Renewable energy capacity grows at record levels
Wind, solar and hydro energy grew at its fastest ever pace last year, equating to almost 22% of global power generation, according to a new report from the International Energy Agency (IEA).
The Paris-based organisation's third annual Medium-Term Renewable Energy Market Report estimates that global renewable energy generation will rise by another 45% to make up nearly 26% of global electricity generation by 2020. But it also warns that annual growth in renewable power will begin to slow after 2014, as policy and market risks threaten to slow deployment.
"Renewables are a necessary part of energy security," explained the IEA's executive director Maria van der Hoeven. "However, just when they are becoming a cost-competitive option in an increasing number of cases, policy and regulatory uncertainty is rising in some key markets. This stems from concerns about the costs of deploying renewables.
"Governments must distinguish more clearly between the past, present and future, as costs are falling over time," she added. "Many renewables no longer need high incentive levels. Rather, given their capital-intensive nature, renewables require a market context that assures a reasonable and predictable return for investors. This calls for a serious reflection on market design needed to achieve a more sustainable world energy mix."
The IEA's annual report also raises the alarm over the non-binding nature of a 27% renewable energy target for 2030, while also calling for a clear and stable framework. The absence of a binding target 'raises questions about how effective the overall target can be as member states would be able to define their commitment to renewables voluntarily', the report states adding that 'the framework overseeing these commitments lacks detail'.
Justin Wilkes, the deputy chief executive of the European Wind Energy Association, says the IEA report 'hits the nail on the head when it comes to ambitious national targets for 2030'. "Not only is a 27% target too low but it doesn't oblige member states to follow through," said Wilkes. "Europe's heads of state need to agree in October on a binding 30% renewables target if real progress is going to be made to improve Europe's energy security, competitiveness and climate objectives."
Wilkes stressed the need for policymakers to provide more forward guidance for the industry to spur further investment, adding: "It's imperative that national governments resist making abrupt changes to support mechanisms that can blindside investors and deter financing of wind power projects. Political and regulatory risk is reflected in the cost of capital and a stable framework can go a long way to eliminating these risk premiums."
The IEA expects installed wind capacity to reach 162.9GW by 2018 based on data for European members of the Organisation for Cooperation and Development. The new figure shows a marginal increase of 2.4GW in the forecast from last year's report.