Distributed solar to lead five-year renewables boom says IEA

The world’s total
renewables-based power capacity will grow by 50 percent in the next five years
– and solar PV will account for 60 percent of this increase.

That’s the headline finding of
a new report released today into renewables from the International Energy
Agency.

The IEA says that the 50 percent
rise between now and 2014 will amount to 1200 GW – equivalent to the current
total power capacity of the US.

The expected growth comes after
renewable capacity additions stalled last year for the first time in almost two
decades and the IEA cautions that the renewed expansion “remains well below
what is needed to meet global sustainable energy targets”.

“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 IEA Executive Director Dr Fatih Birol.

The report highlights the three
main challenges that need to be overcome to speed up the deployment of
renewables: policy and regulatory uncertainty, high investment risks and system
integration of wind and solar PV.

While all forms of solar are
forecast to increase in the next half-decade, it is distributed PV – the
installation of solar systems on homes, commercial buildings and industrial
facilities – that is particularly set to take off over the next five years.

Distributed PV accounts for
almost half of the growth in the overall solar PV market through 2024 in the
IEA’s forecast.

The report stresses that
“contrary to conventional wisdom, commercial and industrial applications rather
than residential uses dominate distributed PV growth, accounting for
three-quarters of new installations over the next five years”.

The IEA states that this is
because economies of scale, combined with better alignment of PV supply and
electricity demand, enable more self-consumption and bigger savings on
electricity bills in the commercial and industrial sectors.

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However, the number of solar
rooftop systems on homes is set to more than double to some 100 million by
2024, says the report, with the top markets on a per capita basis that year
forecast to be Australia, Belgium, California, the Netherlands and Austria.

“As costs continue to fall, we
have a growing incentive to ramp up the deployment of solar PV,” said Dr Birol.
The cost of generating electricity from distributed solar PV systems is already
below retail electricity prices in most countries. The IEA forecasts that these
costs will decline by a further 15 to 35 percent by 2024, making the technology
more attractive and spurring adoption worldwide.”

“Distributed PV’s potential is breathtaking,”

Fatih Birol, IEA

The report warns, however, that
important policy and tariff reforms are needed to ensure distributed PV’s
growth is sustainable. Unmanaged growth could disrupt electricity markets by
raising system costs, challenging the grid integration of renewables and
reducing the revenues of network operators.

By reforming retail tariffs and
adapting policies, the IEA says utilities and governments can attract
investment in distributed PV while also securing enough revenues to pay for
fixed network assets and ensuring that the cost burden is allocated fairly
among all consumers.

“Distributed PV’s potential is
breathtaking, but its development needs to be well managed to balance the
different interests of PV system owners, other consumers and energy and
distribution companies,” Dr Birol said. “The IEA is ready to advise governments
on what is needed to take full advantage of this rapidly emerging technology
without jeopardising electricity security.”

According to the report,
improving economics, policy support and more effective regulation could push
distributed PV’s global installed capacity above 600 GW by 2024, almost double
Japan’s total power capacity today. Yet this accelerated growth is still only 6
percent of distributed PV’s technical potential based on total available
rooftop area.

Elsewhere in the renewables
market, the report predicts that renewable heat is set to expand by one-fifth
between now and 2024, driven by China, the European Union, India and the US.

“The heat and power sectors
become increasingly interconnected as renewable electricity used for heat rises
by more than 40 percent,” said the IEA, “but overall, renewable heat potential
remains vastly underexploited.” It says the share of renewables in total heat
demand is forecast to remain below 12 percent in 2024 and calls for more
ambitious targets and stronger policy support.

Biofuels currently represent
some 90 percent of renewable energy in transport and the IEA forecasts that
their use is set to increase by 25 percent over the next five years. This
growth is dominated by Asia, particularly China, and is driven by energy
security and air pollution concerns.  

Despite the rapid expansion of electric vehicles, renewable electricity only accounts for one-tenth of renewable energy consumption in transport in 2024 in the report, and the share of renewables in total transport fuel demand still remains below 5 percent.


Developments in renewable energy will be discussed in detail, and the latest technologies showcased, at POWERGEN Europe and POWERGEN International, which both take place in November, and next year at POWERGEN India and POWERGEN Asia.

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