnection standards and net metering/billing for local distributed renewables (i.e., on customer rooftops) is another key elementof utility-grid integration.a Net metering allows customers to benefit
from retail electricity prices for any locally generated power thatthey supply back to the utility (rather than for self-consumption).
In the absence of net metering, utility-set prices for reverse(customer-to-utility) power sales may be lower than retail electricity rates. An increasing number of utilities around the world are
required by regulation to allow customer net metering for various
sizes of installation.29
Integrating renewable energy at the power plant level with fossil
fuels was another form of utility-grid integration pointed to by someexperts.30 (See Box 4.)
Finally, the broad range of technologies and practices implied by theterm “smart grids” underlies the utility-grid integration challenge.
(See also Chapter 4 for more on smart grids at the local/city level.)
The concept of “smart grids” implies all of the necessary informationand communication technology (ICT) infrastructure to implement
the strategies noted in this section for balancing variable renewables
on utility grids. The concept also implies the necessary ICT for much
more efficient use of energy in buildings, transport, and industry that
goes along with the integration of renewables into these sectors(see following sections). And “smart grids” implies ICT for controlling local micro-grids and combining centralized generation, local
generation, demand management, and energy storage at all levels.31(See also “Great Debate 5” on page 27.)

26

Box 4 | Hybrid Fossil Fuel/
Renewable Power Plants
Another way for renewables to integrate with utility power
grids is through the hybrid combination of fossil fuel andrenewable technologies at the power plant level. Someexperts expressed optimism that such hybrid technologies
would become a significant part of future energy systems,
although few scenario models incorporate such hybrids. Said
one power technology expert, “renewables advocates don’t
like to include fossil fuel technologies when talking about the
future, but hybrid technologies need to be on the radar also.”
Such hybrid technologies have been the subject of researchand development for decades, much of it by the fossil fuelindustry. And commercial applications have been growing,particularly for biomass co-firing with coal or gas in conventional power plants. There were some 100 co-fired plants
operating in Europe, another 40 in the United States, andseveral in Australia and Japan.
Other hybrid technologies cited by experts include: (1) solar
thermal power (CSP) plants integrated with combined-cycle
natural gas turbines; (2) biomass and coal co-gasification
systems to produce synthetic natural gas, with a typical mix
of 20% biomass and 80% coal; (3) wind farms that are integrated with compressed-air energy storage and simple-cycle
natural gas turbines to provide constant-output power froma remote location and thus maximize transmission capacity;and (4) CSP plants that preheat feed water for a coal power
plant to increase its efficiency.

Source: See Endnote 30 for this chapter.

Buildings
Integration of renewable energy into buildings involves several
technologies and forms of infrastructure, including solar heating
and cooling, low-energy or “passive” buildings, district heating
and cooling, small-scale combined heat and power (CHP) plants,
biomass-fueled heaters and stoves, “building-integrated” solar PV,
and thermal energy storage.32
Experts and scenarios underline that a transition to much higher
efficiencies for buildings and heating and cooling equipment isfundamental to the integration of renewables. For example, GEA(2012) models a roughly 50% reduction in heating and cooling energy demand by 2050 through best practices in design,
construction, and technology. This section presents many of
the key technologies and infrastructure that experts and scenarios show will be part of future integration with buildings.33(See also buildings and district heating in Chapter 4, and biomass
technologies in Chapter 6.)a) Net metering allows a two-way flow of electricity between the electricity distribution grid and customers with their own generation system. The customer
pays only for the net electricity delivered from the utility (total consumption minus self-production). A variation that employs two meters with differing tariffs
for purchasing electricity or exporting excess electricity off site is called “net billing.”

Great Debate 5 | Centralized or Decentralized Power Grids?

One expert said, “My intuition tells me we will head strongly to localized grids, with everything a distributed technology. Local
semi-autonomous micro-grids will operate to minimize the balancing needs on the centralized systems, with sophisticated control
systems, although the central grid remains available if needed.” On the contrary, argued another expert, “I just don’t see the case forthe power system becoming like the Internet—the economic case still very much favors centralized power systems, as decentralized
systems are more expensive.”

02

Industry experts, “decentralization advocates,” utility managers, researchers, and other experts interviewed had widely divergent
views on the question of distributed (decentralized) energy systems and the degree to which current centralized power systems
will evolve into more decentralized and distributed versions.a Some believed that centrally managed grids would become relics, andenvisioned networks of smaller, interlinked local grids with renewables and energy storage embedded throughout.

Still others cited specific motivations and conditions that could herald distributed power systems. Constraints to building moretransmission capacity were cited by several experts, who said that lack of transmission could force more distributed systems. For
example, industrial companies that demand high reliability will increasingly find the desired reliability in local power systems rather
than from centralized grids, claimed one expert. Another believed that “resilience” rather than “reliability” would drive the adoptionof distributed systems—and called the resilience of distributed systems an “emergent property” that would counter shocks anddisruptions.
Another expert thought that decentralized power systems would emerge strongly in rural parts of developing countries where
centralized systems do not yet exist—and where adding new centralized systems will be expensive. “Rural electrification throughmini grids will emerge as a major phenomenon … providing electrification at competitive cost to rural consumers,” the expert said.
(See also developing countries in Chapter 5.) And one expert pointed to the coming “logic of mini-grids” at the level of a small island,a remote rural community, an urban neighborhood, or an entire city. “Cities start to look like islands,” the expert said.
On balance, many experts actually had little to say about distributed energy, simply believing that the future could be a balanced
combination of both centralized and distributed, with renewables at all levels and scales. Centralized grids will still be needed toaccommodate large-scale wind farms, including offshore wind, along with CSP and nuclear, they said. “The coming era of distributed
generation will not necessarily seem like a revolution, but simply an evolution of current systems,” one claimed.
Most scenarios do not address the issue of centralized vs. decentralized power systems. The Lovins/RMI (2011) “Transform” andNREL (2012) scenarios for the United States are two exceptions. Lovins/RMI models an electric power system in which fully halfof renewable power capacity takes the form of distributed sources—700 GW of rooftop solar PV and 250 GW of distributed wind
power by 2050—connected through interlinked micro-grids. Both scenarios show an 80% share of renewable electricity by 2050,
but NREL only projects 85 GW of distributed solar PV.
Overall, a picture of power systems of the future emerged as a complex combination of on-site, mini-grid, and centralized grid levels,with renewables and natural gas generation and energy storage at all levels, and with all levels coordinated and interacting,according to a range of requirements for cost, reliability, flexibility, and service.

Notes and discussion: See Annex 4

n Solar Hot Water and Space Heating (“Solar Thermal”)
Solar thermal experts saw the integration of solar hot water andspace heating into buildings as an extremely strong and continuing trend. In 2011, about 50 gigawatts-thermal (GWth) of new solar
collectors were installed globally, enough new capacity to serve atleast 25 million homes. China represents 60% of the global market,
with about 120 GWth of capacity existing at the end of 2010. One
Chinese solar thermal expert expected to see that capacity increase
5-fold by 2030, to at least 450 GWth. Other experts envisioned
solar thermal collectors being integrated into building components
in new and innovative ways. And they pointed to the growing useof solar “combi” systems, which provide both space heating and hot
water, as an important future trend being led by Europe.34

Many experts believed that the highest-growth segment of solar
thermal markets would become large systems for public and institutional buildings (i.e., hospitals, hotels, and schools), multi-family
residences, and commercial buildings. Hundreds of such systems
already exist in Europe and are appearing in other countries. One
example is a recent solar thermal system in Riyadh, Saudi Arabia, for
supplying hot water and heating to a university of 40,000 students.
Installed in 2011, this system became the largest such installationin the world. Chinese experts envisioned large systems integrated
with new commercial buildings. Solar for heating will also be used
increasingly with district heating systems alongside biomass, noted
one Danish expert, who said that, “in Denmark, solar-assisted district heating is booming because of the high price of gas.”35a) Some experts preferred the term “decentralized” rather than “distributed.” One expert preferred to think in terms of “on-site” vs. “remote,” because large-scale
generation resources like wind turbines can also be “distributed” on local grids.

27

RENEWABLES GLOBAL FUTURES REPORT 02 INTEGRATED FUTURES: CHALLENGES AND POSSIBILITIESn Solar Coolinga growing extent, large-scale solar thermal systems. Greenpeacenotes that, “the lack of district heating networks is a severe structuralbarrier to the large scale utilization of geothermal and solar thermalenergy as well as the lack of specific renewable heating policy.”38(See also district heating in Chapter 4.)

Experts pointed to solar cooling as a key future trend. Solar cooling
involves the use of solar thermal systems to drive chillers for air
conditioning and other cooling needs, often integrated with conventional cooling systems. However, experts claimed that solar coolingis most practical for new construction, as it is much easier to integrate with cooling systems when installing in new buildings, rather
than when retrofitting existing buildings. Solar thermal-driven
chillers have traditionally been used only in large buildings, but one
expert suggested that much smaller solar chillers could be designedthat would be competitive in residential homes, if designs could befashioned with much lower costs and lower technical complexity.36

n Low-Energy or “Passive” Buildings
Passive buildings are those with zero or minimal energy requirements for heating and cooling, due to highly insulated building
envelopes with low thermal loss. The concept of a passive building
also encompasses high-efficiency heating equipment, passive solararchitecture for solar gains, solar day-lighting, and embedded thermal storage. European experts noted that passive buildings will be
key to the 2010 EU directive for “nearly” carbon-neutral buildings
by 2018–2020.39

One of the key issues that solar thermal experts discussed was how
to take integrated approaches to managing power, heating, andcooling together in buildings. They explained that in many climates,
the electricity summer peak is driven by cooling, so renewable cooling can help shave electric peaks. And heating and cooling are connected because solar thermal systems that are sized for adequate
heat supply in winter conditions are oversized for summer use, so
excess capacity can be used for cooling in summer.37

With a passive house design, small amounts of renewable heating
and cooling are sufficient to provide normal comfort levels in all seasons. A biomass pellet stove, and/or solar thermal system in suitableclimates, can then provide most of the required heating energy for
all-season comfort, perhaps with a gas boiler or electric heat pumpas back-up. For groups of passive houses clustered close together, ashared solar thermal system or district heating system of relatively
small size can be used as a community energy system because of
the low heat demand. One passive building expert thought thatsuch buildings would emerge as a strong trend by 2020—leading
to a “passive house revolution”—due to a confluence of factors,
including the EU directive, new building products, new thermal storage components, economies of scale in manufacturing, consumerawareness, and integration into architect/engineer training.40

n District Heating
District heating using renewables is already widespread in many
countries. In Northern Europe, many countries make extensive useof biomass in district heating systems. Many industry experts andscenarios project growing use of district heating to efficiently supply
clusters of buildings and whole neighborhoods, fed from biomass(either heat-only or combined heat and power), geothermal, and to

Figure 4: Buildings: Integration Opportunities
4
5

8
2

3

1
1 Two-way power flow with electric grid2 Electric vehicle with battery used by house
3 Home energy management system
4 Solar PV panels
5 Solar thermal panels (heat and hot water)
6 Geothermal heat pump and hot water tank
7 Biomass pellet stove
8 Passive heat storage

28

6
7

Industry

Heat storage integrated with solar heating and cooling was also
seen as a coming trend, including both daily and seasonal storage. Coupled with low-energy buildings and passive solar gains,heat storage allows much higher shares of renewables for heating.
Experts pointed to new storage technologies like phase-changematerials and chemical storage. Said one expert: “phase-changematerials have more potential but will take longer to develop, so
we could see more chemical storage … The main advantage ofphase-change is that it is more compact, and could also be used forseasonal storage.” Thermal storage components can be integrated
into new building designs or retrofitted in existing buildings.41

Integration of renewable energy into industry has been mostly
limited to biomass heat and power in forest and food processing
industries, using waste biomass residues. However, some industry
experts claimed that industrial process heat applications werebooming in other industries in some countries, citing Brazil andIndia. Experts in China also claimed that China was on the verge of arevolution in the use of renewable energy for industry.44
Much of industrial energy demand is for low-temperature heat,
which can be supplied from renewable sources. Most low-temperature heat is today produced from medium-temperature heat, leading to losses. So substitution with renewables can save even moreenergy than the actual renewables input. Conventional solar thermal heating, biomass, and solar thermal power (CSP) will be threeimportant sources of industrial process heat in the future, experts
said. Solar thermal can supply low temperature heat, biomass can
supply low- and medium-temperature heat, and CSP can supply
heat at all levels but especially high-value, high-temperature heat.45

02

n Heat Storage

Many experts and scenarios note the potential for dedicated CSP
plants coupled with industrial facilities, particularly water desalination plants. Said one expert of renewables integrated with industry:“… there is a long road to build trust in the technology throughensuring reliability. This will be a learning process. There are many
new projects now, but most are still experimental. There is a lot of
research, but much of it is confidential and not public.”46

n Building-Integrated Solar PV
A number of solar PV experts expressed the view that as solar PV
reaches grid parity, building construction practices will make muchgreater use of so-called “building integrated” PV (BIPV). (See solar
PV in Chapter 6 for more discussion of grid parity.) In 2010, an
estimated 1.2 GW of the solar PV added was classified as buildingintegrated, or about 7% of the global solar PV market. The idea of
BIPV encompasses several practices, first among them the use ofsolar PV-integrated building materials. Experts said that future BIPV
roofing materials will evolve to higher efficiencies (to 14% from 8%
today), increased reliability, and greater durability.42
One expert also pointed to the aesthetic issue of building-integrated
PV, particularly for commercial buildings. “Solar PV will be seen asa cost of decoration, a cost of making buildings look good, like anyother decorative façade material,” said this expert.
Another expert envisioned that “solar glass” would become a common form of architectural glass, commonly available in architectural
glass catalogs and routinely specified by architects. Since architectural glass shipping costs are relatively high, the integration of BIPV
into architectural glass would become a local practice throughout
the world. That is, local building materials companies would buy
thin-film PV and integrate it on a roll-to-roll basis into building
materials. Other common BIPV practices anticipated by experts
include solar PV as a standard option integrated into prefabricatedhomes, and built-in solar PV connections and wiring when homes
are first built to reduce “balance of system” costs.43

A report by UNIDO (2010), Renewable Energy in Industrial
Applications: An Assessment of the 2050 Potential, was one of thefirst to comprehensively address the issue. The report notes that
renewables play a relatively small role in industry today, but it findsthat over 20% of all final energy use and feedstock in industry in
2050 could come from renewables. This includes contributions frombiomass, solar thermal, and heat pumps by 2050 that together represent almost half of today’s level of industrial energy use from all
sources.47
The UNIDO report emphasizes future biomass use in energy-intensive industries such as pulp/paper, wood, cement, chemicals, andpetrochemicals. The report projects that half of all solar thermalheat will be used in the food industry, with the remainder spreadamong other industries. The report also notes the potential for solar
process cooling, primarily in the food and tobacco industries. The
GEA (2012) “Efficiency” scenario echoes UNIDO’s projection, andshows a similar long-term share of at least 45% of manufacturing
energy from renewables. The IEA WEO (2010) concludes that, “overall, there is significant potential to increase the use of renewables
in industry.”48
The chemical industry also sees the potential to integrate solid
biomass and liquid biofuels as industrial feedstocks. For example,
Dow Chemical said, “while oil and natural gas will continue to be
the predominant chemical feedstocks for the foreseeable future,much of the organic chemistry practiced today can be achieved
using ethanol, seed oils and other biological sources such as algae.”
Huntsman noted: “the global push for renewable fuels is creating
new sources of feedstocks for the chemical industry.… Increasingly,
we believe our feedstocks for making differentiated chemicals will
come from bio-based sources … [including] co-product glycerinfrom biodiesel manufacture, biodiesel itself, vegetable oils, andbio-ethanol. In addition, we are evaluating feedstocks from theagriculture industry to make new and novel bio-based products.”49

29

RENEWABLES GLOBAL FUTURES REPORT 02 INTEGRATED FUTURES: CHALLENGES AND POSSIBILITIESTransport
Integration of renewable energy in road transport has so far
involved the practice of blending 5–20% shares of ethanol andbiodiesel with conventional vehicle fuels, and to a lesser extent,
use of high-blend fuels with 75–100% biofuel shares. (High-blend
ethanol requires specially designed or “flexible fuel” vehicles.) In
total, biofuels supplied the equivalent of about 3% of global roadtransport energy in 2011, so the contribution of renewable energy
to transport remains limited.50
In the future, there are several new vehicle technologies and fueltypes possible that would greatly accelerate integration of renewable energy into transport. These include advanced biofuels, electricvehicles (including plug-in hybrids), hydrogen or methanol fuel-cellvehicles, natural gas vehicles, and compressed air vehicles. In thecases of these new vehicle technologies, renewable energy could
supply a much greater share of transport energy by providing
the electricity needed for electric vehicles, and by using renewables to manufacture hydrogen or synthetic natural gas fuels.51, a(See also transport in Chapter 4 and biofuels in Chapter 6.)
There are ongoing debates about the viability of all of these technologies. Debates about the future of electric vehicles involve battery
cost, performance, and cycle life, and the prospects for continued
battery technology improvement. Debates about hydrogen revolvearound fuel-cell cost and performance, on-board hydrogen storage
technology, and refueling infrastructure. Debates about natural gas
vehicles revolve around refueling infrastructure and the efficiencyof electrolyzer technology necessary for converting renewable electricity into synthetic natural gas.52
Experts offered many diverging views on how serious these issues
were and over what time frames they could be resolved. However,many were of the firm opinion that renewable-powered electricvehicles would eventually dominate transport, some believing that
this would begin to happen before 2020, and others seeing a “takeoff” in the period 2020–2030.53
Key to integration of renewables will be much more efficient, lightweight vehicles that can be powered by smaller amounts of biofuels
or that utilize smaller, lighter batteries or fuel cells for electric vehicles, emphasized some experts. Amory Lovins and Rocky Mountain
Institute, in their book Reinventing Fire (2011), make the case forsuper-efficient vehicles that require only one-quarter to one-tenth
the energy of vehicles today, while still providing conventional size,
performance, safety, and convenience. Key elements of their vision
are lightweight materials, notably carbon fiber (as used today in the
Boeing 787 and Airbus 380), and advanced manufacturing techniques and design that make the transition from metal to carbon
fiber roughly cost-neutral.54
Another key will be electric “micro-vehicles,” including small oneperson or two-person commuter cars and two-wheeled cycles
and scooters. In developing countries today, particularly India
and China, markets for these micro-vehicles are already growing rapidly, noted several experts, who thought that developing country markets for such vehicles could become orders ofmagnitude larger than in developed countries. In general, many
experts pointed to a growing diversity of vehicle types, sizes, and30

purposes, with more differentiated service niches, coupled with awider array of ownership and mobility-service business models.55(See business models in Chapter 3.)
Conservative scenarios, particularly those by oil companies, generally project the continued dominance of fossil fuels in transport,with modest increases in biofuels use, and electric vehicles possibly making inroads by 2030–2040. For example, Shell says: “…
biofuels are expected to play an increasing role in helping tomeet demand for transport fuel. Shell predicts that their share of
the global transport fuel mix will increase from 3% today to 9%
by 2030.” BP says, “Electric vehicles and plug-in hybrids, andthe use of compressed natural gas in transport is likely to grow,but without making a material contribution to total transport
before 2030.” And ExxonMobil “expects to see growth in plug-in
hybrids and electric vehicles, along with compressed natural gas
and liquefied petroleum gas powered vehicles. However, thesewill account for only about 5 percent of the global fleet in 2040,
their growth limited by cost and functionality considerations.”56(See also transport shares in Chapter 1.)
Moderate scenarios project significant use of electric vehicles
after 2025–2030 and much greater use of advanced biofuels.
For example, the IEA WEO (2010) says, “electricity used in electricvehicles or in plug-in hybrids plays an important role in meetingtransport energy demand in all three scenarios, especially in the“450” scenario.” The WEO “450” scenario, the highest-renewablecase, projects a 20 TWh aggregate battery capacity of electric vehicles and plug-in hybrids by 2035, representing hundreds of millions
of vehicles. But the IEA notes that even in this case, only 45% of
the electricity supplied to these vehicles would come from renewables, given the projected share of electricity from renewables in2035. Thus, its “450” scenario puts greater emphasis on advanced
biofuels.57
High-renewables scenarios project up to 50–80% of transport energy from renewables by 2050 from a mixture of electricvehicles (including plug-in hybrids), hydrogen fuel-cell vehicles,
and advanced biofuels. A 70% renewables share is projected in thea) Of course, electric vehicles charging from centralized grids use power from all sources, not just renewables, and the proportion of power from renewables
depends on several technical and operational factors; see Endnote 51 for this chapter.

Visionaries thinking in the long term pointed to the integration oftransport with electric power and renewables as a future “gamechanger.” Such views, dating back to the 1990s, are gaining morewidespread acceptance, they said. These experts envisioned millions
of grid-connected electric vehicles providing grid balancing for variable renewables and controlled through smart grids—the so-called“vehicle-to-grid” (V2G) concept. Some named this aggregation ofpotentially millions of vehicles a “virtual power plant” that could
be controlled by a utility subject to vehicle-owner-set parameters
through “smart grid” technology. Automakers themselves haveincreasingly recognized this potential, and several now incorporate
the notion of V2G into their own future visions, including Mitsubishi
and Toyota.61

02

Greenpeace (2012) scenario, which also shows electricity providing 44% of transport energy by 2050. This shift is accompanied
by reductions in transport energy demand (60% less compared to
the reference case), through shifts to smaller vehicles, reductions
in distances traveled, shifts from road to rail, changes in behavior, and greater use of public transit. The GEA (2012) “Advanced
Transportation” cases project some combination of electricity andhydrogen fuels delivering 20–60% of transport energy by 2050,
depending on levels of overall transport demand by then.58

As part of the V2G paradigm, experts also pointed to electric vehicles integrated with near-zero-energy building technologies, microgrids, and solar PV, in which the electric vehicle becomes part of thebuilding’s energy system and can supply power to the building (i.e.,homes and offices) when parked. This has been called the “doubleuse” concept. “It needs systems thinking,” said one energy storage
expert, referring to the need for automakers, equipment vendors,architects, and building developers to work together.62
Some auto companies seem to be pursuing this vision: for example, Toyota has introduced its “Smart Center” concept for homesthat integrates home energy management, electric vehicles, local
renewables, energy storage, and smart-grid control into a single
system. In this concept, electric vehicle batteries would be “usedas a household power source in emergencies,” said Toyota, which
implies less than full V2G integration. However, in 2012, Toyota alsoannounced actual testing in Japan of “vehicle-to-home” systems(V2H) that allow routine power-sharing between home and vehicle.
Nissan has a similar program for “smart houses” and developmentof local energy storage solutions.63

Automakers also offer many future visions. Almost all of the
top-25 global automakers are developing plug-in hybrids and/or
electric vehicles, and many appeared set to bring them to market
in 2013–2014, following early leaders such as Mitsubishi, Nissan,
BYD, Kia, and GM, which already introduced commercial products in
2009–2012. Mitsubishi envisions that 15–20% of its annual vehicle
sales by 2020 will be electric and plug-in hybrid vehicles (following
the commercial introduction of its iMiEV electric car in 2009).59
Automakers see the growth of electric vehicles tied to the development of local vehicle charging infrastructure. (See Chapter 4.) For
example, Mitsubishi notes that worldwide sales of its iMiEV aredoing best in Norway, where public parking facilities have been
adapted to re-charge electric vehicles. BMW projects that 5–15%
of its new vehicle sales will be fully or partially electric by 2020.
Daimler and BMW both are also developing hydrogen fuel-cell vehicles, and part of their vision is the production of hydrogen vehicle
fuels from renewables. Audi is developing natural gas vehicles, andpart of its vision is the production of synthetic natural gas fromrenewables. Tata is developing an ultra-light fiberglass compressedair car charged by electricity with a range of 300 kilometers. Many
automakers are also introducing flex-fuel vehicles that run on highshare blends of biofuels.60

Beyond road transport, many scenarios show a transition to greateruse of electric rail transport for freight in particular, and also forpassengers. For shipping and aviation, experts believed that thesetransport modes would be much more difficult to integrate withrenewables, and would require the longest time frame. Several
airlines have demonstrated biofuel use in aircraft test flights inrecent years, but experts noted that alternative aviation fuels are
not available in sufficient quantities for use beyond small shares.
Some scenarios ponder a major role for hydrogen in both shipping
and aviation in the long term, but few model such by 2050. Most
scenarios show some role for biofuels in shipping and aviation
by 2050, but typically much less than for road transport. The IEA(2009) found that projections for biofuels in aviation ranged from a
few percent to 30% by 2050.64

31

$
€
RENEWABLES GLOBAL FUTURES REPORT 03 investment futures: flows, investors, and business models

03

INVESTMENT
FUTURES:FLOWS, INVESTORS,AND BUSINESS MODELS
Annual investment in renewable energy
reached US$ 260–290 billion in 2011 and is
projected to increase annually through2020 and well beyond. Innovative new forms
of investment and finance are projectedfrom new sources, such as pension funds
along with new business models for energy
services for households and businesses
and for mobility services.

32

€Global investment in renewable energy reached $260–290 billion
in 2011, up from just $40 billion in 2004.a Solar PV received thelargest share of annual investment, at $127 billion, followed by wind
power at $84 billion. The year 2011 also saw record investment insolar thermal power (CSP) ($20 billion) and offshore wind power($13 billion), offset by modest year-on-year declines in investment
for biomass (to $11 billion in 2011) and biofuels (to $7 billion). Assetfinance for utility-scale projects, biofuel refineries, and distributed
projects together exceeded $160 billion. Globally, in 2011, net
investment in renewable power capacity exceeded investment inall fossil fuel and nuclear power capacity combined. Since 2010, in
fact, renewable energy has received more than half of new powergeneration investment.2
Many finance experts interviewed in 2011 believed that annual
private investment in renewables could exceed $500 billion annuallyby 2020. A few experts cited figures as high as $1 trillion by 2020.
However, while most experts were generally optimistic about theopportunities for scaling up and extending many existing investment sources and mechanisms, some also cautioned that there

will be a clear need in the future to go beyond current financing
sources. These experts asserted that utility balance-sheet finance,bank lending, private equity, and venture capital are only scalable
to a certain point, and would not support $500 billion-plus annual
investment levels; to reach these levels would require the involvement of other institutional investors and new equity sources at both
small and large scales.3
Scenarios also show large investment volumes in the future,
although estimates vary over a wide range. At the low end, theInternational Energy Agency (IEA) World Energy Outlook (2012)
projects a $6.4 trillion total investment in renewable energy during the 23-year period 2012–2035, or an average of $280 billion
per year. This is roughly equivalent to the actual investment volume
in 2011, so the IEA’s projection does not show major growth ininvestment. Technology shares of this $6.4 trillion are led by wind
power (33%), followed by hydro (24%), solar PV (20%), biomass andgeothermal (12% together), and biofuels (6%). Investment in nonOECD countries accounts for fully half of the global total over theperiod 2012–2035, with larger investment shares for hydro relative
to OECD countries, which in turn show larger shares for solar PV.4

03

Finance experts interviewed in 2011 were quite optimistic about
the clean energy sector in general. A typical expression was, “there
is barely any renewable energy market that isn’t getting raised in
discussions for investment.” One expert noted, “investors will reachthe point—and this is happening already—where they perceive
renewable energy as no more risky than ‘standard industrial risk’ forinvestments, equivalent to other standard forms of infrastructure
investment.” Another said that, “by 2020, renewables will be theleading energy class for investment.”1 (Although global economic
uncertainties in 2012 were clouding short-term business andinvestment prospects in many countries, such expert sentiments
should be interpreted in a long-term context.)

Higher scenario projections for future investment better mirror theexpert opinions noted previously. Bloomberg New Energy Finance(2011) projects $400 billion annual investment in renewable energy
capacity by 2020, and $460 billion by 2030, three-quarters of which
will be for wind and solar power. BNEF shows solar PV investment
rising to $150 billion by 2020 and then remaining constant through2030. It also shows wind power investment rising to $140 billion by2020 and then $200 billion by 2030. And BNEF shows investment
in biofuels, biomass, and waste-to-energy reaching $80 billion by2020 and then declining slightly to $70 billion by 2030.5$ €Figure 5: Annual Investment Flows to Renewable Energy in Scenarios
Greenpeace, Average for 2011–2030
GEA, High Renewables by 2050
Expert Opinions of “Reasonable“
BNEF by 2030
BNEF by 2020
IEA WEO, Average for 2012–2035
2011 Actual

0

200

400

600

800

1000

Billion USD

Source: See Endnote 6 for this chapter. See Annex 2 for full scenario names and citations.

Notes: All scenarios are 2012 except BNEF is 2011; figures are for renewable energy capacity additions, although accounting methods andcounted investments vary across sources, see endnote.
a) All dollar amounts in this chapter are in U.S. dollars. Investment data from Bloomberg New Energy Finance and Frankfurt School UNEP Collaborating Center,
2012, Global Trends in Renewable Energy Investment 2012. The numeric range shown here is approximated and reflects different reporting methods that
include or exclude $10 billion for solar hot water and $25 billion for hydro projects larger than 50 MW. (Commonly reported BNEF figures exclude these items.)

33

RENEWABLES GLOBAL FUTURES REPORT 03 investment futures: flows, investors, and business models

GEA (2012) projects up to $800 billion per year by 2050 in its highest-renewables case, but as low as $160 billion per year for somecases with low energy demand and high shares of nuclear powerand carbon capture and storage. At the highest end of the projections, Greenpeace (2012) shows a $20 trillion investment in renewable energy during the 20-year period 2011–2030, or an averageof $1 trillion per year. Greenpeace notes that “a major driving force
for investment in new generation capacity will be the replacementof the ageing fleet of power plants in OECD countries and the build
up of new power plants in developing countries.”6 (See Figure 5 forcomparisons of annual investment flows across scenarios.)
Virtually all finance experts believed that investment and ownershipin renewable energy will come from a broadening array of sources. In
interviews, experts elaborated a wide range of investment sources,
mechanisms, and models. These include insurance companies andpension funds, utilities, oil companies, retail investors, sovereign
wealth funds, banks, public equity, and multilateral finance.7
Several experts pointed to the “unlocking” of pension funds andlarge institutional investors looking for stable, safe, long-term
investments that could be guaranteed on 20-year time frames.
Such “unlocking” could occur by creating ratings for renewableenergy projects (asset finance), by lengthening feed-in tariff validity periods, by extending project design lifetimes, by reducing
construction performance risk, and/or by insuring against windresource variability risk. Another mechanism for unlocking pension
funds is utility-pension fund joint-ownership models, where a utility
finances and builds a project with short-term funds and then sells
a share of the project to pension funds. Dong Energy is one utility
that has piloted this approach with 49% pension-fund ownership.
Beyond pension funds, some experts pointed to sovereign wealthfunds, particularly from oil-exporting countries, as a significant newsource of finance.8
Utility companies themselves do not necessarily share the degreeof optimism suggested by experts and scenarios. Nevertheless,over the past 20 years, utilities around the world have increasingly
embraced renewable energy investments, either on their balance
sheets, through the establishment of subsidiaries, or as investment partners. Hydro has been the preferred renewable investment
by utilities for many decades, but since the 1990s, utilities haveincreasingly invested in wind power, and to a much lesser extent inother renewables. Industry experts pointed to progressive utilities
as bellwethers of future industry-wide investment.9
Several utilities have announced multi-billion dollar investments inrenewables over the next five years, including EDF, E.ON, RWE, andVattenfall, and at least three of these are also targeting 20% ormore shares of renewables by 2020. Some utilities have reached thepoint where over half of their generation assets are already renewable, including Iberdrola and Next Era Energy Resources. And some
utilities have set climate-related targets: for example, Dong Energy
targets a 50% carbon dioxide (CO2) emissions reduction by 2020
and an 85% reduction by 2040 (relative to 2006). Notwithstanding
these examples, many other utilities around the world see renewables as minor parts of their corporate strategies, or have yet toinclude renewables at all.10
Oil and gas companies do not necessarily envision large investments
in renewables either. Many are investing in renewables, but still at
relatively low levels, and indications are few that these companies
plan large investments in the long term. French Total’s announcement in 2009 that it would invest $2 billion in renewables during
2010–2020 was a large leap from the few millions it had been investing prior to that, but this still represents a very small share of thecompany’s investment in oil and gas upstream activities. BP launched
its Alternative Energy business in 2005 and committed to invest $8
billion over 10 years (and had reached almost $7 billion by 2011).11
Oil companies with recent investments and plans in the renewables
arena include BP (wind), Chevron (geothermal, solar, wind), ENI(solar), Petrobras (solar, wind, hydro), Repsol (geothermal, wind),
Sonatrach (solar), Statoil (geothermal, wind), and Total (solar).

Great Debate 6 | Will Utilities Lead, Follow, Push Back, or Perish?
With increasing levels of renewables, the business models and revenue streams of many existing utility and energy companies arecoming under threat or stress. Some companies will lose market share, revenue, and even sufficient profit to continue to exist, many
experts believed. How existing companies (called “incumbents” by some) decide to respond to that stress will shape how renewableenergy develops in the future.
Experts believed that change is under way, and many were confident that utilities would rise to the challenge. One said, “utilities are
already reevaluating their strategies, and this will certainly start to happen in the next 3–5 years, and then we’ll see overall changes
in business models and market structures in the 5–10 year time frame.” Another commented that “utility resistance is declining withnew business models, guided by new policy frameworks,” and believed that, “the mindset of established utilities is changing—they
are recognizing that if they do not change, they can’t continue with business-as-usual.”
However, not all experts were as certain that utilities would lead. Said one, “utility system transformation will emerge within five
years, but led by external stakeholders, not by the utilities themselves.” Another saw the utility leadership question as generational:“To transform the utility systems in the ways required, we are going to have to retire many existing power engineers.”
One finance expert believed that some utilities will come under pressure to lead or perish quite soon, and predicted the “coming
imminent collapse in financing of conventional centralized power generation assets in OECD countries.” This expert explained that“solar PV will destroy the financing, economics, and operations of the traditional centralized networks much faster and with muchlarger negative consequences than anyone is discussing.”

Notes and discussion: See Annex 4.
34

Great Debate 7 | What Roles Will Oil and Gas Companies Play?
Oil companies are a dominant part of our existing energy systems. Will they remain that way in the future? Clearly, oil companies are
positioning themselves as biofuels suppliers in addition to many agriculture-based biofuels producers. Over the past decade, someoil companies have sought to position themselves as future suppliers of hydrogen from renewables, or have tried to get involved insmall-scale solar or biomass projects, but with limited success. Some experts believed that offshore logistics capabilities will
ultimately mean a major role for oil companies in offshore wind power given comparative advantages, but so far few oil companies
have gone beyond expressing interest.

(Many oil companies are also investing in biofuels; see Chapter 2.)
Some companies recognize in particular the comparative advantage
they have for geothermal and offshore wind development. With
environmental goals in mind, oil and gas companies are also investing in carbon capture and storage, natural gas generation, energy
efficiency, and nuclear power—with renewables just one strategy
among many and not necessarily the most important, company
statements suggest.12
Beyond traditional energy companies, recent investment trends byprivate companies in a wide variety of other industries also suggest
future investors. As just one example, Google has invested close to$1 billion in renewable energy projects in recent years.13
Finance experts suggested a variety of other new investment models and mechanisms that could take hold in the future, and cited
examples of such models in use today. General categories include
community ownership (co-ops and community-based utilities),
direct ownership by business and retail power customers, ownership/leasing by equipment vendors themselves, ownership by large
institutional investors such as pension funds, and ownership bynational and local governments.14
Other investment mechanisms cited by experts include default
insurance for utility power-purchase agreements, securitization ofpotentially thousands of rooftop solar PV loans (initiated throughbanks) into securities for long-term investors, and new ways toinvolve aggregates of many small investors in larger renewableenergy projects. One such aggregation model cited is the U.S. modelof master limited partnerships used in the oil and gas industry.15
Most experts foresaw continued markets for the “environmental
attributes” of renewables, such as present-day green certificatesand carbon trading. But experts also foresaw markets for these
attributes expanding and diversifying in ways that are difficult toimagine today. Overall, a common sentiment was that “renewables
will continue to be paid for their environmental attributes.”16
In developing countries, finance experts saw a continued need for
multilateral finance. Said one, "There are still political and geopolitical risks around the world … We’ll see the multilaterals continuing
to fill the gap and provide capital for renewable projects in addition

to banks and institutional funds.” But beyond multilateral finance, anumber of finance experts also pointed to a “broadening and deepening” of finance sources in developing countries. A broader baseof institutions, sources, and types of finance will emerge, including institutional investors, manufacturers, project developers, andother forms of foreign direct investment. And more finance will go
to countries beyond the current major recipients (i.e., Brazil, India,
and China), to include those countries currently considered “secondtier” and “third-tier.”1703

Notes and discussion: See Annex 4.

The often-cited risk of utility power-purchase agreements not
being honored (also called “power off-take risk) will continue to be amajor concern, said one expert. But policy learning, and finding new
ways to reduce investment risks, including new types of structured
investment funds and guarantee schemes, will be crucial to thisdeepening. Experts foresaw guarantee funds for power-purchaseagreements, construction risk mitigation, and higher levels of equityfrom local investors. One expert projected that developing-country
governments themselves would provide public equity in renewableenergy projects, to share risks and leverage private finance.18
As noted in this report’s introduction, some 120 countries aroundthe world have some type of policy and/or target to promoterenewable energy, and the number of policies keeps growing year
by year. The IEA estimates that government support for investments
in renewables will continue to increase in the coming decades
through a variety of policy mechanisms. IEA WEO (2012) estimatesthat government support for renewables amounted to almost$90 billion worldwide in 2011.a This support grows to $240 billion
annually by 2035 in the “New Policies” scenario.19
The IEA estimates that EU support for renewables will peak in the
2020s at around $70 billion annually and remain above $30 billion
through 2035. U.S. government support will peak somewhat later,
at about $60 billion before 2030 (compared to $15 billion in 2009).
Chinese government support will exceed $30 billion during the late
2020s (compared to $3 billion in 2009), and government support
in India will similarly reach almost $30 billion (although later—by2035).20a) “Government support” from policies is both direct and indirect, meaning that it goes beyond direct payments from government budgets. The IEA uses the term“subsidies” in a broader sense to mean “government support,” where costs are met “either through government budgets (for example, tax credits) or by endusers collectively." The IEA defines direct subsidies as “tax credits for production and investment, price premiums and preferential buy-back rates (or feed-in
tariffs).” Indirect subsidies “arise from mandates, quotas and portfolio standards, which support the uptake of renewables at higher costs to the economy or
the consumer.” (IEA WEO, 2012, p. 233)

35

RENEWABLES GLOBAL FUTURES REPORT 03 investment futures: flows, investors, and business models

Business Model Possibilities
Interviews revealed many interesting possibilities for business models
in the future that could channel the future investment flows suggested in the previous section. Of course, private companies havebeen developing new models for renewable energy business andinvestment for many years already. In the coming years and decades,
companies will continue to be successful with these models, while
many new models will also emerge. It is difficult, of course, to saywhich models will succeed in the long term. In developing countries,
experts pointed to demographics as an important factor, and cited
innovative social and economic ideas by the younger generation as asetting within which renewable energy would grow. Across all countries, a selection of interesting possibilities follows, some of which
are already being tested or used in commercial practice today.21(See endnotes for specific examples of some of these models.)n Third-Party Energy Services. Third parties and utility companies
will install, own, and operate solar PV on behalf of residents or building
owners. A variety of companies will offer leasing and vendor-financeoptions. Third parties will bundle renewables investments with energy
efficiency improvements, high-efficiency end-use equipment, and/or local energy storage for a true “energy services” business. Somecompanies will specialize in micro-grids that serve multiple buildings
with electricity and/or heat, and offer a variety of models such as likeenergy-service, leasing, or co-op ownership. And as energy supply
becomes more capital-equipment based at a local level, rather thancommodity-based at a centralized level, companies will begin to offer
households per-kilowatt capacity-based pricing plans (perhaps withkilowatt-hour (kWh) caps or time-of-day restrictions), beyond traditional per-kWh pricing—akin to the transition of mobile phone plansfrom per-minute billing to fixed billing plans with limits.22
n Mobility Services. Electric vehicle leasing companies will offer
pricing plans based on the distance driven, including energy andbattery costs. Fleet rental companies will provide short-term vehicle
use in concentrated urban areas through smart-cards and membership, with vehicles charged through company-owned distributed
renewable generation. Electric vehicles will become integrated
with household-based renewable energy systems and packaged
together with such systems. Electric vehicle “power integrator”
companies will sell large blocks of energy storage and controllable charging (demand-response) to utilities, and contract withthousands of vehicle owners for intermediated charging control.
Automakers will integrate renewable energy into their businessby becoming producers of renewables-derived fuels, for example
synthetic natural gas for use in natural gas vehicles. Automakers
will also partner with local governments and property developers tobuild electric-vehicle charging infrastructure.23
n Property-Assessed Clean Energy Loans. Cities will borrowfunds from investors and lend these funds directly to local property
owners for additions of renewable energy and for energy efficiency
improvements. Owners will repay the loans over long time frames,
for example 20 years, through added amounts on local property tax
assessments. A number of cities in the United States are alreadypiloting this model (called “PACE”) for both residential and commercial properties. One unique feature is that loans can be transferred
to new owners if properties are sold, unlike conventional mortgage
finance.24
36

n Utility Business Models. Utilities will offer on-the-bill financing
for end-user investments. Utilities will use smart metering to create new consumer power-pricing models that offer rates based ontime of use, capacity, reliability, and degree of curtailment allowed,
among other characteristics. Utilities will tailor pricing models to thekinds of local-power infrastructure present on the consumer side.
Local-scale utility companies, some based on the co-op model, will
provide electricity and/or heating on the scale of a community, district, or small city, with most of their generation coming from local
renewable sources. Emerging grid-based energy storage providers
will sell energy storage services to utilities, end-users, or renewablegenerators, either through existing ancillary services markets or
through bilateral contracts.25
n Community and Cooperative Ownership. Local communities
and cooperatives will invest in renewable energy systems underjoint-ownership models that also reflect new social models forenergy services. This has started already in some parts of Europe,
Japan, and the United States, and experts foresaw much wider useof community and cooperative models in the future. One “local
power” expert cited examples of communities that have invested
in local wind turbines, and have come to view wind power “as anormal part of life, not alien … especially if local inhabitants are partowners and see benefits from turbines locally.” Cooperative models
for multi-family or multi-building residential heat supply will also
proliferate in the future, said experts.26
n Industry and Retailer Involvement. Industrial firms and retailers whose businesses depend on high levels of reliability will sign
long-term power-purchase agreements with renewable energy
generation companies for guaranteed availability and stable longterm pricing. These firms will also continue to purchase increasing quantities of green power products offered by a growing arrayof competing providers (in those jurisdictions where retail powercompetition is allowed). In retail products, a range of consumerlabels and certifications will indicate the origin of embedded energy
in products, such as the “WindMade” label indicating renewableenergy content.27
n Rural Energy Services. In rural areas of developing countries,
many new business models will emerge for provision of energy services, building on existing models and business activity. One expert
noted that, “renewable energy companies [operating in rural areas]
will more and more see themselves in the role of ‘energy service’companies,” rather than seeing themselves merely as technology
providers. African experts foresaw a host of new business models bringing lower costs in the future that would spur rural use ofrenewable energy. For example, consumer-oriented organizations
will increasingly train households how to build household biogas
plants using the households’ own labor and materials, and purchasing only technical components. These experts saw such “antiturnkey” models proliferating in the future.28 (See also developing
countries in Chapter 5.)

Box 5 | Utility Business Models for Solar PV

Many new business models are emerging that go beyond suchhistorical patterns. Under one model—tax equity financing ofthird parties—a utility acts as a tax equity investor, often throughan unregulated subsidiary. (One example is the Pacific Venture
Capital subsidiary of Pacific Gas and Electric in California.) A second model is on-bill financing, in which a utility provides loans to
its customers for investments in solar that are repaid on monthly

utility bills. (Maui Electric in Hawaii is an example.) Equipment
leasing is another model, in which a utility leases solar PV systems
to its customers. (New Jersey Natural Gas is an example.)
Under a “community solar” model, a utility owns and operates asolar PV system serving multiple customers, located either at the
point of end-use or on the distribution system, and sells the powerfrom that system at a fixed long-term (i.e., 20-year) “solar rate”
to those customers. One variation involves a utility selling power
via fixed proportional shares of solar system output. (Examples
include the Sacramento Municipal Utility District in California,
Salt River Project and Tucson Electric Power in Arizona, and othermunicipal utilities.)

Source: See Endnote 29 for this chapter.

03

In the United States, electric utilities are moving to employ innovative new business models for solar PV. Over the past several
years, utilities have typically purchased solar power from thirdparty-owned facilities (through power purchase agreements),
either larger ground-mounted systems connected directly totransmission grids, or smaller (less than 2 MW) systems on distribution grids. In fewer cases, utilities have directly owned or
financed such facilities.

Great Debate 8 | Will Green Power Purchasing Scale Up Like Organic Food Has?
In many countries, consumers have a variety of options for purchasing “green” renewable energy—generally in the form ofelectricity, although in some countries voluntary purchases of “green” biogas, heat, and transport biofuels are also possible.
In 2011, green power sales continued to expand in a number of countries as price premiums for green power over conventionalenergy continued to decline. In the United States, regulations in several states require utilities or electricity suppliers to offer green
power products; as a result, more than 850 utilities offer green pricing programs.
Experts noted that although green power sales are setting new records, green power is still a tiny fraction of total power sales.
Some experts compared the situation to the early years of organic foods, and wondered whether households and companies would
dramatically scale up their purchases from green power suppliers. (Experts noted that it also depends on the existence of policies
that allow consumer choice of electricity supplier at the retail level, or that mandate utilities to offer green power options.)
Experts pointed to corporate purchases of green power as an encouraging trend, noting green power purchases among many
leaders in corporate sustainability. “Corporate governance is heading toward climate and sustainability goals,” said one corporate
watcher, who believed that green power would increasingly fit those goals. However, some questioned whether other types ofcorporate models for renewable energy investment would become more significant than green power.

Notes and discussion: See Annex 4.

37

RENEWABLES GLOBAL FUTURES REPORT 04 FUTURES AT THE LOCAL/CITY LEVEL: INITIATIVE, PLANNING, AND POLICY

04

FUTURES AT
THE LOCAL/CITY LEVEL:INITIATIVE, PLANNING,
AND POLICY
Innovative approaches and visions forrenewable energy futures are found at the
local/city level in a rapidly growing numberof jurisdictions around the world. Elements
include public infrastructure, community
investment, municipal utilities, planningapproaches for low-energy buildings andrenewable heating/cooling, public transport
fleets, electric vehicle infrastructure,and “smart cities” concepts.

38Interviews with local government officials and stakeholders,
together with a range of local planning documents and publishedliterature, suggest that in the coming decades, many cities and local
communities around the world will have transformed their energy
systems into much more localized and sustainable systems that
integrate renewable energy in many possible ways.2
In the interviews, local experts envisioned greater use of local renewable resources of all forms, mixed with smarter, interconnectedenergy flows from neighboring or distant regions. They foresaw
renewable energy integrated with intelligent energy management
systems at a local scale, and with practices and technologies thatmaximize the use of local resources. And they foresaw this integration across all sectors: electricity, heating, cooling, and transport.3

Africa) targets 15% by 2020. Some cities target the share of electricity consumed only by the local government itself, for its own
buildings, vehicle fleets, and operations. Such “own-use” targets
can range from 15% to 100%. For example, Austin (Texas) andPortland (Oregon) in the United States target 100%.6
Another type of target is the share of total energy from renewables,
including transport and heating. For example, Calgary (Canada) targets 30% by 2036, and Seoul (South Korea) targets 20% by 2030.
Some targets apply to biofuels use in public transport or vehicle
fleets. For example, Stockholm (Sweden) targets 100% of public
transit buses running on biogas or ethanol by 2025. And some targets are for total amounts of installed renewable energy capacity or
number of installed units. For example, Los Angeles (USA) targets
1.3 GW of solar PV by 2020, Kunming and Dezhou (China) both target 50% of homes with solar hot water, and Iida City (Japan) targets
30% of homes with solar PV.7
The following sections present visions of future city and local government roles and infrastructure development, in terms of integrationof renewables into urban planning and built infrastructure; urban
mobility; emerging “smart cities” paradigms; and 100% renewabledistricts, cities, and regions. These visions emerged from interviews
with city officials and stakeholders, along with documents accumulated from over 60 cities in Europe and in Brazil, China, India, Japan,
Morocco, South Africa, and the United States.8

04

Many regions, cities, and towns around the world are planning orenvisioning their renewable energy futures.a In many respects, cities
and local governments are at the forefront of meeting the integration challenges noted in Chapter 2 for buildings, transport, and evenelectric grids. And many of the business models noted in Chapter
3 are evolving through local initiative. In addition to a variety ofplanning approaches, specific policies for renewable energy canbe found in hundreds of cities around the world. Such policies can
include targets, subsidies, public investment, innovative financing,bulk procurement, green power purchasing, building codes, transport fuel mandates, municipal utility regulation, and many others.
And local policies for renewable energy often complement, and inmany cases go beyond, national-level policies.1, b

The number of city and local governments engaged with their longterm energy futures is in the thousands. The most prominent collection of local approaches is the EU Covenant of Mayors, which hasbrought together more than 4,500 local governments from Europe
and around the world to adopt future targets and plans for climate
mitigation, energy efficiency, and renewable energy. Over half of theworld’s largest cities have adopted action plans for climate change,
many of which explicitly target renewable energy for reducing
greenhouse gas emissions.4
Many local emissions-reduction targets extend to 2020 and beyond,typically for 20–50% reductions from baseline levels, althoughsome are higher. For example, Tokyo (Japan) targets a 25% reduction by 2020, Oslo (Norway) targets a 50% reduction by 2030,
and both Chicago (USA) and Hamburg (Germany) target an 80%
reduction by 2050. Stockholm (Sweden) has a unique emissions target: reduction of per-capita emissions to 3 tonnes of CO2 by 2015.
And cities in India such as Rajkot and Bhubaneswar target specificreductions in fossil fuel use. In addition, a number of cities and local
communities around the world plan to use 100% renewable energy
or aspire to become “carbon neutral” or “fossil fuel free.”5 (See following “100%” section.)
Hundreds of cities have established targets specifically for renewable energy, most to 2020 and beyond. There are several common
types of target. One is the share of total electricity consumption
within the local jurisdiction from renewable energy. Such electricity-share targets typically range from 10% to 30%. For example,
Sydney (Australia) targets 25% by 2020 and Cape Town (South

Integration Into Urban Planningand Built Infrastructure
A wide range of urban planning approaches and goals emerged fromthe interviews and documents. Experts envisioned investments inlocal infrastructure and urban landscapes that integrate distributed
renewable energy across all sectors. To achieve this integration,
they said that cities and local communities are increasingly focusedon understanding, mapping, maximizing, and managing renewable
resources—using tools like “smart grids” for electricity, heating,and cooling. Experts noted that urban planning approaches in particular include the integration of renewable energy into low-energy
buildings and heating and cooling infrastructure. Urban planning
can also include local control of municipal utilities and local power
grid infrastructure.9 (See also buildings in Chapter 2 and "Great
Debate 5" on page 27.)a) Thanks to Lily Riahi for conducting research and interviews that formed the basis for this chapter, and for co-authoring the text.
b) For a full set of local policy examples beyond those in this chapter, see annual editions of the REN21 Renewables Global Status Report.

39

RENEWABLES GLOBAL FUTURES REPORT 04 FUTURES AT THE LOCAL/CITY LEVEL: INITIATIVE, PLANNING, AND POLICYn Low-Energy Buildingsn Heating and Cooling Infrastructure

Cities and local governments are shifting their focus from traditional“percentage savings” goals for efficient buildings to new goals of“near-zero” or “net-zero” energy use that includes on-site renewable energy. This approach utilizes a variety of planning approaches,
new building codes, and building demonstrations. In Europe, the“Energy Performance of Buildings” directive took effect in 2011,
requiring all new and retrofitted buildings to be near-zero energy
use by 2020. The directive is driving many local communities in
Europe to establish renewable energy targets for buildings, to revise
building codes, and to alter permitting and land-use policies so that
renewable energy is required or favored.10

Cities and local experts increasingly envision a future where urban
district heating and cooling systems meet a large share of heating
and cooling needs. Such systems incorporate a variety of renewable
resources in heat-only and combined heat and power (CHP) configurations and can supply clusters of buildings or entire neighborhoods. Many contemporary examples exist of local district heatingwith renewables, particularly using biomass in CHP plants. Other
sources of heat include deep geothermal steam or hot water, waste
incineration, and waste industrial process heat.13

Globally, hundreds of cities have demonstrated carbon-neutral andnet-zero-energy buildings, using practices suited to local renewable
resources. Experts envisioned that by 2050, most new and renovated residential and commercial buildings worldwide will be highly
energy efficient and rely on renewable energy systems to ensure
zero or near-zero energy use—that is, to produce at least as muchenergy as they consume. Experts saw net-zero-energy and/or carbon-neutral buildings becoming a key aspect of local infrastructure
and planning. Such buildings have already begun to populate urban
landscapes and are proving cost-effective compared to traditionallyconstructed buildings, experts said.11

Examples of Low-Energy Building Plans
Amsterdam has directed that all new developments be“energy neutral” starting in 2015. Portland (Oregon, USA)aims to achieve zero-net greenhouse gas emissions in all
new buildings and homes by 2030. Hamburg (Germany) in2009 enacted a Renewable Heating Act and Energy Efficiency
Ordinance that will require new buildings to use renewableenergy for a share of heating in real estate contracts. Other
cities with low-energy building planning and codes include
Adelaide (Australia), Albuquerque (USA), Austin (Texas, USA),
Cape Town (South Africa), Chicago (USA), Edinburgh (Scotland,U.K.), Freiburg (Germany), Gothenburg (Sweden), Kyoto (Japan),Malmö (Sweden), Miami (USA), Munich (Germany), Sacramento(California, USA), Seoul (South Korea), Sydney (Australia),
Vancouver (Canada), Växjö (Sweden), and Wellington (New
Zealand).1240

Experts also foresaw a larger role for CHP systems at the building
level—so-called “micro-generation” using a variety of renewablefuels such as biomass and biogas, along with natural gas and landfill
gas. In the absence of district heating or on-site CHP (or complementing them), renewable heating and cooling on a building levelcan come from solar-thermal collectors and ground-source (geothermal) or air-source heat pumps. One expert coined phrases fortwo [complementary] heating and cooling approaches: the “electricity building” that uses electric heat pumps and the “co-generationbuilding” that uses CHP either on-site or through district systems.14
District cooling and on-site cooling can similarly make use of all
types of renewable heat sources and configurations to provide
space cooling with chillers, including geothermal heat pumps
using ground, ocean, or lake sources. District cooling can also
draw upon existing sources of heat like combined-heat-and-power
plants. Indeed, district heating and cooling systems can be madeto complement each other when there is a demand for both, andcan also incorporate thermal energy storage. Some experts foresaw
intelligent and integrated district heating and cooling systems using
a variety of heat and cold sources and meeting a variety of customer
needs. And experts emphasized that on-site renewable heating andcooling systems can integrate with or supplement conventional(HVAC) heating and cooling systems.15

Examples of Heating and Cooling Infrastructure
Solar hot water and/or heating in new building construction
is mandated in Barcelona (Spain), Lianyangang (China), Rajkot(India), Rio de Janeiro (Brazil), and San Francisco (USA). Rosario(Argentina) is adding solar water heaters to public buildings.
Xianying (China) plans to expand geothermal space heating
six-fold. Copenhagen (Denmark) plans to supply heat to virtually all homes by 2025 with district heating and biomass CHP
plants. Hamburg (Germany) allows individually owned solar
thermal collectors to supply heat to the local district heating
network. Hong Kong (China) plans a district cooling systemusing an ocean-source geothermal heat pump. Paris (France)
is expanding a district cooling system using geothermal. Many
cities have already reached high levels of heat supply fromrenewables: for example, Reykjavik (Iceland) meets 95% of its
heating needs from geothermal, and Växjö (Sweden) supplies
90% of heat demand from renewables, primarily biomass.16

Integration Into Local and Urban Mobility

Cities and experts noted that much can be done at the local level,
including promotion policies and infrastructure planning, to develop
local power grids that incorporate local renewable resources. (Seealso Box 6 on “Smart Cities.”) However, experts also noted that suchopportunities are limited by the degree to which local governments
own or control their local grids, as most local distribution networks
are owned and operated by regional or national entities. In thisregard, experts noted trends toward municipal ownership or control
of local power distribution and generation infrastructure.17

Over the past two decades, cities and local communities haveincreasingly grappled with how to “green” local transport and incorporate renewable energy along with the full range of low-emissions
and energy-efficient vehicles and strategies. Among many lessons,cities have been finding that rebuilding urban transport systems
to incorporate greater shares of renewable energy requires a hostof complementary measures. Cities around the world as diverse as
Yokohama (Japan), Hamburg (Germany), and São Paulo (Brazil) havearticulated visions and initiated specific projects and plans to maketheir transport sectors more efficient and to integrate renewableenergy.20 (See also transport in Chapter 2.)

Municipally owned or controlled utilities allow local governments
and citizens to play a much greater role in the planning and development of local power infrastructure. Several experts suggested
models for how the presence of municipal utilities might accelerate local renewables development. For example, local governments
could directly mandate utility investments, targets, or promotion

Examples of Municipal Utilities
San Francisco (USA) established a new utility with the goal ofproviding the city with 100% renewable electricity by 2020.
Austin (Texas, USA) mandated that its municipal utility reach a
30% electricity share from renewables by 2020, and actuallyreached that goal eight years early, in 2012. Boulder (Colorado)
residents, unsatisfied with the existing regional utility’s
progress with renewables, voted in municipalization in 2012.
Other cities with existing municipal utilities are quickly moving toward high shares of renewables, including Amsterdam(the Netherlands), Copenhagen (Denmark), Munich (Germany),
Sacramento (California, USA), and Växjö (Sweden). In Germany,
hundreds of municipal utilities are aiming at more renewables.18

In the future, cities and local communities will strive increasingly
to integrate renewables into transport through the use of renewable electricity for both private vehicles and public transport (trains,
trams, and buses). Hamburg (Germany), for instance, aims to convert its urban rail transit to be 100% renewable by 2050. Calgary(Canada) plans to run its entire urban transit system with windenergy. Freiburg (Germany) already runs its electric tram system
on 100% renewables. Cities like Genoa (Italy), Hong Kong (China),
Mexico City, and Sydney (Australia) are making large investments inthe extension and electrification of their urban transport systems.21
Many cities are adding or converting to electric trolley buses andenvisioning future fleets of battery-electric or fuel-cell buses,
recognizing that electric mobility increases opportunities for
integrating renewable energy. And a number of cities around theworld are introducing charging stations for private electric vehicles,
including Hong Kong (China), Yokohama (Japan), Amsterdam (theNetherlands), and Munich (Germany), while at the same time working to integrate renewables into local electricity supply and as direct
power for such charging stations.22

04

n Local Power Grids and Municipal Utilities

Thus, cities clearly envision that the shift to electric vehicles will beaccompanied by a shift toward renewable sources for vehicle charging. Many examples exist today that point to the future integration ofrenewables with electric vehicles at the local level. (Renewable supply can come either through direct renewable energy installationsor through green-power purchases or certificates.) Austin (Texas,USA), for example, already powers its 50 electric-vehicle charging
stations with green electricity. New York City and Chicago (USA) andMexico City have all built solar-powered charging stations. Hamburg(Germany) plans that its current stock of 100 electric-vehicle charging points will be supplied from 100% renewable electricity. And
the utility company in the Australian Capital Territory plans to powerelectric-vehicle charging stations in the city of Canberra with wind,hydro, and solar power.23

policies that encourage private investment. Or a municipal utility
could see renewables as a branding opportunity to differentiate
itself from national and international utilities (which may also seek
only larger-scale projects). Or, local governments could participate
in profit-sharing schemes with utilities. Experts also noted trends
toward municipalization or re-municipalization of local utilities(especially as existing concession/franchise agreements start toexpire). For example, a number of cities in the United States andEurope are considering re-municipalization.19

In parallel, most cities are investing in various ways to promote modal
shifts from private vehicles to public transport that will also enablelarger shares of renewables in transport. Cities envision a future withdeclining shares of private gasoline and diesel vehicles (and more
use of hybrid vehicles), and with increasing shares of electric vehicles
and bicycles that complement public transit and become a core partof a city’s energy infrastructure. Taxis can be part of such strategies
as well: Mexico City inaugurated a zero-emission taxi program to put
100 electric taxis on the streets by 2012.24
Cities are also increasingly using ethanol, biodiesel, and biogas tofuel public transit systems and public vehicle fleets, as well as promoting these fuels for private vehicles. Cities and experts envisioned

41

RENEWABLES GLOBAL FUTURES REPORT 04 FUTURES AT THE LOCAL/CITY LEVEL: INITIATIVE, PLANNING, AND POLICY

Box 6 | Emerging “Smart Cities” Paradigms
The idea of “smart cities” is an emerging local paradigm that many
experts expected to see extended globally in the coming decades.
Already, there are more than 100 announced “smart cities” projects around the world. As cities move toward sustainable andlow-carbon infrastructure, they will increasingly use informationand communication technologies (ICT) to develop “smart” energy
systems that enhance energy efficiency and energy management,that maximize the integration of local renewables in buildings andlocal power grids, and that integrate electric vehicles in effective
ways.
Cities and experts alike viewed ICT and “smart” systems as playing a distinctive role in the future process of “greening” urban
infrastructure. They envisioned “smart” systems at the local levelthat handle increasing amounts of variable renewable energy
from local sources, incorporate local energy storage, and provide
greater flexibility, efficiency, and transparency in the power distribution grid. (See also Chapter 2 for discussion of renewables
integration into utility grids, buildings, and transport.)

Smart buildings. As buildings and homes become low-energy,“passive,” or zero-emission, intelligent energy management willplay a greater role. Transition to these types of buildings will
employ greater efficiency, on-site energy generation, and realtime information on energy use for both the consumer and theenergy network. A major step toward these goals will be widespread deployment of smart meters mandated by local authorities
or national governments. Connected to an energy management
system, these meters will allow owners to have real-time information about the energy consumption of their homes and buildings
in terms of heat and power systems. Such “intelligent building
information systems” are paving the way for greater integrationof renewables into building infrastructure and the grid.
Smart grids. “Smart grids” refers to a wide variety of innovations
for future electric grids. (See Chapter 2.) At the local level, “smart
grids” can mean many things, such as local energy consumption
management (“demand response”), integration and balancing of
distributed and variable renewable sources, grid balancing withthis trend continuing for decades into the future, and foresaw manytransit systems becoming 100% renewable fueled. For example,
Johannesburg (South Africa) is introducing a fleet of ethanol-fueledbuses. In Brazil, São Paulo and Rio de Janeiro collaborated on apilot project to fuel city buses with a biodiesel blend, and Curitiba
is expanding its bus fleet to 140 pure-biodiesel buses. São Paulois also promoting “flexible fuel” vehicles that run on a much wider
range of gasoline-ethanol blends.25

42

In India, New Delhi plans to fuel its bus fleet with biogas produced
at local sewage treatment plants. In Japan, Kyoto will fuel public
buses with biodiesel from waste cooking oil. Portland, Oregon, in
the United States requires all vehicle fuels sold within city limits tobe biofuel blends. And both Hong Kong (China) and Wellington (New
Zealand) plan to add biofuels to their transport fleets. In Denmark,Frederikshavn fuels local transit from biogas and bio-methanol
derived from waste, straw, and manure, along with growing numbers of electric and fuel-cell vehicles.26

energy storage, enabling of so-called electric vehicle-to-grid (V2G)
and vehicle-to-home (V2H) applications, and optimum controlof renewable-linked heat supply and combined heat and power(CHP) systems. Some cities even envision smart-grid control of
so-called “virtual power plants” that combine citywide distributed
renewables into flexible aggregated power at the city level. Cities
and local governments envision many benefits from smart grids,
foremost a stable, efficient, and resilient energy system, as well as
the ability to incorporate higher levels of local renewables.

Smart transport. Under “smart” paradigms, cities will promoteelectric vehicles not only to reduce emissions and improve air
quality, but also to enable “smart” charging to smooth energy
demand and store energy to balance variable local renewables.
Experts emphasized that such coordination will be important toensure that electric vehicles do not place stress on local power
grids and cause overloads. Yokohama, Japan, for instance, aims
to introduce electric vehicle charging stations that also provide
embedded energy storage. And electric vehicle charging and discharging will provide energy storage capacity for balancing variable renewable energy at lower cost. (See Chapter 2 on power gridand transport integration for more discussion.)
Hundreds of cities and local governments around the world areworking actively toward ICT-rich smart buildings, smart grids, andsmart transport. As one example, Boulder, Colorado (USA) plans toinvest more than $100 million in creating a smart grid for the city.
Many other active examples can be found, such as Amsterdam,
Beijing, Buenos Aires, London, Moscow, Paris, São Paulo,
Singapore, Seoul, Stockholm, and Sydney. A number of cities indeveloping countries are also following suit by more incrementally
introducing ICT technologies, such as Delhi, Dhaka, Johannesburg,
Karachi, Lagos, and Manila. Although the level of ICT integration
varies from city to city, and local technological capabilities andskills are key to progress, many cities acknowledge the important role that ICT and “smart” paradigms will play in their futuretransformation.

Source: See Endnote 17 for this chapter.

Finally, cities are employing urban-density strategies, such aspedestrian zones and bike-sharing systems, to encourage greateruse of human-powered transport. Barcelona, Berlin, London,
Melbourne, Mexico City, Montreal, and Paris, among others, alreadyhave bike-sharing systems, while Sochi (Russia) and Genoa (Italy)
are among those planning investments. Experts believed that thesetrends will lead to further integration of renewable energy, as mostof these cities also aim to deploy electric bikes, which can then be
powered from renewables.27

Growing numbers of regions, cities, towns, and communities areenvisioning “100%” renewable energy futures for themselves in thelong term. Already, a number of small towns meet 100% or close
to 100% of their electricity and heating needs from local renewable energy sources. Examples include Güssing (Austria), Samsøand Thisted (Denmark), Dardesheim and Schönau (Germany), Varese(Italy), and Kuzumaki (Japan). Some of these communities also produce “surplus” renewables that they use to offset fossil fuel transportation, and thus can declare themselves “100% total energy.”28
Many medium-size cities aim to transition to various forms of"100%" in the coming decades, such as Fredrickshavn (Denmark),
Moura (Portugal), Malmö (Sweden), and San Francisco (USA). Larger
cities, with populations over 1 million, are also working towardvarious "100%" or "near-100%" goals in time frames ranging from2025 to 2050, and have set benchmarks along the way. Examples
include Copenhagen (Denmark), Hamburg and Munich (Germany),
Gothenburg (Sweden), Rizhao (China), and Sydney (Australia).29
While some cities have set explicit 100% renewable energy visions,others have instead established carbon-neutral or fossil-fuelfree goals that imply moving toward 100% renewable energy. In
Sweden, Växjö aims to be fossil-fuel-free by 2030, and Gothenburg
and Stockholm aim for the same by 2050. Copenhagen, Denmark,plans to be the world’s first carbon-neutral capital by 2025. Many
cities have also set specific carbon-reduction targets, many ofwhich are in the range of 40–80% reduction from 1990 baselines
by 2050, often with incremental goals to be met in 2025 or 2030.
A wide range of other cities aim to become “green” cities in the2030–2050 time frame, such as Sydney (Australia), Toronto andVancouver (Canada), Paris (France), Berlin (Germany), Amsterdam(the Netherlands), London (U.K.), and Chicago, Portland, and Seattle(USA).30

The integration of renewable energy in the urban environment isalso being advanced through the development of zero-emission or
renewable energy neighborhoods and districts within cities. As large
cities transition to decentralized renewable energy supply, theyenvision starting with smaller 100% renewable energy neighborhoods and districts. Local authorities are advancing the integrationof renewable energy through self-sufficient communities within
the larger city environment. Such districts allow for a step-wisescale-up of renewable energy and help local authorities to gain bestpractices, encourage business engagement, demonstrate innovations, and gain public interest and acceptance. Several cities such
as Vancouver (Canada), Copenhagen (Denmark), Helsinki (Finland),Hamburg and Munich (Germany), Rotterdam (the Netherlands),
Stockholm and Malmö (Sweden), and London (U.K.) have planned or
begun implementing zero-emissions districts.32
National and local governments also plan a number of 100%
renewable energy cities to be newly constructed “from the groundup.” Examples include “Masdar City” in the United Arab Emirates,“PlanIT” Valley in Portugal, “Songdo” in South Korea, and “Tianjin
Eco City” in China. Planned populations for these cities range fromthe thousands to the hundreds of thousands.33

Example of 100% Electricity04

Local Visions and Actions for 100% Renewable
Communities

Munich, Germany, plans by 2025 to meet all city electricity
demand from 100% renewable power through a combination of local capacity and out-of-city capacity ownership thatprovides renewable energy certificates. Local capacity will bea mix of hydro, solar PV, geothermal, biomass, biofuels, andbiogas. The plan also envisions profiting from investments inrenewable energy capacity Europe-wide in sufficient quantity
to cover local demand, including solar PV farms in the Germanstates of Saxony and Bavaria as well as in Spain, and windfarms in the North Sea.31

43

RENEWABLES GLOBAL FUTURES REPORT 05 Futures at the National and EU Levels

05

Futures at
the National
and EU Levels:
Market Growthand Policy Support
National renewable energy markets areprojected to grow strongly in the coming
decade and beyond, as shown by current
policies and targets, and by scenario andexpert projections. Snapshots of Europe,
the United States, Japan, China, and India
show many emerging and possible
developments. Projected markets in amuch greater number of developing countries
will create a diverse geographic base.

44

This chapter provides brief national-level market projections andpolicy discussions for Europe, the United States, Japan, China, andIndia.a The chapter then covers more generally a range of market andpolicy points for developing countries considered together, including
some specific national policy targets, plans, and market projections
in a number of developing countries, as well as some regional projections for Africa, Asia, Latin America, and the Middle East.1

policy targets for wind power by 2020 include Denmark (50% of
its electricity); France (19 GW onshore and 6 GW offshore), Italy (12GW onshore and 0.7 GW offshore) and Spain (35 GW onshore and
0.8 GW offshore). By 2030, two high-renewables scenarios show
400–500 GW of wind power in Europe (EWEA, 2011, “Pure Power,”
and GWEC, 2012, “Advanced”). By 2050, EWEA believes that wind
power could supply half of Europe’s electricity.5

In interviews with national experts, many emphasized the strong
linkage between market growth and future policies in these countries.2 (See “Great Debate 2” on page 13 for a fuller discussion ofthese linkages.)

European solar industry experts expressed optimistic visions for the
adoption of solar PV throughout Europe as well. One expert projected that solar PV in Europe would reach 130–400 GW by 2020,reflecting three cases from “baseline” to “accelerated” to “paradigm shift." (For comparison, Europe had 51 GW in 2011.) Germany
alone targets 52 GW by 2020, the expert noted, and believed that
Germany would perhaps reach 60–70 GW. Beyond 2020, Europewide growth might level off somewhat, some experts thought. EREC
(2010) projects 400 GW by 2030 and 1,000 GW by 2050 for Europe.6

EuropeEurope’s target for a 20% share of total final energy from renewables by 2020, adopted in 2008, coupled with feed-in-tariffs andmany other strong support policies that date back a decade or morein many EU countries, have been instrumental in making Europe a
global leader in renewable energy.b Many European experts believedthat Europe would continue this leadership, although perhaps at a
reduced pace given economic difficulties and the clear ascendancyof China in wind power since 2009, and solar PV more recently.
European renewable energy advocates are pushing for a further
target for 2030, such as the 45% target proposed by EREC (2011).
Many experts believed that such a target was feasible and integral
to Europe’s continuing policy and market leadership in the 2020s.4
Industry experts were quite optimistic about wind power inEurope, both onshore and offshore, an optimism that is reflectedin current scenario projections and also national targets. National

Experts were optimistic about biomass for heating and combined
heat and power (CHP) plants, especially in northern European countries. Biomass-based district heating systems, individual biomass(pellet) stoves, and biofuels for transport were all cited as highgrowth markets in the future.7
European policymakers and industry experts highlighted several key
areas of future policy in Europe that could influence future markets.
These include: an EU-wide target for 2030, EU-wide grid infrastructure planning and strategy, a coming EU directive on the energy
performance of buildings, the time frames for continuing and thenphasing out policy support mechanisms like feed-in tariffs (manysaw phase-outs starting in 2020–2030), the future of carbon policy
and the Emissions Trading System, standardization (“harmonization”) of electric utility rules and regulation, support for centralized
versus decentralized investments, and local standards and codes forrenewable heating. Many of these issues are the subject of current
debates or were expected to become central debates in the coming
years.805

In a short space, it is impossible to provide the full range of market
projections and policy discussions for all countries and regions. The
reader is referred to the online supplement “Topical Discussion
Report,” which contains fuller country-specific information, including expert-contributed milestones and more “Great Debates.”3

Great Debate 9 | How Will Feed-in Tariffs Evolve?
Given lower technology costs, higher support costs to consumers as markets expand, and higher renewable power shares on grids,
some European experts questioned how long Europe’s policy support mechanisms would be needed, or how long governments
would maintain them. Some saw the evolution of many support mechanisms during 2020–2030 to meet changed market conditions
and power grid integration needs. And many saw continued policies through 2030 and beyond, particularly if a new target for 2030
is adopted, such as the 45% share proposed by EREC (2011). At least one scenario, Eurelectric (2009) “Power Choice,” projects aphase-out of support mechanisms by 2030. Some experts believed that net metering policies were on the rise, and that as solar PV
reaches and goes beyond grid parity (see solar PV in Chapter 6), solar PV feed-in tariffs would evolve over time into net metering
policies. (See footnote on page 26 for definition of net metering.)

Notes and discussion: See Annex 4.

a) Throughout this chapter, market growth is reflected mainly in gigawatts (GW) of renewable power capacity. To put these GW figures in some context, refer toTable 4 on page 53, and also see the online supplement “Glossary and Basic Energy Concepts.” Markets are typically measured in annual GW capacity addedor the growth of total GW capacity existing, the former typically denoted by “annual market” and the later by “capacity” or simply a GW or percentage growth
figure. Another common metric is growth of the annual market, meaning year-on-year increase in annual capacity added. These three distinct metrics canconfuse unaware readers. Furthermore, capacity in GW is only partially indicative of total power generated (actual benefit received), as the same capacity ofdifferent types of renewables (or of any energy technology) in different conditions will provide widely different amounts of actual power generation.
b) The Europe 2020 target includes a 10% target for transport. National action plans could collectively reach a 21% share for heating. See Chapter 1 for discussionof country-specific targets for EU member countries. EC JRC (2011) expected Europe to slightly exceed these shares by 2020.

45

RENEWABLES GLOBAL FUTURES REPORT 05 Futures at the National and EU Levels

United States
Scenarios show a wide range of long-term market growth forrenewable energy technologies in the United States. (See Table
3.) However, many U.S. experts foresaw great policy uncertainty
beyond 2013 and believed that long-term renewables markets in
the United States will be strongly tied to how policy decisions get
resolved in the coming years. These experts wondered about extension of the Investment Tax Credit (which expires in 2016) and theProduction Tax Credit (which was to expire in 2012 for wind andin 2013 for other technologies), as well as air quality regulations,carbon policies (or lack thereof), and fossil fuel subsidies.9
Many policy experts pointed to continuing strong state-level policy
support as the foundation for continued growth in future markets,
including Renewable Portfolio Standard (RPS) policies in a majorityof states, as well as a variety of other subsidies and support mechanisms at the state level. Experts also were quite certain that new
utility regulations were coming, at both the state and federal levels,
to facilitate the integration of renewables at higher shares on power
grids, including “smart grid” planning and grid management.10
Some U.S. solar experts foresaw growing solar PV markets regardlessof policy outcomes, as unsubsidized solar PV reaches “grid parity”
with residential electricity rates over the coming decade in more andmore states, starting with high-rate states like Hawaii and California.
(See solar PV in Chapter 6 for more discussion of grid parity.) One
expert projected a huge increase in solar PV capacity in the coming years, from 70 GW in 2015, to 100–140 GW by 2020, to several
hundred GW by 2030. (For comparison, 4 GW existed in 2011.) Goingeven further, the Lovins/RMI (2011) “Transform” scenario shows 700
GW by 2050 in a fully half-decentralized energy system.11
Still, many experts acknowledged the large impact that U.S. federal policy would have on future markets. For example, one expert
projected an annual market of 5–6 GW per year by 2020 if theInvestment Tax Credit were extended, but much slower growth in
the absence of the credit. (For comparison, the annual market was
1.9 GW in 2011.) Another expert emphasized the role of state net
metering policies and other state-level support in future markets,with or without the Investment Tax Credit. Some experts foresaw
a broad array of applications for solar PV beginning to boom in the
period 2013–2015, especially for commercial rooftops, which soon
would capture half the market, some said.12
Likewise, U.S. wind industry experts foresaw continued growth ofwind power markets regardless of policy outcomes, but much faster
growth and larger markets if the Production Tax Credit is extended
beyond 2012. For example, one expert projected an annual wind
power market of up to 15 GW per year over the coming decade with
continuation of the credit, but only 2–4 GW per year if the credit
expires and wind markets rely solely on state-level RPS policies forsupport. (For comparison, the annual market was 7 GW in 2011.)“We really need the [Production Tax Credit] in the U.S. for 10 more
years to become competitive,” said the expert. Another expert
added that the future of wind power also depends on whether stateutility commissions take fuel price risk into account in regulatory
frameworks.13

Japan
Following the Fukushima nuclear accident in March 2011, Japanwas in the process of finalizing its “national green policy strategy”
in late 2012. Proposed versions of this strategy have targeted acomplete phase-out of nuclear power by 2040, as well as a 30%
share of electricity from renewables by 2030. Japan also enacted
a milestone feed-in tariff policy in late 2011 that began to change
perceptions of Japan’s renewable energy future, both within Japanand internationally. Markets for solar PV, wind, geothermal, biomass,and small hydro are all supported by the feed-in tariff. During 2012,
there were regular announcements in the press of planned renewable energy projects by Japanese companies, including dozens ofplanned megawatt-scale solar PV plants.14
Japanese policy targets for 2020 include 33 GW of solar PV, 9.5 GW
of wind, 1 GW of geothermal, and 4 GW of biomass. Dozens of local
governments throughout Japan also have targets for shares andamounts of renewable energy for their cities and regions. (This now
includes Fukushima Prefecture, which is targeting a 100% renewable energy share by 2040.) Japanese renewable energy experts

Table 3: U.S. Renewable Power Capacity by 2030–2035 and 2050 in Recent Scenarios
Wind

Solar PV

CSP

Biomass

Geothermal

Ocean

GW
Actual 2011 Capacity for Comparison

47

4

0.5

14

3

0

DOE EIA Annual Energy Outlook (2012)

70

8

1

6

6

—

IEA World Energy Outlook (2012) “New Policies”

160

70

10

40

8

1

IEA World Energy Outlook (2012) “450”

270

120

60

50

12

1

Greenpeace Energy [R]evolution (2012, U.S. edition)

650

390

140

1

50

15

By 2030–2035

By 2050

46

NREL Electricity Futures Study (2012) “80% ITI”

460

170

60

80

25

—

Lovins/RMI Reinventing Fire (2011) “Renew”

500

480

80

40

15

—

Sources: See Annex 2. Actual 2011 from REN21 Renewables Global Status Report, 2012. Some figures rounded to nearest 5 or 10 GW fromoriginal sources. CSP stands for solar thermal power.

One Japanese solar PV industry executive projected that solar PV
capacity could reach 100 GW in Japan by 2030, for an annual average market of 5 GW per year. He also believed that Japan could
attain a 50% share of residential electricity use from solar PV
by 2030, and that half of Japan’s solar PV would be installed onresidential rooftops, one-quarter on commercial rooftops, and onequarter in utility-scale “mega” plants. (For comparison, Japan had
5 GW of solar PV capacity existing in 2011, with an annual market
of 1.3 GW in 2011.) An older NEDO (2009) “PV Roadmap” projected
an annual solar PV market of 6–12 GW by 2030. Greenpeace (2011)shows 100 GW existing by 2030.16
For wind power, industry experts projected 20–50 GW by 2030–
2050. (For comparison, Japan had 2.5 GW of wind capacity in 2011.)
Wind power capacity in scenario projections for 2050 range from 50
GW (Japan Wind Power Association, 2010) to 70 GW (Greenpeace,2011). An older NEDO (2009) “White Paper” projected only 7 GW ofwind power by 2030.17

China
In 2010, China became the global leader in renewable energy, interms of annual investment, taking that title from Germany, which
had held it for several years. Scenarios and expert opinion suggestthat China will remain the global leader in the coming decades. A
number of new renewable energy policies have been enacted since2005, including feed-in tariffs, quotas for electric utilities, biomass
power development programs, and solar PV support policies in someprovinces. Most Chinese experts interviewed in 2011 seemed totake China’s future leadership almost for granted, as if there wasno turning back.19
Of all technologies, Chinese expert projections for hydropower
were the most certain. In 2011, China had 212 GW of hydropower,
including about 18 GW of pumped hydro. Experts consistently cited
400 GW as the ultimate level, and believed hydro would grow to
300–350 GW by 2020, consistent with an existing policy target of
300 GW for 2020. They believed that hydro would then reach 400
GW before 2030. In line with these, BNEF (2011) shows 400 GW
by 2030. Beyond 2030, scenarios show a leveling off, with projections for 2050 in the range of 380–430 GW (LBNL, 2011; Zhang etal., 2010; China ERI, 2009). The ERI projection includes 60 GW of
pumped hydro by 2050. Plans announced by State Grid in 2010 callfor 21 GW of pumped hydro by 2015 and 41 GW by 2020.20
Projections for wind power were wider-ranging than hydro but
still fairly consistent. In 2011, China had 62 GW of wind power, thehighest of any single country. China’s wind power target increased
step-wise over several years, and by 2012, stood at 200 GW by
2020. All industry experts interviewed in 2011 believed wind power
capacity would reach 150–200 GW by 2020. China added 18 GW of

Box 7 | State-Provincial Markets and Policies
State-provincial level markets and policies have been a significant feature of renewables’ historical evolution, and manynational experts pointed to leadership at the state-provincial
level as a continuing driver in the future. Support policies, policy
targets, utility regulation, and many other forms of local market support can be seen in U.S. states, in Canadian provinces, inJapan’s prefectures, in Australian states, in Indian states, and in
Chinese provinces. In many other countries, sub-national policies for renewables are a part of the national policy landscape.
In Canada, several provinces have policy targets or renewable
portfolio standard (RPS) policies, and five provinces have capacity targets for wind power before 2020, ranging from 0.5 to 7
GW each, including Alberta, Manitoba, New Brunswick, Ontario,
and Quebec. In Japan, at least two prefectures, Fukushima andNagano, target 100% renewable energy in the long term, as aconsequence of the Fukushima disaster, and other prefectures,such as Kanagawa, are active with policy. The roles of statesin the United States and India are mentioned elsewhere in thischapter.
Biofuels blending mandates exist at the state-provincial levelin at least 26 jurisdictions around the world. Several feed-in
tariff policies exist, such as in the Australian Capital Territory
and Nova Scotia (Canada), and others have policy targets forelectricity share, as noted in Chapter 1, including Abu Dhabi(United Arab Emirates), Scotland (U.K.), South Australia, andUpper Austria. (See also Chapter 4 on local/city policies.)

05

were particularly optimistic about the future of solar PV, geothermal, and offshore (including floating) wind power. These experts
acknowledged, however, many practical and policy difficulties
facing investors and developers in the future. These include permission for geothermal drilling in national parks, land-use issues inhigh-wind coastal areas, transmission interconnections for onshore
wind power, and offshore wind turbine interference with fishing andshipping.15

Source: See Endnote 18 for this chapter.

new capacity in 2011, and most experts saw continued 15–20 GW
annual markets through 2020.21
Beyond 2020, some Chinese experts saw annual wind power markets increasing to 25–30 GW between 2020 and 2030, particularly
if wind power becomes competitive with coal after 2020, theysaid. Their estimates for 2030 capacity ranged from 300 to 400
GW. After 2030, some believed markets might begin to saturate,
and annual volume could decline to 5–10 GW. Estimates for 2050
ranged from 400 to 600 GW. Published scenarios are in line withthese estimates and show 330–350 GW by 2030–2035 (IEA WEO,
2012; BNEF, 2011), and 400–500 GW by 2050 (China ERI; LBNL).22
Solar PV market projections were the most uncertain, reflecting
much more nascent domestic markets and uncertain policy conditions. In 2011, China had 3 GW of total solar PV capacity, but mostof that (2 GW) was added in 2011 alone, pointing to rapid market
change during 2011–2012.a China’s first policy target for solar
PV was 1.8 GW by 2020, enacted in 2007. That target was later
increased to 5 GW and then 20 GW. In 2012, China announced thatthe target would be 50 GW by 2020.23
In 2011 and 2012, new solar PV promotion policies, as well as much
lower costs, started to influence domestic markets. Many Chineseexperts, interviewed in 2011, believed that domestic solar PVa) China’s domestic market should not be confused with solar PV production for export. Prior to 2011, China had become a leading global manufacturer of solarPV, but virtually all production was exported.

47

RENEWABLES GLOBAL FUTURES REPORT 05 Futures at the National and EU Levels

markets would “catch up” with other parts of the world by 2015–2020. One expert believed that 100 GW might be reached in 2020,
but others thought that level might take until 2030. In the longer
term, several experts did foresee 500–1,000 GW. One believed that
1,000 GW could ultimately reflect just distributed rooftops alone,with many utility-scale plants in addition. And one believed that
solar energy in all forms could become a majority of energy supply
in China by 2050. Scenarios show 200–250 GW for 2030–2035(BNEF; IEA WEO; and Greenpeace, 2012), and 300–800 GW for
2050 (China ERI; Greenpeace).24
Expert views on biomass varied based on views of resource availability, use of biomass for competing purposes, biomass costs relative to other renewables, and whether large-scale power plants (upto 25 MW) are viable in large numbers given the geographically (andinstitutionally) diffuse nature of agricultural wastes. In 2011, China
had 4 GW of biomass power and a policy target of 30 GW by 2020.
Some experts believed that capacity might not exceed 30 GW in thelong term. China ERI (2011) shows biomass power leveling off at 40
GW before 2050. Some experts believed that beyond 2025, biomass
would be used mainly for cellulosic ethanol. Others saw biomass
used primarily for household heating and cooling, for producing
bio-methane, as feedstocks to chemical industries, and gasified on
small scales for use with smaller gas engines.25
In 2011, China produced 2.3 billion liters of biofuels, mostly ethanol.
Policy targets of 10 million tonnes of ethanol (12.6 billion liters) and2 million tonnes of biodiesel (2.3 billion liters) exist for 2020. Many
Chinese experts saw liquid biofuels becoming a major use of biomass in the future, starting in 2020–2025. They said wastes, crops,
and jatropha all have big potential. “Biomass will be used for liquid
fuels and chemical process inputs, but not very much for power
generation,” they said. But some saw limited potential for biofuels
because of future industrial use of biomass resources.26
Finally, many Chinese experts were optimistic about the use of solar
thermal for hot water, space heating, and industrial process heat.
In 2010, China had 170 million square meters (m2) of solar heating
and a policy target of 300 million m2 by 2020. One solar industry
executive projected 600 million m2 by 2030. The utilization of solar
thermal could peak as quickly as 2030, another expert said, providing water heating in 30–50% of buildings, some space heating, andindustrial process heat in low-land-density settings. Other experts
thought that solar thermal for industrial process and water heating could start to take off before 2015. “Industrial applications will
become very important,” one said.27

India
Renewable energy policy in India continues to be a mixture ofnational-level and state-level initiatives. Renewable Portfolio
Standard (RPS) regulations and feed-in tariff policies have existed
at the state level for many years, and continue to be updated
regularly. At the national level in recent years, India has adopted
a feed-in tariff, instituted tradable renewable energy certificates(RECs), established a green-building rating system, and enacted anational energy conservation code for buildings that incorporates
renewables.28

48

Other state-level policies continue to be adopted, such as solar PV
support schemes, interest-free loans, electricity sales-duty exemptions, guaranteed grid access, and transmission wheeling policies, instates such as Andhra Pradesh, Gujarat, Karnataka, Rajasthan, andTamil Nadu. As one expert noted, “the role being played by state
governments in supporting renewables is often in support of theirindustrial development aspirations.” This expert also noted that the
Jawaharlal Nehru National Solar Mission for developing solar PV andsolar thermal power (CSP) markets, which started in 2010 at thenational level, subsequently spawned initiatives from several state
governments that together match or exceed the federal effort.29
Wind power could be a major share of added power capacity through2020 and beyond, said experts. In 2010, India ranked 5th in theworld in wind power capacity, at over 13 GW. There is no nationaltarget for wind power, but one expert foresaw 90 GW by 2022 if anational electricity plan is met. Two scenarios show 90–100 GW by
2020 and 185–190 GW by 2030 (GWEC, 2012; Greenpeace, 2012).
Risø (2010) shows 200 GW by 2050. Wind power in the future could
be limited by transmission constraints, and overcoming this bottleneck will be a key part of future infrastructure development, as wellas addressing variability through smart grids, energy storage, andgetting major utility buy-in of renewables, experts said.30
Use of grid-tied solar PV is still small in India, about 1 GW in 2012.
But the national solar target enacted in 2010 for 20 GW of gridconnected solar by 2022 (both PV and CSP) would start to accelerate development in coming years, said Indian experts. And somestates have their own solar PV targets: for example, Chhattisgarh
targets up to 1 GW by 2017.31
Most experts believed India would meet or exceed the 2022 solar
target. Once (retail) grid parity is reached around 2015–2017, theysaid, markets would accelerate, although widespread net metering
would be required, they said (see also solar PV in Chapter 6). One
solar expert foresaw many more utility-scale solar PV plants proliferating at scales of 1–50 MW, in addition to rooftop applications. The
expert also said that thin-film PV markets could be larger in India thanelsewhere due to India’s high-temperature conditions. Solar thermaland CSP could also become important for renewable-assisted air
conditioning and industrial process heat, especially in meeting India’s
policy target of 14 GWth of solar thermal capacity by 2022.32
Hydropower currently provides the majority of renewable electricity in India and will continue to grow, according to scenarios like
Greenpeace (2012), which shows hydro capacity peaking by 2030,
with 25 GW added by then.33
The use of biomass, biogas, small wind power, small hydro, and solar
PV for rural “off-grid” energy will continue to be important because
India will not achieve full electrification in the coming decades, said
experts. So the “access” question for rural households will remain
relevant in the long term. Among India’s policy targets is the goalof 20 million rural lighting systems by 2022.34 (See more discussionof rural renewable energy in the following section on developing
countries.)

Developing Countries(Other Than China and India)
Through interviews, workshops, scenarios, and published articles,
many perspectives on developing countries were collected fromknowledgeable experts: managers, researchers, officials, anddevelopment experts. Virtually all experts expressed the view thatmarkets will expand into a much greater number of developing
countries on a vastly greater scale. This will create a much morediverse geographic base, beyond developing country leaders Brazil,
China, and India.35

Great Debate 10 | What Is the Future of Coal Power in India Relative to Renewables?
Experts believed that a key choice facing India will be whether to increase imported coal for power generation (given that domestic
production will not increase), or to turn increasingly to renewable energy for the majority of new power investment.
Some experts said that this question depends heavily on the availability and price of imported coal, and on future expectations about
availability and price. One expert, however, noted in late 2012, “I thought this was already pretty much decided with the shelving ofplans for 42 GW of coal capacity since early 2012 and Tata's announcement that it will build only renewables, not coal plants, because
there's no business case for new coal plants.” Some experts underlined, however, the expected growth of GDP and population, alongwith present-day chronic power shortages, to say that India faces huge needs for more power, and that coal was still a viable option.
If, as one projection shows, India’s GDP will quadruple by 2030, then total power capacity would have to expand between 3-fold and5-fold by 2030, according to one expert. In this scenario, renewables additions would have to exceed 100 GW through 2030 just for
the renewables share of electricity to remain constant, as 400–700 GW of new capacity would be added by 2030, the expert said.
Some experts believed that up to three-quarters of new power capacity added between now and 2030 will be renewable, if highprices of imported coal make wind and solar competitive with new coal power.
This could mean an added 300–500 GW of renewable power capacity by 2030. Greenpeace (2012) shows total power capacity
increasing by more than 500 GW by 2030, with virtually all of those additions from renewables. Total coal power capacity peaks in the
2015–2020 time frame at 130 GW (up from 100 GW in 2009), and then declines to 100 GW in 2030 and 15 GW in 2050. By 2050, this
scenario projects that over 90% of electricity, heating, and cooling will come from renewables, along with about 60% of transport fuels.

Notes and discussion: See Annex 4.

In recent years, developing countries have continued to enact avariety of policy targets for future shares and amounts of renewable energy. These targets underscore the emerging leadershipin many countries for renewable energy futures, and foreshadow
future markets. For example, countries targeting wind power by
2020, 2025, or 2030 include Argentina (1.2 GW), Brazil (16 GW),
Egypt (7.2 GW), Jordan (1 GW), the Philippines (2.4 GW), South Africa(9.2 GW), and Thailand (1.2 GW). Examples for geothermal targets
include Kenya (5 GW), the Philippines (3.5 GW), and Indonesia (13GW). Examples for biomass power targets include Brazil (13 GW),
Nigeria (30 MW), and Thailand (3.6 GW). Examples for hydro targets
include Brazil (117 GW by 2021, from 84 GW in 2011) and Ethiopia(22 GW by 2030).37
Some countries have total renewable capacity targets, such as thePhilippines (triple 2010 capacity by 2030) and Tunisia (40% of total
power capacity by 2030). And at least 35 developing countries havepolicy targets for shares of electricity from renewables by either
2020 or 2030.38 (See Chapter 1 for sector-share targets, and annual
editions of the REN21 Renewables Global Status Report and associated online interactive map for complete targets database.)
Several countries target rural (off-grid) renewable energy—for
example, Bangladesh (150,000 biogas digesters by 2016 and 2.5
million solar PV systems by 2015), Benin (50% of rural electricity by2025), Colombia (30% of rural energy capacity by 2030), Lesotho(35% of rural electricity by 2020), Micronesia (50% of rural electricity), and Uganda (100,000 biogas digesters by 2017). And a few

countries target solar heating/hot water units or capacity, including
Jordan (30% of households by 2020), Morocco (1.2 GWth by 2020),
and Mozambique (100,000 units).39
Experts in developing countries repeatedly stressed several common
issues that they believed will shape (or limit) renewables development in the future. The most commonly cited were: the availabilityof credit, technical know-how, and renewable resource data; thedrive for local manufacturing and “local content” requirements;
public education and information; development of long-term energy
planning capacity and tools; and the imperatives of power capacity
shortages. Others complained that already-enacted policies are
not being implemented, that institutional responsibilities for forging
new power market rules and roles is unclear, that short-term
problems are crowding out long-term thinking, that conventionalenergy industries are mounting resistance to renewables, andthat evaluation criteria in competitive bidding programs for new
generation resources are unfair to renewables. Many pointed tosecurity of energy supply as a growing motivation that would shaperenewables markets.40

05

Experts believed that this expansion will accelerate through 2020
in leading countries such as Argentina, Chile, Colombia, Egypt,
Ghana, Indonesia, Jordan, Kenya, Mexico, Nigeria, the Philippines,
South Africa, and Thailand. And beyond 2020, renewables markets
will become even broader-based in a larger number of countries, asdeveloping countries take increasing leadership. The annual REN21
Renewables Global Status Report documents annual progress anddeepening engagement in developing countries, for renewableenergy policies, markets, and investments.36 (See also Box 8.)

Beyond these issues, experts outlined several areas of opportunity and expected market trends:n Electric power infrastructure. Developing countries will needto build “lots of infrastructure” in the next 10 years, noted many
experts. However, paths for infrastructure development may notfollow traditional models, noted experts, who foresaw expanding markets uniquely tied to the lack of full rural electrification
and weak centralized power grids in many countries. These paths
include many “off-grid” options, continuing investment in hydroand geothermal power, and micro-grids instead of new centralized
grids. Experts also noted that high shares of hydropower in many
countries, as well as future opportunities for pumped hydro, provide
opportunities for balancing variable renewables.41 (See also utility
grid integration in Chapter 2, “Great Debate 5” on page 27, and moreon rural renewable energy at the end of this section.)49

RENEWABLES GLOBAL FUTURES REPORT 05 Futures at the National and EU Levels

Box 8 | Brazil and South Africa
Along with China and India, Brazil and South Africa are members of
the so-called “BRICS” group, distinguished by large, fast-growing
economies. Although per-GDP investment in renewable energy inBrazil and South Africa is still far behind China, targets and scenarios point to high-renewables futures in these countries.
Brazil already receives more than 80% of its electricity fromrenewables, virtually all of that hydropower. And over half of passenger vehicle fuels come from ethanol, by far the highest sharein the world, as a result of continuous policies dating back to the1970s. Over the past decade, many renewable energy policies,
such as public competitive bidding under the country’s PROINFA
program, spurred nascent renewables markets for wind and biomass power, and a growing share of small hydro (plants less than
30 MW). Also, policies at the local level in some cities have spurred
solar hot water markets.
In the coming decade, scenarios and forecasts show a major wind
power market emerging in Brazil, including a government projection that wind capacity will increase from 1.5 GW in 2011 to 16
GW by 2020. (For comparison, the annual market in 2011 was 0.6
GW.) By 2030, Brazil’s national energy plan (2009) shows smallhydro capacity doubling, biomass power quadrupling, wind powerincreasing almost 20-fold, and large hydro almost doubling (allrelative to 2010). Taken together, the plan projects more than 100
GW of added renewables capacity between 2010 and 2030. For
biofuels, at least one projection (EPE, 2012) shows a tripling of
ethanol production from 2011 to 2020.

n Diesel generator replacement. Experts stressed the large
markets emerging for replacing existing diesel generators withrenewable-hybrid alternatives, in countries with large existing
diesel capacity. The use of renewables for off-grid and island-grid
infrastructure (including urban power grids) will become increasingly competitive with diesel generators, asserted experts, and withincreasingly favorable economics. Many cited the use of hybrid
wind-diesel systems or biomass power for replacing conventional
diesel power systems.42
n Settlement patterns and population expansion. Developing
countries will face a number of development pressures in the futurethat renewable energy can address, said experts, noting that population growth and settlement expansion to new areas will require
new energy services. For example, in lieu of costly grid expansion tothese new areas, some African experts envisioned new mini-grids
and renewable energy “islands” across the African landscape thatallow small villages to be productive and support larger populations.
One Egyptian expert saw the need to establish new areas of settlement outside of the Nile delta and valley to accommodate population growth—and saw those new areas served with renewables.43

50

n Power market regulations. Almost all electric utility systems inOECD countries have undergone some process of restructuring or
liberalization in past decades, including “unbundling” of generation,transmission, and distribution. Experts envisioned many developing countries going through this process in the coming decade,with consequently improved conditions for renewables, along withcompetitive markets for grid balancing services. Utility regulatorychanges would also usher in net metering for distributed renewables, experts foresaw, bringing a new era of two-way power flows

In 2012, South Africa introduced a 20-year resource plan calling for renewables to represent 38% of all new power capacity
added through 2030. This would mean 22 GW of new renewable capacity, most of which is planned to be wind and solar PV
power, with smaller amounts of hydro (2.6 GW) and CSP (1.2 GW).
The resource plan would lead to a 43% share of electricity fromrenewables by 2030, which compares with a 50% share by thesame time projected by Greenpeace (2011).
In the longer term, South African experts believed that renewables could supply up to half of the country’s energy by 2050.
They also emphasized the importance of CSP in South Africa’s
future, and foresaw much higher capacity than in the resource
plan, perhaps to 20 GW by 2035. They believed that South Africa
could become a world leader in CSP, with high local manufacturingcontent and competitive costs.
Experts also noted that solar PV “grid parity” was coming toparts of South Africa, and that PV markets were heading “off thecharts,” citing both rural uses and emerging net metering policies
for urban uses. (See solar PV in Chapter 6 for more discussion ofgrid parity.) And experts pointed to domestic policies supportiveof solar water heating and foresaw major market advances, suchas most new buildings constructed with solar thermal.

Source: See Endnote 36 for this chapter.

on local distribution systems, requiring new policies, new power distribution infrastructure, “smart grid” controls and meters, and integration of rooftop renewables into building codes, said experts.44
n Energy efficiency. Experts noted that large improvements in theefficiency of energy use are possible, which will reduce the needfor more supply additions, thus allowing renewable energy to attainhigher shares. As one example, the IRENA (2012) study on theprospects for the African power sector shows an improvement inenergy efficiency of 20–30% by 2050 (compared to the reference
scenario), which accompanies the growth of renewables to a 73%
electricity share. The Greenpeace (2011) scenario for South Africa
shows 50% less energy consumption by 2050 due to efficiency,
relative to the 2050 reference case.45
n Regional cooperation frameworks. Experts noted that many
developing countries are too small by themselves to create large
market opportunities and attract high levels of investments. They
noted that regional frameworks and projects for infrastructuredevelopment incorporating renewables will be important for somecountries, and that such frameworks can lower transaction costs,
mitigate risks, and attract larger investments from multilateraldevelopment institutions or private investors. They also notedthat such frameworks can aid cross-border transfers of renewable
power.46
n Research, education, and manufacturing. Experts expected
to see new research and manufacturing centers in developing countries, reflecting a shift to local knowledge and industry.
They expected this shift to lower costs and make technologies
more accessible. Experts also pointed to ongoing plans for future

Following are projections for individual technology markets
across developing countries.48
n Hydropower represents a majority of the existing power generation in many developing countries. In all scenarios, hydropower continues to grow strongly in developing countries. For Latin America,
the Brazil National Energy Plan (2009) shows hydropower almost
doubling by 2030 to 150 GW. Other Latin America regional projections for 2030 include 170 GW (Greenpeace, 2012) and 240 GW(World Bank, 2011). For Asia, Greenpeace (2012) shows non-OECD
Asia (minus China) reaching 100 GW by 2050, and APEC/ADB (2009)
projects hydro continuing to grow in the Asia-Pacific region by anaverage of 3% annually through 2030. For Africa, projections by
2050 include 50 GW (Greenpeace, 2012) and 150 GW (IRENA, 2012).49
n Small hydropower, a subset of the overall hydro market, hasbeen growing much faster than large hydro in many countries. As
one example, the Brazil National Energy Plan (2009) shows smallhydro doubling to 9 GW by 2030.50
n Traditional biomass is already a major source of energy indeveloping countries, primarily “traditional biomass” for heating
and cooking in rural areas. Experts foresaw one of the most important
future trends in developing countries to be the continued andaccelerating shift away from traditional biomass cookstoves tomore modern forms of stoves and fuels, including efficient biomass
cookstoves and stoves that burn biogas or biofuels.51
n Modern biomass use is growing in many developing countries,and experts foresaw expansion of several key markets in the
coming decades, including: (1) expanding wood chip/pellet markets
in countries such as Argentina, Brazil, Chile, the Philippines, andSri Lanka; (2) greater use of biogas for cooking, heating, and electricity generation in countries such as Nepal, Vietnam, and Kenya(in addition to markets in China and India); and (3) continued
expansion of modern biomass power generation and cogeneration(combined heat and power) in countries such as Brazil, thePhilippines, and Thailand, as well as throughout Africa—includingin Kenya, Mauritius, Tanzania, Uganda, and Zimbabwe.52
n Wind power was expected to boom across many developing
countries in the coming decade, said many wind industry experts.
By 2011, a total of 39 developing countries had existing wind power
capacity, including 11 countries in Africa/Middle East, 20 countries
in Latin America and the Caribbean, and eight countries in Asia.
Significant additions in 2011 occurred in Argentina, Brazil, Cape
Verde, Chile, Costa Rica, the Dominican Republic, Honduras, andVietnam. By 2011, 35% of global wind power capacity existed indeveloping countries (including China and India), up from 10% in
2005.53
By 2030, scenarios show 80–95 GW of wind power in Africa (GWEC,
2012; IRENA, 2012), 100 GW in the Middle East, 130 GW in Latin
America, and 210 GW in non-OECD Asia (Greenpeace, 2012).54
Expert statements also pointed to a coming wind power boom. “Thenext major expansions of wind markets will be to Latin America,
including faster growth in Brazil, which is emerging as the next big
player in wind power, and to a lesser extent to Africa, which is stillhindered by lack of power grids,“ said one expert. “We might easily

be surprised by developing country markets in the coming years,
including Latin America, Africa, and Southeast Asia, with muchgreater market diversification,” said a wind industry executive, whocalled existing projections for these regions “conservative.”55
n Solar PV and solar thermal power (CSP) markets have historically been concentrated in a small number of countries. In 2011, fully
three-quarters of global solar PV capacity existed in just 5 developed countries. The share in developing countries was less than 6%.
Experts insisted that this situation would not exist much longer, andthat a major broadening of solar PV and CSP markets to developing
countries will soon occur. By 2030, scenarios show 90 GW of solar
PV and CSP in Africa (IRENA, 2012; Greenpeace, 2012), 260 GW in
the Middle East, 100 GW in Latin America, and 260 GW in non-OECD
Asia (Greenpeace, 2012).56 (See also solar PV and CSP in Chapter 6.)n Rural renewable energy for (off-grid) settlements and smaller
island communities has been a prominent aspect of rural development for decades, especially for the hundreds of millions of households still not served by central power grids. In particular, experts
pointed to the continuing drive for more-efficient cookstoves that
use traditional biomass as a central feature of rural energy futures.
In off-grid areas, many renewable technologies today provide power
for lighting and communications (for homes, schools, health care,and business); heat for space heating, cooking, and crop drying andprocessing; and motive-force for industrial fans, pumps, and equipment.57 (See also Box 9 below.)
Future prospects for rural renewable energy include the continuation of these trends with solar PV, solar thermal, hybrid wind-solardiesel systems, biogas, and biomass gasification. Experts continued
to foresee these technologies used for so-called “productive uses,”in provision of water, health care, education, and small businessservices. This report cannot cover all of these applications, so also
see the Rural Renewable Energy chapter in annual editions of the
REN21 Renewables Global Status Report.58

05

localization—requiring local content in renewable energy projects
as a means to promote manufacturing and jobs. But they debatedwhether localization will produce higher costs, and what it would
mean in practice. Experts also saw renewable energy increasingly
integrated into universities, vocational and engineering schools, andpublic education programs by consumer organizations.47

Box 9 | Solar PV for Rural (Off-Grid) Areas“Solar PV is already becoming competitive with diesel generators, which represents a real revolution in off-grid electricity,”
said one Indian expert, who believed that off-grid markets
for solar PV will become firmly established within five years
once rural service infrastructure develops and business models
become better proven. Many other experts pointed to the hugeproliferation of mobile phones in rural areas and the need forcharging by potentially hundreds of millions of rural households. “People walk miles to charge mobile phones,” said one
expert, who envisioned the proliferation of cheap solar mobile
phone chargers becoming a significant turning point in the useof solar PV.
There are already many examples today of such markets, suchas the well-known Grameen programs in Bangladesh for rural
mobile phones and solar PV. Other experts expected major newmarkets in street and security lighting. Markets for rural solar
lighting systems for households have been growing since the1990s in many developing countries as part of the “access”
agenda by governments, utilities, and rural development
agencies.

Source: See Endnote 57 for this chapter.
51

RENEWABLES GLOBAL FUTURES REPORT 06 EVOLUTION OF TECHNOLOGIES, COSTS, AND GLOBAL Market Growth

06

EVOLUTION OFTECHNOLOGIES,COSTS, AND
GLOBAL Market
GrowthGlobal markets for renewable energy
have boomed over the past decade. This
expansion has brought considerable
innovation and cost reduction and willcontinue to do so. Projections for future
market growth are equally dramatic, driven
in part by further technology improvements
and continuation of cost trends. Markets
have already reached the point where
technology is no longer the “bottleneck,”
many say.

52

In power generation, global wind power capacity grew by 20% in2011 (to 238 GW), after growing by an annual average of 26%
over the five-year period 2006–2011. Solar PV capacity grew by arecord 74% in 2011 (to 70 GW), after growing by an average of 58%
over the five-year period. Solar thermal power (CSP) grew by 35%
in 2011. In contrast, hydropower, biomass, and geothermal power
have been mature for decades, and five-year growth rates for theserenewables were more on par with conventional energy technologies. In terms of total power generation capacity, renewableenergy reached 1,360 GW in 2011, including 970 GW of hydropower.
This meant that global renewable capacity represented about onequarter of total global power capacity.2
Growing markets for hot water and space heating that incorporate
biomass, solar thermal, and geothermal have also contributed totechnology evolution and cost reduction.a Biomass remains theprimary form of heat supply from renewables, and provides about
one tenth of global energy supply, two-thirds of which is “traditional” biomass use (see footnote on page 15). Another 10% of thebiomass resource is used for electricity generation and combined
heat and power (CHP). Most biomass is consumed locally, butinternational trade in wood pellets has grown since the mid-1990s.

Markets for solar thermal collectors (for hot water and heating)have been growing rapidly in recent years, and solar now provides
almost as much heating capacity as modern biomass. Solar heating capacity grew by 27% in 2011, following 17% annual average
growth over the five-year period 2006–2011. Geothermal heating
capacity is roughly one-fifth that of biomass heating capacity andalso growing.3
Transport fuels from renewables are primarily ethanol and biodiesel
produced from a variety of biomass crops. Production of these
two fuels together reached 107 billion liters in 2011, about 3% of
total global road transport fuel consumption. Ethanol fuel production grew by an annual average of 17% over the five-year period
2006–2011, although growth was stagnant in 2011, and biodiesel
grew by an annual average of 27% over the five years.4
Expert interviews and scenarios offer projections of continued
dramatic global market growth in the coming decades, coupledwith continuing technology improvements and cost reductions.
These projections are explored in this chapter. Most common are
projections for global power capacity, as shown in Table 4 fromfive scenarios to 2030. In these scenarios, wind power capacity
increases between 4-fold and 12-fold by 2030, solar PV between
7-fold and 25-fold, CSP between 20-fold and 350-fold, biomass
power between 3-fold and 5-fold (with one exception), geothermal
between 4-fold and 15-fold, and hydro between 30% and 80%.5
The following sections explore projections for the evolution ofmarkets, technologies, and costs for individual technologies.
These include future cost projections by experts and scenarios.
In general, scenarios and experts expect costs to decline for ahost of reasons, such as increased market volumes that acceleratetechnology development, economies of scale in manufacturing, andmaterials advances.6, b

06

With the explosive growth of renewable energy markets over the
past decade have come dramatic technology improvements andcost reductions. These growth rates reflect a “take-off” phase thathas seen many renewable energy technologies become mainstream
investments and undergo dramatic advances in performance, cost,and scale.1 (For details on the status of all technologies and markets,see annual editions of the REN21 Renewables Global Status Report.
For more on cost comparisons between renewables and otherenergy technologies, see “Great Debate 1” on page 12. For policies
underlying market growth, see “Great Debate 2” on page 13, andChapter 5. For more on technology integration, see Chapter 2.)

Table 4: Global Renewable Power Capacity by 2030 in Recent Scenarios
Hydro

Wind

Solar PV

CSP

Biomass

Geothermal

Ocean

GW
Actual 2006 Capacity for Comparison

–

74

8

0.4

45

9.5

0.3

Actual 2011 Capacity for Comparison

970

238

70

1.8

72

11

0.5

IEA WEO (2012) “New Policies”

1,580

920

490

40

210

40

10

IEA WEO (2012) “450”

1,740

1,340

720

110

260

50

10

IEA ETP (2012) “2DS”

1,640

1,400

700

140

340

50

20

BNEF GREMO (2011)

—

1,350

260

30

—

IEA RETD (2010) “ACES”

1,300

2,700

1,000

120

340

—

—

Greenpeace (2012)

1,350

2,900

1,750

700

60

170

180

1,200

Sources: See Annex 2. Actual 2006 and 2011 from REN21 (2008, 2012).
Notes: CSP stands for solar thermal power. Figures for 2030 are rounded to nearest 10 GW or 50 GW from original sources. Hydropower
figure for 2011 excludes pure pumped hydro capacity; a comparable figure for 2006 is not available, see REN21 (2012), notes to Table R2,
and note on hydropower on page 168.
a) Markets for cooling from renewables are much less developed than for heating, but are also growing; see annual editions of the REN21 Renewables Global
Status Report. For more on both heating and cooling technologies, see buildings integration on page 26 and urban infrastructure integration on page 39.
b) Some experts questioned the sustainability of high levels of “manufactured” renewables like wind and solar PV in the very long term, in terms of material
resources, rare earths, recycling, and toxic wastes. See Endnote 6.

53

RENEWABLES GLOBAL FUTURES REPORT 06 EVOLUTION OF TECHNOLOGIES, COSTS, AND GLOBAL Market Growth

Current cost estimates by REN21 (2012) are also included in thefollowing sections for comparison with future projections.a However,both current cost estimates and future projections are surroundedby considerable controversy, and the figures presented here are notclaimed as definitive. In several instances, industry experts disputed
REN21 estimates of current costs and said commercial costs wereactually much lower, as evidenced by commercial contracts being
signed in 2012, even excluding (backing out) any subsidies. Some ofthese disputes have been noted in the text.7 (All costs given in thischapter are intended to reflect unsubsidized costs unless otherwise
noted.)

locations in Morocco, wind power is at parity or cheaper than coal,”said one African expert. A previous edition of IEA WEO (2010)
showed costs declining to about 6–9 cents/kWh during the period
2021–2035, but the most recent edition (2012) offers no costprojections. IEA ETP (2012) projects 5–10 cents/kWh by 2020.11
Industry experts saw many possible technology changes forthcoming, such as new materials, lower weight (especially of blades
and nacelles), concrete towers instead of steel, permanent-magnet
generators (which reduce wear on drive trains), direct drives,
substitutes for rare earths (including non-magnet generators),
deformable blade profiles, more sophisticated monitoring andreporting of performance, and more sophisticated optimization.12
Some believed that the wind turbine industry could evolve similar
to the aircraft industry, reaching a plateau in size like in the 1970s
but with growing sophistication and performance in other respects.
“Lifetimes are likely to remain at 20 years because we are getting
close to design limits; turbines are not as over-engineered as they
were in the 1980s,” said one expert. Transport and logistics will
become more important, and manufacturers may even establish
mobile factories to manufacture parts on-site.13

Wind Power: Onshore
All industry experts saw wind power continuing as a very strong
market for decades. Among the most optimistic projections was
1,000 GW globally by 2020, made by a wind industry executive.
Another expert saw 50% of global electricity from wind by 2050 as
possible, and “not insurmountable given enough gas and storage tobalance.” In 2011, 50 countries added new wind power capacity, andmany experts expected a growing diversity of wind markets in many
more countries around the world to take off before 2020.8
Some utilities are equally optimistic. For example, RWE said that“wind power is well on its way to becoming competitive even ina non-regulated market.” And Gas Natural Fenosa said that “windenergy is one of the most mature renewable technologies and is themost widespread and has the greatest growth horizon world-wide.”9Contemporary onshore wind power costs are cited by REN21 (2012)
as 5–16 U.S. cents/kWh, although some experts claimed thatlower costs of 4–5 cents/kWh were more typical for good sites.b
Regardless of the exact figures, industry experts pointed out thatonshore wind power is already competitive with wholesale power
prices in many locations, and some European experts expected wind
power to achieve full grid (wholesale) parity with fossil fuel plants
in Europe by 2015, with typical costs down to 8–10 U.S. cents/kWhequivalent.10
Other experts asserted that wind power at good wind sites in the
United States, Europe, and many developing countries is alreadycompetitive with conventional wholesale power costs. “In some

One wind industry executive also stressed the information technology side of wind power, and said: “Our industry is going to become
more sophisticated—we are already a major global user of supercomputer power.” The executive pointed to a much stronger focus
in the future on information technology (IT) and monitoring (i.e.,
hundreds of measurement points on a single turbine), combinedwith smarter maintenance, which will mean less downtime because
components will be replaced before failure. And maintenance will bedone during low wind periods to reduce the impact of maintenance
downtime. And further research and development opportunities inwind for the future will also make heavy use of computing power:
aerodynamics/fluid dynamics, grid balancing, assessment of windconditions, and wind site analysis that uses anti-correlations ofwind resources for less variability.14
Experts pointed to the potential for much cheaper small-scale turbines, which some said could revolutionize the use of wind powerin local power applications and for hybrid wind-diesel systems in
off-grid applications (see also developing countries in Chapter 5).
REN21 (2012) gives current costs of small-scale wind turbines (lessthan 100 kW) of 15–20 cents/kWh in the United States, and costsof household-scale turbines (less than 3 kW) of 15–35 cents/kWh.
WWEA (2012) shows more than 650,000 small wind turbines globally in 2010, and notes that: “Fully competitive small wind markets
are … found in developing countries where off-grid and mini-grid
applications prevail.”c WWEA projects that the global capacity ofsmall wind turbines will increase almost 10-fold between 2010 and
2020.15
Experts also foresaw other possible “game-changers” for wind
power. Examples are low-speed turbines, vertical-axis designs, andtowers that can be built on-site from the ground up or act as theirown cranes. One expert said, “So many people and different typesa) There are few published sources that give current cost ranges on a recurring global basis other than REN21. IEA (2012) Energy Technology Perspectives gives
cost projections just for the United States. However, many one-time studies capture current costs at the time of their publication, for example GEA (2012) and
IPCC (2011), but often give costs only for a particular region. IRENA (2012) is a new publication on costs but was available too late for press.
b) All costs in this chapter are in U.S. dollars.

54c) The World Wind Energy Association defines “small wind” as less than 100 kW and notes that many definitions exist.

Wind Power: Offshore
The IEA WEO (2010) offered this prognosis for offshore wind power:“Offshore wind turbine technology needs further development.
At present, most offshore turbines are based on onshore turbine
technology, modified to reflect practices and experiences in otheroffshore industries. The reliability of offshore turbines, which
is currently lower than that of onshore wind turbines, needs toimprove. More robust turbines, designed from the outset to operate in offshore conditions, need to be developed for the technology
to take off.… Improved foundation designs can help bring costs
down. Although offshore wind turbines are currently located inshallow water areas, significant potential exists in deep waters andnew designs are being developed to allow capturing this potential.
Floating turbines are one such design.”17
Current offshore wind power costs are cited by REN21 (2012) as
11–22 cents/kWh. The IEA WEO (2010) projects costs declining
to 6–9 cents/kWh during the period 2021–2035. The IEA ETP(2012) “Technology Roadmap” for wind power envisions improved
economics of foundations, supply chains, and installation strategies
through 2020, and then beyond 2020, a next generation of offshore
wind turbines and floating foundations.18
Expert opinion about future markets for offshore wind power varied
widely. Some experts believed that offshore wind could become
fully half of the global wind power market by 2020. One said: “Wewill see steady incremental progress with offshore wind. Costs arehigher but the wind is steadier so there is less need for balancing.
Offshore wind farms are closer to coastal load centers, attractivefrom a technical point of view, and help to boost economies ofdepressed port and harbor facilities. Floating turbines are absolutely
achievable, and might represent a major tipping point on offshore
costs. We could see mass production, built onshore and then moved
offshore, so won’t require the extensive logistics of offshore construction.”19 (For more pro-and-con discussion, see “Great Debate
11” on this page.)
One Swedish expert was also optimistic, and saw a strong
equivalence between onshore and offshore wind power markets
in Sweden: “I think we’ll see a lot more offshore in the next five
years. In Sweden, the cost of offshore in cents/kWh is not higher
than onshore, and there is no special support for offshore relative
to onshore. Offshore can be located in the path of inter-country

Great Debate 11 | What Are the Pros and Cons of Offshore Wind Power?
Expert views on offshore wind power varied widely, and experts debated the pros and cons of offshore wind relative to onshore.
The positive points cited by experts included less visual impact, less impact on shipping lanes near coastlines, higher wind speeds,
bigger projects, no NIMBY (“not in my backyard”) problems, proximity to coastal urban population centers, bigger project developers
providing more credibility and investor security, more predictable wind patterns, scalability to very large size plants, and public relations value for oil companies and pension funds.

06

of companies are involved all along the value chain, from university
research to IT companies to major industrial firms to specialized
technology suppliers, that some major innovations are almost
inevitable.”16

Many utilities are optimistic about the prospects for offshore wind power. For example, E.ON recently said that offshore wind has
an "enormous potential for the future.” And RWE said: “Over the next few years, [onshore wind power] will be joined by enormous
offshore wind farms that offer a number of advantages. Apart from greater [public] acceptance, winds in coastal areas and at sea
are stronger and more persistent.” Iberdrola called offshore wind power “the second revolution in renewables.”Negative points cited by experts included higher costs than onshore wind and higher levels of policy support needed (feed-in tariff
premiums). One expert said: “I don’t expect offshore to be competitive without policy support until at least 2025–2030,” and further
said: “I doubt that offshore will ever be as cheap as onshore.” Another offered: “Offshore wind markets will really be a matter ofgovernment support for a long time. It’s not clear yet how to reduce offshore costs, since only one-third of the cost is the turbine.”
Utilities also point to the technical and logistics difficulties: “The stresses on the equipment from wind, waves, salt water and ice arealso greater [than onshore]. It is also more difficult to perform installation and servicing work at sea, and the distance to the coast
requires special rules for connection to the grid,” said Vattenfall. And “Huge challenges need to be overcome with regard to technology and materials,” said RWE.
Some experts framed the question of offshore wind development as a social or institutional issue. One asked: “Should policy promoteoffshore to avoid the problems of onshore wind power social acceptance and land use?” Another, however, criticized the diversionof investment resources away from onshore installations that could be more locally owned and controlled. “The only reason we areseeing offshore development is because big utilities like big centralized projects—and that’s not the right reason,” said the expert.

Notes and discussion: See Annex 4. Sources for quotes: See Endnote 19 for this chapter.
55

RENEWABLES GLOBAL FUTURES REPORT 06 EVOLUTION OF TECHNOLOGIES, COSTS, AND GLOBAL Market Growthtransmission lines across the water. The deciding factor is how theinfrastructure costs are allocated between transmission and theturbines and offshore plant itself.”20
Technology experts envisioned definite technology evolution foroffshore turbines. Possible future innovations include floating offshore configurations, offshore logistical platforms that can service
entire groups of offshore turbines, longer lifetimes (now 25 years
versus 20 years for onshore), and larger turbine sizes. One windindustry executive believed that offshore turbine sizes will reachat least 10 MW in size. Experts saw the maturing of supply chains,
including vessels, harbor facilities, operations and maintenance andlogistics strategies, new foundation concepts, fewer moving parts,
new two-blade concepts, gearless turbines, and a greater focus on
reliability and logistics to reduce operating costs and downtime.21

differential electricity prices across customer classes, seasonal or
peak pricing, “smart” pricing plans that link prices to grid conditions,and net metering rules.a Grid parity including subsidies matters toinvestors, while grid parity excluding subsidies matters to policymakers (as an indication that cost- or price-based policy support is
no longer needed).24
In addition, if customers face “time of day” (peak) pricing, or
prices based on grid conditions, then grid parity may well exist
at peak times (or on high-demand days) but not at other times.
Furthermore, financial experts pointed out that “cost of electricity”
metrics, including the concept of grid parity, are not as important toinvestors as financial rate-of-return metrics—that is, does a solar
PV project meet a given rate-of-return threshold? The answer candepend on factors outside of conventional “grid parity” assessments, and financial experts asserted that finance, not cost, has
become the key constraint for solar PV markets.25
Many solar PV experts claimed that grid parity already exists insome locations around the world for certain types of consumers,
although such claims often mean costs including subsidies rather
than unsubsidized costs. Regions cited include Germany, Italy,
Japan, Spain, parts of India, and parts of the United States, including
California and Hawaii. But there was little consistency among expert
claims.26

Solar PV
Many solar PV experts and visionaries were very optimistic about
the future of solar PV. “A lot of new markets for solar PV are going
to pop out of the woodwork as the cost per watt declines—the sky
is the limit,” said one. Another lamented persistent perceptions ofsolar PV as “exotic,” when in fact its maturity is beginning to rival
wind and geothermal. One longstanding industry expert projectedthat global solar PV capacity could reach 400–800 GW as soon as2020. And by 2050, global solar PV capacity could reach as high as
8,000 GW, one visionary challenged.22
Expert estimates in 2011 for the annual solar PV market by 2015
ranged from 23 GW to 43 GW, and for the annual market by 2020
from 40 GW to 160 GW. (The annual market in fact reached a record
30 GW in 2011, as reported in mid-2012 after those estimates were
made.) Europe accounted for 75% of the global market in 2011,
but some experts believed that this would shift before 2020, with
Europe’s market share declining below 50% as markets in China,
Japan, and other Asian countries take hold.23 (See also Chapter 5.)
For a long time, many considered “grid parity” to be the “holy grail”
of solar PV, dating back to the 1980s. Generally, “grid parity” isaccepted by most to mean equivalence of solar PV generation costswith retail electricity prices. However, solar PV experts pointed outthat this concept can be misleading or distorted due to subsidies,56

A typical comment was, “Yes, I agree that solar PV is close to grid
parity in many places, and I would expect grid parity in parts of theUnited States, Japan, and Europe by 2015.” One expert expressed
optimism that by 2020, fully 30% of global electricity sales would
be at retail price parity with solar PV. Another claimed that grid parity in the United States already existed in Hawaii and would cometo California within 3–5 years, and to several other states by 2020.
Another believed that “about 20% of the U.S. population is alreadyat grid parity, and most of the rest will get there by 2020.” The IEA
ETP (2012) “Solar PV Roadmap” also shows grid parity by 2020 for
most applications (in many regions).27
Historically, one common metric for PV progress has been
module price in dollars per watt. This metric has undergone along decline that has accelerated in recent years, and in 2011
it was approaching the historic “holy grail” level of $1/watt.
Many experts pointed to the dramatic reductions in this metricin recent years. Said one Chinese solar PV industry manager:“Since 2000, manufacturing cost has been reduced by 3–4 times,
from $6/watt in 2000 to below $1.50/watt today; back then, we
thought $3/watt was going to be a big achievement, but we wentright past that.” Several experts (in 2011) predicted prices below$1/watt in the near future, including prices down to $0.80 for
crystalline silicon before 2020.28
REN21 gives current solar PV costs in Europe of 22–44 US cents/
kWh for rooftop installations and 20–37 US cents/kWh for utilityscale installations, depending on system size, efficiency, latitude,
local solar radiation conditions, and other factors, although there
are a wide range of estimates cited from other sources, including
lower numbers in the 9–13 cents/kWh range, and much controversya) In some countries, grid parity is also confounded by public subsidies to retail consumer electricity prices. Cost- or price-based policy support is generally acapital investment subsidy or tax credit, or a feed-in tariff (preferential pricing). However, other forms of policy support may continue to be needed even at grid
parity, such as net metering rules, interconnection standards, and guaranteed-purchase mandates. See Endnote 24 for this chapter for details. See footnote on
page 26 for definition of net metering.

about such numbers. In the long term, costs for solar PV are projected in several scenarios to fall below 10 cents/kWh.29
In particular, IEA ETP (2012) shows costs in 2030 at roughly 7–11
cents/kWh for utility-scale projects and 8–14 cents/kWh for rooftop installations. Greenpeace (2012) shows costs of 5–10 cents/
kWh by 2030–2040, depending on the region.30 (However, experts
also pointed out that many published projections of future costs are
too high for low-latitude countries because of the improved solar
resource.)

As cost-reduction in PV modules slows down, “the balance of system is where the biggest cost reductions will occur—from $2.50/
watt today to perhaps $1.30/watt by 2030—as solid-state inverters decline in cost and mounting hardware is eliminated,” said one
expert. Another said: “we will see continued cost reductions, notjust the solar PV panels themselves, but also the costs of integrated
installations, as component and system costs drop.”32
Historical factors contributing to solar PV cost reduction haveincluded wafer fabrication (thinner wafers and lower material
costs), cheaper forms of atomic-layer deposition, process automation, economies of scale in manufacturing, and higher cell efficiencies. In the future, solar PV cost reductions could come from several
directions, although there was some disagreement about which
would prove the most important.33“The way to cheaper PV is through higher efficiency of cells,”
asserted several solar PV experts. In contrast, one expert asserted
that, “it’s easier to reduce the manufactured cost per square meter
than to improve efficiency.” Yet another believed, “it is impossible tosay where the technology will go!” Many firms are now conducting
research on new materials, but one expert cautioned against any
quick revolution, given that development cycles can take 5–10 years
before commercial products are seen. “Silicon is going to be really
tough to beat,” the expert added.34
Beyond manufacturing cost reductions of existing crystal-silicon
and thin-film technologies, experts cited the following directions
for further cost reductions: (1) higher cell efficiencies, with crystal
silicon reaching 20–24% and thin-film reaching 15% by 2020, followed by a whole range of PV products with efficiencies in the range
of 5–40% beyond 2030; (2) greater use of thin-film, with market
shares possibly reaching 30–40% by 2020–2030, up from 20% in
2010; (3) dye, polymer, and organic PV as cheaper, lower-efficiency
alternatives beyond 2020, mostly useful for consumer applications;(4) use of more “earth abundant” materials in fabricating solar PV,
beyond 2020; (5) new and cheaper foundation materials such asgraphite to reduce the need for steel mountings; and (6) cheaperbalance-of-system components, integrated with power systems
and demand-side equipment control.35

Concentrating Solar Thermal Power (CSP)
Many experts believed that solar thermal power markets would
become much stronger by 2020. One expert offered a very optimistic prognosis: “We could see 50–70 GW of CSP worldwide by
2020, which could include 5 GW in Spain, 5 GW in the rest of Europe(especially Turkey), 20 GW in the U.S., 30 GW in the Middle East/
North Africa (especially Morocco), 5 GW in India, and possibly 5 GW
in China.” Another was even more optimistic: “The global CSP market could reach 25–50 GW/year by 2020 if some major companies
enter the market, and even 50–100 GW/year is not unreasonable.”
Greenpeace (2012) shows over 2,000 GW of CSP by 2050.36
CSP power costs are cited as 19–29 cents/kWh by REN21 (2012).
There are many divergent claims over the current “real” costs of CSP
in today’s markets, by industry, experts, and regulators, which hinders understanding of how far CSP costs have to fall before becoming competitive. Other industry estimates in 2011–2012 showedcurrent costs as low as 10 cents/kWh for new projects. Cost ranges
given by scenarios are 7–11 cents/kWh by 2030 (IEA ETP, 2012),
11–23 cents/kWh by 2035 (IEA, WEO 2010), and 6–10 cents/kWhin the long term (Greenpeace, 2012).37

06

Grid parity also accounts for “balance-of-system” costs, including
mountings, wiring, and power inverters. Balance-of-system costs
have historically represented about half of total costs, but have also
been falling in tandem with PV panel costs. In recent years, more
attention has focused on the cost reductions possible in balanceof-systems, including new mounting materials, cheaper electronics,
and stand-alone DC systems that do not require inverters.31

The IEA WEO (2010) offered the following prognosis of solar CSP
economics: “Further technology improvements and cost reductions
are important, especially in the mirrors/reflectors, which account foraround 20–40% of the overall capital costs, depending on the plantdesign. Power tower technologies are considered to have significant potential in this respect, with potential cost reductions for the
heliostat on the order of a factor of two to three. Even more fundamental to the economics of CSP is increasing its availability, throughthe integration of storage (e.g., molten salt). While this significantly
increases the upfront investment costs … it can be more than offset
by the value of the increased hours of operation per day.”38
CSP technology faces decades of evolution and offers many possible
areas of cost reduction, according to experts. Most were optimisticthat CSP will have a prominent place in energy systems of the future,and that development trends of the previous five years are only the
beginning of a strong decade through 2020. One expert gave thislong-term prognosis: “CSP development will probably remain policy
dependent through 2025 or 2030, depending on natural gas prices.
After that, it will enter a competitive period with steep learning
curves, and by 2050 will be installed at rapid rates reminiscent of
natural gas turbines in the 1980s and 1990s. These time frames
could be accelerated if natural gas prices rise steeply or become
more volatile, such that fuel price risk becomes a major factor.”39

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RENEWABLES GLOBAL FUTURES REPORT 06 EVOLUTION OF TECHNOLOGIES, COSTS, AND GLOBAL Market Growth

The IEA ETP (2010) “Technology Roadmap” envisions continued
innovation in CSP though 2020, and then envisions a number of
specific innovations during 2020–2030, including higher working
temperatures (higher efficiency), larger storage capacities, supercritical plants, desalination by co-generation, and tower plants with
air receivers and gas turbines. The roadmap envisions networks of
HVDC transmission lines to bring CSP power from remote areas, andincreased policy support and incentives as costs become closer tocompetitive. Beyond 2030, incentives may no longer be needed, andsolar CSP storage makes major contributions to balancing power
grids. The roadmap concludes that, “in the sunniest countries, CSP
can be expected to become a competitive source of bulk power inpeak and intermediate loads by 2020, and of base-load power by
2025 to 2030.”40
But CSP also faces headwinds, according to experts, including: (1)cheaper competing solar PV costs if CSP storage and other attributes are discounted; (2) land and water use (although hybrid dry/
wet cooling can be used in areas with limited water resources); and(3) transmission access in remote desert regions. In particular, there
was much disagreement about the future competitiveness of CSP
versus solar PV. CSP plants can offer many hours of energy storage
that solar PV cannot, and this was frequently cited as a key asset
for CSP plants, relative to solar PV. With enough storage, a CSP plant
can offer all the capabilities of a conventional generator, providing
firm dispatchable power, as well as grid balancing, spinning reserve,
and ancillary services, but with even greater flexibility than a conventional fossil fuel or nuclear plant.41
Experts stressed that part of CSP technology evolution will take theform of novel applications, some of which are emerging already.
Such applications include: (1) managing grid variability and providing peak power using thermal energy storage embedded within the
CSP plant; (2) dedicated CSP plants powering desalination plants incoastal areas; (3) embedded CSP plants in industrial facilities to provide power and industrial process heat; (4) pre-heating feed-water
for a coal power plant to reduce coal consumption; (4) integration
with combined-cycle natural gas plants (already occurring); and (5)producing gas or liquid fuels including hydrogen.42

biomass. However, the IEA (WEO, 2010) foresaw more biomass use
for power generation: “Global modern primary biomass consumption
nearly triples between 2008 and 2035 … most of the increase in biomass comes from the electricity sector and transportation. By 2035,
power generation becomes the largest biomass-consuming sector.”
The GEA (2012) projects that bioenergy use of all forms doubles or
triples by 2050, for power, heat, and transport, including co-processing with coal or natural gas with carbon capture and storage.43(See also Box 4 on page 26.)
Experts viewed the future of biomass from four distinct viewpoints:
n Fuel supplies. A breakthrough in biomass demand could come asbiomass becomes a mainstream commodity in commercial markets
in standard forms like pellets or bio-heating oil (from pyrolysis/
torrefaction), said experts. In particular, they expected pellets tobecome a widespread commodity, efficiently transported internationally. And while some experts questioned how much biomass
could be produced given competition for land and food, others saw
no real limits because of the huge resources available from agricultural and forest wastes, and from new approaches to growing
biomass crops on surplus land.44
n Technical conversion pathway/process. Most biomass used
today is simply burned for heat and power. The second most common process is anaerobic conversion to biogas. Experts foresaw
increased production of biogas from sewage plants, manure, andorganic waste, and cheaper biogas plants made with new materials.
Some also saw new applications for the biogas: “Biogas will be used
for transport, as it doesn’t need to be cleaned for use in a vehicle
engine to the same extent it needs to be clean for a gas turbine,”
said one expert. Some foresaw much greater use of thermal gasification, while others questioned whether gasification would achieve
wide scope.45
n Heating technologies. Experts envisioned much greater use of
biomass heating technologies, including CHP plants, district heating
systems, cooling systems for commercial and public buildings, andindustrial process heat. Future CHP systems might predominantly
fall into the “small or medium scale” of 5–10 MW, but also at smaller
sizes of 1 MW, or larger sizes up to 100 MW.46
n Integration into agricultural and forestry industries throughintegrated “bio-refineries.” According to some experts, the futurewould see fewer stand-alone bioenergy production sites, and rather
would trend toward multi-purpose co-production systems, which
co-produce biofuels, sugar, electricity, and biogas, and also utilize
leftover waste for fertilizer, chemicals, biofuels, animal feed, andother chemicals. These “integrated bio-refineries” could become
part of the food system by 2020, and lead to integrated “bio-based”
industries for food, fuels, chemicals, textiles, paper, and otherproducts.47

Biomass Power and Heat

58

Many biomass experts interviewed believed that biomass’ main contribution in the long term will be to heat supply, and that markets forbiomass will gravitate toward both combined-heat-and-power (CHP)
and heat-only systems, along with co-production of gas and liquid
fuels. For example, one expert projected that, “by 2050, renewables
will provide more than 80% of global heat supply, half of that from

Biomass applications are extremely diverse, and so few generalizations can be made about costs. Greenpeace (2012) characterizes
costs in this way: “The crucial factor for the economics of biomass
utilization is the cost of the feedstock, which today ranges from anegative cost for waste wood … through inexpensive residual materials to the more expensive energy crops. The resulting spectrumof energy generation costs is correspondingly broad. One of themost economic options is the use of waste wood in … CHP plants.
Gasification of solid biomass, on the other hand, which opens up a

wide range of applications, is still relatively expensive." In the longterm, Greenpeace expects that favorable electricity production
costs will be achieved by using wood gas both in micro CHP units
and in gas-and-steam power plants, and says, "there is [also] great
potential to use solid biomass for heat generation in both small andlarge heating centers linked to local heating networks.”48

like batteries. GEA (2012) shows pumped hydro costs in the range
of 3–9 cents/kWh.51

Geothermal
Geothermal is considered a mature technology. REN21 estimatescurrent geothermal power costs at 6–11 cents/kWh. Some scenarios do show future declines in costs with technology improvements. For example, Greenpeace (2012) shows geothermal power
costs declining from 15 cents/kWh today to 9 cents/kWh by 2050.
Greenpeace says: “[Geothermal electricity] was previously limited
to sites with specific geological conditions, but further intensive
research and development work has enabled widened potentialsites. In particular the creation of large underground heat exchange
surfaces—Enhanced Geothermal Systems (EGS)—and the improvement of low temperature power conversion, for example with theOrganic Rankine Cycle, could make it possible to produce geothermal electricity anywhere. Advanced heat and power cogeneration
plants will also improve the economics of geothermal electricity. Asa large part of the costs for a geothermal power plant come fromdeep underground drilling, further development of innovative drilling technology is expected.”52

Hydropower

Many experts foresaw an expanding future role for pumped hydropower, particularly as a form of energy storage to balance variable
renewables, including using rapid-reaction turbines and variablespeed pumps. NREL (2012) notes that: “Pumped-storage hydropower is considered a mature technology. However, incremental
improvements in efficiency are possible, and the flexibility of existing and future plants may be improved using variable-speed drive
technologies. Other possible developments include use of saltwater
pumped-storage hydro facilities in coastal regions and undergroundpumped-storage hydro.” IEA ETP (2012) similarly notes that new
projects or retrofits are incorporating variable-speed pumps that
increase the ability of pumped hydro to provide grid flexibility on
shorter time scales.50
REN21 (2012) shows 130 GW of pumped hydro capacity globally in
2011, more than one-third of this in Europe. REN21 also notes that
Europe plans an additional 27 GW by 2020, that the United Stateshas 34 GW under permit, and that China increased its five-year plan(2011–2015) target for pumped hydro to 80 GW. IEA ETP (2012)
notes that historically, pumped hydro could be justified economically by arbitrage in daily electricity price spreads, but that in recent
decades, natural gas has reduced spreads such that, “at present,energy arbitrage, the traditional driver for investment in pumped
hydro, does not stand up in market conditions.” However, IEA ETP(2012) also shows pumped hydro levelized energy costs, at about
12 cents/kWh, to be significantly less than other storage options

06

Hydropower has been a mature technology for decades, and scenarios like GEA (2012) show stable costs for hydro in the future.
As noted in Chapter 2, the storage inherent in most hydropower provides capacity for managing variable renewables on
power grids. Many projections show continued market growth
for all forms of hydro, particularly in developing countries.49(See Table 4 on page 53 and also Chapter 5 for many countryspecific projections.)

Ocean Energy
Market projections for ocean energy are difficult because the technology is still not commercial. By 2011, a handful of projects werein operation around the world, notably in France and Korea, and theocean energy industry appeared poised for full commercial-scale
development. Some experts offered the possibility of future breakthroughs. GEA (2012) shows ocean energy costs of 9–38 cents/
kWh in 2009, depending on the technology, and projects potential
declines in the future to 6–20 cents/kWh for ocean-thermal power(OTEC), 9–30 cents/kWh for tidal power, and 8–30 cents/kWh forwave power.53
Greenpeace (2012) sees potential for lower costs in the coming
decades: “The cost of energy from initial tidal and wave energy
farms has been estimated to be in the range of 25–95 US cents/
kWh, and for initial tidal stream farms in the range of 14–28 US
cents/kWh. Generation costs of 8–10 US cents/kWh are expectedby 2030. Key areas for development will include concept design,
optimization of the device configuration, reduction of capital costs[with] alternative structural materials, economies of scale, andlearning from operation.… In the long term, ocean energy has thepotential to become one of the most competitive and cost effective
forms of generation.”54

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RENEWABLES GLOBAL FUTURES REPORT 06 EVOLUTION OF TECHNOLOGIES, COSTS, AND GLOBAL Market Growth

not yet competitive with conventional fuels) around 2020 in the
New Policies Scenario. By 2035, advanced biofuels make up 18%
of total biofuel production.” An IEA (2011) "Technology Roadmap"
for biofuels envisions demonstrations of commercial-scale production of cellulosic-ethanol, biomass-to-liquids diesel, hydrotreatedvegetable oil, and bio-synthetic gas by 2015. Beyond 2015, theroadmap envisioned innovative "bio-refinery" concepts, and beyond
2020, feasible production of algae-derived biofuels and other novel
biofuels routes.56

Biofuels
Several industry experts believed that by 2050, biofuels could
provide at least 25–35% of the world’s transport fuels, althoughother experts questioned high shares based on sustainability andresource constraints. (See “Great Debate 12” on this page.) One
expert believed that the share could reach even higher, and become
based predominantly on crop wastes, thus negating concerns about
land use and sustainability—if vehicles became super-efficient andtotal transport energy demand is much less. Experts also disagreed
about whether biofuels in the long term would remain mostly
so-called “first generation,” or whether “advanced” biofuels (i.e.,
cellulosic-ethanol and bio-synthetic gas) would eventually dominate
markets. Many experts foresaw increased research, development
and commercialization efforts, but some were uncertain of the ultimate results of such efforts.55
Oil companies are relatively optimistic about biofuels, and manyare investing or expecting to invest in biofuels research and production. “Advanced biofuels … will play an increasing role,” said
Chevron, which like many oil companies was actively investing in
advanced biofuels research. The IEA (WEO, 2012) says: “Advanced
biofuels … are assumed to become commercially available (though

Cellulosic ethanol plants are still considerably more expensive tobuild than corn ethanol plants in the United States, by a factor of
2–3 in higher investment costs, said one expert. So costs will haveto decline significantly, although cellulosic feedstocks are cheaper,so capital investment costs give only part of the picture. Experts
pointed to continuing incremental improvements in costs through avariety of possible processes, including hybrid processes combining
biochemical and thermo-chemical conversion.57
Fundamentally, there remains a wide variety of expert opinion: somebelieve commercialization is close at hand, while others believecommercialization may never occur. Factors include developing
cheaper enzymes, feedstock prices, technological learning, and sustainability issues. The IEA WEO (2012) “Current Policies” scenario
projects that advanced biofuels, like biomass-to-liquid biodiesel orcellulosic ethanol, will become commercial by 2025, while the "450"scenario projects this happening much sooner, by 2015.58
There are a variety of advanced biofuels technologies in research
stages that may one day achieve commercial viability. Experts
pointed to several possibilities, including biomass-gasification-toliquid conversion pathways, sugar-to-biodiesel conversion using
yeast fermentation, bacteria for producing biodiesel from cellulosic
materials, and algae as a potential biofuel feedstock.59

Great Debate 12 | How Sustainable Can Biofuels Become in the Long Term?
The sustainability of biofuels has attracted increased attention over the past several years. In Europe, a 2009 EU directive for renewable energy targets a 10% share of transport energy from biofuels and electricity by 2020. The directive requires that biofuels must
generate minimum levels of greenhouse gas emissions reductions, compared with fossil fuels, if biofuels are to count toward meeting the target. Similar requirements exist for the U.S. Renewable Fuel Standard and California’s state standard. Brazil also adopted
new sustainability policies for sugarcane ethanol in 2009.
These types of policies notwithstanding, several experts were concerned about sustainability issues with current-generation biofuels. They noted issues like land use, deforestation, biodiversity, food prices and security, and social issues with local populations.
And some believed that only advanced biofuels, particularly from agricultural wastes and from crops on marginal lands like switch
grass, would ensure future sustainability. One developing country expert said: “I am afraid the world is placing excessive emphasis on
biofuels. This would mean diversion of land in developing and poor countries from food crops to fuel crops—a strategy that may not
be acceptable to all countries.”
The IEA (2011) “Technology Roadmap” for biofuels says that high shares of biofuels in the long term pose “a considerable challenge
given competition for land and feedstocks from rapidly growing demand for food and fiber, and for … biomass for generating heatand power.” But the roadmap concludes that ultimately it should be possible, from residues and waste, along with sustainably grownenergy crops. (For more discussion, see REN21 Renewables 2010 Global Status Report, Sidebar 7, page 43.)

Source: See Endnote 55 for this chapter. Notes and discussion: See Annex 4.
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CONCLUSION: TRANSFORMATIONAL CHANGE?
Many experts in the course of interviews for this report believedthat futures with high shares of renewable energy are possible, andthat this is a matter of choice, not of technology or economics. Allof the necessary technologies exist, they said, and the long-term
economics across different choices are relatively similar, or even tilt
in renewables’ favor, they believed. “If we don’t have a renewableenergy future, it’s not because we can’t—it’s because we decided
not to,” said one. Others believed that the diverse motivations
behind renewable energy, together with the changing economics
and risks of energy technology portfolios, not just individual technologies, would drive transformational changes sooner than many
expect.

Beyond the transformation of power grids and transport, many
experts also pointed to coming transformations in buildings andconstruction. They noted that change could be much slower thanwith power and transport, due to the long lifetimes of buildings. But
they framed transformation in terms of new renewables-integrated
building materials and components becoming standard products,
and in terms of the acceptance and adoption by architects/engineersand developers of renewable power, heating, and cooling technologies as standard elements of homes and commercial buildings. This
would usher in a new era of building design and construction, said
experts, including the adoption of so-called "near-zero-energy,""net-zero-energy," and “passive” buildings noted in Chapter 2.

Experts concerned about climate change said that significantly more
renewable energy would be needed to meet mitigation goals, andthat this would also drive transformational change. They pointed
out that climate mitigation scenarios must compare the costs ofrenewables with other mitigation technologies, primarily energy
efficiency, carbon capture and storage for fossil fuels, and nuclear
power. Of these options, energy efficiency is generally considered
the cheapest, they said. But beyond efficiency, some questioned
whether carbon capture and storage would become commercial
enough, and asserted that nuclear power would remain too expensive and socially unacceptable. (See also Box 2 on page 16.)

The idea that technical transformation would lead to financial transformation was expressed by one expert in this way: “At 80–90%
renewable power share on grids, you can keep the lights on but notnecessarily keep the financial and business structures intact andviable.”Many of the industry and utility managers interviewed were alreadyhard at work bringing about high-renewables futures, in places like
Denmark, Germany, and Spain. To them, a future with high sharesof renewable energy was already inevitable, in part because oflong-term national targets and already-high existing shares. (See
Chapter 1.) To them, the main question was, “how will all the energy
system pieces fit together in the most efficient way, and how long
will it take to transform the system?”Indeed, transformational change is clearly implied by some existing
national policy targets. For example, Denmark’s targets for a 50%
electricity share and 40% heating share by 2020 (and 100% sharesfor both by 2050) will force transformational change in the electricity
and heating sectors. Germany’s targets for at least 35% electricity
share by 2020 and 80% by 2050 will do likewise. (And, experts
noted, perhaps sooner than expected: Germany’s electricity share
had already reached a reported 25% in the first nine months of2012. And one said: “European utilities in particular are facing trouble
right now because they have to invest in the grids themselves andput increased attention on grid balancing, both at centralized anddistributed levels, in order to accommodate renewable energy policy
goals and targets to be fulfilled in the next 5–10 years.”)
Some experts saw transformation just around the corner, not justtechnically, but also financially and institutionally. One said: “Electricutility companies will face some of the greatest challenges intechnical and institutional restructuring that they have ever facedin the past 100 years.” Another said: “Transportation systems willdefinitely become less homogeneous, with a multitude of fuel types
and vehicle types, and with local solutions tailored to local conditions and geography. The days of ‘one size fits all’ transport are
numbered.”Indeed, the coming of solar PV “retail grid parity” to many locales
and regions around the world, as noted in Chapter 6, was cited bysome experts as heralding a transformation in the way utilities must
be managed, financed, and operated—and a transformation potentially so rapid that many utilities would be caught scrambling for
new technical approaches as well as new business models to remain
viable. This is already happening today, said some experts, who said
grid parity had already come to some locales.
Transformational change is also implied by many of the other technical integration challenges facing electric utilities noted in Chapter
2, as well as the choice of utilities themselves to “lead, follow, pushback, or perish.” (See “Great Debate 6” on page 34.)
Experts foresaw that some utilities and energy companies will leadthe coming transformations, and pointed to utilities that are alreadyengaged in rethinking, planning, and implementing new strategies. However, experts also warned that with the coming of large
amounts of distributed generation by end-users, utility companies
could lose sales revenue from existing investments. At the margin,smaller shares are not threatening. But as renewable shares getbigger, an incentive emerges for utilities to resist or even actively
discourage renewable energy, so as to not lose market share, in thiscase to their own customers.
Spain is a case where such utility resistance has been manifesting already, according to one Spanish expert, given large sharesof renewables seen in recent years. Large utility companies thatonce led renewable energy development were turning back in 2012
to championing coal and actively blocking new renewable energy
policies for self-generation, said the expert. Even gas companies in
Spain, previously having entered solar hot water markets, were feeling the effects from reduced gas demand, the expert said.
In interviews, some policymakers questioned the role of policies in leading transformation, given that most existing policies
are “incremental” in nature. The policy “bridge” to a transformedenergy system was not necessarily clear to them. The viewpoints inthis report point to several features of such a bridge, starting with

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RENEWABLES GLOBAL FUTURES REPORT CONCLUSION

revised concepts of cost competitiveness and “subsidies” across allenergy technologies, continuing with sector-specific policies (i.e.,
power grids, buildings, transport) that support integration in individual sectors, and innovation and action at all levels, whether local,
national, or regional. Viewpoints also suggest that such a policy
bridge would include energy policies that place greater emphasis
on financial risk-return metrics and risk-reducing energy-portfolio
approaches rather than traditional cost-based and technologybased approaches.aViewpoints suggest that new forms of finance, whether at thecommunity-ownership level, or at the level of national pension
funds or sovereign wealth funds, coupled with new risk-mitigation
financial instruments, will also usher in transformation.
And viewpoints suggest that transformation will come from theexisting role of China in global renewable energy markets, and fromthe emerging roles of a large number of developing countries interms of policy support, markets, development motivations, energy
security, and local manufacturing. And that rural energy “access”
with renewables for hundreds of millions of rural households would
also be transformative, from home lighting to small industry toreplacement of millions of diesel generators.
Some experts saw the transformation of energy systems as an
instrument of social equity—and used phrases like “energy democracy” to denote the control and choice that decentralized forms ofrenewable energy can bring. Some saw “soft” strategies like alliance building and communications, and building stakeholder groups
at local levels, as key parts of decentralized energy futures. They
favored less centralized investment, even of renewables technologies themselves, and more community-based power systems. Someexperts noted that public acceptance of nearby infrastructure likewind farms and transmission lines varies with the degree to which
local communities feel that this infrastructure is serving them
directly, or the degree to which they have an ownership or controlling stake. (See also “Great Debate 5” on page 27.)transformed energy system?” Many of the ideas noted in Chapter
2, in terms of modifying the operation of existing fossil fuel power
plants, new roles for natural gas and the implications for natural gas
technologies, and even hybrid fossil fuel-renewable power plants,
point to a co-evolution of all energy technologies together, not justthe addition of renewables. But the long infrastructure lifetimes ofexisting energy technologies play a role in how long the transition
will take. (See the idea of “lock in” in the report's Introduction.)
Finally, experts pointed to “whole-system” thinking when it comesto energy, transport, buildings, and industry, including the roleof energy efficiency. Such whole-system thinking is also noted
throughout this report. End-use equipment choices and higher enduse energy efficiency, for example, are crucial components of anenergy system built with renewable energy. Interviewees stressed
perspectives of wheel-to-wheels, cradle-to-grave, and ecoindustry, and other systems thinking. And experts pointed out that“whole-system” thinking does not apply only on technical levels, butalso on institutional, policy, business, and social levels.
In the words of one visionary: “We can be almost certain that the
future will not be a linear growth line from today. We always underestimate the future, which then produces surprises. I’m sure we’reunderestimating the growth of renewables as well.”Some experts saw transformation as driven by consumer choice
and perception as well, not strictly by technologies or economics.
This includes, for example, consumer decisions about which typesof vehicles to buy, how the vehicles will be owned and used, howpeople wish to integrate vehicles with their home energy systems,
and how they will allow their electric vehicles to support grid balancing. Certainly, consumer choice is already playing a large rolein the proliferation of rooftop solar PV systems in some countries,
noted experts, along with consumer decisions to purchase green
power at the retail level. (See also "Great Debate 8" on page 37.)
Experts emphasized that “transformation” implies more than justintegration. One asked: “Do we really need renewables to fit into
the existing system, or do we need all energy technologies to
evolve in different ways and with different roles and shares into a62a) For more on policies and transformational change, a good reference is the “Policies” chapter in IPCC (2011). The IPCC report’s Chapter 8 on “Integration” is also
highly relevant.

EPILOGUE: SPEAKING PERSONALLY( Views of the Author)

As noted from the start, this report is intended to objectively
portray the range of credible views and possibilities about the
future of renewable energy, expressed by an array of experts andscenarios. In writing the report, I put aside my personal views inorder to present the fullest range of possibilities. Here, however,I take the liberty to express my own views, many of which mirror
content in the preceding chapters. While most readers should findtheir own views represented somewhere in the report, some readers
may disagree with mine. My views come from personal experience
working in the field of renewable energy since 1986, and from thework I conducted in 2011–2012 as the basis for this report.
Overall, I think there are excellent prospects for the world to become
predominantly powered (and fueled) by renewable energy by the
2040–2050 timeframe (including electricity, heating, cooling, andtransport). Indeed, this should be an explicit political and social goalworldwide. As to what “predominantly” means, I would say something like 80–90%. I don’t believe that we can reach “100%,” asmany now advocate, although “100%” is a useful political and social
archetype. Rather, I think we need to allow for a modest share offossil fuels to accompany renewables, particularly for those needs
that are most difficult to meet with renewables, including freighttransport and shipping, high-temperature industrial process heat,airline travel (unless we start using passenger airships again), andsome natural gas use in power grids to balance variability.
At some point before 2020, the question of renewables’ fundamental economic competitiveness will cease to be an issue. Renewable
technology costs will continue to decline, while fossil fuel prices willcontinue to increase. Investors will recognize renewables as sound,low-risk investments, and renewables will become a preferred targetof equity finance and seen as a strong inflation hedge.
Eventually, the main questions will simply become questions offinance, rates of return, infrastructure lifetimes, rates of replacement of existing energy infrastructure, and the evolution of highefficiency end-uses, from appliances to cars to homes to factories.
These end-uses will be “paired” with renewables as integrated
energy services.
However, materials constraints for manufactured renewable technologies (including supplies of specific elements and rare earths),
recycling (especially of batteries), and toxic wastes could eventuallypresent a formidable challenge. I am swayed by both pessimistic
and optimistic assessments of how well we can manage such achallenge.
Governments should continue to support renewables through the2020s because a host of institutional and social issues for integration of renewables will continue to require attention, foremost
among them a host of policies and practices for utility grid integration (as discussed in Chapter 2) and new policies and practices for
efficient, low-energy building construction integrated with renewable heating and cooling.
Governments should also undertake crash programs for electric andthermal storage technologies, which have the greatest potential tohave a transformative impact. And governments should abandon

all support for nuclear power, which is too expensive, unnecessary
in view of what renewables can do, and unworthy of the legacy weleave to future generations.
Most experts agree that electricity will be the easiest to supply fromrenewables. I believe that the world will achieve close to 100%
electricity from renewables in the long run without much difficulty.
And I believe that this can be achieved even without a major energy
storage breakthrough—given the many other available options for
managing grid variability. Utilities and regulators will figure it out,
but renewables are growing so fast that there is not much time.
Energy storage will help as well, and commercial battery storage
technologies are closer than most realize, for both local and centralized levels. Pumped hydro storage is already well established, and I
believe it can be expanded greatly to manage variability, in spite ofenvironmental issues, to become an important part of a renewableenergy future.
In the coming years, there will be an explosion of solar PV rooftops
across the world, big and small. Fifteen or 20 years from now,a “bare” rooftop will seem very strange to us, and most new
construction will include PV as routine practice. This will lead to aparallel explosion in micro-grids (both residential and commercial),
community-scale power systems, and autonomous-home systems.
The grid will become a much more complex hybrid of centralized
and distributed power, with a much greater variety of contractualmodels between suppliers and consumers. For bulk power supply
and industry, the “big grid” resources—wind, solar thermal power(CSP), and geothermal—will predominate. I happen to think thatmost biomass in the long run will be used for heating and transport
fuels and not electricity, but this is uncertain.
Solar heating and cooling have great promise. There is no reason
why many new and existing buildings should not be outfitted withsolar heating and cooling systems integrated into building architecture. And we will see dedicated CSP plants that double as industrial
heat supply. It also seems that there could be a boom in geothermalheat pumps given proper incentives and integration with building
codes and regulations. And for countries in northern climates, or
those with high quantities of readily available agricultural wastes,
wood pellets for residential and small-commercial heating could
become ubiquitous, with large and sophisticated markets for woodpellet distribution. Similarly, there are large opportunities for pipedand containerized biogas for home heating and cooking.
The single most important driver for renewables-based heating andcooling in the future will be innovations and changes in building
construction, including widespread adoption of so-called “passive”
or “zero-energy” building models that require very little heatingenergy, even in cold winter climates, due to super insulation, solar
gain, thermal storage, and high-efficiency heating equipment. Only
when such buildings are widespread can renewables play a largerole in heating and cooling. Such buildings are not much more
expensive than ordinary construction, but the architecture andconstruction industry is far from providing off-the-shelf, least-cost,and integrated solutions for passive buildings.

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RENEWABLES GLOBAL FUTURES REPORT EPILOGUE

I see no reason that virtually all passenger transport cannot become
electric in the long term, leading to 100% renewable passenger
transport. However, this cannot be accomplished with current
battery technology, which is still quite expensive. But the transition
to much smaller and cheaper electric micro-vehicles, coupled withnew lightweight materials for conventional-size electric vehicles,
and new forms of vehicle ownership and mobility services, lead me
to believe that a high share of mobility will be served by electricity
in the future, perhaps as soon as 2020–2025. Battery technology
remains a big wild card, but it seems inevitable that battery technology breakthroughs will occur with advances in new materials.
Given that all passenger transport will become electric (except for
air travel), biofuels will be most important for non-passenger transport, such as freight, and perhaps for some industrial uses. However,I don't believe that biofuels from food crops will be a part of ourtransport future, as land will be needed for human food consumption given growing populations and climatic changes that affectagricultural productivity, as well as problematic sustainability issues.
Advanced biofuels made from cellulose that is grown on marginallands and from agricultural waste could become very significant, but
I remain unconvinced that cellulose-to-biofuels technology is a surething. Other types of advanced biofuels show promise.
As for hydrogen fuel-cell vehicles, I think fuel cells for convertinghydrogen into electricity are best left in homes and buildings where
the substantial waste heat from this process can be utilized productively, not in vehicles where it cannot. And I remain unconvincedthat fuel cells will ever be cheap enough.
In the future, I see renewable energy investments proceeding along
three main tracks:
1. “Mega projects.” Large-scale onshore and offshore wind farms,
grid-tied CSP plants, autonomous CSP for desalination, multimegawatt-scale ground-mounted solar PV, large biorefineries,
and large-scale energy storage projects will be driven andfinanced by large companies and institutional investors, including
national governments.
2. “Big rooftops.” Commercial and industrial companies will put
renewables on their rooftops, primarily solar PV and solar heating/cooling, integrated with geothermal heat pumps and intermediate-scale storage technologies. Public entities will also leasepublic rooftops and a wide range of other public infrastructure for
its “rooftop-like” qualities.
3. “Communities and autonomous consumers.” Communities, small
groups, and individual investors will install rooftop renewables,
shared heat supplies, jointly owned wind turbines, and othercommunity-based power using a wide range of local renewables
and storage technologies. New forms of consumer finance, vendor
finance, and utility on-bill finance will help greatly.

64

The financial difficulties that were affecting economies aroundthe world at the close of 2012 will likely affect all three tracks formany years. These conditions will likely bring investor risk-aversion
and possibly much higher inflation-induced interest rates, which
would certainly dampen investments for many years. But where

OECD countries may fall back for a time due to financial difficulties,
I remain convinced that China, India, and many other developing
countries will take up the slack soon enough.
What must happen for the visions in this report, and my personal
vision expressed here, to become reality in the coming decades?
First, we must believe these things are possible. That belief isgetting easier every year as market and investment trends provide
confirmation. Then, we must look to the countless individual decisions
made everyday by consumers, homeowners, utilities, construction
firms, corporate executives, financiers, and many others, and how
those decisions can better align with a renewable energy future.
Much can also be achieved through decisions by local groups,
whether at the community level, the sub-neighborhood level, or
the homeowner association level. Better education and training isfundamental to all of the above decisions. Research and development (both public and private) for new technologies, especiallydriven by new materials, will certainly make the future come easierand faster. But we don’t need to wait for those breakthroughs—wehave enough at our disposal already. Finally, governments havean important role to play in the many ways outlined in this report,
although with perhaps less focus on costs and more on risks, andcertainly with more attention to the necessary sector-specificpolicies for electric power, buildings, industry, and transport.
I intend to personally see the transformations discussed in thisreport happen by 2040–2050, if not sooner. Onward to a renewableenergy future!

Eric Martinot

Annex 1 – LIST OF INTERVIEWS
A series of interviews with 170 individuals was undertaken from late 2010 through mid-2012 to gain expert and industry views of the futureof renewable energy. These interviews were focused on the long term, 2020 and beyond. (The long-term nature of solicited views makes themless prone to becoming outdated by subsequent short-term developments, although this is certainly a consideration.)
Persons interviewed included heads of industry associations, business people, financiers, researchers, consultants, academics, public advocates,
policymakers, multilateral (intergovernmental) agency staff, electric utility managers, regulatory staff, journalists, and city government officials.
Interviews included 16 executives (CEOs, presidents, or executive vice presidents) and two parliamentarians.
Interviews were conducted as unstructured discussions, rather than formal question-response sessions, often based on a set of 4–8 questions
posed in advance, and tailored to the expertise and interest of each interviewee. Most interviews were conducted in-person at the place ofbusiness of the interviewee, while a few were conducted by phone. Interviews were typically 45 minutes to 1.5 hours in length, although somelasted up to three hours. Report author Eric Martinot conducted most interviews. Additional interviews on local/city and developing country
topics were conducted by Lily Riahi of the REN21 Secretariat.
All interviewees were promised anonymity of remarks, so names cannot be cited within the body of the report. As noted in the Preface, thepurpose of the interviews was not to elicit quotes from specific experts, but rather to compile an overall mosaic of information that capturesa credible range of views of the future. Some quotes have been used in the text, taken from interviews without attribution, to make the text
more interesting and to provide a more direct experience of interview results. All quotes in the report come from interviews except where
publication citations are given.
The majority of interviews were conducted with experts and executives in Europe and the United States, with an additional 15 interviews
in Japan, 22 in China, and 16 in India, South Africa, and other developing countries. Supplementing the individual interviews in developing
countries, three additional roundtable discussions were held, specifically as input to the report, in India (organized by The Energy and Resources
Institute—TERI), Morocco (organized by the African Renewable Energy Alliance and the World Future Council), and South Africa (organizedby the South Africa National Energy Development Institute). Two additional roundtable discussions were held in Germany (organized by theWorld Council for Renewable Energy) and the United States (organized by the National Renewable Energy Laboratory). The contribution of allinterviewees and workshop participants is greatly appreciated.
Pallas Agterberg (Alliander)David Cadman (City of Vancouver Council)

Lisa Frantzis (Navigant Consulting)Donald Aitken (Donald Aitken Associates)

Sanjeev Chaurasia (Credit Suisse)

Uwe Fritsche (Öko-Institut)

Matthias Altmann(Ludwig-Bölkow-Systemtechnik GmbH)Chen Mozi(China Electric Power Research Institute)Gang Wu (Chinese Academy of Sciences)

Adnan Amin (International Renewable
Energy Agency–IRENA)

Mike Cleary (NREL)

Carlos Gasco (IEA)

Luis Crespo (European Solar Thermal
Electricity Association)

Dolf Gielen (IRENA)

Lena Dahlman(Swedish Bioenergy Association)

Cristina Gomez (Red Eléctrica de España)

Kjell Andersson(Swedish Bioenergy Association)
Doug Arent (National Renewable Energy
Laboratory–NREL)
Dan Arvizu (NREL)

Guy Dauncey(BC Sustainable Energy Association)

Alan AtKisson (AtKisson and Associates)

Paul Denholm (NREL)

Roger Ballentine (Green Strategies)

Pedro Dias (European Solar Thermal
Industry Federation)

Pedro Ballesteros Torres (European
Commission/Covenant of Mayors)
Marlett Balmer(Deutsche Gesellschaft für Internationale
Zusammenarbeit)
Morgan Bazilian (formerly UN Industrial
Development Organization)

Karin Haara (World Bioenergy Association)
Toshishige Hamano (Sharp)
Kirsty Hamilton (Chatham House)

Mike Eckhart (Citigroup)

Steve Hauser (NREL)

Jorgen Edstrom (Copenhagen Energy)

Rainer Hinrichs-Rahlwes (European
Renewable Energies Federation)

Sachio Ehara (Kyushu University)

Lawrence Bloom(formerly Noble Cities Plc)

Fort Felker (NREL)

Joost Brinkman (Accenture)

Stefan Gsänger
(World Wind Energy Association)Lars Hansen (Dong Energy)

Mohamed El-Ashry (UN Foundation)

Gunnar Braun (Verband kommunaler
Unternehmen e.V., Landesgruppe Bayern)

Herbert Girardet (World Future Council)

Du Xiangwan (Chinese Academy ofEngineering)

Kubeshnie Bhugwandin(Eskom, South Africa)

Denise Bode(American Wind Energy Association)

Nick Gardner (BNP Paribas)

Ditlev Engel (Vestas)

Aksel Hauge Pedersen (Dong Energy)

Winfried Hoffmann (European Photovoltaic
Industry Association)
Jeffrey Holzschuh (Morgan Stanley)Hans-Josef Fell (German Parliament)

Toshio Hori
(Green Power Investment Corporation)

Manfred Fischedick (Wuppertal Institute)

Huang Ming (Himin Solar Corp.)

Doerte Fouquet (Becker Büttner Held)Roland Hulstrom (NREL)

Paolo Frankl(International Energy Agency—IEA)

Jiang Kejun(China Energy Research Institute)65

RENEWABLES GLOBAL FUTURES REPORT ANNEXes

Jiang Liping (China State Grid Energy
Research Institute)

Gustav Melin(European Biomass Association)

Henrik Johansson (City of Växjö)Sebastian Meyer (Azure International)

Thomas Johansson (Lund University)

Wolfgang Meyer (Zukunftsrat Hamburg)

Jason Schäffler (Renewable Energy andEnergy Efficiency Partnership)

Eveline Jonkhoff (Gemeente Amsterdam)

Alan Miller(International Finance Corporation)

Martin Schöpe(German Ministry for Environment)

Mackay Miller (NREL)

Markus Schüller (Fichtner GmbH)

Arne Mogren(European Climate Foundation)

Tilman Schwencke(Mainstream Renewable Power)

David Mooney (NREL)

Jigar Shah (Carbon War Room)

Miwa Mori (Passive House Japan)

Shi Dinghuan(China Renewable Energy Society)Hans Jørgen Koch (Danish Energy Agency)
Peter Jørgensen (Energinet.dk)
Tomas Kåberger(formerly Swedish Energy Agency)
Vinod Kala (Emergent Ventures India)
Dan Kammen(University of California at Berkeley)
Christian Kjaer(European Wind Energy Association)David Kline (NREL)

Fredrick Morse (Abengoa Solar)
Josiah Munda(Tshwane University of Technology)

Steve Sawyer (Global Wind Energy Council)

Shi Pengfei(China Wind Energy Association)
Shi Zhengrong (Suntech)

Jonker Klunne (Council for Scientific andIndustrial Research, South Africa)

Yoshihisa Murasawa (Tokyo University)

Walter Short (NREL)

Ed Murray (Aztec Solar)

Scott Sklar (Stella Group)

Jochen Kreusel (ABB Asea Brown Boveri)

Sabine Nallinger (City of Munich Council)

Arun Kumar(Alternate Hydro Energy Centre, India)

Kevin Nassiep (SANEDI)

V. Subramanian(Indian Wind Energy Association)

Minoru Kumazaki(Japan Wood Pellet Association)
Kiyoshi Kurokawa(Health and Global Policy Institute)
Stephen Lacey (ClimateProgress.org)
Niels Ladefoged (European Commission)

Pancho Ndebele (Southern Africa Solar
Thermal and Electricity Association)
Ni Weidou (Tsinghua University)
Kiyoshi Nishimura (Osaka University)
Kent Nyström(World Bioenergy Association)
Andre Otto (SANEDI)

Ole Langniss (Fichtner GmbH)

Walt Patterson (Chatham House)

Geoff Lawler (City of Melbourne)

Terry Penney (NREL)

Stef le Fèvre (City of Amsterdam)
Jeremy Leggett (Solar Century)

Emiliano Perezagua Gil(European PV Technology Platform)

Debra Lew (NREL)

Brian Perusse (AES Energy Storage)

Li Junfeng (Chinese Renewable Energy
Industries Association)

Anil Pinto (Siemens South East Asia)

Toru Suzuki (Hokkaido Green Fund)
Hiroshi Takahashi(Fujitsu Research Institute)Nobuo Taniguchi(formerly Tokyo Municipal Government)
Tao Gang (Sinovel)
Sven Teske (Greenpeace International)
Molly Tirpak Sterkel(California Public Utilities Commission)
Claude Turmes (European Parliament)
Dirk Uwe Sauer (Aachen University)
Daniel Vallentin (Wuppertal Institute)
Roberto Vigotti (OME)
Wang Zhongying (China Center for
Renewable Energy Development)

Bo Lidegaard (Politiken)

Klaus-Peter Pischke(KfW Development Bank)

Michael Liebreich(Bloomberg New Energy Finance)

Martin Powell(London Development Agency)

Christine Lins (formerly European
Renewable Energy Council)

Michaela Pulkert (HVB - UniCredit Group)

Lutz Weischer (World Resources Institute)

Mario Ragwitz (Fraunhofer ISI)

Karsten Wessel (IBA Hamburg)

Liu Bin (China CECEP Wind Power Corp.)

David Renne(International Solar Energy Society)

Bob Williams (Princeton University)

Amory Lovins (Rocky Mountain Institute)
Ma Xiulu (Baoding Yingli)
Ernesto Macias(Alliance for Rural Electrification)
Preben Maegaard (Danish Folkecenter)
Thembakazi Mali (South African National
Energy Development Institute—SANEDI)
Jaume Margarit (IDAE Institute for Energy
Diversification and Efficiency)
José María González Veléz (Spanish
Renewable Energy Association)
Andreas Maryensson Lamppa(formerly City of Växjö)66

Toru Morotomi (Kyoto University)

Yasushi Santo (YS Energy Research)

Robert McFarlane (McFarlane Associates)

Wilson Rickerson(Meister Consultants Group)
Dima Rifai(Paradigm Change Capital Partners)
Jan Rispens (Erneuerbare Energien
Hamburg Clusteragentur GmbH)
Brad Roberts(Electricity Storage Association)
Tetsuo Saitou(Japan Wind Power Association)
Elizabeth Salerno(American Wind Energy Association)
Armin Sandhoevel(Allianz Climate Solutions)Carl Weinberg (Weinberg Associates)
Oliver Weinmann (Vatenfall)

Heikki Willstedt Mesa
(Spanish Wind Energy Association)
Ryan Wiser(Lawrence Berkeley National Laboratory)
Wu Chuangzhi(Guangdong Energy Institute)
Wu Gang (Goldwind)Yang Xiaosheng (Longyuan)
Dana Younger(International Finance Corporation)
Arthouros Zervos(European Renewable Energy Council)
Zhang Dongxiao (Beijing University)
Zhang Xiliang (Tsinghua University)

Annex 2 – LIST OF SCENARIOS COVEREDText Citation

RegionFull Reference

APEC/ADB (2009)

Asia andthe PacificAsia-Pacific Economic Cooperation/Asian Development Bank. 2009. Energy Outlook for Asiaand the Pacific. Mandaluyong City, Philippines. 400 pp.

BNEF (2011)

Globaland China

Bloomberg New Energy Finance. 2011. Global Renewable Energy Market Outlook (GREMO).
London.

BP (2012)

GlobalBP. 2012. BP Energy Outlook 2030. London. 88 pp.

Brazil MME (2010)

BrazilBrazil Ministry of Mines and Energy. 2010. “Outlook for Alternative Renewable Energy inBrazil.” Brasilia. 28 pp.

China ERI (2009)

China

China Energy Research Institute. 2009. China’s Low-Carbon Development Pathways by 2050.
Beijing. 168 pp.

China ERI (2011)

China

China Energy Research Institute. 2011. “Potential Secure, Low-Carbon Growth Pathways for
the Chinese Economy.” Beijing. 27 pp.

CREIA (2012)

China

Chinese Renewable Energy Industries Association. 2012. “Study of High Percentage
Renewable Energy in China.” Beijing.

EC (2009)

EuropeEuropean Commission. 2009. EU Energy Trends to 2030. Luxembourg. 184 pp.

EC (2011)

EuropeEuropean Commission. 2011. “Energy Roadmap 2050.” Luxembourg. 22 pp.

EREC (2010)

EuropeEuropean Renewable Energy Council. 2010. RE-thinking 2050: 100% Renewable Energy
Vision for the European Union. Brussels. 76 pp.

Eurelectric (2009)

EuropeEurelectric. 2009. Power Choices – Pathways to Carbon Neutral Electricity in Europe by
2050. Brussels. 96 pp.

EWEA (2011)

EuropeEuropean Wind Energy Association. 2011. Pure Power: Wind Energy Targets for 2020 and
2030. Brussels. 97 pp.

ExxonMobil (2012)

GlobalExxonMobil. 2012. ExxonMobil – The Outlook for Energy: A View to 2040. Irving, Texas. 52
pp.

Garg (2012)

India

Garg, P. 2012. “Energy Scenario and Vision 2020 in India.” Journal of Sustainable Energy &Environment. Vol. 3. Pp. 7–17.

GEA (2012)

GlobalRiahi, K. et al. 2012. “Energy Pathways for Sustainable Development (Chapter 17).”
In Global Energy Assessment – Toward a Sustainable Future. Cambridge University Press.
Cambridge, U.K. and International Institute for Applied Systems Analysis.
Laxenburg, Austria. Pp. 1203–1306. (1866 pp. total)

Greenpeace (2012)(Global and China)

GlobalGreenpeace/European Renewable Energy Council (EREC)/Global Wind Energy Council(GWEC). 2012. Energy [R]evolution: A Sustainable World Energy Outlook. Amsterdam. 339 pp.

Greenpeace (2012)(Europe)

EuropeGreenpeace/European Renewable Energy Council (EREC). 2012. Energy [R]evolution
European Union. Brussels. 128 pp.

Greenpeace (2012)(India)India

Greenpeace/European Renewable Energy Council (EREC)/Global Wind Energy Council(GWEC). 2012. Energy [R]evolution India. Richmond Town Bangalore, India. 80 pp.

Greenpeace (2011)(Japan)Japan

Greenpeace/European Renewable Energy Council (EREC). 2011. Energy [R]evolution Japan.
Tokyo. 108 pp.

Greenpeace (2011)(South Africa)

South Africa

Greenpeace/European Renewable Energy Council (EREC). 2011. Energy [R]evolution South
Africa. Johannesburg. 108 pp.

Greenpeace (2012)(United States)

United States

Greenpeace/European Renewable Energy Council (EREC)/Global Wind Energy Council(GWEC). 2012. Energy [R]evolution United States. Forthcoming.

GWEC (2012)

GlobalGlobal Wind Energy Council. 2012. Global Wind Energy Outlook. Brussels. 52 pp.

GWEC (2011)(India)India

Global Wind Energy Council/World Institute of Sustainable Energy (WISE)/Indian Wind Turbine
Manufacturing Association (IWTMA). 2011. Indian Wind Energy Outlook. Brussels. 64 pp.

IEA ETP (2010)

GlobalInternational Energy Agency. 2010. Energy Technology Perspectives. Paris. 706 pp.

IEA ETP (2012)

GlobalInternational Energy Agency. 2012. Energy Technology Perspectives. Paris. 688 pp.

IEA RETD (2010)

GlobalRenewable Energy Technology Deployment Implementing Agreement of the IEA. 2010.
Achieving Climate Stabilization in an Insecure World: Does Renewable Energy Hold the Key?
Report prepared by Navigant Consulting. Burlington, Massachusetts. 59 pp.

67

RENEWABLES GLOBAL FUTURES REPORT ANNEXes

68

Text Citation

RegionFull Reference

IEA WEO (2010)

GlobalInternational Energy Agency. 2010. World Energy Outlook 2010. Paris. 738 pp.

IEA WEO (2011)

GlobalInternational Energy Agency. 2011. World Energy Outlook 2011. Paris. 664 pp.

IEA WEO (2012)

GlobalInternational Energy Agency. 2012. World Energy Outlook 2012. Paris. 672 pp.

IPCC (2011)

GlobalIntergovernmental Panel on Climate Change. 2011. Renewable Energy Sources and Climate
Change Mitigation Special Report. New York. 1076 pp.

IRENA (2012)

AfricaInternational Renewable Energy Agency. 2012. Prospects for the African Power Sector.
Scenarios and Strategies for Africa Project. Abu Dhabi. 60 pp.

ISEP (2011)

Japan

Institute for Sustainable Energy Policies. 2011. “From ‘Unplanned Power Outages’ towards a‘Strategic Energy Shift’: Report on Energy Shift after March 11th.” Tokyo. 22 pp.

JWPA (2012)

Japan

Japan Wind Power Association. 2012. “Potential for Introduction of Wind Power Generationand Mid/Long Term Installation Goals (V3.2).” Tokyo. 12 pp.

LBNL (2011)

China

Lawrence Berkeley National Laboratory. 2011. China’s Energy and Carbon Emissions Outlook
to 2050. Berkeley, California. 66 pp.

Lovins/RMI (2011)

United States

Lovins, Amory, and Rocky Mountain Institute. 2011. Reinventing Fire: Bold Business Solutions
for the New Energy Era. White River Junction, Vermont. Chelsea Green Publishing. 352 pp.

METI (2010)

Japan

Ministry of Economy, Trade and Industry. 2010. “The Strategic Energy Plan of Japan.” Tokyo.
(In Japanese)

NEDO (2009a)

Japan

New Energy and Industrial Technology Development Organization. 2009. “White Paper on
Renewable Energy Technologies.” Kawasaki, Japan.

NEDO (2009b)

Japan

New Energy and Industrial Technology Development Organization. 2009. PV Roadmap
Toward 2030. Kawasaki, Japan. 126 pp.

NREL (2012)

United States

National Renewable Energy Laboratory. 2012. Renewable Electricity Futures Study (volumes
1 to 4). Golden, Colorado. 854 pp.

Risø (2010)

GlobalRisø National Laboratory/Denmark Technical University. 2010. Risø Energy Report 9:
Non-Fossil Energy Technologies in 2050 and Beyond. Roskilde, Denmark. 90 pp.

SEI (2009)

EuropeStockholm Environment Institute/Friends of the Earth. 2009. Europe’s Share of Climate
Change. Stockholm. 68 pp.

SOFRECO (2011)

Africa

SOFRECO. 2011. Africa Energy Outlook 2040. (Report done in consortium with Ascon Africa,
Sofrecom, Nathan Sysra, Cabira, and MWH). Clichy, France. ONRI.1/PIDA/2010/04. 125 pp.

UCS (2009)

United States

Union of Concerned Scientists. 2009. “Climate 2030: A National Blueprint for a Clean Energy
Economy.” Cambridge, Massachusetts. 16 pp.

UNIDO (2010)

GlobalUnited Nations Industrial Development Organization. 2010. Renewable Energy in Industrial
Applications: An Assessment of the 2050 Potential. Vienna. 60 pp.

US DOE EIA (2011)

GlobalU.S. Department of Energy. Energy Information Administration. 2011. International Energy
Outlook 2011. Washington, D.C. 292 pp.

US DOE EIA (2012)

United States

U.S. Department of Energy. Energy Information Administration. 2012. Annual Energy Outlook
2012. Washington, D.C. 240 pp.

World Bank (2010)

East Asia

World Bank/AusAid. 2010. Wind of Change – East Asia`s Sustainable Energy Future.
Washington, D.C. 162 pp.

World Bank (2011)

Latin America

World Bank. 2011. Meeting the Balance of Electricity Supply and Demand in Latin America
and the Caribbean. Washington, D.C. 194 pp.

WWF (2011)

GlobalWorld Wide Fund for Nature/Ecofys. 2011. The Energy Report: 100% Renewable Energy by
2050. Gland, Switzerland. 256 pp.

WWF Japan (2011)

Japan

World Wide Fund for Nature Japan. “Energy Scenario. 100% Renewable Energy.” Kiko
Network. Tokyo. (In Japanese)

Zhang et al. (2010)

China

Zhang, Xiliang et al. 2010. “A study of the role played by renewable energies in China’s
sustainable energy supply.” Energy. Vol. 35. Pp. 4392–99.

Annex 3 – SCENARIOS, MODELS, AND VARIABLES
INFLUENCING RENEWABLE ENERGY FUTURES
When experts were asked about the future of renewable energy,
many replied that the future depends on policies, financing, businessconditions, energy market regulation, cost reductions, social issues,and other factors that are outlined throughout this report. Far fewer
replied that technology development itself was a key factor. Theirviews also depended on the kinds of comparisons that are being
made between renewables and conventional energy technologies,
including cost comparisons. (For more on cost-competitiveness withconventional energy, see “Great Debate 1” on page 12 and “Great
Debates 1–3” in Annex 4.)
At least 18 “key variables” emerged from interviews and scenarios,
presented in the following section. Experts considered many ofthese variables when thinking about renewable energy futures ininterviews. Scenario models incorporate many or all of these variables as either (exogenous) inputs or as internal (endogenous) variables. Scenario outcomes depend on how these variables are used,or what values are assumed for them if treated as inputs.
Most scenarios consider variables such as economic growth (GDP),energy intensity and demand, fuel costs, carbon prices, technology
costs, and degree of policy action. These variables could be considered the drivers for renewable energy and other energy technologies, and may be modeled based on storylines of socio-economic
conditions, expectations about technological change, policy drivers,
projected growth rates, or other considerations.
Scenarios can be categorized as either descriptive or normative.
Under descriptive studies, “forecasts” predict likely futures fromcurrent trends, using extrapolation and modeling; “exploratory scenarios” emphasize the drivers of possible futures, without specifying a predetermined end state; and “technical scenarios” explore
technology possibilities and configurations, emphasizing feasibility
and implications of different options.
Under normative studies, “visions” elaborate desirable and plausible
futures, emphasizing benefits; “backcasts” start with a predetermined end point—a desirable (or constrained) future—and theninvestigate pathways and technology configurations leading there;
and “roadmaps” prescribe sequences of policies and measures. The
scenarios covered in this report are a mixture of these types. As
noted in Box 2 on page 16, many high-renewables scenarios arebackcasts based on future carbon-related constraints.
Scenarios are an important tool for dealing with complexity anduncertainty about the future. They allow exploration of alternative
futures and can provide insights to policymakers and the public alike.
However, scenarios are not predictions. Rather, they can be seen as“if … then” queries: If policies accelerate the growth of renewables,
what is the difference between situations with and without policies? If renewables costs decline, how will markets shift investment
patterns? If CO2 emissions should be stabilized, what combinationsof technologies will achieve stabilization? These questions must
be answered under sets of conditions and/or interrelationships for

population, economic growth, energy demand, technology changes,
technology and fuel costs, environmental emissions, and structuralchanges in the economy.
Modeling tools are commonly used to carry out scenario analysis,
with a range of software tools available. Categories of models
include techno-economic, partial and general equilibrium, simulation, optimization, and end-use accounting. The entire economy
may be modeled, or just the energy system or energy demand.
The IEA World Energy Model, used for the World Energy Outlook,has been refined for two decades and comprises 16,000 equations
defining interrelationships among energy, economy, technology,
investment, resources, and environment. In general, the model andmodeling approach have a significant impact on both data requirements and results.

Variables Influencing Renewable Energy Futures
1. Population growth and demographics. Population affects
energy demand and economic output and thus energy use. The
United Nations projects a global population of 9 billion by 2050.
Demographic changes also affect needed infrastructure and energy
services.
2. Gross domestic product (GDP) and energy intensity of GDP.
Economic output affects energy demand. The energy intensity of
GDP reflects the structure of the economy, in terms of energyintensive activities vs. low-energy activities (i.e., manufacturing vs.
service).
3. Energy efficiency and per-capita energy consumption. How
much additional energy efficiency is possible, and how much can beachieved in practice? Some scenarios show large energy efficiency
gains that reduce total energy consumption by substantial amounts,
relative to a baseline case without energy efficiency gains. (See Box
2 on page 16.)
4. Renewable energy technology costs. How will costs decline
over time? Many policy-intensive scenarios show continued cost
reductions through 2050. Some scenarios include “learning curves”
in their models, which project future cost reductions based on pasthistory and cumulative technology production over time. (See also
cost projections in Chapter 6.)
5. Policy action. There is wide recognition that policies haveunderpinned renewable energy development over the past decades,
and that the need for policies will continue well into the future.
Therefore, both the degree of policy action and the descriptionof policies are central to scenarios. Reference scenarios typicallyenvision low levels of policy action, while policy-driven scenarios
envision full implementation of existing policies plus often stronger
future policies. (See also “Great Debate 2” on page 13.)69

RENEWABLES GLOBAL FUTURES REPORT ANNEXes

6. Fossil fuel subsidies and taxes. Subsidies and taxes for competing fuels affect the competitiveness of those fuels relative torenewables. Models project whether subsidies remain at current
levels, or whether they are phased out, and by when. Most scenarios
do not account for phasing out subsidies, but there are exceptions.
For example, the IEA WEO (2010) “New Policies” scenario shows aphase-out of subsidies in net-oil-importing countries by 2020. (Seealso “Great Debate 1” on page 12.)
7. Interest rates (discount rates). Renewable energy investments
are capital-intensive and thus heavily dependent on the cost ofcapital. Finance experts underlined that interest rates are “factor
one” in the analysis of future projections and possibilities. Smallchanges in interest rate can have large consequences. Scenarios
have to assume interest (discount) rates far into the future in modeling economic competitiveness.
8. Finance availability and risk-return profiles. How much financewill be available for infrastructure investments, at what levels of risk
and return? This question relates to macroeconomic and financial
conditions in general, and the willingness of large institutional investors to fund infrastructure investments given their time, risk, andreturn profiles. Scenarios generally do not model these parameters.
9. Carbon prices and taxes. To what degree will carbon prices andtaxes affect the economics of renewable energy? Many scenarios
model future carbon prices and taxes. But experts point out thatcarbon prices are very uncertain, and depend very much on market
rules and in many cases government allocations of credits.
10. Natural gas prices, price volatility, and demand. What happens to future gas prices and gas demand? Experts saw natural gas
power generation as the main continuing competitor with renewable energy, but also noted that the two are complementary. Many
scenarios project a large shift from coal to natural gas. Experts
pointed to natural gas price volatility, and the need for (and cost of)gas price hedging, as part of the competitiveness equation.
11. Coal prices and demand. Does coal remain a central feature of
our energy systems, or is coal “on the way out" as some visionaries suggest? Most scenarios show global coal use increasing. For
example, US DOE EIA (2011) shows global coal use increasing 50
percent by 2035, but almost all the increase occurs in non-OECD
Asia, where China nearly doubles its coal consumption by 2035.
12. Oil prices. What happens to future oil prices? Most scenarios
show long-term oil prices in the $100–150 per barrel range continuing for decades. Among many possible effects, oil prices affectthe competitiveness of biofuels for transport, and indirectly influence natural gas prices.
13. Nuclear power acceptance and government support. How
much will governments continue to support nuclear power? How will
political and social acceptance change, as it did in some countries
after the 2011 Fukushima accident? Experts noted debates about
the true costs of nuclear power, whether nuclear becomes a sourceof carbon credits, and whether nuclear power investments would
be made in the absence of accident insurance provided by governments. Very few scenarios model these factors.

70

14. Shale gas cost and availability. What production quantities
of shale gas are feasible and how will shale gas affect natural gas
prices? Some experts in the United States and China consideredshale gas prospects as one important determinant of renewable
futures in those countries. One U.S. expert said, “Cheap shale
gas is here,” and cited an electricity cost of 5–6 cents/kWh fromshale gas, cheap enough to undercut renewables, the expert said.
However, others said the verdict remains uncertain as to how commercial shale gas will become.
15. Carbon capture and storage (CCS) technology cost andviability. Will CCS become commercial? When? Experts expresseda range of views about whether CCS would become commercially
viable. Many believed the answer would be important to the futureof renewables, as many carbon-constrained scenarios show tradeoffs between higher amounts of future renewables and the use of
CCS with coal and natural gas. (See also Box 2 on page 16.)
16. Power transmission network expansion, environmental andsocial issues. Can ways be found to expand and strengthen networks in ways that are socially acceptable? Many experts believedthat stronger networks will be essential to renewables’ future (seeChapter 2), but they were uncertain about the degree to which
networks could be expanded given environmental and social issues
in developed countries, and the levels of investment required indeveloping countries.
17. Population and resource geography. The location of population centers relative to areas of renewable resources affects how
much transmission must exist to accommodate renewables. Experts
pointed to claims that the “best” renewable resources in specificregions are far from population centers and thus more difficult toharness. One expert, however, brushed aside resource geography asa major constraint, and said, “the notion that we must use ‘the best
wind areas’ or ‘the best solar areas’ is a big and pervasive fallacy.”
18. Climate change perception and reality. How will perceptions
about climate change evolve over time? How quickly will the climate
actually change? These questions will affect political and social
willingness and mandate to reduce carbon emissions and employ
renewables.

Annex 4 – GREAT DEBATESAND TOPICAL DISCUSSION REPORTInterviews conducted for this report (see Annex 1) revealed differences of opinion and points of uncertainty on issues related torenewable energy costs, policies, technologies, investment, andintegration. These differences of opinion were framed into a series
of “Great Debates” about the future of renewable energy, 30 ofwhich are summarized here. For further reading on these subjects,
see the cited cross-references and endnotes, and the listed topics
from the online supplement, “Topical Discussion Report” (available
at http://www.ren21.net/gfr). That report also contains many more
“Great Debates” discussions.

Great Debates(See endnotes for references and further reading)

Topic number and name in“Topical Discussion Report”
for further reading

Cost comparisons
Is renewable energy more expensive than conventional energy?
Experts pointed out factors that skew cost comparisons, including existing subsidies to fossil fuels andnuclear power, future fuel price risk, environmental costs, social costs, and many other factors and risks.1(See Great Debate 1, page 12.)What is the right way to make economic decisions and comparisons between competing
technology alternatives, such as between renewables and fossil fuels?
Metrics include levelized cost of energy (LCOE), financial rate of return (IRR), and total future energy
system cost. Experts advocated for decisions more strongly based on financial risk-return perspectives,
including a “mathematics of diversification” to reduce energy system/portfolio risk.2(See Great Debate 1, page 12.)How should fair economic comparisons incorporate conventional energy subsidies, recognize
fossil fuel price risk, account for social costs, and include (internalize) environmental costs?

2. “Cost Comparisons”
3. “Key Variables”

2. “Cost Comparisons”
3. “Key Variables”
4. “Energy Systems”

2. “Cost Comparisons”
3. “Key Variables”

Some advocated removing subsidies for fossil fuels, while others saw subsidies for renewable energy
as “leveling the playing field.” Emissions policies are one method of partly including environmental costs,
and experts called for new mechanisms to account for social costs.3(See Great Debate 1, page 12.)

Policy evolution
What is the future role of policy?
At the national, state, provincial, and local/city levels, policies have played a major role in driving renewable energy markets, investments, and industry growth in the past. Experts expected policies
to remain a critical part of the future, and offered a range of views about the future role of policy.4(See Great Debate 2, page 13, and national policy examples in Chapter 5.)
How will feed-in tariffs evolve?
Given lower technology costs, higher support costs, and higher renewable power shares on grids, someexperts questioned how long feed-in tariffs would be needed, in Europe in particular, or how long governments would maintain them. Some saw evolution during 2020–2030 to meet market conditions andpower grid integration needs.5 (See Great Debate 9, page 45)
What role should (or will) carbon-based policies have in promoting renewable energy?
European experts debated the role of the Emissions Trading System (ETS). Some envisioned full-fledged
currency-like markets, and one expert said, “the ETS could be the end of coal.” Others called the ETS
ineffective, partly due to low carbon prices.6

6. “Policies”
20. “Cities”
21–28. Country topics

6. “Policies”
21. “Europe”

6. “Policies”

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RENEWABLES GLOBAL FUTURES REPORT ANNEXes

Utility power grid integration and policy
Is energy storage necessary for high levels of renewables?
Experts pointed to many options to manage variability besides storage, and dispelled myths aboutstorage being needed above some arbitrary share of renewables. Some said little or no energy storage
would be needed to attain even high shares, and others pointed out that needs depend on gridcharacteristics and energy sources.7 (See Great Debate 3, page 25.)
What policies (if any) are needed to establish a “price” in power markets for flexibility
and balance?

12. “Power Grids”
14. “Energy Storage”

12. “Power Grids”

Experts pointed out that many balancing/ancillary markets today are captive markets, but will need to
become competitive. “We need new electricity market design—more competition for ancillary services
and better integrated spot and future markets,” said one expert.8(See utility power grids in Chapter 2, page 23.)
How can utilities better use demand-response to manage variability, and what policies are needed(if any) to support demand-response?

12. “Power Grids”

In the words of one expert: “Policymakers are beginning to understand that demand-response is really
important for renewables, especially for industry and large commercial buildings. Is demand-response
sufficient? Probably not, but it becomes one of the first priorities to balance power grids with higher
levels of variable renewables.”9 (See utility power grids in Chapter 2, page 23.)Is the concept of “base load” meaningful for future energy systems?
Experts pointed out that several different definitions of “base load” exist, and that meanings can betechnical, economic, or institutional in nature. They questioned whether other concepts would better
serve future thinking, and said that with some definitions, renewable energy could be considered “baseload.”10 (See Great Debate 4, page 25.)
Centralized or decentralized power grids?
Experts had divergent views on the question of distributed (decentralized) energy systems and thedegree to which current centralized power systems will evolve into more decentralized and distributed
versions. Some believed that centrally managed grids would become relics, while another said, “theeconomic case still very much favors centralized power systems.”11 (See Great Debate 5, page 27.)

12. “Power Grids”
15. “Base Load”

12. “Power Grids”
13. “Distributed Grids”
19. “Cities”

Transport and buildings integration
How soon will builders and architects embrace “low-energy” or “passive” house designs?
Experts said “low-energy” or “passive house” designs were not much more expensive than ordinary
construction, but such designs had yet to be embraced by the building industry.12(See buildings in Chapter 2, page 26.)
How soon will affordable battery-electric vehicles with “acceptable” driving ranges emerge?
Experts debated how fast battery technology performance would improve and costs would decline.
Others pointed to changing social views of “acceptable” driving range as recharging infrastructure
emerges, and to high-efficiency micro-vehicles and the next generation of lightweight vehicle technologies as factors reducing the importance of this question.13 (See transport in Chapter 2, page 30.)
Which transport technologies will ultimately prevail for integrating renewables into transport?
Many technologies and fuels offer possibilities for integrating renewables into transport, including
biofuels, plug-in hybrids, electric vehicles, hydrogen fuel-cell vehicles, synthetic natural gas, andcompressed air. Expert views pointed to all these, although the future seemed quite uncertain to most.
Some foresaw a coming full-scale transformation to electric vehicles.14(See transport in Chapter 2, page 30, and biofuels in Chapter 6, page 60.)

72

17. “Buildings”
19. “Cities”

16. “Electric Vehicles”
20. “Local Mobility”

12. "Power Grids"
16. “Electric Vehicles”
20. "Local Mobility"
30. "Biomass and Biofuels"

Investment and business models
Will utilities lead, follow, push back, or perish?
With increasing levels of renewables, the business models and revenue streams of many existingenergy companies are coming under stress. How will existing energy companies respond to that stress?
Some utilities simply may no longer be viable, said one expert. Many experts believed utilities would
rise to the challenge. However, not all were certain that utilities would lead.15(See Great Debate 6, page 34.)
What roles will oil and gas companies play?
Will oil companies be major players in future renewable energy markets? Oil companies are positioning
themselves as biofuels suppliers and investors in other forms of renewables. Some experts believedthat offshore logistics capabilities will mean a major role for oil companies in offshore wind power.
Due to the complementary fit of natural gas and renewables, experts foresaw greater involvement by
gas companies.16 (See Great Debate 7, page 35.)
Are existing sources of finance set to reach their limit?

10. "Business Models"
11. “Energy Companies”

4. “Energy Systems”
11. “Energy Companies”

9. “Investment”

To what level of annual investment in renewables can bank lending, private equity, and utility balancesheet finance reach, before new sources like pension funds, sovereign wealth funds, and others will beneeded as central rather than peripheral sources? Some finance experts believed that attaining higher
investment levels would require major involvement from such new sources.17(See investment in Chapter 3, page 33.)
Will green power purchasing scale up like organic food has?

10. “Business Models”

Green power sales are setting new records but are still a tiny fraction of total power sales.
Will households or companies dramatically scale up their purchases from green power suppliers?
Corporate governance is trending toward climate neutrality and greater green power purchasing,but at some point do other investment models become more significant than green power?18(See Great Debate 8, page 37.)
Which business models will best suit offshore wind power?
Some experts believed that further cost reduction and a quantum leap in market size are contingent on
new business models emerging that recognize that a majority of project costs are not for the turbinesthemselves, and that long-term operation and maintenance costs present the biggest investment risk.19(See business models in Chapter 3, page 36.)

10. “Business Models”
29. "Wind Power"

Country/region-specific debates
How soon will solar PV markets surge in China?
Until recently, virtually all solar PV production in China was exported, with a very small domestic
market. Since 2010, emerging new support policies have led experts to believe that a surge indomestic solar PV markets was “just around the corner.” Many linked market growth to further policy
development, while others saw solar PV cost reductions driving new markets.20(See China in Chapter 5, page 47, and solar PV in Chapter 6, page 56.)
What is the future of coal power in India relative to renewables?
Experts believed that a key choice facing India will be whether to increase imported coal for power
generation, or to turn increasingly to renewable energy for the majority of new power investment.
Some said this question depends on the availability and price of imported coal; others linked it to theimperatives of GDP growth.21 (See Great Debate 10, page 49.)
Should (or will) Europe, the Mediterranean, and North Africa evolve a “super grid” that links
these regions and distant renewable resources?

24. “China”
28. “Solar Power”

2. “Cost Comparisons”
4. "Energy Systems"
25. “India”

12. “Power Grids”
21. “Europe”

Some European experts advocated for a strong “super grid” across Europe to more strongly link different
resource regions and provide balancing. Some also advocated for the so-called “Desertec” project todevelop renewables in North Africa linked through new grids back to Europe.22
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RENEWABLES GLOBAL FUTURES REPORT ANNEXes

What will happen in the United States if the Production Tax Credit (PTC) and Investment
Tax Credit (ITC) are not renewed?

6. “Policies”
22. “United States”

All U.S. experts acknowledged the large impact that federal support policies would have on future
markets, but also noted that existing state-level policies still provided some long-term certainties.
Experts gave various prognoses of what markets would do if the PTC and/or ITC expire.23(See United States in Chapter 5, page 46.)
How extensive will “south-south” technology transfer become in the coming decade, and towhat extent will Chinese manufacturing spread to other developing countries?

27. “Developing Countries”

Said one developing country expert, “South-south energy development and technology transfer
will no longer be a cliché but will be real—people in developing countries really need to learn how tobuild, design, install renewables and will start to seriously learn from each other.”24(See developing countries in Chapter 5, page 48.)

Technologies
When does solar PV reach grid parity and what does that mean?
Many experts said grid parity already exists in many locations around the world and would sooncome to many more, transforming electric utility systems both technically and financially. Scenarios
generally put grid parity farther in the future. Some experts disputed the meaning of “grid parity”
itself.25 (See solar PV in Chapter 6, page 56.)
In what ways does solar thermal power (CSP) with embedded energy storage capture thebalancing value from storage, or serve industrial uses?
Experts pointed to many potential uses of CSP for grid balancing, industrial process heat, desalination,and other stand-alone applications. These new applications have yet to capture the full value of CSP,
said experts.26 (See industry in Chapter 2, page 29, and CSP in Chapter 6, page 57.)
What are the pros and cons of offshore wind power?

2. "Cost Comparisons"
12. "Utility Grids"
13. "Distributed Grids"
28. “Solar Power”

12. "Power Grids"
14. "Energy Storage"
18. “Industry”
28. “Solar Power”

29. “Wind Power”

Pros include less visual and noise impact, no NIMBY (“not in my backyard”) issues, more predictablewind patterns, and bigger project sizes. Cons include higher costs and policy support needed,
technical and logistics difficulties, and centralized nature crowding out decentralized options.27(See Great Debate 11, page 55.)
Which markets will make the most use of biomass resources in the future?

30. "Biomass and Biofuels"

Some believed that biomass was better left for heat supply, including gasification and combined
heat and power, while others envisioned much greater power generation. Others said that thequestion is wrong, as integrated “biorefineries” of the future yield multiple products with highefficiency, linked with other industrial sectors.28 (See buildings in Chapter 2, page 26, heat supply in
Chapter 4, page 40, and biomass in Chapter 6, page 58.)
How long will it take to commercialize cellulosic-ethanol?

30. "Biomass and Biofuels"

Some said that this technology is already commercial, given a number of plants already in operation.
Others said that the technology is still, as it has been for several years, “a few years away.”
A few said they have given up waiting and did not believe that cellulosic ethanol would ever becommercial.29 (See biofuels in Chapter 6, page 60.)
How sustainable can biofuels become in the long term?
Experts were divided over the long-term future of so-called first-generation biofuels, in large partdue to sustainability issues, including land use, deforestation, food prices and security, and social
issues.30 (See Great Debate 12, page 60.)

74

30. "Biomass and Biofuels"

REN21 Steering Committee 2013
INDUSTRY ASSOCIATIONSMEMBERS AT LARGE

NGOs

Dennis McGinn
American Council on Renewable Energy(ACORE)

Michael Eckhart
Citigroup, Inc.

Ibrahim Togola
Mali Folkecenter / Citizens United for
Renewable Energy and Sustainability (CURES)

Ernesto Macias
Alliance for Rural Electrification (ARE)David Green
Clean Energy Council (CEC)
Li Junfeng
Chinese Renewable Energy Industries
Association (CREIA)
Rainer Hinrichs-Rahlwes
European Renewable Energy Council (EREC)

Mohamed El-Ashry
United Nations Foundation
David Hales
Second Nature
Kirsty Hamilton
Chatham House

Irene Giner-Reichl
Global Forum for Sustainable Energy (GFSE)
Sven Teske
Greenpeace InternationalPeter Rae
RENAlliance

Emani Kumar
ICLEI – Local Governments for Sustainability
South

Arthouros Zervos
Public Power Corporation

Tetsunari Iida
Institute for Sustainable Energy Policies (ISEP)

Steve Sawyer
Global Wind Energy Council (GWEC)

Tomas Kaberger
Japan Renewable Energy Federation (JREF)

Marietta SanderInternational Geothermal Association (IGA)

Harry Lehmann
World Council for Renewable Energy (WCRE)

Richard Taylor
International Hydropower Association (IHA)

Athena Ronquillo Ballesteros
World Resources Institute (WRI)

Heinz Kopetz
World Bioenergy Association (WBA)Rafael Senga
World Wildlife Fund (WWF)Stefan Gsänger
World Wind Energy Association (WWEA)INTERNATIONAL ORGANISATIONSNATIONAL GOVERNMENTSSCIENCE & ACADEMIA

Bindu Lohani
Asian Development Bank (ADB)

Mariangela Rebuá de Andrade Simões
BrazilPiotr Tulej
European Commission

Hans-Jørgen Koch
Denmark

Nebojsa Nakicenovic
International Institute for Applied Systems
Analysis (IIASA)

Robert K. Dixon
Global Environment Facility (GEF)

Manfred Konukiewitz
Germany

Paolo Frankl
International Energy Agency (IEA)

Shri Tarun Kapoor
India

Kevin Nassiep
South African National Energy Development
Institute (SANEDI)

Adnan Z. Amin
International Renewable Energy Agency(IRENA)

Oivind Johansen
NorwayRajendra Pachauri
The Energy and Resources Institute (TERI)

Veerle Vandeweerd
United Nations Development Programme(UNDP)Mark Radka
United Nations Environment Programme(UNEP)
Pradeep Monga
United Nations Industrial Development
Organisation (UNIDO)
Vijay Iyer
WorldbankDavid Pérez
Spain
Paul Mubiru
UgandaThani Ahmed Al Zeyoudi
United Arab Emirates
Tom Wintle
United Kingdom

David Renné
International Solar Energy Society (ISES)

RenewableS
GLOBAL FUTURES REPORT

REN21
c/o UNEP
15, Rue de Milan
F-75441 Paris CEDEX 09
Francewww.ren21.net

2013