IEA: Solar PV Leads as Renewables Growth in Shadow of Policy Risks

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Global investment in new renewable power capacity is expected to reach just under $250 billion as additions remain at a level of 125 gigawatts (GW) in 2014, according to the latest International Energy Agency report. But annual investment is expected to drop slightly during the next few years as global capacity growth slows and costs fall.

Renewable electricity generation is projected to grow worldwide by almost 5% through 2020, by which time it will make up 26% of global electricity generation. Increased geographic spread for the industry and falling costs for clean technologies will be growth drivers for the sector. Hydropower, including pumped storage, represents about 37% of the anticipated growth, with onshore wind taking 31%.

The Organization for Economic Cooperation and Development (OECD), an international economic organization of 34 countries, is expected to account for 30% of new renewable generation globally during 2013-2020 in a baseline scenario. Despite huge growth in non-OECD markets, renewables are expected to meet only 35% of electricity needs in these countries, compared to 80% in OECD countries. Many OECD countries, such as those in the Middle East, remain in an early take-off phase, with deployment likely to accelerate to high levels only over the long run.

In the IEA's global growth scenario, renewable capacity will grow from 1,690 GW in 2013 to 2,555 GW in 2020. China will account for almost 40% of global expansion and more than 55% of non-OECD growth. Domestic renewables in China should account for nearly 45% of incremental power generation to 2020, ahead of coal.

Photovoltaic (PV) solar power is expected to triple to 400 GW by 2020, and onshore wind is forecast to grow to 600GW. Average annual investment should run above $230 billion.

Under an enhanced scenario, with supportive policies, renewable capacity could be 125--250 GW higher in 2020 than in the baseline case, reaching a cumulative 2,680--2,760 GW. Solar PV could reach 465-515 GW in 2020, with wind climbing to a possible 635-655 GW.

Despite the growing competiveness of renewable technologies, renewable power is increasingly at risk of not being developed at the level considered necessary to meet the global carbon dioxide climate change objective, with solar PV being the only technology to beat the carbon dioxide scenario level, due to falling costs and expansion in non-OECD countries. The IEA reports that "notable shortfalls" may occur in bioenergy, onshore wind and hydropower.

Increased policy risks, particularly in developed markets, cloud the development picture, raising concerns over how fast renewables can scale up to meet long-term development objectives.

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