Renewables growth stunted by policy, Agency warns

28 August 2014
By E&T editorial staff
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Growth in renewable energy sources is being inhibited by government policy, warns the International Energy Agency

Growth in renewable energy sources is being inhibited by government policy, warns the International Energy Agency

Growth in renewable energy around the world will slow unless governments reduce uncertainty over policies, the International Energy Agency has warned.

Power generation from renewable sources such as hydropower, wind and solar grew strongly in 2013, and accounted for more than a fifth (22 per cent) of electricity generation globally last year, the IEA said in a report on renewables.

Electricity from renewables is expected to grow by 45 per cent and make up a more than a quarter (26 per cent) of global power generation by 2020, the study said.

However, annual growth in new renewable power is expected to slow after this year, raising the risk that there will not be enough renewable energy generation to help meet global efforts to cut emissions to tackle climate change.

The report estimates that up to 2020, investment in new renewables will average more than 230 billion US dollars (£140 billion) a year, lower than the 250 billion US dollars (£150 billion) invested in 2013, as both investment costs fall and growth in new capacity slows.

IEA executive director Maria van der Hoeven said: "Renewables are a necessary part of energy security. However, just when they are becoming a cost-competitive option in an increasing number of cases, policy and regulatory uncertainty is rising in some key markets. This stems from concerns about the costs of deploying renewables."

Van der Hoeven urged: "Governments must distinguish between the past, present and future, as costs are falling over time. Many renewables no longer need high incentive levels.

"Rather, given their capital-intensive nature, renewables require a market context that assures a reasonable and predictable return for investors.This calls for a serious reflection on market design needed to achieve a more sustainable world energy mix."

In the European Union there were uncertainties over the precise nature of post-2020 renewables policy and the building of a pan-European grid to integrate variable renewables, the report said.

In emerging economies such as China, renewable growth is threatened by issues such as an absence of measures needed to integrate low-carbon to the grid and the cost and availability of financing.

The report points to some countries where opportunities for renewables growth have opened up, such as Brazil, where good resources and financing has seen onshore wind compete successfully with gas plants, and northern Chile, where high electricity prices and strong sun conditions have opened up a new unsubsidised solar market.

Biofuels and renewable heat are also increasing, though at slower rates than renewable electricity, the Medium-Term Renewable Energy Market report found.

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