Beyond Policy: The Future of Renewable Energy
The pace of growth of renewable energy technologies – hydropower, wind, solar, geothermal, biopower, and emerging renewables – has accelerated in the last decade.
Since 2005, 870 gigawatts (GW) of renewable energy capacity have been added to the global electric power system. In 2014 alone, 37 GW of hydropower, 51 GW of wind power, and 40 GW of solar power were installed, according to the International Renewable Energy Agency (IRENA).
Today, when a new power plant is built somewhere in the world, it is just as likely to be renewable as it is fossil fuel or nuclear. We believe this trend will continue and that more than 50 percent of new global electricity capacity additions will come from renewable energy through the end of the decade.
Data from global electricity markets highlight the magnitude of renewable energy's presence on the global power scene. In 2014, generation from renewable energy sources added up to nearly 5,500 terawatt hours (TWh).
Renewables have now edged out natural gas as the second-largest source of electricity generation – second only to coal – and with the current boom, renewable energy will continue to be a leading fuel in the future. Renewables are an important addition to the diverse international electricity generation portfolio.
New investments in renewable power are outpacing investment in additional fossil fuel capacity as well. Global new investment in renewable energy, excluding large hydro, was $270 billion in 2014. That represents a 17 percent increase from 2013.
Investment in renewables was evenly split between developed and developing countries. Total investment in fossil fuel generation capacity was $289 billion. However, many of these investments were made to replace existing power plants that were being retired. Investments for net fossil fuel capacity additions were $132 billion.
Furthermore, for the first time, the European Bank for Reconstruction and Development has more investments in renewable energy than in thermal power.
A confluence of factors is driving this transition. First, growth in global electricity demand has fueled the rise of all power generation technologies. GE estimates that global electricity generation rose from 16,800 to 21,900 TWh between 2005 and 2014, with nearly 2,000 GW of new sources of electricity installed to meet this growing demand.
Second, the rising threat of climate change, the desire for increased domestic energy security and enhanced economic development have prompted policymakers to implement an increasing number of renewable power support policies across the globe. These policies have been successful in encouraging the adoption of renewable power over the last decade.
Third, and most importantly, as a result of technology innovation, renewable power technologies have become increasingly cost competitive over time and more "grid-friendly" – or compatible with the electric power system.
According to Bloomberg New Energy Finance, the levelized cost of electricity (LCOE) for onshore wind power has declined by 15 percent since 2009, which has enabled wind power to be the least-cost source of electricity generation in many jurisdictions around the world.
DEEPER INSIGHTS
The largest cost reductions have come from solar photovoltaic (PV) technology, which has experienced a 53 percent decline in costs since 2009. New technologies that incorporate energy storage to reduce the impact of variability from wind and solar PV technologies, as well as the addition of digital technologies that ensure the renewable power system are fully optimized, will continue to push down the cost of renewable energy and facilitate their integration to the grid
Looking ahead, the combination of business innovation and smart renewable energy policies will continue to drive large amounts of renewable energy investment, capacity and generation. GE estimates that another 730 GW of renewable energy capacity will be added between 2015 and 2020.
Renewable energy capacity additions will account for over 50 percent of total global electric power capacity additions through the end of the decade. As in the last decade, hydropower, wind and solar PV are expected to account for the bulk of these additions.
As a result, carbon dioxide emissions from electricity generation will be up to 13 percent lower in 2020 than they would have otherwise been without non-hydro renewable power technologies in the global electricity portfolio.
However, there are both challenges and opportunities in the path ahead. First, stakeholders must work together to coordinate electricity planning. Second they must develop rules to ensure system flexibility, expansion of electricity access and to improve systems operations according to market evolution expectations.
In order to accommodate the increasing levels of variable renewable energy, both demand- and supply-side technologies within the electric system must become increasingly flexible. Greater levels of deployment and utilization of the existing grid-friendly capabilities of renewables will be required.
Technology innovations like more sophisticated methods of forecasting the wind and sun, and cost-competitive energy storage solutions will be needed to allow renewables to become more predictable and to better manage variability. And finally, the Industrial Internet must be fully leveraged to enable greater control and coordination across the grid.
Through technology and business model innovation, GE believes that these challenges can be transformed into opportunities. At GE, innovation is driven across the organization and accelerated by GE's commitment to Ecomagination.
Innovations like GE's Digital Wind Farm and new Industrial Internet successfully blend the physical and digital in ways that help maximize resource productivity across the global energy system. Over 100 years ago, GE imagined a world where humankind was able to successfully harness the sun, wind, and sea.
Thanks to continuous technology innovation, this is the world that we live in today. Let's seize this opportunity and work collaboratively to further accelerate renewable energy innovation, build new solutions and create a sustainable electric power system for the planet, its people and the world economy.
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