Medium Term Renewable Energy

 In 2013, global renewable electricity generation rose by 5.0% to reach nearly 5,070 terawatt-hours (TWh) and accounted for almost 22% of total power generation. Globally, renewable generation was on par with that of natural gas, whose generation declined slightly in 2013, but remained behind coal, which was almost double the size of renewables. This result stems from continued renewable expansion as well as difficult economics for gas generation in many OECD countries in 2013 and difficulty to access affordable gas supplies in non-OECD regions.
Hydropower deployment reached 41 gigawatts (GW) in 2013, partly due to the early commissioning of new capacity in China. But the return of hydro availability to more normal levels in China and the effects of drought in Brazil caused global hydropower generation to expand by less than 2% year-on-year compared to over 4% in 2012. Non-hydropower renewable generation grew by almost 16%. New solar photovoltaic (PV) capacity (+39 GW) surged in 2013, led by China and Japan, where deployment is incentivised through attractive feed-in tariffs. Onshore wind additions (+34 GW) were their lowest since 2008, largely due to a drop in new capacity in the U.S. stemming from policy uncertainty over the renewal of federal tax incentives at the end of 2012. Though smaller, solar thermal electricity additions were equivalent to the record level achieved in 2012, and offshore wind was deployed at its highest level to date, with the start of several large projects long under development.
Global biofuels production rose by almost 7% in 2013 to reach over 115 billion litres (L). In Brazil, ethanol output was boosted by a higher-than-expected sugar cane harvest that led to a 2 billion L additional ethanol production compared to the previous forecast. In the United States, ethanol production rose marginally in 2013, as the effect of elevated corn prices resulting from an extensive drought in the previous year was mitigated after the 2013 corn harvest. Biofuels output, adjusted for energy content, accounted for 3.5% of global oil demand for road transport in 2013, versus 3.4% in 2012 and 2.0% in 2007. Meanwhile, the geography of biofuels policy support is shifting; while backing for increased biofuels volumes is waning in several key markets—the U.S., the EU and Brazil—it is expanding in newer non-OECD markets, such as Southeast Asia.
Over the medium term, renewables face a transition period, as new generation, capacity additions and investment in renewable power are all expected to level off through 2020. Global renewable electricity generation is projected to grow by almost 45% to over 7,310 TWh in 2020 (+5.4% per year). Hydropower, including output from pumped storage, represents about 37% of total growth, followed by onshore wind at 31%. Non-OECD markets are expected to account for around 70% of new renewable power generation from 2013-20. Yet, they meet only 35% of fast-growing electricity needs, illustrating the still-significant role of fossil fuels. China accounts for almost 40% of the global expansion and over 60% of non-OECD growth. Renewables should account for nearly 45% of China’s incremental power generation over the medium term, ahead of coal. Among other non-OECD regions, the Americas and the rest of Asia should make the largest growth contributions.
In the OECD, renewables are transitioning to a slower but stable annual capacity expansion. Renewable generation is expected to account for near 80% of new power generation from 2013-20. While a significant share, there is limited upside potential to growth given overall sluggish demand and policy risks in key markets. In many cases, the rapid deployment of renewables requires scaling down of part of the existing energy system, which is putting incumbent utilities under severe pressure. In addition, while renewables are now much more competitive with other forms of electricity, all power generators are struggling in OECD markets where there is oversupply and low wholesale prices. These trends are particularly marked in Europe.