During the past decade, renewable energy growth has been uneven across the world, driven by government support. In wind power, China became the global leader in terms of new yearly installed capacity in a very short time, overtaking the United States in 2010. Germany continues to lead the world in solar energy photovoltaic capacity, followed by Spain and Japan.
The United States has the largest geothermal power capacity with the Philippines, Indonesia, Mexico and Italy following. China is the leading hydropower producer, followed by the United States, Brazil, Canada and Russia. In bioenergy for power, the Unites States leads and is followed by Germany, Sweden, Finland and the United Kingdom.
In order to achieve the goals of halving the global energyrelated CO2 emissions by 2050, as assumed in ETP 2010 BLUE Map scenario, a significant effort in deployment of renewable electricity is needed. In 2008, over 3,700 TWh of power was produced globally using renewable sources of energy. To meet the BLUE Map scenario, this production will need to almost double to over 7,000 TWh by 2020.
While hydropower will remain the largest source of renewable power, revolutionary growth in the deployment of wind turbines, solar energy, geothermal energy and bioenergy technologies will be needed: wind power must see an annual average growth rate of 17% and solar power 22% to meet their 2020 targets. These sorts of levels are achievable. Since 2005, we have observed comparable growth rates both for wind turbines and solar power technologies, averaging at 26% and 50%, respectively.
The challenge will be to maintain this high growth for the longer term. This will require manufacturing cost reductions, driven by stable and predictable policy support that adapts to market conditions. Renewable energy RD&D investment also needs to continue to expand in all major economies.
Renewable energy policy
Policy support for renewable energy has increased considerably over the last decade; there has been a proliferation in policy tools and a strong growth in the number of countries using these policies. Countries pursue renewable energy to improve their energy security by diversifying the energy mix with locally available resources and to achieve climate goals.
Renewable electricity policy has undergone a continual evolution over the past 10 years. As countries gain experience in renewable energy deployment, they learn from their own and other nations’ experiences, and adapt schemes to meet their policy goals in an effective, costefficient manner. IEA presents this evolution in CEM countries for the following technologies: wind energy, solar photovoltaic, Concentrated solar power (CSP), geothermal power, bioenergy for power (details for biomass and biogas) and hydropower.
Renewable electricity policy
In 2010, almost all major economies had some form of support scheme for renewable electricity; this stands in contrast to 2000, when only 16 countries provided targeted support. Seventeen countries currently have FIT schemes, ten countries implement quota obligation systems with tradable green certificates, and four countries have tender systems in place.
In 2010 and in the beginning of 2011, a number of countries adapted PV FIT schemes, with the Czech Republic, Spain, France, Italy and Germany revising policies and tariff rates given unexpected rapid growth that resulted in escalating policy cost. Brazil has also shifted from a FIT support scheme to capacity tenders in an effort to use a more adaptive policy framework. Japan is considering extending its current FIT scheme to include solar PV, wind farm, small hydro, geothermal energy and biomass.
Australia passed legislation to extend its mandatory renewable energy target for electricity to 2020, with the objective of achieving 20% of electricity from renewables. A number of governments introduced new policies, with India planning to launch a renewable quota obligation system at the beginning of 2011. South Africa has made significant progress in plans to advance its Solar Park, which will build 5GW of solar energy capacity by 2020.
Renewable heat policies
Government support for renewablesbased heat is low compared to renewablesbased electricity or biofuels for transport. Policy design for renewable heat raises different issues as compared to renewable electricity policy design due to a number of differences between the delivery of heat and electricity.
The heterogeneous nature of heating fuels means that there is a diverse group of companies supplying the market. The demand side is also is fragmented and difficult to target: heat is produced on site by millions of building owners and developers, district heating operators and industries. Moreover, installers, heating engineers and architects often act as crucial gatekeepers between supply and demand.
A “feedin tariff” refers to a fixed guaranteed price at which power producers can sell renewable power into the electric power network; quota obligation systems require a minimum percentage of electricity sold or generation capacity installed to be provided by renewable energy, which utilities must meet. They can also set obligations that a minimum percentage of electricity purchased comes from renewable energy sources; A tradable green certificate represents the certified generation of one unit of renewable energy, generally one megawatthour (MWh). Certificates can be traded and used to meet renewable energy obligations among consumers and/or producers, and can also be used for voluntary renewable energy power purchases.
To date, the most widely adopted mechanisms for the support of renewable heat are direct capital grants and tax credits for the purchase of a renewable heating system. Direct capital grants for solar thermal systems exist in many European Union countries. However, subsidy schemes often depend directly on the public budget; as such, conditions change regularly and schemes suffer from stopand go support, depending on the political agenda. Another disadvantage is the absent guarantee of producing renewable heat, as grants or tax credits are often provided without verifying whether heat equipment has been properly installed.
Still, grant and tax credit schemes continue to stay in force, as they are popular with individual consumers and have low transaction costs relative to other schemes. A number of countries have deviated from financial incentive schemes to introduce use obligations for renewable heat systems.
The Spanish government developed a national solar heat obligation policy in 2006; Portugal and cities in Italy, Brazil and India followed. Since a solar obligation incentivises one specific technology, such a policy should be introduced only where there is no competition with other renewable technologies for the same market. The procedure for checking compliance and the absence of an incentive to exceed the required level of the obligation are weaknesses of the solar obligation.
The German Marktanreizprogram aims to increase renewable heat in general, including geothermal heat from hot sedimentary basins used in district heating systems. Moreover, the German Renewable Energy Sources Act guarantees a bonus of EUR 3 cent/kWh to the FIT for geothermal (binary) power plants if the waste heat is made useful. In March 2011, the United Kingdom announced the Renewable Heat Incentive (RHI), the first heat market feedin tariff.
The RHI is designed to provide a continuous income stream over twenty years upon installation of an eligible renewable heating system. In 2011, the scheme will introduce premium payments for the nondomestic sector. In 2012, the scheme will expand to the domestic sector. Solar thermal systems are rewarded a premium payment of GBP 0.085/kWhth (EUR 0.099/kWhth) for systems < 200 kWth.
Public spending on research, development and demonstration for renewable energy
Renewable energy RD&D comprises solar PV, concentrated solar energy, solar thermal heating and cooling, wind energy, hydropower, geothermal electricity and heat, production and use of biomass and waste (including liquid biofuels and biogas), and other renewable technologies such as ocean and wave/tidal power.
Overall, there was a significant threefold increase in CEM countries’ RD&D expenditures on renewable energy between 2000 and 2010. In 2010, there was a large decrease to USD 3.1 billion total spending from 2009’s all]time high of USD 3.8 billion due to reductions in stimulus spending.
However, estimates for 2011 indicate that spending regains momentum as more data become available from a wider range of countries. Between 2000 and 2010, countries spent USD 56 billion on nuclear energy and USD 22 billion on fossil fuels RD&D, this compares to renewable technologies for which CEM countries spent only USD 16 billion over the same time period.
The United States is the largest spender on renewable energy RD&D among CEM countries. Between 2005 and 2010, the United States spent USD 4.9 billion, representing 40% of the total spent by all countries. In addition, the US spending amount increased significantly compared to the first half of the decade, when the country spent USD 1.4 billion (2000-2005). In 2011, the United States has made a significant increase in solar energy RD&D, especially Concentrating Solar Power (USD 141 million) which represents as much as 12% of total renewable technologies RD&D for this year. Japan and Australia increased expenditures on solar energy; each country spent about USD 145 million in 2011.