The International Energy Agency (IEA) has significantly increased its five-year growth forecast for renewable energy in light of what it describes as a “turning point” in 2015, when a record 153 GW of new renewables capacity was added globally.

In its ‘Medium-Term Renewable Market Report’, the agency forecasts renewables growing 13% faster between 2015 and 2021 than was expected in its earlier 2015 forecast. By 2021, global renewable electricity capacity is forecast to grow by 42%, or 825 GW.

The report attributes the upward revision to stronger policy backing in the US, China, India and Mexico, as well as to cost decreases associated with onshore wind and solar photovoltaic (PV) technologies. Over the forecast period, the IEA expects solar PV costs to fall by 25% and onshore wind costs to decline 15%.

“We are witnessing a transformation of global power markets led by renewables and, as is the case with other fields, the centre of gravity for renewables growth is moving to emerging markets,” IEA executive director Dr Fatih Birol said in a statement.

During 2015, the record additions arose mainly from onshore wind, at 63 GW, and solar PV, at 49 GW. “This is equivalent to more than the total cumulative installed power capacity of a country like Canada,” the report states.

For the first time, renewables also accounted for more than half of net additions to power capacity in 2015 and overtook coal in terms of global cumulative installed capacity.

“About half-a-million solar panels were installed every day around the world last year [and], in China, which accounted for about half the wind additions and 40% of all renewable capacity increases, two wind turbines were installed every hour in 2015.”

Over the next five years, the IEA forecasts that renewables will remain the fastest-growing source of electricity generation, with their share growing to 28% in 2021, from 23% last year.

Renewables are also expected to cover more than 60% of the increase in world electricity generation over the medium term, rapidly closing the gap with coal. Generation from renewables is expected to exceed 7 600 TWh by 2021, which is equivalent to the total current electricity generation of the US and the European Union combined.

However, the IEA warns that policy uncertainty persists in too many countries, which is slowing down the pace of investments.

ESKOM RESISTANCE

In South Africa, a series of competitive auctions has resulted in the procurement of some 6.4 GW of renewables capacity from 102 projects since 2011. However, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is currently shrouded in uncertainty, owing to resistance from State-owned utility Eskom to the signing of new power purchase agreements.

Eskom claims the costs associated with renewables are exorbitant, despite the fall in prices in more recent REIPPPP bid windows, calculating a net economic loss of R4.27-billion for the first six months of 2016.

Head of generation Matshela Koko has also asserted that, if Eskom agrees to sign up to bid window 4.5 with renewables independent power producers (IPPs), in 2021/22 some 21 TWh of renewable production will be purchased at an average cost of 207c/kWh, which will be passed through to the already overburdened consumer.

“To prevent a repeat of the R4.27-billion net economic loss recorded in the first six months of 2016, Eskom should not sign the remaining expedited renewable IPPs, including bid window 4.5. In addition, costs linked to bid windows 1 to 3.5 should be ring-fenced and funded separately,” Koko argues.

The South African Wind Energy Association, which has lodged a complaint against Eskom with the regulator, argues that the utility has no discretion about whether or not to carry out energy policy as determined by the Energy Minister.

Even strong renewables proponents agree that the prices associated with the earlier REIPPPP bid windows are high. However, they argued that the tariffs are reflective of an industry that has been developed from scratch over a relatively short period.

Also highlighted is the steep fall in tariffs in subsequent bidding rounds, with wind and solar PV prices reportedly falling to 62c/KWh in the most recent auctions. These projects have not yet reached financial close, while some projects have not even been formally proclaimed as preferred bids.

The IEA expects a “two-speed world” for renewable electricity over the next five years.

“While Asia takes the lead in renewables growth, this only covers a portion of the region’s fast-paced rise in electricity demand. China alone is responsible for 40% of global renewable power growth, but that represents only half of the country’s electricity demand increase. This is in sharp contrast with the EU, Japan and the US where additional renewables generation will outpace electricity demand growth between 2015 and 2021.”

It also cautions that rapid progress in variable renewables, such as wind and solar PV, could exacerbate system integration issues in a number of markets, while the cost of financing remains a barrier in a number of developing countries.