Renewable markets around the world

Friday 09 February 2018

This article appeared on www.iea.org

The United States
Despite policy uncertainty, the United States remains the second-largest growth market for renewables. The main drivers remain strong for new onshore wind and solar capacities, such as multi-year federal tax incentives combined with renewable portfolio standards as well as state-level policies for distributed solar PV.

Still, the current uncertainty over proposed federal tax reforms, international trade, and energy policies could have implications for the relative economics of renewables and alter their expansion over the forecast period.

India
India’s moves to address the financial health of its utilities and tackle grid-integration issues drive a more optimistic forecast. By 2022, India is expected to more than double its current renewable electricity capacity. For the first time, this growth over the forecast period is higher compared with the European Union.

Solar PV and wind together represent 90% of India’s capacity growth as auctions yielded some of the world’s lowest prices for both technologies. In some Indian states, recent contract prices are comparable to coal tariffs. India’s accelerated case indicates that renewable capacity expansion could be boosted by almost a third, providing that existing grid integration and infrastructure challenges are addressed, policy and regulatory uncertainties are reduced, and costs continue to fall. With this growth India would equal the United States, becoming the joint second-largest growth market after China.

China is the undisputed renewable growth leader
China alone is responsible for over 40% of global renewable capacity growth, which is largely driven by concerns about air pollution and capacity targets that were outlined in the country’s 13th five-year plan to 2020. In fact, China already surpassed its 2020 solar PV target, and the IEA expects it to exceed its wind target in 2019. China is also the world market leader in hydropower, bioenergy for electricity and heat, and electric vehicles.

Today, China represents half of global solar PV demand, while Chinese companies account for around 60% of total annual solar cell manufacturing capacity globally. As such, market and policy developments in China will have global implications for solar PV demand, supply, and prices. In the Renewables 2017 main case forecast, total solar PV capacity around the world reaches 740 GW by 2022 – more than the combined total power capacities of India and Japan today.

If uncertainties and barriers are addressed, solar PV growth could accelerate even more. Two important challenges in China – the growing cost of renewable subsidies and grid integration – limit growth in the main case forecast.

China’s renewable energy policies are being modified quite substantially in order to address these challenges. China is moving away from its feed-in-tariff (FIT) programme to a quota system with green certificates. Together with ambitious power market reform, new transmission lines, and the expansion of distributed generation, these new policies are expected to speed up deployment of solar (and wind). However, the timing and implementation of this policy transition remains uncertain.

The European Union
In the European Union, renewable growth over the forecast period is 40% lower compared with the previous five-year period. Overall, weaker electricity demand, overcapacity, and limited visibility on forthcoming auction capacity volumes in some markets remain challenges to renewable growth. Policy uncertainty beyond 2020 remains high.

If adopted, the new EU Renewable Energy Directive covering the post-2020 period would address this challenge by requiring a three-year visibility over support policies, thereby improving the market’s predictability.

Developing Asia and Sub-Saharan Africa
For the first time, Renewables 2017 tracks off-grid solar PV applications more closely in developing Asia and sub Saharan Africa. Over the forecast period, off-grid capacity in these regions will almost triple – reaching over 3,000 MW in 2022 – from industrial applications, solar home systems (SHSs), and mini-grids driven by government electrification programmes, and private sector investments.

Although this growth represents a small share of total PV capacity installed in both regions, its socio-economic impact is nonetheless significant. Over the next five years, SHSs – the most dynamic sector in the off-grid segment – are forecast to bring basic electricity services to almost 70 million more people in Asia and sub Saharan Africa. It will also lead to new business players bringing innovative payment solutions that allow low-income populations initial access to electricity services.

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