Renewable power generation capacity will grow by 13.3% in 2018 to 154.6GW, according to new research from analysts Frost & Sullivan.
The research group says that investment in renewable energy will hit $228.3bn in 2018, with growth slightly down on 2017 as a result of China’s decision to slow the rate of growth in its solar sector.
Despite this, the improving economics of both generation technologies and storage, as well as increasing public support suggest that the sector remains well placed to thrive, the report adds.
“The Chinese government’s announcement of modifications to its solar policy dramatically changed the projections the renewable industry had for 2018 and the following years,” says Maria Benintende, Energy & Environment Senior Industry Analyst at Frost & Sullivan.
“Worldwide, we see that as the number of countries cutting subsidies increases, the market is compelled to consider purely commercial alternatives to feed-in tariffs, such as competitive auctions and private-sector power purchase agreements.”
Nonetheless, solar will still represent the lion’s share of new capacity at almost 90GW, with another 53GW coming from wind.
One particularly fast-growing area will be floating solar, especially in hydropower dams. “The current installed capacity of 1 GW can double or triple. As PV floating installations do not compete with other productive land uses and as they can employ already deployed transmission infrastructure, there is a growing interest in it from the end users of South America, South Europe, India, and Asia-Pacific,” the report’s authors state.
By contrast, growth in the wind sector has slowed as the industry has seen a switch from a subsidy-based model to a competitive auction-based model in key markets such as Germany and the UK. However, the pace is expected to pick up after 2019, driven by renewable-friendly energy policies, support schemes, and continued reduction in turbine costs.
Wind is already the most competitively priced technology in most markets, well able to compete with other power generation sources. “Improvements in wind turbine technologies, power electronics, and management systems, the introduction of hybrid systems, and increasing storage options guarantee present and long-term growth of this technology,” the report says.
Offshore, where the conditions are tougher and turbines are more remote, digital solutions and cost-effective techniques for the remote inspection and maintenance of turbines, regardless of weather conditions will help to drive down costs in coming years.
The group adds that increased demand for electricity is also lifting technologies such as biomass, geothermal and small hydro. But the group cautions that these technologies will not grow as fast as wind and solar because they depend on resource availability, face greater risks and have higher upfront capital requirements.
Asia will be the main driver for clean energy this year, responsible for 58% of the global new installed capacity in 2018. Almost all of the region’s $115 billion of investment (96%) will be in the solar, wind, and biomass sectors.
Sentiment in Europe has strengthened after the European Union, which is already on track to meet its Renewable Energy Directive targets of having 20% renewables in the energy mix by 2020, recently raised the bar by committing to 32% renewables by 2030.
The North American market is set to remain steady in the face of low natural gas prices and the current US administration attitude to climate change and renewable energy development. “The region is expected to maintain investment levels at $33.17 billion for 2018 thanks to its strong base for renewable power generation,” the report states.
In Latin America, the picture is rosier, with power markets in Mexico, Argentina, Brazil, and Colombia, among others, building momentum in the renewable energy market that will see a 20.1% increase in total installed capacity, bringing with it $17.7bn in investment.
Frost and Sullivan adds that renewables investment will exceed investment in other power generation technologies in Africa and the Middle East, particularly utility-scale solar PV, although infrastructure funding in Africa and the domination of fossil fuels in the Middle East remain challenges, as the uncertainty over Saudi Arabia’s $200bn, 200GW solar project highlights.