Renewable sources will be the second most important global source of energy by 2016 due to its continuing growth, according to the “Medium-Term Renewable Energy Market Report”. By 2018, the report projects that the power generation from renewables will increase by an estimated 25 percent of gross power generated.
Over the period of 2012 to 2018, renewable electricity generation is predicted to rise from 4,860 terawatt hours to 6,850 TWh, an increase of 40 percent. Comparing it to the period of 2006 to 2012 growth in generation, it is 50 percent higher than the 1,330 TWh increment registered.
This positive outlook on renewable electricity generation is due to the accelerating investment and deployment in emerging markets where renewables help meet demand for power, and the fact that renewable are becoming cost-competitive.
“As their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation. This is good news for a global energy system that needs to become cleaner and more diversified, but it should not be an excuse for government complacency, especially among O.E.C.D. countries,” said I.E.A. Executive Director Maria van der Hoeven.
The report shows that though investments in renewable energy in 2012 were high, there was still a small decline. This is due to policy uncertainties that cloud the investment outlook for some key markets. When it comes to project viability, even when resources are good and technology costs are favorable, policy, market, and technology risks can still undermine it – with policy uncertainty being the biggest risk.
When it comes to biofuels, it is expected that the clean fuel will reach 2.4 million barrels per day in 2018, an increase of over 25 percent from 2012 to 2018. But biofuels still face short-term production challenges, such as the slow development of advanced biofuels, sustainability of feedstock supply chains, sluggish oil demand growth, and policy uncertainty.
Ms. Van der Hoeven pointed out that policy uncertainty is public enemy number one for investors.
“Many renewable no longer require high economic incentives. But they do still need long-term policies that provide a predictable and reliable market and regulatory framework compatible with social goals,” I.E.A.’s executive director added, noting that worldwide subsidies for fossil fuel still remain six times higher than the economic incentives for renewables.
That is why persistence of supportive policy frameworks will be crucial to maintaining the deployment momentum of renewable sources, the report concluded. – EcoSeed Staff