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A high potential in renewable energy development, coupled with cost-effectiveness in project development has placed regions like the Middle East and sub-Saharan Africa among others as preferred locations to set up clean energy projects
A report by the International Energy Agency (IEA) titled Medium-Term Renewable Energy Market Report 2015 (MTRMR) has revealed that renewables are set to capture the top spot in electricity growth over the next five years. The main drivers of growth are emerging economies as well as falling costs of electricity production.
Specifically, since cost effectiveness is key, sub-Saharan Africa has emerged as the most favourable destination for energy deployment. “Affordable renewables are set to dominate the emerging power systems of the world,” said IEA executive director Fatih Birol. “With excellent hydro, solar and wind resources, improving cost-effectiveness and policy momentum, renewables can play a critical role in supporting economic growth and energy access in sub-Saharan Africa, meeting almost two-thirds of the region’s new demand needs over the next five years.”
Noting the potential in clean energy generation in other regions globally, the IEA also said that time was right for governments in the regions mentioned, to step up efforts to channelise the growth potential and iron out policies that are coming in the way of development.
“Renewables are poised to seize the crucial top spot in global power supply growth, but this is hardly time for complacency. Governments must remove the question marks over renewables if these technologies are to achieve their full potential, and put our energy system on a more secure, sustainable path,” added Birol.
Renewable electricity additions over the next five years will top 700GW, said the report, and will account for almost two-thirds of net additions to global power capacity. Non-hydro sources such as wind and solar photovoltaic panels will represent nearly half of the total global power capacity increase.
The share of clean energy in the global power generation mix is expected to exceed 26 per cent by 2020 from 22 per cent in 2013. By 2020, the amount of global electricity generation coming from renewable energy will be higher than today’s combined electricity demand of China, India and Brazil, revealed the report. The geography of deployment will increasingly shift to emerging economies and developing countries, which will make up two-thirds of the renewable electricity expansion to 2020. China alone will account for nearly 40 per cent of total renewable power capacity growth and requires almost one-third of new investment to 2020.
However, as much as the potential remains to be harnessed, the report has also highlighted risks that could impede the sector’s growth. Sustained financing, regulatory barriers, grid constraints and macroeconomic conditions pose challenges in many emerging economies. Additionally, rapid deployment of renewables requires scaling down fossil-fired power plants in developed countries. This adds pressure on incumbent utilities, said the report.
Based on such unpredictable factors, wavering policy commitments to decarbonisation and diversification could also undermine investor confidence. Consequently, global growth in the report’s main case forecast is not as fast as it could be – and annual installations level off, falling short of what’s needed to put renewables on track to meet longer-term climate change objectives, explained the report.
While clear policies could boost renewable power growth by 25 per cent globally, an overall positive outlook towards the sector itself could improve investor feedback and contribution to the sector. The COP21 climate negotiations in Paris in December could create a virtuous cycle for renewable deployment by increasing long-term policy vision and predictability, said the report.