This inventory indicates a further increase in the renewably-sourced share of the global electricity mix. The combined annual mean growth of all the renewables posted over the decade to 2012 of 4.7%, was higher than that of the conventional sectors at 3.1%. The 2012 renewable share in the world's electricity mix was 20.8%, compared to 19.9% in 2011 and 18.3% in 2002. Growth in renewable output was particularly strong between 2011 and 2012 (6.2%), as it increased by 276.3 TWh in 2012, rising to 4 699.2 TWh, and can be put down to the higher than expected rise in hydropower output (3.8% or 132.7 TWh), primarily in China. It also reveals the vitality of the non-hydro renewable sectors whose combined output increased by 16.1% between 2011 and 2012 (143.7 TWh). Wind power's expansion of 82.8 TWh in 2012 in absolute figures that gave a total of 534.3 TWh, came second to that of hydropower, but solar power (photovoltaic and CSP) gets the top prize for thrust with its 65.5% year-on-year increase (41.4 TWh), that took the combined contribution past the 100 TWh line to 104.5 TWh. Biomass growth was on another scale (18.6 TWh more for a total of 326.2 TWh), and geothermal power likewise (with 1 TWh more for a total of 70.4 TWh).
The realignment of the global electricity mix is not over. In its publication "Renewable energy, medium term market report 2013", the International Energy Agency (IEA), reckons the renewable share could reach 25% in 2018. It forecasts that non-hydro renewable energies, driven by wind and solar power investments could generate 8% of gross electricity output in 2018. The IEA predicts that gross renewable electricity output will continue to pick up speed in the medium term to 2018, rising by approximately 40% and forecasts installed renewable capacity increasing from 1 580 GW in 2012 to 2 350 GW in 2018. While the main renewable energy source will be hydropower, the other renewable sectors – namely biomass, wind power, solar photovoltaic, concentrated solar power, geothermal power and marine energies – will expand much faster. Two strong trends are behind this build-up… the market's geographic expansion and renewables' competitive edge over conventional solutions.
The growth in renewable electricity production will be harder to achieve. There is already proof in Germany, Spain, Italy and even China, whose wind and solar power sectors have all experienced major growth, that integrating new capacities into their grids is no plain sailing. The initial phase of renewable capacity deployment was relatively easy to achieve because production was underpinned by incentive-based policies such as Feed-in Tariffs. The system was extremely effective at slashing production costs and thus absorbing large quantities of economically viable renewable energy in the various national electricity mixes.
It is clear that support for these now mature technologies is due for radical change. Now that they are close to the market, they will have to press on without putting undue strain on electricity consumers. Early in November 2013, the trailblazing European Commission addressed this sensitive issue by presenting its new renewable energy support mechanism reform strategies. It advocates phasing out Feed-in Tariffs in deference to other support mechanisms to encourage producers to be market-oriented. These alternative mechanisms that have already been adopted in a number of countries include tenders, buy-back premiums added to the market price and binding renewable electricity purchasing quotas for energy suppliers.
While the Commission would like to steer renewable producers towards the market, it is lukewarm about creating capacity markets, as those being set up in several European countries. It views as a last resort option a reserve capacity market based on gas- and coal-fired plants, to compensate for renewable production hiccups. It advises governments to identify the causes of the disparity between production and consumption and find a remedy for the problem first, for example, by encouraging consumers to use electricity during off-peak periods.
The European example demonstrates the future challenges for regions whose renewable output will be delivered intermittently. The modernisation of transport and distribution grids calls for strengthening works to be carried out where the renewable energy output potential is highest, for instance, to connect more offshore wind turbine capacity. Furthermore interconnections will be required between the various national grids to increase renewable electricity production system margins, as intermittent fluctuations inherent to a number of renewable electricity-generating sectors are statistically reduced when their outputs are injected into a single, interconnected and highly extensive electricity grid. The higher the system margin, the easier it is for utility companies to integrate more renewable input into the electricity mix without having to resort to reserve capacities. Setting up smart grids at local level would also contribute to evening out peak consumption by adjusting the consumption load curve to the production curve. A renewable energy boom also calls for electricity storage development work. There are several solutions, the cheapest of which is to increase pumped-storage plant capacities where possible. Other techniques are suitable for cost-reduction development work such as energy storage as methane. Surplus wind- or photovoltaic-sourced electrical energy could be used to break down water into dihydrogen and dioxygen (water electrolysis), as dihydrogen is used for methanizing carbon dioxide. One of the main advantages of this process is that existing infrastructures such as the natural gas grid can be used to store the energy. Producing hydrogen that can be used for fuel cell power generating, is also feasible but raises more storage problems. Most materials are porous to hydrogen gas, which implies production losses. Liquid hydrogen is easier to store but requires much more energy to chill (hydrogen's liquefaction temperature is about -252°C), thereby reducing its efficiency.
While integration solutions do exist, the tight economic and finance context prevailing in many countries through the spread of the recession, are no longer conducive to such rapid development of the renewable sectors. According to the UNEP (United Nations Environment Programme) report, "Global Trends in Renewable Energy Investment", renewable energy investments – except for major hydropower projects – contracted by 12% between 2011 and 2012, even though part of that drop can be attributed to cheaper renewable energy equipment prices. In 2012, investments amounted to US$ 244.4 bn compared to US$ 279 bn in 2011. Solar power was the main target sector of these new investments (US$ 140.4 bn, an 11% drop), ahead of wind power (US$ 80.3 bn, a 10% drop), biomass and waste (US$ 8.6 bn, a 34% drop), biofuels (US$ 5 bn, a 40% drop) and geothermal power (US$ 2.1 bn, a 44% drop). The only sectors to see investments increase in real terms were small hydro (US$ 7.8 bn, a 20% rise), and marine energies (US$ 0.3 bn, a 13% rise).
In spite of being much lower, renewable energy investments were the highest in Europe in 2012 at US$ 79 bn (US$ 112.3 bn in 2011), ahead of China, which invested US$ 66.6 bn in 2012 (US$ 54.7 bn 2011). At the same time the United States slipped behind China with US$ 36 bn invested (US$ 54.8 bn 2011). The investment levels were much lower in India at US$ 6.5 bn (US$ 13 bn 2011) and Brazil at US$ 5.4 bn (US$ 8.6 bn in 2011).
To put these figures into perspective, the UNEP report points out that renewable technologies excluding hydropower represented 42% of the 213 GW of additional electricity capacity installed across the world in 2012 compared to 36% in 2011. If we add the investments in major hydropower, renewable energy investments of US$ 260 bn were more or less on a par with those in fossil fuel production capacities, namely US$ 262 bn. If we exclude end-of-life thermal power plant replacements and only consider net fossil energy investments, they amounted to just 57% of the sums invested in renewable capacities. Judging from these figures, one can assume that developing renewable electricity-generating sectors has at last become a worldwide priority!