New IEA report points to uncertainty over policy as reason for predicted slowing of renewable energy deployment
Policy uncertainty and grid integration risks are driving a slowdown in global renewable energy deployment, according to a new International Energy Agency (IEA) report

New IEA report points to uncertainty over policy as reason for predicted slowing of renewable energy deployment

Policy uncertainty and grid integration risks are driving a slowdown in global renewable energy deployment, especially in OECD economies, according to a new International Energy Agency (IEA) report published on the 28th August.

Clean energy capacity investment will still rise to $1.61 trillion by 2020. But in its first global investment outlook, the agency predicted a $20 billion drop in yearly new clean energy funding by the decade’s end to $230 billion.   

 “Renewable power is increasingly at risk of falling short of global climate change objectives,” the IEA report says.

In Europe, the Agency sees a challenge in maintaining regulatory frameworks that offer remuneration certainty, while shifting to lower incentive schemes and integrating greater levels of variable renewables into the grid system.

 “Governments must distinguish more clearly 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,” said the IEA’s executive director, Maria van der Hoeven.

 “The technology is there and it will become cheaper but the question remains, under what conditions and at what risk. Providing certainty is key and for that we need frameworks that will give guidance not just over five years but over the next 20 years.”    

With “a significant proportion of Europe’s current energy generation capacity due to be phased out in the coming years,” - according to Imke Lübbeke, a senior policy officer for WWF Europe - it may be that generating sets play an increasingly important role in supporting grid infrastructure across Europe, particularly during fault conditions or at times of high demand.

Navigant Research Report Forecasts Distributed Power Generation Growth
A new report cites policy change in relation to renewable energy support as a chief driver of distributed power generation growth that includes diesel and gas generating sets.

A new report analysing the global market for distributed power generation (DG) calls for utilities to proactively seek to accommodate DG. It describes finding a balance between growth in DG installation and fairly compensating utilities as a key issue for the energy industry. Over the next decade, the study forecasts global cumulative deployment of DG to total over 1.2 TW, led by diesel generator sets, solar PV and natural gas generator sets, respectively.

The report, titled 'Global Distributed Generation Deployment Forecast,' includes DG market forecasts for 2014-2023 by region and technology, with the latter including distributed solar PV (<1 MW), small wind turbines (<500 kW), stationary fuel cells, natural gas generator set, and diesel generator set capacity and revenue.

On key drivers of DG deployment, the report identifies innovation across policy, technology and capital. It characterises policy as the single most important driver, with 138 countries currently having established renewable energy support policies, and 16 US states having set renewable portfolio standards (RPS) with solar and/or DG provisions. In Europe, DG is the primary target of policy, and China has set a distributed solar PV target.

On technology, the report notes that DG systems must increasingly be able to communicate both with the utility grid and other DG assets, particularly in microgrids. In terms of capital, public and private investment in DG technologies has grown significantly, supported by third-party owned systems, such as the solar lease and solar power purchase agreement.

Overall, the report predicts global revenue from DG to nearly double, from US$97 billion in 2014 to more than US$182 billion by 2023, resulting in a cumulative revenue of US$1,300 billion. Of the 1,213 GW of DG installed over this period, at least 321 GW are expected to substitute for new large-scale power plants, with diesel generator sets leading in deployment, followed by solar PV and natural gas generator sets. The report calculates the resulting potential cumulative lost utility revenue at US$223 billion.

With DG reaching higher levels of penetration in Germany, the UK and Italy, the study notes that utilities in Western Europe are already losing hundreds of billions of dollars in market capitalisation. In the US, the prospect of losses is causing a 'struggle' among utilities, the DG industry and regulators.

According to the report, a balance between DG growth and fair compensation to utilities would enable DG customers and utilities to take advantage of new revenue opportunities while enabling the use of the existing electrical grid as a backup service for onsite power.