Policy uncertainty hamstrings renewables growth

Although India’s capacity additions in renewables exceeded fossil fuel-powered plants in 2018, new investment in the sector declined by 16% due to uncertainty in import tariffs and exchange rates

Renewable energy is increasingly powering the world. But erratic policy making could be holding back the sector from contributing more to cut carbon emissions and combat climate change, a global report said last week.

For the fourth straight year, more renewable power capacity was added than fossil fuel and nuclear power combined, according to REN21’s Renewables 2019 Global Status Report. The comprehensive 15th annual overview of the state of renewable energy said that 100 GW of solar photovoltaic alone was added in 2018.

However, a lack of ambitious and sustained policies to drive decarbonisation across the heating, cooling and transport sectors meant that nations are not maximising the benefits of the energy transition — including cleaner air and energy security — for their people, the report by the international think tank said.

“A key breakthrough could occur if countries cut their fossil fuel subsidies, which are propping up dirty energy,” Rana Adib, Executive Secretary of REN21, said in a statement. Forty countries have undertaken fossil fuel subsidy reform since 2015, but these subsidies continued to exist in 112 countries in 2017, with at least 73 countries providing subsidies of over USD 100 million each, the report said. Estimated total global subsidies for fossil fuel consumption were USD 300 billion in 2017, an 11% increase from 2016.

Investment in renewables

Global investment in renewable power and fuels totalled USD 288.9 billion in 2018, as estimated by Bloomberg New Energy Finance, the status report said. This was 11% less than the USD 326.3 billion invested in 2017 and does not include investments in hydropower projects larger than 50 MW.

Investment in India fell 16% to USD 15.4 billion, although this was the country’s second-highest annual total to date. The investment decline reflected uncertainty in import tariffs and exchange rates. Investment in wind power equalled its 2016 record, at USD 7.2 billion, but investment in solar power declined 27% to USD 8.2 billion.

The overall investment in renewable power capacity (including all hydropower) in 2018 once again far exceeded that in fossil fuel and nuclear power capacity, the report said. The total dollar amount invested in renewable power was almost exactly three times higher than the amount invested in new coal- and gas-fired generators combined.

Although investments in renewables were focussed on solar power, which secured USD 139.7 billion in 2018, it was down 22% from 2017, due largely to lower unit costs for solar power and to changes in China’s photovoltaic market. Although wind power investment continued to lag behind solar power, it increased 2% in 2018, to USD 134.1 billion.

Investment in China, the country that attracts the most renewable energy investment by far, fell sharply from its record high in 2017, the report said. The next-largest investments were in the US, Japan and India.

China accounted for the bulk of investment worldwide for the seventh successive year, at USD 91.2 billion in 2018, although this was down 37% from 2017 and was the lowest annual figure since 2014. The dip was due largely to a mid-year change in the government’s feed-in tariff policy, which halved investment in solar power (to USD 40.2 billion, down from USD 89 billion in 2017).

Other sectors

REN21 said there is a huge opportunity for countries to drive action by expanding the transition to the heating, cooling and transport sectors. Renewables supply more than 26% of global electricity but provide only 10% of the energy used for heating and cooling and just over 3% for transport. This imbalance between energy sectors is in large part due to insufficient or unstable policy support, the report said.

“With the countries needing to come back with more ambitious climate targets in 2020, this report shows there are an array of opportunities to scale up action and improve people’s lives by extending the benefits of the energy transition throughout the economy,” Arthouros Zervos, REN21 Chairperson, said in a statement.

The annual global market for solar photovoltaic exceeded 100 GW for the first time, with a year-end total of 505.5 GW. Higher demand in emerging markets and Europe compensated for a substantial decline in China, although Asia still eclipsed other regions for new installations.

The global wind market was fairly stable, with about 51 GW added in 2018, boosting cumulative capacity 9% to 591 GW. Following a record year for wind power in Europe and India in 2017, both markets contracted in 2018, but notable growth occurred in several other regions and countries. Asia was the largest regional market, representing nearly 52% of added capacity.