Early in June 2018, the Renewable Energy Policy Network for the 21st Century (REN21) published its annual report on the global state of the renewable energy industry. The results for 2017 were record-breaking - investment in renewable generation was three times higher than investment in fossil fuels.
Although excellent results were achieved in 2017, the report also concludes that even faster growth is possible, and three areas have been especially challenging for renewable sources: heating, cooling and transportation. REN21 also points out the importance of energy efficiency, which received less attention in 2017 compared with previous years.
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REN21 is a network of over 900 industry experts from many parts of the world, and 400 of them were actively involved in writing the 2018 report on renewable sources.
A Breakdown of Power Generation Investment for 2017
Global investment in new generation capacity throughout the world added up 455 billion USD for the year 2017, broken down as follows:
- Renewable power, excluding hydropower over 50 MW = 265 billion USD (58.2%)
- Large hydropower (over 50 MW) = 45 billion USD (10%)
- Fossil fuel-based generation = 103 billion USD (22.6%)
- Nuclear power = 42 billion USD (9.2%)
Solar power had the highest growth with 98 GW of capacity installed, equivalent to installing 40,000 solar panels per hour, and representing a 33% increase in capacity. Wind power also had an excellent year, with 52 GW of new capacity - an 11% increase. Overall, renewable energy sources added 178 GW to the global generation capacity. Thanks to their fast growth in recent years, renewable energy sources now account for 25% of power generation in the world.
Main Areas for Improvement: Heating, Cooling and Transportation
Renewable sources have been adopted at a much slower rate in heating and cooling, where they only account for 10% of total energy use. Their share of transportation energy consumption is even smaller, at only 3%.
Government policies have played a key role in transitioning power generation to renewable sources - 146 of 197 countries considered in the REN21 study have renewable energy targets. For comparison, only 48 of 197 countries have renewable transportation policies, and 42 of 197 have deployed renewable heating and cooling programs.
It is important to note that renewable alternatives already exist for heating, cooling and transportation. However, they generally come with a high upfront investment. Consider that solar and wind power were at this point at the start of the 21st century, but the combination of favorable policy and innovation helped reduce their cost and increase their performance. In the case of heating, there is also a significant opportunity to reduce emissions with renewable sources - heating currently accounts for 39% of total CO2 emissions.
Trends Shaping the Energy Industry
The REN21 global report also identifies key trends that could transform the energy industry in the near future, leading to new business models and enhancing the capabilities of existing technologies.
- Internet of Things (IoT): Smart monitoring systems are being deployed to reduce the operation and maintenance expenses of power plants, and distributed energy resources such as residential PV systems and batteries are being aggregated into “virtual power plants” that can mimic the behavior of a centralized system.
- Blockchain: In simple terms, blockchain is a transaction system where operations are registered and verified anonymously. Although the technology has been used mostly with cryptocurrencies, it has also been deployed successfully for energy trade among small-scale generators.
- Energy storage: The two most promising forms of energy storage are batteries and thermal storage systems. Batteries can be used for electrical loads, while thermal storage can complement heating and cooling loads. Energy storage achieves synergy with variable renewable sources like solar and wind power, since its removes their main limitation - inability to deliver power on demand.
- Distributed energy resources: With the low cost of solar power, along with the commercial availability of home batteries, distributed energy systems are becoming possible. Generation is no longer limited to centralized power plants.
Renewable energy plays an important role in reducing the carbon footprint of human society, and it has gained a significant share of the electricity sector. However, there are still significant opportunities for improvement and innovation in heating, cooling and transportation. The REN21 also emphasizes the importance of energy efficiency as a complement for renewable energy, pointing out that energy efficiency measures had reduced priority globally in 2017.