While renewable energy will make up an increasing share of the global power mix in the next five years, many governments are not doing nearly enough to bring countries in line with climate change targets, the International Energy Agency said in its latest renewable energy outlook.
In the main model of the report, published on Oct. 21, the agency projects that 1,200 GW of renewable energy will be added globally in the next five years, the equivalent of the current power capacity of the entire U.S. This figure marks a 14% boost from the IEA's 2018 forecast.
While renewables growth has been strong, it will not be enough to meet targets set in global climate agreements, the agency warned. "Renewables are already the world's second largest source of electricity, but their deployment still needs to accelerate if we are to achieve long-term climate, air quality and energy access goals," said Fatih Birol, the IEA's executive director.
To speed up the rollout of renewables, governments globally should tackle policy and regulatory uncertainty, reduce investment risks and address the system integration of wind and solar PV, the IEA said. And a special emphasis should be placed on decarbonizing transport and heat, which have not yet seen strong representation of renewables in their power mix, the organization added.
If governments are able to successfully tackle these challenges, total renewables capacity could increase by more than 60% to 4,000 GW by 2024, the report's "accelerated case" forecasts.
Much of the IEA's boosted outlook for anticipated capacity gains comes from developments in the EU, which has seen an increase in planned auction capacities. China's forecast growth is also higher than last year as a result of "improved system integration for variable renewables" and because of solar PV and onshore wind becoming increasingly competitive.
Global offshore wind capacity is forecast to nearly triple to 65 GW by 2024. Half of the capacity growth will happen in the EU, while China will add 12.5 GW of capacity. "Record-low contract prices" will also grow offshore capacities in the U.K., Denmark, the Netherlands and Germany and the first large U.S. offshore wind projects will also come online during the forecast period, the IEA said.
Distributed solar growth
Currently, the lion's share of renewables growth is being delivered by solar power. PV systems in homes, commercial buildings and industry have almost tripled since 2014, the agency said. The largest installed distributed solar capacity in 2018 was in China, at 51 GW. Japan and Germany have 34 GW and 33 GW of capacity, respectively, while the U.S. has 26 GW and Italy 16 GW.
Cost reductions in private solar installations have boosted growth in that market, especially in Europe, the U.S. and Japan, the IEA said. "Rapid investment cost reductions of 60-80% since 2010 have raised the economic attractiveness of solar PV," the report reads.
Over the next five years, this trend is set to continue, driven by ongoing policy incentives and cost reductions. The expansion of off-grid solar will give over 100 million people, including many in less developed countries, access to electricity in the next five years, the IEA predicts.
To ensure distributed PV growth is sustainable, important policy and tariff reforms are needed. "Unmanaged growth could disrupt electricity markets by raising system costs, challenging the grid integration of renewables and reducing the revenues of network operators," the IEA said.
Solar prices are set to decline rapidly in the report's outlook window up until 2023, with some of the lowest prices seen in Portugal, as well as South America. Auction prices for renewables projects depend on regional tender designs and financing mechanisms in different countries, the agency added, and onshore wind auctions will see more price fluctuations, reflecting technology maturity, auction design and resource availability.
Within the next five years sketched out by the IEA, some existing wind farms will reach retirement age. As the global wind fleet matures, repowering and maintenance will require suitable policy frameworks to incentivize developers, the IEA argued.
Currently, about 5 GW, or 1%, of global capacity is 20 years old — the age at which turbines usually need to be replaced. By 2024, this number will have grown sevenfold.
"Fortunately, given recent technology improvements, refurbishing and repowering onshore wind projects may be valid alternatives to decommissioning," the IEA said. Developers may even repower their units before the end of its lifetime to keep repair costs down, it added.
Operational and maintenance costs usually become substantial around 15 years of age, according to the IEA. Currently about 7%, or 40 GW, of global installed wind capacity has reached this age. By 2023, this number will triple, with Germany and the U.S. having the largest ageing fleets.