Renewable power

Generation by technology

Of all energy sources in the electricity sector, renewables had the highest rate of generation growth in 2018. Renewables-based electricity generation increased by 7% (almost 450 TWh) – equivalent to Brazil’s entire electricity demand, and faster than the 6% average annual growth since 2010.

Solar PV, hydropower and wind each accounted for less than one third of 2018 total electricity generation growth, with bioenergy representing most of the rest. Taken together, renewables fuelled almost 45% of the world's increase in electricity generation, and they now account for almost 26% of global electricity output, second after coal.

Renewable power overall needs to sustain annual growth of 7% over 2018-30 to meet the SDS level. This will require faster deployment of all renewable technologies including hydropower, which represented 65% of global renewable generation in 2018, but on the contrary, the rate of annual renewable capacity additions did not rise last year.

Solar PV is still on track with the SDS, with generation increasing by over 30% in 2018 thanks to continuous policy support and cost reductions. In addition, the tracking status for bioenergy was upgraded from 'needs improvement' to 'on track'; several policy and market developments in China contributed significantly to this status change.

Stable and predictable renewable policies

For all renewable power technologies, the long-term stability of targets and policies is essential to ensure investor confidence and continued growth. At the same time, policies need to continuously adapt to changing market conditions to achieve greater cost-competitiveness and improve integration of renewables into the system.

Policy shift to competitive auctions

Different policy instruments have been used to support renewable electricity deployment through different stages of technological maturity. Options include administratively set feed-in tariffs or premiums, renewable portfolio standards, quotas and tradeable green certificate schemes, net metering, tax rebates and capital grants. Some of these instruments have been introduced in parallel.

Recently, auctions (for centralised, competitive procurement of renewables) have become increasingly widespread and have been instrumental in discovering renewable energy prices and containing policy costs in many countries, especially for solar PV and wind.

However, the success of such policies in achieving deployment and development objectives relies on their design and ability to attract investment and competition.

Distributed PV

Increasingly, distributed generation is supported through net metering and net billing, with a number of possibilities to remunerate excess electricity fed into the grid.

However, careful consideration is needed to avoid jeopardising the electricity network’s cost recovery and creating cross-subsidisation among those customers that self-consume and those that do not.

Policy design for variable renewables

Increasingly competitive, renewables – especially solar PV and wind – are rapidly transforming power systems worldwide. However, reforms to market design and policy frameworks will be needed to ensure investment at scale both in new renewable capacities and in power system flexibility to integrate high shares of variable renewables in a reliable and cost-effective manner.

As variable renewable energy shares increase, policies ensuring investment in all forms of flexibility become crucial.

These include, for example, policies and measures to:

• enhance power plant flexibility by improving operations of the existing conventional fleet
• unlock demand-side management, for example by allowing the participation of pools of consumers in the system services market
• support energy storage
• improve and enhance grid infrastructure

Addressing technology-specific challenges

Some renewable technologies are still relatively expensive and/or face specific technology and market challenges, so require more targeted policies.

These policies could address:

• better remuneration of the market value of storage for concentrating solar power (CSP) and pumped-storage technologies
• timely grid connection and continued implementation of policies that spur competition to achieve further cost reductions for offshore wind
• improved policies to tackle pre-development risks for geothermal energy
• larger demonstration projects for ocean technologies

Other policy actions are needed to reflect the multiple benefits of bioenergy for electricity, including rural development, waste management and dispatchability.

Sector coupling becomes important

As the transport, heating and cooling, and power sectors become increasingly interdependent, cross-linked decision making and policies designed to be beneficial across sectors will be crucial.

For example, the success of electric vehicle (EV) deployment will depend critically on the strengthening of electricity distribution networks and smart charging systems at the local level.

Solar PV remains on track with the SDS, with generation increasing by over 30% in 2018 thanks to continued policy support and cost reductions.

Bioenergy was upgraded from ‘more efforts needed’ to ‘on track’ due to positive policy and market developments in China.

The tracking status of onshore wind, offshore wind and hydropower remains unchanged as ‘more efforts needed’, while concentrating solar power, geothermal and ocean power remain well below the growth rates necessary to meet clean energy goals.

Although capacity additions remained flat in 2018, solar PV generation increased 31% in 2018, and represented the largest absolute generation growth (+136 TWh) of all renewable technologies, slightly ahead of wind and hydropower. Despite recent policy changes and uncertainties in China, India and the United States, solar PV competitiveness improved. Solar PV is still on track to reach the levels envisioned in the SDS, which will require average annual growth of 16% between 2018 and 2030.

In 2018, onshore wind electricity generation increased by an estimated 12%, while capacity additions only grew 7%. However, more efforts are needed: annual additions of onshore wind capacity need to increase much faster through 2030 to get on track with the SDS.

Compared with record 32% growth in 2017, offshore wind electricity generation increased only 20% in 2018. Given its relatively small base, offshore wind growth must accelerate even further to reach the generation levels demonstrated in the SDS. Cost reductions, technology improvements and rapid deployment achieved in Europe need to be extended to other regions.

Hydropower generation is estimated to have increased by over 3% in 2018 due to continued recovery from drought in Latin America as well as strong capacity expansion and good water availability in China. This was a much larger increase than the 1.5% increase in 2017. However, capacity additions declined for the fifth consecutive year, putting this technology off track with the SDS, which requires continuous growth in new-build capacity to maintain an average generation increase of 2.5% per year through 2030.

In 2018, bioenergy electricity generation increased by over 8%, maintaining average growth rates since 2011 and exceeding the 6% annual rate needed through 2030 to reach the SDS level. As recent positive policy and market developments in emerging economies indicate an optimistic outlook for bioenergy, its tracking status was upgraded in 2018 from ‘more efforts needed’ to ‘on track’.

Concentrating solar power (CSP) generation increased by an estimated 8% in 2018. Nevertheless, CSP is not on track with the SDS, which requires annual average growth of almost 26% through 2030. Policy design that emphasises CSP plant storage value will be key to attract additional investment.

Geothermal electricity generation increased by an estimated 6% in 2018, much more than the average growth of the five previous years. Nevertheless, the technology is still not on track to reach the SDS level, which would require a 10% annual increase in generation over 2018‑30. Policies tackling challenges associated with pre-development risks are needed to increase the deployment of geothermal for power.

Electricity generation from marine technologies increased an estimated 3% in 2018. The technology is not on track with the SDS, which requires a much higher annual growth rate of 24% through 2030. Policies promoting R&D are needed to achieve further cost reductions and large-scale development.