This document provides an overview and forecast of global renewable energy capacity and generation from 2011-2017. It finds that renewable power generation is projected to rise 40% over this period, led by strong growth in China, India, Brazil and other emerging markets. Renewable deployment is also expected to spread out geographically as the costs of some technologies become more competitive. Key renewable technologies like wind and solar PV are forecast to see double-digit annual growth rates, while total renewable capacity additions are expected to accelerate compared to the previous period.

1. Medium-Term Renewable Energy
Market Report 2012
Michael Waldron
Senior Renewable Energy Market Analyst
© OECD/IEA 2012

2. Objective and scope
 With the increasing role of a portfolio of maturing
renewable technologies in the power mix…
 The IEA is publishing its first medium-term report focused
on renewable energy
 Bottom-up, global renewable forecast of renewable electricity
capacity and generation over 2011-17
 Detailed analysis of 12 OECD countries (Austria, Denmark, France,
Germany, Italy, Japan, Norway, Spain, Sweden, Turkey, UK, US) and
China, India, Brazil (~80% of world renewable electricity)
 For 2012 edition, focus on 8 technologies in power sector
with some analysis on solar thermal heating
 Completes slate of IEA MT forecasts: oil, gas, coal
 Methodology consistent with other MT reports
© OECD/IEA 2012

3. Global Overview
© OECD/IEA 2012

4. Key trends
 As a portfolio of renewable technologies matures, global
renewable power generation is forecast to rise 40%
 Supported by policy/market frameworks and economic
attractiveness in increasing range of countries and circumstances
 Technology cost developments, grid/system integration,
cost/availability of financing also weigh as key variables
 High level of economic/policy uncertainty in some countries
 This projected growth is an acceleration vs previous period
 Growth is 60% higher over 2011-17 versus 2005-11
 Renewable deployment is projected to spread out
geographically, with increased activity in emerging markets
 Deployment spurring economies of scale in some technologies -
virtuous cycle of improved competition and cost reductions
© OECD/IEA 2012

5. Growth in renewable power is forecast
to accelerate
 Hydropower remains the main renewable power source (+3.1% p.a.)
 Non-hydro renewable sources grow at double-digit annual
percentage rates (+14.3% p.a.)
TWh
Global renewable electricity production and forecast
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Hydropower Wind onshore Bioenergy Solar PV
Geothermal Wind offshore CSP Ocean
© OECD/IEA 2012

6. Growth is led by non-OECD countries
 Non-OECD accounts for two-thirds of the overall growth
 China, Brazil, India lead; others grow significantly as well
 OECD growth still largely driven by Europe but Americas
and Asia-Oceania make significant contributions
TWh Global renewable electricity production and forecast
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
OECD Americas OECD Asia-Oceania OECD Europe
China Brazil India Rest of non-OECD
© OECD/IEA 2012

7. Non-hydro technology deployment
spreads out
 Number of countries with cumulative capacity larger than 100MW
(can cover consumption of 100k households) increases significantly
 Growth areas include Asia, Africa, Latin America and the Middle East
Number of countries with installed
capacity above 100 MW
80
Non-OECD
OECD
60
40
20
0
2011
2005
2017
2011
2017
2011
2005
2017
2011
2005
2011
2005
2017
2011
2005
2005
2017
2011
2005
2017
2017
Onshore Offshore Bioenergy Solar PV CSP Geothermal Ocean
wind wind
© OECD/IEA 2012

8. Annual growth patterns for non-hydro
technologies vary significantly
 China becomes deployment leader
 OECD Europe deployment growth slows
 OECD Americas growth reflects US policy uncertainties
GW
Annual capacity additions , non-hydro technologies
40
35
30
25
20
15
10
5
0
2010 2011 2012 2013 2014 2015 2016 2017
OECD AO OECD AM OECD EUR China Rest of non-OECD
© OECD/IEA 2012

9. Generation additions over 2011-17 differ
across regions and technology portfolios
OECD Americas (+179 TWh) OECD Asia-Oceania (+77 TWh)
Wind onshore
Wind onshore
Bioenergy
Bioenergy
Solar PV
Solar PV
Other
technologies
Other
technologies
OECD Europe (+365 TWh) Non-OECD (+1 220 TWh)
Hydropower
Hydropower
Wind onshore
Wind onshore
Bioenergy
Bioenergy
Solar PV
Solar PV
Other Other
technologies technologies
© OECD/IEA 2012

10. Investment in renewable electricity
 Annual investment topped USD 250 billion in 2011
 Most recent quarterly data suggest some slowing
 Economic and credit risks weigh on medium-term picture
 European bank project finance and utility finance more strained
 Other sources/structures of finance play increasing role
 Development banks
 New institutional and non-traditional corporate investors
 Smaller scale financial innovation for small distributed capacity
 Ultimately, cost and availability of financing to depend
most on prevailing policy and technology environments
© OECD/IEA 2012

11. Renewable technologies compete better in a
wider range of circumstances
 Renewable generation in general still more expensive
than bulk power but…
 Hydropower and geothermal mostly competitive
 Onshore wind competes well in good resource areas
 Solar PV approaches peak gen. costs in places with summer peak
 Residential PV can be cheaper than average retail power prices
USD/MWh Levelised costs of power generation
Utility scale Small scale
500
400
300
200
100
0
© OECD/IEA 2012

12. Country and Regional Outlooks
© OECD/IEA 2012

13. US renewable generation to grow steadily
 Average renewable growth of 2.4% annually over 2011-17
 Non-hydropower growth at stronger rate, + 8.4% annually
 Onshore wind, solar PV and bioenergy grow strongest
 CSP and geothermal growth are large in global terms
 % of total power gen: 9% (2005), 13% (2011), 14-15% (2017)
TWh
United States renewable generation and forecast
700
600
500
400
300
200
100
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Hydropower Wind onshore Bioenergy Solar PV Geothermal CSP Wind offshore
© OECD/IEA 2012

14. State mandates drive the US picture
 Main US deployment drivers: state RPSs, federal financial
incentive levels, ample grid capacity, innovative financing
Source: DSIRE (March 2012). © OECD/IEA 2012

15. But other challenges remain in the US
 Main US deployment challenges:
 Duration of federal incentives
 Wind production tax credit (PTC) expires at end-2012; but investment
tax credit for solar goes through 2016
 Competition with natural gas
 Cost and availability of tax equity finance
GW US wind capacity growth
10
Forecast based
on expiration of
PTC at end-2012
8
6
Expiration of federal PTC
4
2
0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
© OECD/IEA 2012

16. China accounts for 40% of global growth
 Drivers:  Challenges:
 Growing energy needs  Pricing framework
 Diversification  Priority dispatch
 Government targets  Grid upgrades
 Ample low-cost finance  Prohibitive licensing for
 Robust manufacturing small-scale systems
TWh
1 800
 Challenges: generation
China forecast renewable TWh
8 000
China power demand vs GDP growth Y-o-Y
Chg
18%
1 500
 Pricing framework 16%

14%
1 200 Priority dispatch 6 000
12%
900  Grid upgrades 4 000
10%
8%
600  Prohibitive licensing for 6%
300
small-scale systems 2 000
4%
2%
0
0 0%
2011 2012 2013 2014 2015 2016 2017 2005 2008 2011 2014 2017
Hydropower Wind onshore Bioenergy Solar PV Wind offshore CSP Demand Demand, Y-o-Y (RHS) GDP, Y-o-Y (RHS)
Source: © OECD/IEA 2012

17. India sees strong hydropower, wind and solar growth
 Drivers:  Challenges:
 Supportive policy  High distribution losses and
environment: Five-Year Plan regulated prices
targets, diverse financial  Grid strengthening and
incentives expansion needed
 Low-cost financing from dev.  Complex administrative
banks and private sector requirements for projects
 Rural electrification needs –
distributed generation
TWh
India forecast renewable generation TWh India domestic electricity supply and
250
1 000
distribution losses 100%
200 800 80%
150 600 60%
100 400 40%
50 200 20%
0 0 0%
2011 2012 2013 2014 2015 2016 2017 2000 2002 2004 2006 2008 2010
Hydropower Wind onshore Bioenergy Solar PV CSP Ocean Domestic electricity supply Percentage losses (RHS)
© OECD/IEA 2012

18. Brazil’s hydropower and wind grow strongly
 Drivers:  Challenges:
 Government sponsored power  Adequate margins for wind
auctions projects (?)
 Cost reductions – wind recently  Environmental licensing
outbid natural gas  Economic attractiveness of
 Pipeline of hydropower projects solar PV (?)
 Low-cost financing from dev.
banks and private sector
TWh
Brazil forecast renewable generation Brazil average auction price for new wind
600 160
500 140
120
400
100
300
80
200
60
100 40
BRL per megawatt-hour
20
0 USD per megawatt-hour
2011 2012 2013 2014 2015 2016 2017
0
Hydropower Wind onshore Bioenergy Solar PV 2009 2010 2010 2011 2011 2011
Reserve A-3 Reserve A-3 Reserve A-5
© OECD/IEA 2012

19. Thank You
&
Questions
© OECD/IEA 2012