Biomass Energy
Bioenergy draws on a wide range of potential feedstock materials: forestry and agricultural residues and wastes of many sorts, as well as material grown specifically for energy purposes. The raw materials can be converted to heat for use in buildings and industry, to electricity, or into gaseous or liquid fuels, which can be used in transport, for example. This degree of flexibility is unique amongst the different forms of renewable energy.1
The most commonly used conversion methods – combustion of fuels to produce heat or electricity; anaerobic digestion to produce methane for heat or power production; and the conversion of sugary and starchy raw materials to ethanol, or of vegetable oils to biodiesel – all are well-established and commercial technologies.2 A further set of conversion processes – for example, the production of liquid fuels from cellulosic materials by biological or thermochemical conversion processes, such as pyrolysis – are at earlier stages of commercialisation or still under development.3
In 2015, drivers for the production and use of biomass energy included rapidly rising energy demand in many countries and local and global environmental concerns and goals. Challenges to bioenergy deployment included low fossil fuel prices and rapidly falling energy prices of some other renewable energy sources, especially wind and solar PV.4 Ongoing debate about the sustainability of bioenergy, including indirect land-use change and carbon balance, also affected development in the sector.5 Given these challenges, national policy frameworks continue to have a large influence on deployment.
Bioenergy Markets
Bioenergy contributes more to primary global energy supply than any other renewable energy source.6 Total energy demand supplied from biomass in 2015 was approximately 60 exajoules (EJ).7 The use of biomass for energy has been growing at around 2% per year since 2010.8 The bioenergy share in total global primary energy consumption has remained relatively steady since 2005, at around 10%i, despite a 24% increase in overall global energy demand between 2005 and 2015.9
Bioenergy plays a role in all three main energy-use sectors: heat (and cooling), electricity and transport. The contribution of bioenergy to final energy demand for heat (traditional and modern) far outweighs its use in either electricity or transport.10 (→See Figure 6.)
Figure 6. Shares of Biomass in Total Final Energy Consumption and in Final Energy Consumption by End-use Sector, 2014
Solid biomass represents the largest share of biomass used for heat and electricity generation, whereas liquid biofuel represents the largest source in the transport sector.11 (→See Figure 7.)
Figure 7. Shares of Biomass Sources in Global Heat and Electricity Generation, 2015
i The final energy share is about 14%, as seen in Figure 6.
Bio-heat Markets
Biomass in many forms – as solids, liquids or gases – can be burned directly to produce heat for cooking and heating in the residential sector by means of the traditional use of biomass or in modern appliances. It also can be used at a larger scale to heat larger institutional and commercial buildings, or in industry to produce high-temperature process heat and/or lower-grade heat for heating or drying. The heat can be produced directly or co-produced with electricity via combined heat and power (CHP) systems and distributed from larger production facilities by district heating systems to provide heating (and in some case cooling) to residential, commercial and industrial customers.
The traditional use of biomass for heat involves primarily the use of simple and inefficient devices to burn woody biomass, in the form of fuelwood or charcoal.12 Biomass energy use in 2015 is estimated at 31 EJ, although it is difficult to quantify the volume consumed given the informal nature of the supply and uncertainty regarding the use of these biomass materials.13 Consumption of fuelwood for traditional energy uses remained stable in 2015 compared to previous years, at an estimated 1.9 billion cubic metres (m3); the largest shares of fuelwood (as well as other fuels such as dung and agricultural residues) are consumed in Asia, South America and Africa.14 The use of charcoal for cooking in many developing countries, especially in urban areas, has been increasing by an average of around 3% a year since 2010, reaching an estimated 55 million tonnes in 2015.15
Modern bioenergy applications provided some 14.4 EJ of heat in 2015, of which an estimated 8.4 EJ was for industrial uses and 6.3 EJ was consumed in the residential and commercial sectors (used principally for heating buildings and cooking).16 Modern biomass heat capacity in 2015 increased by an estimated 10 GWth to reach approximately 315 GWth.17
Bioenergy accounts for around 10% of all industrial heat consumption, and its use in industry has been growing at about 1.3% annually over the past 15 years, principally from solid biomass.18 The use of biomass residues to produce heat, often via CHP, is particularly important in bio-based industries. The pulp and paper sector was the largest industrial consumer of bioenergy for heat, sourcing some 43% of its heat requirements from biomass process residues such as bark and pulping liquors.19 The food and tobacco industries also meet a considerable share of their energy needs with biomass. Heat is required to manufacture biofuels as well: for example, bagasse is used to generate heat and power in facilities that produce sugarcane-based ethanol.
The principal regions that rely on biomass for industrial heat are Asia and South America (particularly Brazil, where bagasse is used in sugar production).20 North America is the next largest user; however, the region’s use of bioenergy for heat is declining due to changes in the structure of the forestry and paper industries.21
In the buildings sector, the largest consumers of modern biomass for heat by country include the United States, Germany, France, Sweden, Italy and Finland.22 Europe is the largest consumer by region, due largely to efforts of EU Member States to meet mandatory targets under the Renewable Energy Directive.23
Europe (primarily Italy, Germany, Sweden and France) also was the largest market for wood pellets for heating in 2015, although the region’s second consecutive mild winter reduced demand somewhat during the year.24
Several countries in the Baltic and Eastern European regions have seen an increase in the use of wood fuels in recent years. Rising demand is driven by the countries’ ample biomass resources, widespread use of district heating and desire to reduce quantities of imported natural gas. In Lithuania, for example, 61% of energy used in district heating in 2015 was derived from local forestry industry residues. Lithuania’s biomass-based heat capacity tripled between 2011 and 2015, to 1,530 MWth.25
The United States and Canada have strong traditions of using wood as a fuel for residential heating. As of 2014, some 2.5 million US households used fuelwood as their principal household heating fuel, and another 9 million homes used it as a secondary fuel.26 Use of wood pellets also increased in these markets, although growth was constrained by low oil prices during 2015.27
In China, a programme launched in 2008 to encourage the use of pelletised agricultural residues for heating and to reduce coal use in local district heating schemes has stimulated the growth of a national market and industry. The policy provides support to farmers to collect and process residues and so provides a useful rural economic incentive. It is estimated that more than 6 million tonnes of pellets, with an energy content of some 96 petajoules (PJ), were produced and used in China during 2015.28
Biogas also is used in industrial and residential heating applications. In Europe, it is used increasingly to provide heat for both buildings (space) and industry (processes), often in conjunction with electricity production via CHP.29 Asia leads the world in the use of small-scale biogas digesters to produce gas for cooking and space heating. More than 100 million people in rural China and 4.83 million people in India have access to digester gas.30
Bio-power Markets
Bio-power capacity increased by an estimated 5% in 2015, to 106.4 GW, and generation rose by 8% to 464 TWh; the rise in generation was due in part to increased use of existing capacity.31 The leading countries for electricity generation from biomass in 2015 were the United States (69 TWh), Germany (50 TWh), China (48 TWh), Brazil (40 TWh) and Japan (36 TWh) followed by the United Kingdom and India.32 (→See Figure 8.)
Figure 8. Bio-power Global Generation, by Country/Region, 2005–2015
By country, the United States is the largest producer of electricity from biomass sources. In 2015, US biopower capacity in operation increased by 4% to 16.7 GW; generation in 2015 was close to the 2014 level of 69.3 TWh.33 There are signs that some existing bio-electricity in the United States is not financially competitive with low-cost generation from natural gas and with generation from other lower-cost renewables.34
Bio-power production, from both solid biomass and biogas, continued to grow in Europe.35 Germany remains Europe’s largest producer, and total bio-power capacity in the country remained constant at 7.1 GW in 2015. Much of this capacity (4.8 GW) relates to biogas-fuelled installations based on energy crops. Germany has the largest biogas-powered generation capacity in Europe.36 However, biogas power capacity growth was limited in 2015 due to reductions in financial support for biogas plants.37 Bioelectricity production was up by 2% over 2014, to 50 TWh.
Elsewhere in Europe, both bio-power capacity and generation increased significantly in the United Kingdom during 2015 (by 12% and 27%, respectively), making the country the world’s sixth largest user of biomass for electricity generation.38 These increases were due largely to activities at Drax, previously the United Kingdom’s largest coal-fired power station, where two large generation units have been converted to biomass firing, with a third currently undergoing conversion.39 Around 4% of UK electricity is generated from biomass at the site. The biogas market also grew strongly in the United Kingdom, with the fastest growth of any country in Europe, stimulated by an attractive feed-in-tariff rate.40
In China, bio-power capacity reached 10.3 GW in 2015, an increase of 0.8 GW over the year.41 Generation was up 16% over 2014, to an estimated 48.3 TWh.42 The country’s 2010–2015 Five-Year Plan aimed to reach 13 GW by 2015, with a target of 30 GW by 2030. Factors that have restricted progress include high feedstock prices, poor co-ordination among projects and technical operating difficulties.43
Elsewhere in Asia, Japan’s efforts to stimulate growth in renewables following the Fukushima nuclear disaster have led to increased use of bio-power. Capacity reached a total of 4.8 GW in 2015, and generation reached some 36 TWh. The growing market is based largely on imported fuels such as wood pellets (principally from Canada), wood chips and palm kernel shells.44 In India, bio-power capacity saw relatively small gains in 2015: on-grid capacity increased by 144 MW (up 0.3%) to 4.67 GW, and off-grid capacity rose by 18.9 MW (up 2%) to 927 MW.45
In Brazil, bio-power production relies primarily on sugarcane residues, such as bagasse, as fuel. Capacity increased 250 MW over the period 2013–2015, to 9.7 GW at end-2015. Growth was relatively slow because wind power dominated the country’s renewable energy auctions over this period. Even so, some bio-power projects were selected in the three auctions held in 2013 and 2015, and several PPAs were awarded during 2015 for new and existing bio-power plants.46
Transport Biofuel Markets
In 2015, global biofuels production increased by around 3% compared to 2014, reaching 133 billion litres.47 This increase was due to good harvests in key ethanol-producing countries – maize in the United States and sugar cane in Brazil – but was abated by a slight reduction in biodiesel production. Demand was consistent due to blending mandates, which sheltered markets from the potential impacts of comparatively low global gasoline and diesel fuel prices.
Global production of biofuels was dominated by the United States and Brazil – these two countries produce 72% of all biofuels – followed by Germany, Argentina and Indonesia. An estimated 67% of biofuel production (in energy terms) was fuel ethanol, 33% was biodiesel, and a small but increasing share was hydrogenated vegetable oils (HVO) and other advanced biofuels (with existing capacity of around 0.5 billion litres/year).48 (→See Figure 9.)
Figure 9. Biofuels Global Production, Shares by Type and by Country/Region, 2015
Global production of fuel ethanol increased by some 4% between 2014 and 2015, to 98.3 billion litres. The United States and Brazil accounted for 86% of global ethanol production in 2015. China, Canada and Thailand were the next largest producers.49
US ethanol production rose 3.8% to 56.1 billion litres during the year.50 Domestic demand was supported by the US Environmental Production Agency’s (US EPA) final Renewable Fuel Standard (RFS 2) allocations for annual volume requirements. A 2% increase in gasoline demand also increased the amount of ethanol that could be blended while avoiding the 10% “blend wall”.51 Ethanol production in Brazil also increased by 6%, to a record output of 30 billion litres, due to a good harvest and government measures that have increased the sector's attractiveness.52 The other major producer in the Americas, Canada, ranked fourth globally in 2015, producing 1.7 billion litres (down 1% compared to 2014).53
China, the third largest ethanol producer, produced an estimated 2.8 billion litres in 2015, a decline of 14%. China increased ethanol imports during the year but added no new production capacity, in part because of a moratorium on maize-based ethanol production.54 Asia’s other major producer, Thailand, saw ethanol production rise by 10%, from 1.1 billion litres in 2014 to 1.2 billion litres in 2015.55
In the EU, key producers include France, Germany, Spain, Belgium and the United Kingdom.56 EU ethanol production was down by about 7% in 2015 to some 4.1 billion litres, particularly because of reduced production in the United Kingdom.57
Ethanol production in Africa increased substantially, from 0.10 billion litres in 2014 to 0.13 billion litres in 2015, due largely to increases in production in South Africa.58
Leading countries in biodiesel production worldwide were the United States, Brazil, Germany and Argentina. Following a significant increase in 2014 (up 13% to 30.4 billion litres), global production of biodiesel fell slightly in 2015 to 30.1 billion litres.59 The decline was due to constrained production in Argentina and Indonesia, in particular.
US biodiesel production rose by 2% in 2015, reaching close to 4.8 billion litres.60 In Brazil, output was up 15% to 3.9 billion litres.61 Growth in Brazilian demand for biodiesel was stimulated by an increase in the biodiesel blending mandate to 7%.62 By contrast, biodiesel production in Argentina declined by 30% in 2015, to 2.1 billion litres.63 Output was reduced due to a reduction in export markets, which resulted from a tax increase by the EU on Argentinian biodiesel imports.64
European biodiesel production rose by 5% to 11.5 billion litres.65 Germany was again the largest European producer (2.8 billion litres), followed by France (2.4 billion litres).66
The year 2015 saw significant changes in biodiesel production patterns in Asia. In Indonesia, the region’s largest producer, biodiesel production dropped by over 40% – from 2.9 billion litres in 2014 to 1.7 billion litres – due to delays in fully implementing the B15 biodiesel programme.67 In Malaysia, the introduction of a B7 blend mandate increased demand and resulted in a 40% jump in production to around 0.7 billion litres.68 China’s biodiesel production is estimated to have increased substantially – by an estimated 24% – to 0.35 billion litres in 2015.69
Global production of HVO grew by some 20% to 4.9 billion litres, with the Netherlands, the United States, Singapore and Finland as major producers.70
The use of biomethane as a transport fuel also continued to increase during the year.71 The largest markets are all in Europe, where Sweden, Germany and Finland lead, using a combined 119,000 tonnes (4.7 PJ) of biomethane fuel.72
Bioenergy Industry
The bioenergy industry includes feedstock suppliers and processors; firms that deliver biomass to end-users; manufacturers and distributors of specialist biomass harvesting, handling and storage equipment; and manufacturers of appliances and hardware components designed to convert biomass to useful energy carriers and energy services. Industry, with support from academia and governments, also is making progress in bringing a number of new technologies and fuels to the market.
Solid Biomass Industry
The industries involved in producing solid biomass and manufacturing-related technologies are very diverse. The production and supply of traditional biomass is usually informal and local, although there are signs of increasingly industrial approaches to the production and marketing of systems such as biomass-based cook stoves.73
The industry for manufacturing modern biomass heating appliances is well-developed in Europe and North America, where regional players generally focus on local markets and can tailor their products to specific customer and regulatory requirements. Large-scale systems used for district heating and industrial applications typically are provided by global players.
Fuelwood and other biomass feedstock supply for heat or power production tends to be based locally in order to constrain transport costs and associated emissions. For example, straw used to fuel power generation plants usually is collected within a radius of around 50 kilometres.74
In contrast, wood pellets (which have a relatively high energy density) are traded globally.75 Wood pellets are supplied primarily from Europe (Germany, Sweden and Latvia), North America (the United States and Canada) and the Russian Federation.76 The pattern of trade varies year to year as the demand for pellets for power generation is affected by changes in regulations and levels of financial support. Historically the EU region has been the major importer, but since 2014, Japan and the Republic of Korea also have become important markets.77
The United States exported more than 4.5 million metric tonnes of wood pellets in 2015, 84% of which went to the United Kingdom and 14% to Benelux countries.78 Drax (United Kingdom) has invested more than USD 350 million in fuel production plants in the US states of Louisiana and Mississippi, and in 2015 the company opened biomass pellet storage, handling and loading facilities at Louisiana’s Port of Greater Baton Rouge that are capable of handling 3 million tonnes of pellets a year.79
In Canada, pellet exports remained close to 2014 levels, at 1.63 million tonnes. Rising sales to the United Kingdom (up 23%) and Japan (up 30%) were offset by reductions in exports to Italy and the Republic of Korea.80 Canadian exports to the Republic of Korea fell by 68% because of short-term contracting issues and new regulations that aim to improve sustainability of supply.81
The year 2015 saw growth and developments in industry quality standards and sustainability certifications. ENplus, an industry quality standard, covered 7.7 million tonnes of product in 2015, a rise of 1.7 million tonnes over 2014.82 In addition, in 2015 the Sustainable Biomass Partnership (SBP), an industry-led initiative, developed and published a framework of standards and independent certification procedures that enable companies using biomass at a large scale to demonstrate compliance with legal, regulatory and sustainability requirements that relate to woody biomass.83
The production of torrefied wood/pellets, which increases the energy density of biomass-based fuels and results in a product compatible with systems designed for coal, also saw some expansion during 2015. For example, In the United States, Vega Biofuels entered into a joint-venture agreement to construct a bio-coal manufacturing plant in the state of Georgia, which will be operated by Agri-Tech Producers and Vencor International.84
Liquid Biofuels Industry
In contrast to solid biomass, production of liquid biofuels is focused around a number of large industrial players with dominant market shares. These include ethanol producers Archer Daniels Midland (ADM), POET and Valero in the United States, and Copersucar, Oderbrecht (ETH Bioenergia) and Raizen in Brazil.85
In 2015, there was limited development of new conventional biofuels production capacity in the principal producer markets – the United States, Brazil and Europe – largely because existing plants were not operating at full capacity. Total global biofuels capacity is some 209 billion litres a year.86 With current production of 133 billion litres, there is some 35% spare capacity. Future demand patterns remained unclear due to regulatory and market uncertainty, so there is little motivation for large-scale new capacity investment.
However, new developments occurred in a number of new and emerging markets in Asia and Africa. In Nigeria, for example, an international funding partnership was announced with the country’s cassava growers association to produce ethanol in 10 distilleries in different states around the country.87
Ethanol is traded internationally, and trade patterns showed some significant variations in 2015. US net exports of ethanol increased by 28% compared with 2014, to 2.5 billion litres; shipments were to Brazil, the Philippines, India and the Republic of Korea.88 The Chinese market for ethanol imports (particularly from the United States) has grown rapidly, influencing global trade patterns.89
Biodiesel production is more geographically diverse than ethanol, with production spread among a number of countries. The top producers are the United States, Brazil, Germany, Argentina, France, the Netherlands, Indonesia and Thailand.90 The biodiesel industry has been affected to a significant degree by policy and regulatory changes and by shifting patterns in international trade. In the United States, for example, industry developments have been subject to uncertainty about the biodiesel tax credit and an expectation that Argentina may become a major exporter to the country.91 In Europe, biodiesel sales are constrained by the 7% limit introduced in 2015 on the contribution of starch-rich, sugar and oil crops to the EU’s 2020 biofuel target.92
In 2015, there was active progress in demonstrating the reliable production of a range of advanced biofuels. These fuels offer alternatives to conventional biofuels (produced with sugar, starch and oils) and thereby offer the prospect of lower life-cycle greenhouse gas emissions and reduced competition with food production.93 A number of routes are being investigated including the production of HVO, the use of biological processes to produce fuels from cellulosic materials (such as crop residues), and thermochemical processes including gasification and pyrolysis.94
During 2015, activity related to advanced biofuels was concentrated largely in the United States, Brazil and Europe. Key players in the ethanol, biodiesel and other bio-based industries (as well as fossil fuel suppliers) are playing major roles in this sector, working with technology providers, research groups and academia to develop and bring novel processes into full-scale production.
Capacity for producing fuels by hydrogenating vegetable oils (including used cooking oil (UCO), tall oili and others) increased significantly in 2015.95 UPM (Sweden), for example, invested USD 150 million to develop a plant in Finland on the same site as the company’s Kaukas pulp and paper mill, which produces 100,000 tonnes of diesel fuel from tall oil annually.96 In April 2015, Total (France) announced an investment of some USD 220 million to convert the La Mède oil refinery in southern France into a biorefinery that will produce renewable diesel from UCO and other feedstocks.97
Several additional cellulosic ethanol manufacturing plants began production or were announced in 2015, including DuPont’s plant in the US state of Iowa, which is designed to produce 140 million litres of ethanol per year, the largest such output in the world.98 In Brazil, Grandbio and Raizen’s large-scale cellulose ethanol plants in Alagoas and São Paulo began operations in 2015 and are expected to produce respectively 82 and 42 million litres of cellulosic ethanol annually.99
Progress also was made in the production of fuels through pyrolysis and gasification of biomass during 2015. Biomass Technology Group (Netherlands) opened a 25 MWth pyrolysis plant to generate electricity and process steam and to produce fuel oil from woody biomass.100 In Sweden, the GoBiGas plant in Gothenburg became fully operational in early 2015 and is one of the first successful large-scale examples of the production of methane through the thermal gasification of forest biomass.101 The process is able to run continuously thanks to developments that avoid the build-up of tars, a persistent problem in previous attempts to deploy this technology.
Aviation biofuels took strong strides forward in 2015. By mid-2015, 22 airlines based in Europe, North America and Asia had performed more than 2,000 commercial passenger flights with blends of up to 50% biojet fuel made from used cooking oil, jatropha, camelina, algae and sugar cane. Several airlines concluded long-term offtake agreements with biofuel suppliers, most of which are reported as price-competitive.102 In the United States, United Airlines began using advanced biofuels for its regular operations – the first airline in the country to move beyond demonstration flights and test programmes.103
In the marine sector, Sweden’s Stena Line launched the world’s first methanol-fuelled ferry in March 2015.104 Also in 2015, the US Navy launched an initiative to deploy alternative fuels in its operations. This includes a Carrier Strike Group (CSG) that uses alternative fuels, a contract for 300 million litres of fuel between October 2015 and September 2016 with AltAir Fuels, and a grant of USD 210 million to support three firms in the building of refineries to make biofuels using woody biomass, municipal solid waste (MSW) and used cooking grease and oil.105 A portion of the CSG fuels consists of biofuel made from beef fat, which is certified as a “drop-in” replacement and requires no engine modifications or changes to operational procedures.106
The development and scale-up of biorefineries – facilities that can produce several products from biomass, including energy, chemicals and other valuable products – continued in 2015 with growing efforts in the United States, Europe, China and, most recently, India. For example, Godavari Biorefineries (India) raised more than USD 14 million during the year to increase ethanol production, while also adding specialty chemical production capacity.107
Gaseous Biomass Industry
The biogas sector continued to expand in 2015. Most biogas production is in the United States and Europe, although other regions increasingly are deploying the technology as well.108 In Europe, the first biogas plant in Macedonia was constructed in 2015. The plant digests cattle waste and has a power generating capacity of 3 MW. Also during the year, the European Bank for Reconstruction and Development (EBRD) agreed to provide USD 32 million for a biogas plant in Ukraine.109
Anaerobic digestion plants are being deployed more widely to treat liquid effluents and wastes in Asia, notably in Thailand and Indonesia, where a range of waste materials – including effluents from cassava starch production, palm oil processing and ethanol production, as well as MSW – are being used as feedstocks.110 For example, in early 2016, the Krabi waste-to-energy project began operation in Thailand, processing palm oil mill effluent and producing 12,300 MWh annually, which is exported to the neighbouring electricity grid.111
There are signs in Africa of increasing activity in biogas production, particularly waste-based projects that involve landfill gas, MSW and agricultural residues. The year 2015 saw the launch of the Bronkhurstspruit project in South Africa, which produces 4.4 MW of electricity from the digestion of cattle waste and sells the electricity to a neighbouring industrial plant – the first such project in the region.112 In Kenya, a 2.2 MW grid-connected digester system that uses local crop residues opened in Nakuru Country.113 In Dakar, Senegal, animal waste at a slaughterhouse is digested and used in a CHP system to generate electricity and heat; it produces 800 MWh of electricity and 1,600 MWh of thermal energy annually for internal use.114
i Tall oil is a mixture of compounds found in pine trees and is obtained as a byproduct of the pulp and paper industry.
Geothermal Power and Heat
Geothermal Markets
Geothermal resources provide energy in the form of electricity and direct heating and cooling, totalling an estimated 543 PJ (151 TWh) in 2015.1 Geothermal direct use and electricity generation each are estimated to account for one-half of total final geothermal output (75 TWh each)i.2 Some geothermal plants produce both electricity and thermal output for various heat applications.
About 315 MW of new geothermal power generating capacity was completed in 2015, bringing the global total to an estimated 13.2 GW.3 Countries that added capacity during the year were (in order of new capacity brought online) Turkey, the United States, Mexico, Kenya, Japan and Germany.4 (→See Figure 10.) Turkey accounted for about half of new installations.
At the end of 2015, the countries with the largest amounts of geothermal power generating capacity were the United States (3.6 GW), the Philippines (1.9 GW), Indonesia (1.4 GW), Mexico (1.1 GW), New Zealand (1.0 GW), Italy (0.9 GW), Iceland (0.7 GW), Turkey (0.6 GW), Kenya (0.6 GW) and Japan (0.5 GW).5 (→See Figure 11.)
Capacity additions in 2015 were somewhat lower in total than in recent years. As many as 11 binaryii power plants were completed, totalling 129 MW, and another 8 single-flash plants were completed, totalling 186 MW.6
Turkey continued its relatively rapid build-up of geothermal power capacity, with 10 units completed in 2015, adding 159 MW for a total of at least 624 MW.7 Among the plants completed was a 4 MW binary Organic Rankine Cycle (ORC) unit by Exergy (Italy) that is claimed to be the world’s first to operate at two pressure levels, which increases energy recovery and overall efficiency from low-temperature resources.8 Turkey is well on its way to meeting its goal of having 1 GW of geothermal power capacity in place by 2023.9 In 2015, the country generated 3.37 TWh with geothermal energy, up 50% over 2014.10
The United States added 71 MW with two binary plants (by Ormat, United States) coming online in Nevada, bringing total operating capacity to nearly 3.6 GW (2.5 GWnet).11 Generation in 2015 was 16.8 TWh, representing a 5.6% increase relative to 2014.12 There are some indications that significant new growth could be unleashed if economic and regulatory conditions improved; about 500 MW of projects are languishing in late-stage development in the United States.13
Mexico brought online a 53 MW unit at the Los Azufres field in early 2015 and retired four ageing wellhead units (5 MW each) in the same location. In addition, two 5 MW wellhead plants were installed in the Domo San Pedro field, which is Mexico’s first privately owned geothermal project.14 The total net increase for the year was 43 MW, bringing Mexico’s installed capacity to 1.1 GW.15 During 2015, Mexico’s energy authorities provided additional concessions for the government’s power producer (CFE) in fields where the company already has developed geothermal resources. However, most of the country’s remaining geothermal potential was opened for private investment and development.16
Kenya added at least 20 MW of new capacity in 2015 for a total of about 600 MW.17 Drilling commenced on the first phase of the Akiira Geothermal 140 MW plant after Kenya Power signed a PPA for its output. It is expected that the plant will be sub-Saharan Africa’s first private sector greenfield geothermal development.18 Exploration risk insurance was secured for this project; in many cases, however, risk mitigation remains a hurdle for geothermal development, especially in developing countries.19
In late 2015, another binary plant was completed in Bavaria in Germany, supplying 5.5 MW of power generating capability in addition to 12 MW of thermal output.20 As of early 2016, Germany had a concentration of several small geothermal plants around Munich that take advantage of local low-temperature geothermal resources to provide both heat and power.21
Japan also added several facilities (altogether 6.8 MW) in 2015, bringing its total capacity to 535 MW. The new plants included three binary units; a 5 MW plant, installed by Turboden (Italy) in co-operation with its parent company, Mitsubishi; and a 1.4 MW plant installed at a medical facility in Kagoshima prefecture.22 In Tsuchiyu, Fukushima prefecture, a 400 kW unit was completed as part of revitalisation plans following the loss of tourism to the community’s hot springs following the 2011 nuclear disaster.23 By year’s end, construction also was under way for a 42 MW plant in Akita prefecture.24
i This does not include the renewable final energy output of ground-source heat pumps, which was estimated at 358 PJ (99 TWh) in 2015. See endnote 1 for this section.
ii In a binary plant, the geothermal fluid heats and vaporises a separate working fluid with a lower boiling point than water, which drives a turbine for power generation. Each fluid cycle is closed, and the geothermal fluid is re-injected into the heat reservoir. The binary cycle allows an effective and efficient extraction of heat for power generation from relatively low-temperature geothermal fluids. Organic Rankine Cycle (ORC) binary geothermal plants use an organic working fluid, and the Kalina cycle uses a non-organic working fluid. In conventional geothermal power plants, geothermal steam is used directly to drive the turbine, whereas in a conventional thermal power plant, fuelled by nuclear reaction or fossil fuels, the working fluid is pure water.
GEOTHERMAL POWER
Figure 10. Geothermal Power Capacity Global Additions, Share by Country, 2015
In Tuscany, Italy, the hybridisation of Enel Green Power’s plant, Cornia 2, was completed, with biomass combustion (using local forest biomass) added to an existing facility to raise geothermal steam temperatures from about 150°C to as high as 380°C. Hybridisation of the plant is expected to improve power output and efficiency by providing steam that is drier and of higher temperature. This change added 5 MW of capacity to the plant, and output is expected to increase by 30 GWh per year.25
As geothermal technologies advance and as projects are brought online in new locations, interest in the potential for future geothermal developments continues to spread. For example, plans appear to be gathering steam on the volcanic island of Nevis in the Lesser Antilles. Construction was expected to begin in 2016 on a 9 MW binary plant that could meet the power needs of the island’s 12,000 inhabitants while displacing diesel imports of 19 million litres (4.2 million gallons) per year.26 The neighbouring St. Kitts also is pursuing geothermal exploration.27
Canada does not generate power from geothermal resources, but a recent estimation suggests that there is substantial potential in Alberta, Yukon and British Columbia, with sufficient resources in British Columbia to meet the province’s entire power demand.28 In response to a large expected rise in industrial electricity demand, geothermal power (including binary plants) has been proposed as a cost-competitive alternative to the province’s proposed 1.1 GW “Site C” hydropower project.29
Geothermal direct use – direct thermal extraction for heating and cooling, excluding heat pumpsi – was estimated at 272 PJ (75.5 TWh) in 2015. An estimated 1.2 GWth of capacity was added in 2015, for a total of 21.7 GWth.30 Direct use capacity has grown by an annual average of 5.9% in recent years, while direct heat consumption has grown by an annual average of 3.3%.31 The data suggest that the average global capacity factor (utilisation) for direct geothermal heat plants was 41% in 2014, down from about 46% five years earlier.32 This decline is explained largely by a significant drop in indicated capacity utilisation for swimming and bathing (subject to great uncertainty due to differences in methods of operation), and to rapid growth in geothermal space heating (7% annually), which exhibits below-average capacity utilisation at 37%.33
The single largest direct use sector is estimated to be swimming pools and other public baths, which together accounted for nearly 45% of total geothermal heat capacity in 2015 and a similar share of heat use (9.7 GWth; 33.7 TWh); however, these numbers are subject to uncertainty.34 The second largest sector is space heating (including district heat networks), which was estimated at 8.1 GWth in 2015 (26.2 TWh).35 These two broad markets command around 80% of both direct use capacity and consumption. The remaining 20% of direct use capacity and heat output is for applications that include domestic hot water supply, greenhouse heating, industrial process heat, aquaculture, snow melting and agricultural drying.36
Geothermal district heating continued its relatively dynamic growth in Europe, with several new systems completed in 2015. Eight systems were brought online in France and one in the Netherlands, with a combined installed capacity of nearly 100 MWth.37 As of early 2016, more than 200 additional projects were under development in Europe.38
Many of the geothermal district heat systems being developed in Europe are located in the Paris and Munich areas, where low-temperature geothermal aquifers coincide with population centres that together provide ideal conditions for geothermal district heat development.39 Among a string of new projects in the Paris region is the new 10 MW YGéo project on the outskirts of the city, which is expected to be completed in 2016. These Paris projects tap into the Dogger aquifer that runs between Tours and Colmar. The operating temperature is relatively low, at around 66°C, but the YGéo system will be supplemented with heat pumps for an additional 7 MW.40
Interest in geothermal heat in Europe has expanded in recent years. In the Netherlands, geothermal heat use commenced in 2008. Initially, it was used primarily to serve greenhouses, but use of geothermal heat has grown notably since, rising to 100 MWth as of 2014, with expansion into district heating.41
The countries with the largest geothermal direct use capacity are China (6.1 GWth), Turkey (2.9 GWth), Japan (2.1 GWth), Iceland (2.0 GWth), India (1.0 GWth), Hungary (0.9 GWth), Italy (0.8 GWth) and the United States (0.6 GWth). Together, these eight countries accounted for about 80% of total global capacity in 2015.42
In line with installed capacity, China utilised the most direct geothermal heat (20.6 TWh). Other top users of direct geothermal heat are Turkey (12.2 TWh), Iceland (7.4 TWh), Japan (7.1 TWh), Hungary (2.7 TWh), the United States (2.6 TWh) and New Zealand (2.4 TWh). These countries accounted for approximately 70% of direct geothermal in 2015. On a per capita basis, direct use is by far most significant in Iceland, at 22 MWh per person each year, followed by New Zealand, Hungary, Turkey and Japan, all at 0.5 MWh per person or less.43
i Direct use refers here to deep geothermal resources, irrespective of scale, as distinct from shallow geothermal resource utilisation, specifically ground-source heat pumps. (See heat pumps discussed in Sidebar 4 of GSR2014.)
Geothermal Industry
Low natural gas prices in 2015 created unfavourable conditions for geothermal energy. However, the relatively low oil prices also reduced global demand for drilling rigs, making more rigs available and reducing the associated costs of geothermal exploration and development of new fields.44
In Europe, renewed calls were made to policy makers to support geothermal energy development, primarily through technology-neutral policy measures such as improved data collection in the heat sector; the provision of financing that is directed towards renewable heat and cooling; and a formal examination of the potential for dispatchable renewable energy resources to complement rising shares of variable renewables. Another requirement that is specific to geothermal energy is public risk insurance to mitigate geologic risk.45 In that context, the French government announced a new USD 54.6 million (EUR 50 million) geothermal risk fund in 2015 that will facilitate the initiation of new exploration efforts that carry the greatest risk profiles.46
The industry continued to work towards broader recognition of geothermal power as a valuable ally in the effort to integrate larger shares of variable renewable power. In addition to serving baseload demand, geothermal power also can balance variable grid supply, provide system inertiai, regulate voltage when needed and assist in overall system stability.47
Some important partnerships were launched during 2015. In October, Ormat Technologies and Toshiba Corporation signed a strategic collaboration agreement to offer their customers more competitive solutions, drawing on both Ormat’s binary technology and Toshiba’s flash technology in a combined-cycle configuration. The first project expected under this collaboration is the Menengai plant, under development in Kenya.48
In addition, Engie (formerly GDF-Suez) and Reykjavik Geothermal (RG) announced that Storengy (Engie’s subsidiary) and RG will pursue geothermal energy projects in Mexico, where RG was awarded one of the first two private geothermal exploration permits in the Ceboruco region and expects to complete a new plant by 2018.49
Following the launch of the Global Geothermal Alliance at the UN Climate Summit in 2014, the Alliance issued a joint statement at COP21 in Paris regarding its mission to consolidate government, industry and other stakeholder efforts in order to significantly increase global use of geothermal energy. The Allliance’s goal is to achieve a five-fold increase in geothermal power capacity and a more than two-fold increase in geothermal heating, all by 2030 (relative to 2014 levels).50
i System inertia refers to the aggregate stored kinetic energy in power generators that acts as a short-term buffer in the event of loss of power by slowing down the frequency decline on the grid.
ii Unless otherwise specified, all capacity numbers exclude pumped storage capacity if possible. Pure pumped hydro plants are not energy sources but means of energy storage. As such, they involve conversion losses and are powered by renewable and/or non-renewable electricity. Pumped storage plays an important role in balancing power, in particular for variable renewable resources.
iii Despite slightly lower total capacity, Canada’s baseloaded output exceeds the more load-following output in the United States.
Hydropower
Hydropower Markets
An estimated 28 GW of new hydropower capacity was commissioned in 2015, with total global capacity reaching approximately 1,064 GWii.1 The top countries for hydropower capacity remained China, Brazil, the United States, Canadaiii, the Russian Federation, India and Norway, which together accounted for about 63% of global installed capacity at the end of 2015.2 (→See Figure 12 and Reference Table R5.) Global hydropower generation, which varies each year with hydrological conditions, was estimated in 2015 at 3,940 TWh.3 Global pumped storage capacity (which is counted separately) was estimated to be as high as 145 GW at year’s end, with approximately 2.5 GW added in 2015.4
As in the past several years, the most significant share of new hydropower capacity was
commissioned in China, which accounted for about one-half of the global total. Other countries with substantial
additions in 2015 included Brazil, Turkey, India, Vietnam,
Malaysia, Canada, Colombia and Lao PDR.5 (→See Figure 13.)
China commissioned 16 GW of new hydropower projects (a 26% decline relative to 2014) for a year-end total of 296 GW; in addition, the country has 23 GW of pumped storage capacity.6 Hydropower generation in China increased for the second consecutive year, up by more than 5% in 2015 (at 1,126 TWh).7 Hydropower infrastructure investment declined sharply for the second year in a row, down 17% to USD 12 billion (CNY 78 billion), following a 21.5% drop in 2014.8 China is pursuing large-scale projects including the 10.2 GW Wudongde plant, which is targeted for completion by 2020, as well as smaller projects in more remote regions, such as Tibet. At the same time, however, some potential projects have not advanced because Chinese authorities have refused construction permits for some untapped resources on ecological grounds.9
Hydropower capacity in Brazil increased in 2015 by 2.5 GW (2.8%), including 2.3 GW of large-scalei hydro (>30 MW) capacity, for a year-end total of 91.7 GW.10 Despite the increase in capacity, hydropower output, at 382 TWh, dropped again (2.7% relative to 2014) due to continuing drought conditions. Between 2011 and 2015, Brazil’s hydropower output declined about 15%, even as capacity expanded by about 11%.11 New capacity is being built in a manner to improve the power system’s resilience to drought.12
In 2015, 17 additional 75 MW turbines (1,275 MW) became operational at Brazil’s Jirau plant, with just over 3 GW in place by year’s end.13 Jirau’s sister plant, Santo Antonio (3.57 GW when completed), also along the Madeira River, added three units (212 MW) for a total of 2.5 GW.14 Two units (728 MW) came online at the Teles Pires plant, which will yield 1.82 GW when completed.15 The 11.2 GW Belo Monte was partially commissioned in early 2016, with full commissioning to follow when new transmission infrastructure is in place. Transmission lines continue to be one of the main bottlenecks for development of renewable energy projects in Brazil, with the majority of the country’s transmission projects behind schedule.16
Turkey appears to be on track to achieve its target of 34 GW of hydropower capacity by 2023; this target is part of the country’s plan to pursue all available resources to meet rapidly growing electricity demand.17 Turkey added 2.2 GW in 2015, bringing the total to 25.9 GW.18 Hydropower production has been affected by severe fluctuations in rainfall: following a particularly dry period and sharp drop in output in 2014, production rebounded in 2015 by nearly 66%, to 66.9 TWh.19
India ranked fourth for new installations. In 2015, the country brought online approximately 1.9 GW of new hydropower capacity, most (1.8 GW) of which was in the category of large-scale hydro (>25 MW per facility), and ended the year with a total of 47 GW. Generation in 2015 was an estimated 135 TWh; output of large-scale facilities was 123 TWh, a drop of 5.7% from 2014.20 Completed facilities included the 800 MW Koldam project; this plant in the lap of the Himalayas in the northern state of Himachal Pradesh was long-delayed due to ecological and geological concerns.21 In the state of Uttarakhand, the 330 MW Shrinagar run-of-river project started operation, with a portion of the plant’s output designated for local consumption at no charge.22
Neighbouring Bhutan completed the 126 MW Dagachhu run-of-river station, the first transboundary Clean Development Mechanism (CDM) project registered with the UNFCCC.23 All of the plant’s output is destined for the Indian power market.24 In Nepal, construction of new plants, such as the 111 MW Rasuwagadi and the 456 MW Upper Tamakoshi, suffered severe setbacks due to damage from the April 2015 earthquake and its aftershocks.25 Nepal temporarily lost 150 MW of hydropower capability (about 30% of total), exacerbating an already severe electricity shortfall.26
Vietnam, which ranked fifth for installations, added a little over 1 GW of capacity in 2015. New capacity included the first of three 400 MW units at the Lai Chau plant; when completed, it will be Vietnam’s third largest hydropower facility.27 The country also commissioned the first of two 260 MW units at the Huoi Quang plant, with the second to follow in 2016.28 Serious drought conditions have depleted Vietnam’s reservoirs and strained hydropower production.29
Several other countries in the region completed projects during the year, including: Malaysia brought online the remaining 708 MW of the 944 MW Murun plant; Lao PDR finalised about 600 MW, including the 180 MW Nam Ngiep 2 plant, which has specially designed turbines for its head height of 495 metres; and Cambodia bolstered its inadequate electricity supply with the 338 MW Russei Chrum River dam (financed and built by Chinese corporations).30 Myanmar completed a 140 MW plant on the Paunglaung River, which the government considered a major success in dealing with challenges posed by rapidly increasing power demand and very limited access to electricity, while overcoming significant population resettlement challenges.31
In March 2016, on the eve of the bi-annual meeting of the Mekong River Commission, China announced plans to release additional water into the downstream portions of the Mekong River, continuing into early April 2016 to help alleviate severe water shortages in the drought-stricken downstream countries of Lao PDR, Myanmar, Thailand, Cambodia and Vietnam.32
In North America, the United States continued to rank third globally for installed hydropower capacity but added only 70 MW to its grid in 2015, for a year-end total of 79.7 GW.33 The country experienced a fourth consecutive year of decline in output due to unfavourable hydrological conditions, with generation of 251 TWh, 7.6% below the average for the preceding decade.34
Canada completed 0.7 GW of new facilities and expansions in 2015, raising total installed capacity to 79 GW, while maintaining output at 376 TWh for the year.35 British Columbia’s Waneta expansion project added 335 MW to an existing facility, cost-effectively capturing power from flow that otherwise would be spilled.36 Also in 2015, the 270 MW Romaine-1 project – the second of four planned cascading plants – was completed in Québec.37
The Russian Federation continued to rank fifth globally for total installed capacity, adding a net of 143 MW in 2015 for a year-end total of 47.9 GW.38 Hydropower generation (160 TWh) was down 4.1% relative to 2014.39 RusHydro completed several refurbishment projects in 2015 and had plans to continue modernisation efforts for improved reliability, efficiency and security.40 The Russian Federation's Boguchanskaya plant, which saw completion of the last of nine 333 MW units in late 2014, achieved an effective capacity of 3 GW when its vast reservoir finally reached design capacity in June 2015.41 Following transmission and other plant upgrades, the effective capacity of the restored Sayano-Shushenskaya plant (6.4 GW) increased by another 700 MW, for a total of 5.1 GW.42
In Africa, Ethiopia neared completion of its 1.87 GW Gibe III plant, after nine years of construction, bringing 2 of the project’s 10 turbines into service. Gibe III has one of the tallest concrete dams (246 metres) of its type in the world.43 As of early 2016, UNESCO’s World Heritage Centre continued to monitor the project’s social and ecological impacts.44 Once completed, the plant is expected to increase Ethiopia’s electricity supply significantly and to pave the way for the country to become a major power exporter.45
i Brazil reports hydropower capacity separately by size category, at the thresholds of 1 MW (very small) and 30 MW (small). India reports hydropower above a threshold of 25 MW, separately from smaller facilities.
Hydropower
Figure 12. Hydropower Global Capacity, Shares of Top Six Countries and Rest of World, 2015
Other countries in Africa to add hydropower capacity included Guinea, which tripled its capacity with the completion of the 240 MW Kaleta facility in 2015 (it is anticipated that the plant will alleviate the country’s energy shortage and also benefit neighbours in West Africa), and Zambia, where the 120 MW Itezhi Tezhi plant was completed.46
Numerous small-scale hydropower projects were completed in Brazil, India and elsewhere, including Scotland. The Isle of Mull saw the commissioning of a 400 kW community-owned run-of-river hydropower project in 2015. About half of the project cost was raised through a community share offer; the expected net return of as much as USD 3.6 million (GBP 2.4 million) over 20 years will serve the needs of the community through a local charity.47 (For more on community energy projects, see Feature.)
The World Bank remains committed to continuing its support for well-designed and well-implemented hydropower projects of all sizes for both local development and climate mitigation.48 In 2015, the World Bank announced its new action plan to improve its resettlement policy, drawing on lessons learned, with the intention of significantly improving the protection of people and businesses that may be resettled as a result of World Bank-funded development projects.49
Global pumped storage capacity rose by 2.5 GW, with the year-end total estimated to be as high as 145 GW.50 China added 1.2 GW of new capacity, and Iran completed the first pumped storage plant in the Middle East, the 1,040 MW Siah Bishe.51 Japan added storage with the completion of the second 200 MW variable-speed unit at Kyogoku plant, on the island of Hokkaido.52 In Europe, Austria completed construction of the 430 MW Reisseck II pumped storage facility in 2015, but commissioning was delayed into 2016.53
Opportunities for growth in pumped storage may be hampered in some markets by regulatory restrictions. In China, however, an estimated 27 GW of new capacity is under construction to help reduce curtailment of solar and wind power and to accommodate further growth in variable renewable energy.54
Hydropower Industry
Climate-related risk and rising shares of variable renewable power are driving adaptation in the hydropower industry. During 2015, the industry continued to adapt to manifestations of climate change – including increased glacial run-off and variability of rainfall – through operational changes, modifications to existing plants, and changes to the design of new hydropower plants.55 Responses to rising shares of variable renewables have included an increased emphasis on pumped storage and coimplementation of hydropower with solar and wind power plants in order to both maximise the efficient utilisation of variable resources and conserve water resources.56
Modernisation, retrofitting and expansion of existing facilities continued in many locations. These developments reflect several pressing needs across the industry, including the needs to refurbish ageing infrastructure in many countries; maximise resource utilisation to increase efficiency of operations; shift from baseload operations to cycling and peak operations in many instances; and increase storage capacity for system back-up, reduced vulnerability to hydrological variation and improved overall system resilience.57
The industry approach to project financing continued to evolve in 2015 with a trend towards risk-sharing among partners. Examples include developers taking equity shares in new projects, and public and private parties sharing responsibility for each stage of project development. Refinancing upon successful completion of projects, which reduces long-term costs and frees public funds for further development, is also becoming more common. Although they are not yet subject to any common standards, green bonds have become very important to the hydropower industry because they help lower the risk profiles of projects. Finally, the alchemy of blended finance – leveraging development funding with private capital – has created opportunities to meet varied development goals, such as irrigation and flood control, while tying the objectives into the revenue-generating aspect of hydropower development.58
The most significant providers of hydropower equipment are GE (United States), Andritz Hydro (Austria) and Voith Hydro (Germany), each with about equal market shares. Together they account for about one half of the global industry.59 Other notable manufacturers include Harbin (China), Dongfang (China) and Power Machines (Russian Federation).
Among notable events in the industry in 2015 was the completion of GE’s USD 10.6 billion (EUR 9.7 billion) acquisition of Alstom’s energy activities.60 Andritz Hydro reported unchanged, difficult market conditions with a continued decline (-5.4%) in new orders, although sales were up slightly (+4.7%) for 2015. The company noted that relatively low electricity prices (and low energy prices in general) led to the postponement of many modernisation and refurbishment projects, especially in Europe.61
Voith noted strong sales in North and South America – in Brazil in particular, despite political instability and weak economic conditions in that country.62 The company’s 2015 sales were unchanged relative to 2014. Despite favourable currency developments (due to the weak euro), however, the high orders booked in 2014 could not be sustained, and declined by 5%.63 Voith considers the North American market promising for both new plants and refurbishment, even though plentiful shale gas has depressed electricity prices.64 The Asian market – including Indonesia, the Philippines and Vietnam – gained importance during the year.65
With a slowdown in domestic contracts, Chinese corporations have been increasing their involvement in hydropower-related projects around the world. Their involvement has included both construction and operations, and they have focused particularly in Africa, South Asia and South America.66 In early 2016, China Three Gorges Corporation acquired two hydropower plants in Brazil, becoming Brazil’s second largest private power producer. The State Grid Corporation of China has committed to building and operating new transmission lines in Brazil, including a long-range conduit for output from the large Belo Monte project.67
Ocean Energy
Ocean Energy Markets
Ocean energy refers to any energy harnessed from the ocean by means of ocean waves, tidal range (rise and fall), tidal streams, ocean (permanent) currents, temperature gradients and salinity gradients.1 At the end of 2015, global ocean energy capacity remained at approximately 530 MWi, mostly in the form of tidal power and, specifically, tidal barrages across bays and estuaries.
A commercial market for ocean energy technology has not really developed to date because most technologies are still in various prototype and demonstration stages. The one exception is the application of established in-stream turbine technology in tidal barrages. The two largest ocean energy projects are the 254 MW Sihwa plant in the Republic of Korea (completed in 2011) and the 240 MW La Rance tidal power station in France (1966), both tidal barrages.2
In 2015, it appeared that the proposed 320 MW Swansea Bay Tidal Lagoon in Wales would move forward when the UK government issued planning consent in June.3 However, in February 2016, UK authorities announced an independent review into the feasibility and practicality of tidal lagoon energy in the United Kingdom. The review will consider the cost-effectiveness of such projects, potential impacts, financing options and opportunities for competitive frameworks for project delivery.4
Most of the recent development efforts in ocean power technologies are focused on tidal stream and wave energy in open waters. Several new projects were launched around the world in 2015, with most activity concentrated in Europe. As in most years, ocean energy technology deployments were predominantly demonstration projects.
Ocean Energy Industry
The year 2015 presented a mixture of tail- and headwinds for the ocean energy industry. A number of companies continued to successfully advance their ocean energy technologies and to deploy new or improved devices, but at least one company had to declare bankruptcy.
The tidal industry experienced a number of advances in 2015 with the launch of numerous projects around the world. The Netherlands, for example, saw the completion of two notable projects. In early 2015, Tocardo (Netherlands) installed three grid-connected tidal turbines in a Dutch sea defense dike, in co-operation with the Dutch Tidal Testing Center, and the company plans to expand this 300 kW installation to 2 MW upon further evaluation.5 Later in the year, with the support of Huisman (provider of the turbine suspension structure), Tocardo successfully installed a five-turbine array in the Dutch Eastern Scheldt storm surge barrier.6 The project has a power output of 1.2 MW, which is adequate to supply electricity to approximately 1,000 local households. Also in Dutch waters, the BlueTEC Texel tidal partnership launched a floating platform that carries a Tocardo turbine and supplies power to the grid.7
Atlantis Resources (UK/Singapore) commenced construction at the site of the MeyGen tidal stream project in Scotland in early 2015.8 Later in the year, Atlantis completed cable deployment to the MeyGen site, where the first four 1.5 MW turbines were to be installed in 2016.9 By early 2016, Atlantis was advancing on construction in Scotland of one of the four turbines – a single Lockheed Martin-designed AR1500 – while Andritz Hydro Hammerfest was completing the other three 1.5 MW turbines in Germany. Both turbine designs have an 18-metre rotor diameter and are configured for both active pitch and full yaw capability.10
i This does not include all pilot and demonstration projects currently deployed, which may amount to several additional megawatts of capacity.
Tidal Energy Ltd (UK) reached a milestone when its 400 kW DeltaStream tidal demonstration device became the first full-scale tidal device installed in Wales, in Ramsey Sound.11 Also in Wales, the Swedish tidal stream technology company Minesto secured USD 14.2 million (EUR 13 million) of EU funds to support development of its Deep Green device, which operates as an underwater kite.12 Minesto partnered with Schottel Hydro, a German turbine manufacturer that will supply turbine compo-nents for upcoming deployments of Deep Green devices.13
Also in the United Kingdom, Sustainable Marine Energy Ltd. (UK) installed its PLAT-O turbine platform, which the company hopes will drive down the cost of tidal energy. The platform was fitted with two Schottel instream turbines and installed off the Isle of Wight, where it met all expectations.14 Schottel notes that there is synergy in the combination of turbine and platform because both are designed to be lightweight, robust and simple.15
Nova Innovation (Scotland) and its partner ELSA (Belgium) secured additional funding from the Scottish government for a 500 kW tidal array in Shetland’s (Scotland) Bluemull Sound. The project uses Nova’s 100 kW M100 direct-drive turbine, and the first unit delivered power to the grid in early 2016.16
To the south, Sabella SAS (France) launched its full-scale, grid-connected 1 MW D10 tidal turbine off the coast of Brittany, in the Fromveur Strait, where it supplies electricity to the Ushant Island.17
OpenHydro (a subsidiary of DCNS, France) continued its work off the French coast, deploying the first of two new turbines at EDF’s (France) site at Paimpol-Bréhat, following a few years of testing.18 Across the Atlantic, OpenHydro also advanced a project at Canada’s Fundy Ocean Research Center for Energy (FORCE) in the Bay of Fundy, where the company was awarded USD 4.5 million (CAD 6.3 million) to support its deployment of two 2 MW tidal turbines with local partner Emera.19 The joint venture anticipated turbine deployment in 2016.20
Wave energy also saw progress during the year, with the deployment of several devices in pilot and demonstration projects in Europe, Australia, the United States and elsewhere. AW-Energy of Finland continued to refine its WaveRoller device in 2015, with plans to deploy 350 kW commercial units in a 5.6 MW array in Portugal in the near future.21 In neighbouring Sweden, the 1 MW Sotenäs Wave Power Plant by Seabased (Sweden) started generating power in early 2016. The Sotenäs plant couples linear generators on the sea floor to surface buoys (point absorbers) and is said to be the world’s first array of multiple wave energy converters in operation.22
Off the coast of Tuscany in Italy, 40South Energy (UK) launched its new 50 kW H24 wave energy converter, a fully submerged machine that is optimised to convert wave and tidal energy in shallow waters.23
Also in 2015, Eco Wave Power (Israel) deployed its second-generation wave energy conversion device in the Jaffa Port of Israel.24 The company also advanced on the first 100 kW phase of a 5 MW EU-funded plant across the Mediterranean Sea in Gibraltar; the plant is expected to meet 15% of local electricity demand when it is completed.25
In Australia, BioPower Systems (Australia) deployed its 250 kW bioWAVE pilot demonstration unit off the coast of Port Fairy, Victoria. The device is a 26-metre-tall oscillating structure that was inspired by undersea plants; it is designed to sway back and forth beneath the ocean swell, capturing energy.26 Another Australian firm, Carnegie Wave Energy Ltd, moved towards deployment of its 1 MW CETO 6 device in early 2016, a scaled-up version of the CETO 5 deployed in 2014.27
Across the South Pacific, the US state of Hawaii, home to the US Navy’s Wave Energy Test Site (WETS), saw some progress during the year. Northwest Energy Innovations was chosen by the US Department of Energy to demonstrate its half-scale Azura wave energy device for one year of grid-connected testing at WETS, where the company implemented various improvements that were based on previous (2012) trials.28 Other wave energy technology developers are scheduled to test their devices at WETS in coming years.29
The global wave energy industry received significant support from the Scottish Government in 2015. The government-funded Wave Energy Scotland, which was established in late 2014 to support development of wave energy technology, awarded over USD 13 million (over GBP 9 million) in 2015 to multiple developers in several countries for the advancement of innovative wave energy technologies at various stages of development.30
Among the most notable success stories in wave energy conversion has been the 296 kW Mutriku plant in the Basque Country of Spain, the first commercial wave energy plant in Europe. Since its installation in 2011, the plant has operated continuously and, as of early 2016, it had generated more than 1 GWh of electricity by harnessing wave-driven compressed air (oscillating water column).31
Ocean energy technologies – both tidal and wave energy – also are being developed actively in East Asia. Japan has established several demonstration sites for ocean energy development with two projects coming online in 2015, a 5 kW tidal stream unit at Shiogama and a 43 kW wave energy project at Kuji.32 China also is engaged in the development of both wave and tidal energy technologies and, in 2015, had 10.7 MW of capacity installed, including several development projects.33 The Jiangxia tidal power plant was upgraded in 2015, from 3.9 MW to 4.1 MW.34 Among new development projects is the 100 kW Sharp Eagle wave energy converter, which was deployed in 2015.35 China’s experience to date indicates that the country’s tidal current technologies exhibit significantly lower-cost structures than its wave energy projects, but all are limited by immature technology and lack of experience and supporting infrastructure.36
Although the vast majority of demonstration and pilot projects focus on extracting useful energy from the tides and waves, the year 2015 also saw advances in the area of ocean thermal energy conversion (OTEC). Makai Ocean Engineering (United States) connected a new 100 kW OTEC plant – believed to be the world’s largest – to Hawaii’s electric grid in August.37 Makai’s research and evaluation OTEC plant uses the temperature difference between deep ocean water (at 670 metres) and surface water to generate electricity, where a closed-cycle working fluid of ammonia drives a turbine for power generation.38
As more projects are tested around the world, it is increasingly important to understand the potential effects of ocean energy development on marine life. A report on the status of scientific knowledge in this area, released in early 2016, found that the main potential interactions between ocean energy devices and marine animals that present ongoing concern include: risk of animals colliding with moving components; various potential impacts of sound propagation from ocean energy devices; and any biological effect of electromagnetic fields generated from underwater cables.39 Many of the perceived risks associated with such interactions are driven by uncertainty, due to lack of data, which continues to confound differentiation between real and perceived risks.40
The industry continues to face a variety of challenges that were explored by the European Commission’s Ocean Energy Forum in its 2015 draft Strategic Roadmap on ocean energy. The document outlines the main imperatives for overcoming the hurdles to realising commercial success for the various ocean energy technologies. These imperatives include infrastructure and logistical needs of the industry for technology advancement; overcoming financing obstacles in an industry characterised by relatively high risk and high upfront costs; and the need for improved planning, consenting and licensing procedures.41
The relatively high development risk of ocean energy technologies has proven the need for well-equipped test centres and other risk-mitigating innovations. In combination with competitive financial incentives from the US Department of Energy, the US Navy’s recently renovated Carderock Maneuvering and Seakeeping Basin wave simulator will be used in a government effort to stimulate innovation, establish new companies and drive down costs in the development of new wave energy devices in the United States.42
Across the Atlantic, the FloWave ocean simulation test tank that opened at the University of Edinburgh in 2014 is intended to mitigate project risk by allowing testing of ocean energy devices before committing to the cost of trials at sea.43 In 2015, Canadian and UK parties launched a collaboration to develop a new sensor system to increase understanding of the impact of turbulence on tidal devices, and thus reduce development risk.44 The European Marine Energy Centre (EMEC) and FloWave joined forces to simulate actual sea conditions around Orkney based on EMEC’s monitoring data, with the aim of improving test results.45
Due to difficult market conditions that include limited funding for R&D and a constrained financial landscape in general, EMEC characterised the year as turbulent, but noted also that new developers were signed up for tests at the Centre.46
Despite the many encouraging developments in ocean energy in 2015, the industry’s challenges took their toll, and the year witnessed consolidation in the industry as well as one closure.
Aquamarine Power (UK) announced the successful demonstration of its wave energy converter (Oyster 800) in early 2015, but only a few months later the company was placed in administration due to lack of private sector backing that was required to supplement public funding support; subsequently, the company was dissolved.47
Atlantis acquired from Siemens AG the UK-based company Marine Current Turbines (MCT) – the manufacturer of the world’s first utility-scale tidal stream project (the 1.2 MW SeaGen system). In late 2015, ScottishPower Renewables joined Atlantis as a shareholder in the Tidal Power Scotland Limited (TPSL) project portfolio, folding into TPSL its development projects in Scotland.48
Solar Photovoltaics (PV)
Solar PV Markets
Solar PV experienced another year of record growth in 2015, with the annual market for new capacity up 25% over 2014.1 More than 50 GW was added – equivalent to an estimated 185 million solar panels – bringing total global capacity to about 227 GW.2 The annual market was nearly 10 times the size of cumulative world capacity just a decade earlier.3 (→See Figure 14 and Reference Table R6.) Although the top three markets in 2015 were responsible for the majority of capacity added, globalisation continued with new markets on all continents.4
Until recently, demand was concentrated in rich countries; now, emerging markets on all continents have begun to contribute significantly to global growth, with solar PV taking off where electricity is needed most: in the developing world.5 At the same time, however, many former gigawatt-sized markets in Europe installed little to no capacity in 2015.6 Market expansion in most of the world is due largely to the increasing competitiveness of solar PV, as well as to new government programmes, rising demand for electricity and improving awareness of solar PV’s potential as countries seek to alleviate pollution and CO2 emissions.7
Asia eclipsed all other markets for the third consecutive year, accounting for about 60% of global additions.8 Once again, China, Japan and the United States were the top three markets, followed by the United Kingdom.9 (→See Figure 15.) Others in the top 10 for additions were India, Germany, the Republic of Korea, Australia, France and Canada.10 By end-2015, every continent (except Antarctica) had installed at least 1 GW, and at least 22 countries had 1 GW or more of capacity.11 The leaders for solar PV per inhabitant were Germany, Italy, Belgium, Japan and Greece.12
China’s central government continued to raise installation targets to increase renewable generation, address the country’s severe pollution problems and prop up the domestic manufacturing industry.13 In 2015, China added an estimated 15.2 GW for a total approaching 44 GW, overtaking long-time leader Germany to become the top country for cumulative solar PV capacity, with about 19% of the world total.14 (→See Figure 16.) The provinces of Xinjiang (2.1 GW), Inner Mongolia (1.9 GW) and Jiangsu (1.7 GW) were the top markets for the year, with much of this capacity far from the country’s population centres.15 However, six provinces in east and central regions each had more than 1 GW of solar PV capacity at year’s end.16 Large-scale power plants accounted for 86% of total capacity, with the remainder in distributed rooftop systems and other small-scale installations.17
The rapid increase in solar PV capacity in China, up from only 7 GW at the end of 2012, has caused grid congestion problems and interconnection delays in the country.18 Curtailment started to become a serious challenge in 2015, with particularly high rates in the northwest provinces of Gansu (31% over the year) and Xingjiang Autonomous Region (26%), and a national average of 12%.19 By year’s end, insufficient grid capacity was a significant hurdle for new plants, and investors were growing wary of the sector due to delays in subsidy collection and problems with solar panel quality.20 To address challenges related to curtailment, China has urged top solar-producing provinces to prioritise transmission of renewable energy, build more transmission capacity and attract more energy-intensive industries to increase local consumption.21 Against these transmission and curtailment challenges, solar PV generated 39.2 TWh of electricity in China during 2015, up about 57% over 2014.22
In Japan, the boom continued with as much as 11 GW added to the grid, bringing total capacity to an estimated 34.4 GW.23 Despite another year of record growth, the residential market was relatively low for the second consecutive year, with 0.9 GW connected to the grid. Commercial and utility-scale projects again drove the market.24 Due to limited availability of land, developers turned to abandoned farmland and golf courses to site large-scale plants (an idea spreading to the United States as well).25 Solar PV accounted for 10% of Japan’s electricity demand on some of the hottest summer days, and represented 3% of total power generation in 2015.26
In only three years, Japan doubled its renewable energy capacity, with solar PV making up the vast majority of the total. The large volume of solar PV projects and their output has exceeded the capacity of the grid, leading the government to revise regulations and causing some utilities to refuse new interconnections and to curtail output from existing plants without compensation.27 However, many other entities, both domestic and foreign – including telecommunications and gas companies, home builders and others – scrambled to set up renewable energy infrastructure and to begin buying solar PV-generated electricity from homeowners in anticipation of the liberalisation of Japan’s electricity market in April 2016.28
Elsewhere in Asia, the largest annual market was India (2 GW), ranking fifth globally for additions and tenth for total capacity.29 India’s year-end capacity was over 5 GW, led by Rajasthan (1,264 MW), Gujarat (1,024 MW) and Madhya Pradesh (679 MW).30 Additions were well above 2014 but below expectations for 2015, due to project delays in several states. Even so, the utility-scale pipeline grew rapidly, driven by the improving cost-competitiveness of solar PV and by rising electricity demand.31 While most added capacity was in large-scale ground-mounted projects, India’s rooftop sector also expanded thanks to high consumer awareness and favourable commercial tariffs in some states.32 The most immediate challenge for India’s solar sector, and for scaling up solar power capacity to achieve the country’s ambitious goals (100 GW by 2022), is congestion in the grid.33
India was followed by the Republic of Korea, which added 1 GW to end the year with 3.4 GW.34 Pakistan’s market (an estimated 500 MW) took off in response to national FIT payments and other incentives enacted to help alleviate chronic power shortages and increase reliability.35 Companies flocked to Pakistan, and China played an increasingly important role in the country’s renewable energy expansion, including solar PV.36 Other Asian countries with growing markets include the Philippines and Thailand (both adding more than 100 MW).37
Most of the approximately 20 GW installed outside of Asia was added in North America and the EU.38 North America added 7.9 GW in 2015.39 Canada accounted for about 0.6 GW, for a year-end total of 2.5 GW, with the rest brought online in the United States.40
The United States also had a record year, with solar PV installations exceeding new natural gas capacity for the first time.41 Nearly 7.3 GW was installed, for a total of 25.6 GW.42 The market was driven by a race to complete as many projects as possible before expiration of the federal Investment Tax Credit (ITC), which in late 2015 was extended through 2021.43 The residential sector saw the fastest growth, and direct ownership continued to increase thanks in part to new loan products.44 The utility-scale sector remained the largest, with more than 4 GW added and almost 20 GW under development at year’s end.45 Again, California led for capacity added (3,266 MW), followed by North Carolina (1,134 MW), with Hawaii well ahead for solar penetration.46
Solar PV is proving to be an economically competitive option for meeting US peak power needs, with utility interest going beyond the demand driven by state-based Renewable Portfolio Standards (RPS).47 An estimated 39% of utility capacity added in 2015 was outside of state RPS mandates.48 The success of distributed solar and falling costs has led some US utilities to establish their own solar programmes – including residential and community projects – and has led other utilities to fight for revisions or elimination of supportive policies.49 Net metering has driven most US customer-sited solar PV capacity and has been at the centre of regulatory disputes in more than 20 states.50 With extension of the ITC, the biggest challenges facing solar PV in the United States are ongoing battles over net metering and rate design.51
The EU market picked up in 2015 after three years of decline, but was still far below its 2011 peak (22 GW), restrained by a shift away from FITs and by general policy uncertainty.52 (→See Policy Landscape chapter.) About 7.5 GW was added, bringing the region’s total to almost 95 GW of operating solar PV capacity, well ahead of all other regions.53 Three countries – the United Kingdom (3.7 GW), Germany (1.5 GW) and France (0.9 GW) – were responsible for more than 75% of the EU’s new grid-connected capacity.54 Others adding capacity included the Netherlands (450 MW) and Italy (300 MW), where the market was down dramatically despite the low generating costs and supportive policies.55 Spain, which drove the global market in 2008, has virtually disappeared from the solar PV picture due to retroactive policy changes and a new tax on self-consumption.56
The UK rush was in anticipation of subsidy expirations and FIT cuts, and brought total capacity to 9.1 GW.57 Solar PV generation surpassed hydropower output in 2015 and reached levels that were not expected in the country for several more years.58 Germany’s annual market fell again (23% relative to 2014) to levels of about a decade ago, and well below the Renewable Energy Law (EEG) annual target of 2.5 GW.59 Germany ranked second, after China, for total operating capacity, with 39.7 GW at year’s end.60
Europe has become a challenging market for several reasons. The region is transitioning from FIT incentives to tenders and feed-in premiums for large-scale systems, and to the use of solar PV for self-consumption in residential, commercial and industrial sectors.61 Further, the more that solar PV penetrates the electricity system, the harder it is to recoup project costs. So an important shift is under way: from the race to be cost-competitive with fossil fuels to being able to adequately remunerate solar PV in the market.62 In addition, electricity demand is stagnating and conventional utilities are lobbying simply to maintain their position. Thus, electricity market design is increasingly important, and there is a need for new business models.63
SOLAR PV
Figure 14. Solar PV Global Capacity and Annual Additions, 2005–2015
Utilities in Australia also are facing major impacts from solar PV. The country added more than 0.9 GW, ranking seventh globally for new installations and ending the year with 5.1 GW – the equivalent of one panel per inhabitant.64 Australia’s market has been predominantly residential, with rooftop systems on almost 16% of homes as of early 2016, although the commercial and large-scale sectors started to take hold in 2015.65 Grid-based electricity consumption has fallen significantly in Eastern Australia since 2009 thanks in part to the growth of solar PV, which has eliminated afternoon “super peaks” in electricity demand.66
Australia’s very low wholesale electricity prices and high retail prices are encouraging a shift to solar PV with little incentive to sell into the grid. As a result, there is a small but growing market for storage, and several companies started rolling out affordable options for homeowners in 2015.67 Storage applications are developing quickly in Australia as well as in several other developed countries (e.g., Greece, Japan, Sweden) for on- and off-grid applications, and in some developing countries (e.g., Bangladesh, India, Peru), particularly off-grid.68 (→See Distributed Renewable Energy chapter.)
Latin America and the Caribbean added an estimated 1.1 GW in 2015 to more than double regional capacity.69 Chile installed over 0.4 GW, mostly in very large-scale projects, with a year-end total exceeding 0.8 GW.70 By some accounts, solar PV has become the country’s cheapest source of electricity.71 Honduras emerged as an important market and, along with Chile, was among the top 15 countries worldwide for new installations. The country added nearly 0.4 GW thanks to a generous FIT and to regulatory certainty that set it apart from its neighbours.72 (→See Figure 17.) Mexico and Brazil experienced delays – due to low oil prices and anticipation of the Energy Transition Law in Mexico, and to Brazil’s difficult economic climate and insufficient transmission capacity – but both countries plus Peru had highly competitive auctions in 2015 and early 2016.73 Throughout the region, grid access and financing remained key challenges to growth.74
In developing and emerging economies, obtaining financing – and at affordable rates – is a common challenge; this is not the case for competitive tenders, however.75 In 2015, some of the fastest growing markets were in Africa and the Middle East, where deployment is driven by rapidly falling costs, good solar resources, the desire to reduce energy imports, rapidly growing energy demand and the need to expand energy access.76 Although the Middle East had relatively little capacity in operation at year’s end, much was happening in the region.77 Jordan and the United Arab Emirates held tenders for solar PV in 2015 with record-low bids, and launched several large projects.78 Israel added 0.2 GW for a total approaching 0.9 GW, and others developing projects included Kuwait, the State of Palestine and Saudi Arabia.79
Countries are turning to the sun across Africa as well, with projects ranging from very small to large-scale, both on- and off-grid.80 Leaders for new capacity were Algeria (adding almost 0.3 GW) and South Africa (0.2 GW), which ended the year with 1.1 GW.81 Egypt has a burgeoning sector with increasing numbers of international companies announcing plans to finance, develop and construct up to 3 GW of solar PV projects.82 Projects also were under way in Djibouti, Kenya, Mali, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Tanzania and Zambia, among others.83 The global off-grid solar PV market is estimated at USD 300 million annually, with the strongest growth in sub-Saharan Africa, followed by South Asia.84 However, the African continent faces challenges as it rapidly scales up solar PV installations, including a shortage of skills necessary for installation, operation and maintenance.85
Around the world, the number and size of large-scale plants continued to grow.86 By early 2016, at least 120 (up from 70 a year earlier) solar PV plants of 50 MW and larger were operating in at least 23 countries, with Australia, Denmark, Guatemala, Honduras, Kazakhstan, Pakistan, the Philippines and Uruguay all joining the list during the year.87 Latin America saw the fastest growth, with the number of plants ≥50 MW increasing from 2 to 10.88 The world’s 50 biggest plants as of February 2016 reached cumulative capacity exceeding 13.5 GW.89 At least 33 of these came online (or achieved full capacity) in 2015 and early 2016, including the US Solar Star project (750 MW) and, by some accounts, phase two of China’s Longyangxia hybrid hydropower–solar PV plant (boosting the total to 850 MW).90
The market for concentrating PV (CPV) is young and remains small, but there is interest in niche markets due greatly to higher efficiency levels in locations with high direct normal insolation (DNI) and low moisture.91 CPV includes an optical system to focus large areas of sunlight onto each cell and usually is combined with a tracking system.92 After a number of installations came online during 2012–2014, many projects were cancelled, and little new capacity was added during 2015.93 By end-2015, global CPV capacity totalled 360 MW, most of which is high-concentration systems.94
Solar PV plays a substantial role in electricity generation in some countries. During 2015, solar PV met 7.8% of electricity demand in Italy, 6.5% in Greece and 6.4% in Germany.95 By year’s end, Europe had enough solar PV capacity to meet an estimated 3.5% of total consumption (up from 0.3% in 2008) and 7% of peak demand.96 An estimated 22 countries (including several in Europe as well as Australia, Chile, Israel, Japan and Thailand) had enough solar PV capacity at end-2015 to meet more than 1% of their electricity demand.97 By the end of 2015, China had achieved 100% electrification in part because of significant off-grid solar PV systems installed since 2012.98 Global capacity in operation at year’s end was enough to produce close to 275 TWh of electricity per year.99
Solar PV Industry
The solar PV industry recovery further strengthened in 2015 due to the continued emergence of new markets and to strong global demand. Most top-tier companies were back on their feet in 2015, and strong demand and relative price stagnation helped to consolidate the positions of leading companies.100 It was another challenging year in Europe, however, where shrinking markets in most countries left many installers, distributors and others struggling to stay afloat, and companies diversified risk by moving downstream (e.g., into operation and maintenance, O&M) and focusing on markets elsewhere.101 Low module prices continued to challenge many thin film companies and the concentrating solar industries, which have struggled to compete.102 International trade disputes also continued.103
Average module prices fell further in 2015, but less rapidly than during the 2008–2012 period.104 Spot prices for multicrystalline silicon modules were down about 8% year-over-year to USD 0.55/Watt and below.105 The industry continued to focus on soft costs (non-hardware) through optimisation and improvements of equipment, including: reducing mechanical mounting parts; using robotic technology for installation and maintenance; developing “smart” modules that help optimise output, and 1,500 volt modules that reduce transmission losses.106 Soft costs continued their decline, due also to improved module efficiency and to an increase in average system size.107 Soft costs still differed significantly depending on project location and scale: for example, they were higher in the United States than in Australia, China, Germany or even Japan.108
Record low bids in tenders show that solar PV is competitive – or expected to be when projects are built – in several locations.109 Brazil, Chile, India, Jordan, Mexico, Peru and the United Arab Emirates all saw very low bids for unsubsidised solar PV in tenders in 2015 and early 2016, including Dubai’s contract to ACWA Power (USD 58.5/MWh) in early 2015, and winning bids in Peru (the lowest was under USD 48/MWh) and Mexico (average of USD 45/MWh) in early 2016.110 The year also brought record lows in Germany, with contracts signed for under USD 87/MWh (EUR 80/MWh), and PPAs for utility-scale solar in the United States in the range of USD 35–60/MWh (including the national tax credit).111 Distributed rooftop solar PV remains more expensive but has followed similar price trajectories, and is competitive with retail prices in many locations.112
Global production of crystalline silicon cells and modules rose in 2015. Mono-crystalline cells and modules continued to gain share (about 25% in 2015) from multi-crystalline cells during the year.113 Estimates of cell and module production, as well as of production capacity, vary widely; increasing outsourcing and rebranding render the counting of production and shipments more complex every year.114 Preliminary estimates of 2015 production capacity exceeded 60 GW for cells, and ranged from about 63 GW to 69 GW for modules.115 Thin film production increased by an estimated 13%, accounting for 8% of total global PV production (down from 10% in 2014).116
China has dominated global shipments since 2009.117 By 2015, Asia accounted for 87% of global module production, with China producing about two-thirds of the world total.118 Europe’s share continued to fall, to about 6% in 2015, and the US share remained at 2%.119 Among the leading module manufacturers were several Chinese companies, including Trina, JinkoSolar, JA Solar, Yingli, SFCE (formerly Suntech) and ReneSolar; other top manufacturers included Canadian Solar (Canada), Hanwha Q-Cells (Republic of Korea), First Solar and Sunpower Corp. (both United States).120 There are also rising numbers of manufacturers that shipped around 1 GW each during 2015.121
To meet growing demand and better serve new markets (in some cases driven by domestic content laws), and to avoid import tariffs in some countries, manufacturers increased production capacity around the world, particularly for module assembly.122 New module manufacturing facilities began operation during 2015 in several countries (including Algeria, Brazil, Egypt, Iran, South Africa and Thailand), while expansion plans were announced or under way in several others (including China, Germany, India, Japan, Saudi Arabia and the United States).123 By year’s end, according to company announcements, top manufacturers were constructing almost 7 GW of new factory capacity, aiming to expand in-house to reduce the need for outsourcing and to crowd out smaller competitors.124
Consolidation continued in 2015, but there were far fewer victims than in the high period of 2011–2012. Many solar product manufacturers in China had low profit margins, too much production capacity and significant debt.125 Tianwei (China) defaulted on an interest payment for a domestic bond and then collapsed, Yingli required a government bailout, and Hanergy came under investigation by Hong Kong’s Securities and Futures Commission.126 Power production curtailment and delay of subsidy payments forced some project developers in China to sell projects and halt further development.127
In the United States and Europe, a handful of companies – including manufacturers of modules, trackers and microinverters – closed, became insolvent or were acquired in less-than-positive circumstances.128 SunEdison’s (United States) reversal of fortune, due largely to large acquisitions that increased debt and to a steep decline in the value of two yieldcos (see below), was the year’s biggest loss, and the company filed for bankruptcy in April 2016.129
Mergers and acquisitions, as well as new partnerships, continued among manufacturers and installers as part of the trend to enter other markets (locations or applications) or to capture value in project development.130 For example, Shunfeng International (China), the owner of once-bankrupt Suntech, acquired a majority stake in Suniva, gaining the opportunity to operate in the United States.131 Canadian Solar purchased Recurrent Energy (United States) from Sharp (Japan) to move further into construction and to boost demand for its products.132 SunPower acquired Cogenra (both United States) to build a new line of modules to tap into markets in Africa, China and India.133 The Chinese government continued to push for mergers and acquisitions among domestic solar manufacturers.134
Market consolidation also continued among O&M providers in 2015.135 Most leading solar PV manufacturers have expanded downstream into project development and into engineering, procurement and construction (EPC) to keep more business in-house and reduce costs, and many EPCs (including manufacturers) have moved into O&M of the plants they construct.136 In 2015, European-based EPC companies continued looking towards growth markets, particularly in Japan, the United States and in the Middle East.137 The market for megawatt-scale O&M sustained its rapid growth as more plants aged out of warranty coverage, and because the industry remains attractive even when construction slows (as in Europe).138 By the end of 2015, the global megawatt-scale O&M market exceeded 130 GW.139 New trends that became more apparent during 2015 are the growing split between O&M for large-scale projects, and the increased interest of inverter companies in the O&M business.140
Several strategic partnerships were established, including: SoftBank Group (Japan) and Sharp joined forces with the aim of dramatically reducing installation and maintenance costs; leading US installer SolarCity partnered with DirecTV and the home automation company Nest; and US rooftop developer Sungevity teamed with E.ON to advance initiatives in Europe.141 In addition, several partnerships focused on energy storage options for commercial and residential markets in Australia, Japan, the United States, some European countries and elsewhere.142
The year 2015 saw the formation of several new yield companies (yieldcos). They accounted for nearly one third of large-scale project acquisitions during the second quarter.143 But after soaring in early 2015, the value of many yieldcos plummeted mid-year, largely in response to declining crude oil prices, prompting many companies to attract investors in other ways.144
Other innovative financing options and business models – including solar leases, behind-the-meter PPAs, green bonds and crowdfunding – continued to spread, reducing barriers to customer adoption while increasing the potential for profits.145 An increasing number of firms – including solar developers and installers, investment companies and major banks – have entered the solar financing market, particularly in the United States.146 New online investment platforms are enabling people to invest in solar PV projects around the world.147 In late 2015, CrossBoundary Energy (United States/Kenya) announced the first close of a dedicated fund for commercial and industrial solar in Africa through SolarAfrica (United Kingdom).148
Innovations also focused on technology improvements including streamlining manufacturing processes, lowering costs through materials substitution, reducing environmental impacts and improving efficiency.149 Efficiency records were achieved for new cells and modules, some of which were set to begin production in 2016.150 Perovskitesi furthered their rapid advance, with efficiency increasing five-fold in six years, but hurdles remain before they can be commercialised.151 For the near term, Passivated Emitter and Rear Cellii (PERC) coating technology shows promise for increasing cell efficiency in standard production processes.152 Innovations also continued in areas such as solar windows, spray-on solar and printed solar cells, and both Merck (Germany) and Emirates Insolaire (United Arab Emirates) announced the availability of new building-integrated solar PV (BIPV) products for the façades of buildings.153 Although they remain a niche market, “smart” and AC modulesiii – incorporating electronics to maximise output – were offered by an increasing number of module makers in order to differentiate their products.154 (For information on another development, PV-T, see Solar Thermal Heating and Cooling section.)
By late 2015, several energy storage management system vendors, startups, major inverter makers (including Enphase (United States) and SolarEdge (Israel)), grid vendors and battery makers (e.g., Tesla, NEC and Panasonic) were involved in advancing storage in the solar PV sector.155 US thin film manufacturer First Solar joined other solar companies – including SunPower and Sharp – in the storage market by investing in the startup Younicos (Germany), which develops software to control batteries.156 Most solar PV installers offered energy storage solutions to German customers during 2015, and energy storage was offered with commercial solar systems in some US markets.157 Sonnen (formerly SonnenBatterie; Germany) launched its solar-plus-storage systems for customers in Australia, Germany and the United States to compete with Tesla’s (United States) Powerwall system, also introduced in some markets in 2015.158
i Perovskite solar cells include perovskite (crystal) structured compounds that are simple to manufacture and are expected to be relatively inexpensive to produce. They have experienced a steep rate of efficiency improvement in laboratories over the past few years.
ii PERC is a technique that reflects solar rays back to the rear of the solar cell (rather than being absorbed into the module), thereby ensuring increased efficiency as well as improved performance in low-light environments.
iii Modules with integrated alternating current (AC) inverters that enable them to generate grid-compatible AC power.
Even as technologies advanced, the poor quality of some cells and modules continued to raise concern, with reports of modules as young as two years old failing in the field.159 In China, the rate of module failure (and replacement) accelerated in 2015.160 In some developing and emerging countries, uncertainty about energy yield has contributed to reluctance to provide financing, which is holding back development.161
Inverters address active system functions – such as power conversion and active grid support – and (especially for central inverters) pose the greatest risk to overall system reliability. Thus, manufacturers are working to improve long-term reliability and system-prediction methods.162 New inverter products provide more functions, such as safety and storage management, to appeal to a broader customer base and provide needed grid services.163 In 2015, several companies launched partnerships or products to help integrate solar PV systems with batteries: for example, Enphase launched a next-generation management system, and SolarEdge collaborated with Tesla to provide an inverter that is compatible with Tesla’s Powerwall battery, launching the product in early 2016.164 A proliferation of virtual power plants, especially in Germany and the United States, and growing demand for integrated home systems is forcing inverter manufacturers to make “smarter” systems.165 There is also a trend towards 1,500-volt direct current inverters, which reduce power loss during transmission.166
Rising competitiveness in the inverter industry, a shift to utility-scale installations and increased acceptance of Chinese products has put price pressure on the global inverter market. Even as demand increased in 2015, prices declined.167 Both Enphase and SMA (Germany) restructured and laid off staff in 2015.168 Even so, SMA sold its one-millionth Sunny Boy TL inverter in June, after 30 years in the business, and saw strong demand in overseas markets.169 A few months later, KACO (Germany) and the Saudi Arabian Advanced Electronics Company (AEC) launched Saudi Arabia’s first inverter manufacturing line.170
The CPV industry had another challenging year. Despite record module and cell efficiencies of CPV technologies, and declining system prices since its introduction to the market, CPV has not achieved economies of scale and has been unable to compete with falling prices of conventional solar PV.171 Most notably, in early 2015, Soitec (France) announced plans to exit the industry.172 Suncore (China) also announced plans to halt CPV module production, and Silex Systems (Australia) stopped operations in late 2015; by early 2016, the industry was in crisis following the exit of its largest manufacturers and was in the process of restructuring.173 Those remaining in the industry were working to improve products and to expand their focus, including actively marketing in the MENA region and China, and forming partnerships to expand project pipelines.174
Concentrating Solar Thermal Power (CSP)
CSP Markets
2015 was a year of challenges and changes for concentrating solar power (CSP), also known as solar thermal electricity (STE). Capacity growth in the CSP market decelerated somewhat in 2015. Global operating capacity increased by 420 MW to reach nearly 4.8 GW at year’s end.1 (→See Figure 18 and Reference Table R7.) Nonetheless, a wave of new projects was under construction as of early 2016, and several new plants are expected to enter operation in 2017.2
The year was a turning point in market expansion beyond Spain and the United States, which account for nearly 90% of installed CSP capacity.3 By year-end, facilities were under construction in Australia, Chile, China, India, Israel, Mexico, Saudi Arabia and South Africa.4 Morocco and South Africa surpassed the United States in capacity added, with Morocco becoming the first developing country to top the global CSP market.5
Whereas early commercial CSP development focused entirely on parabolic trough technology, markets now are balanced fairly evenly between parabolic trough and tower technologies. Fresnel and parabolic dish technologies have become largely overshadowed.6 For the first time, all of the facilities added in 2015 (as well as facilities added in early 2016) incorporated thermal energy storage (TES) capacity, a feature now seen as central to maintaining the competitiveness of CSP through the flexibility of dispatchability.7
Morocco was highly active and brought the 160 MW Noor I plant online.8 Noor I forms part of the 500 MW multi-stage Noor-Ouarzazate CSP complex, which is expected to be fully operational by 2018.9
South Africa brought its first commercial CSP capacity online in 2015 with the 100 MW KaXu Solar One facility and the 50 MW Bokpoort facility.10 A further 50 MW was added in early 2016 when the Khi Solar One facility came online, bringing South Africa’s total capacity to 200 MW; an additional 200 MW also was under construction.11 Grid access in areas of high insolation has emerged as a key challenge for South African CSP projects, many of which are being planned in regions with constrained transmission networks.12
The United States followed, adding the 110 MW Crescent Dunes facility to end the year with more than 1.7 GW in operation.13 This followed a record year in the country in 2014, during which almost 0.8 GW was brought online.14 As of early 2016, no new CSP capacity was under construction in the United States. Permitting challenges, a surging solar PV sector and low natural gas prices have resulted in indefinite delays to several large CSP projects.15
Spain remains the global leader in existing CSP capacity, with 2.3 GW at year’s end. However, no capacity came online in 2015, and, as of early 2016, no new CSP facilities were under construction or being planned or developed in the country.16
While Noor I in Morocco was the highlight for the North African market, developments also were under way in other countries in the region. For example, in early 2016, Egypt announced 14 prequalified bidders (including numerous MENA-based developers) for a 50 MW facility.17 In Algeria, where the government announced plans in 2015 to develop 2 GW of CSP by 2030, a number of new projects were in the development stage.18
Figure 18. Concentrating Solar Thermal Power Global Capacity, by Country/Region, 2005–2015
In the Middle East, construction started on Israel’s 121 MW Ashalim Plot B facility. Commercial
operation is expected in 2017, and an additional 110 MW phase is expected to come online in 2018.19 In Saudi Arabia, Integrated Solar
Combined Cycle (ISCC)i
facilities under construction in Duba and Waad Al Shamaal will
incorporate 50 MW each of CSP technology when they enter operation in 2017 and 2018, respectively.20 As domestic energy demand rises in
Saudi Arabia, CSP is considered a strategically important technology for maintaining the country’s status as a
fossil fuel exporter.21
China’s proposed CSP target of 5–10 GW by 2020 came amidst a flurry of development activity.22 Construction at the 50 MW Qinghai Delingha facility commenced in late 2015.23 The facility, which will mark the country’s first commercial CSP plant, is expected to come online in 2017.24 Additional facilities totalling several hundred megawatts are in various stages of construction, although timelines for completion remain unclear.25 Elsewhere in Asia, India’s 25 MW Gujarat Solar One facility entered construction after significant permitting delays.26
In Latin America, construction continued on Chile’s 110 MW Atacama 1 plant.27 Chile saw a notable milestone for CSP when a hybrid CSP/PV facility (incorporating 100 MW) won a baseload tender that also was open to combined-cycle gas technology.28
CSP continued its push into developing markets with high DNI levels and specific strategic and/or economic alignment with the benefits of CSP technology. In this respect, CSP is receiving increased policy support in countries with limited oil and gas reserves, constrained power networks, or strong industrialisation and job creation agendas, including South Africa, Morocco and China.29
i Integrated Solar Combined Cycle facilities are hybrid gas and solar plants that utilise both solar energy and natural gas for the production of electricity.
CSP Industry
It was a watershed year for industry as companies adapted to the shift of CSP markets. The continued stagnation of the Spanish market, along with a long predicted slowdown in the United States, resulted in increased capacity building in new focus markets. Established CSP players created new partnerships and invested in assets in new markets, while local industrial activity emerged in South Africa, the MENA region and China.30
Recognising CSP’s potential for local manufacturing, engineering and skills development, many countries – including Morocco, Saudi Arabia, South Africa and the United Arab Emirates – continued to promote or enforce local content requirements in their CSP programmes during 2015.31
Abengoa, the industry’s largest developer and builder, faced bankruptcy proceedings before reaching an agreement with its creditors and avoiding liquidation in early 2016.32 The company’s rising debt was partially a result of Spanish energy reforms enacted in 2013, which reduced feed-in tariffs for CSP facilities.33 As of early 2016, the company was expected to dispose of equity in several CSP facilities as it restructured its operations over the year.34
Nonetheless, Abengoa and Saudia Arabia’s ACWA Power led the market in ownership of projects that either commenced operations or were under construction during 2015.35 As a developer, owner and operator, ACWA continued to make strong inroads into the global CSP market, most notably through projects in South Africa and Morocco.36
Other top companies in 2015, including those engaged in construction, operation and/or manufacturing, were Rioglass Solar (Belgium); Acciona, ACS Cobra, Sener and TSK (all Spain); and Brightsource, GE and Solar Reserve (all United States).37
Leading manufacturer Schott Solar (Germany) sold its CSP receiver business to Rioglass Solar, the world’s largest manufacturer of CSP mirrors with plants in Chile, Israel, South Africa, Spain and the United States.38 Rioglass Solar previously purchased the CSP receiver business of Siemens (Germany) in 2013.39 GE acquired the power business of Alstom (France) – including the company’s CSP business – towards the end of 2015.40
Developers continued to focus on larger plants, with many facilities exceeding 100 MW in size. South Africa increased the size limit of CSP plants under its Independent Power Producer Procurement programme from 100 MW to 150 MW.41 These larger plants are being developed increasingly in water-scarce regions, so most new facilities are making use of dry cooling technology to reduce water consumption as well as environmental impact.42
Almost all new CSP plants are being developed with TES systems, and global storage capacity is on the rise. The US Crescent Dunes facility represented a major step forward in this regard: with 10 hours of storage, the plant is capable of generating power at any time of day or night for half of the year.43 In Morocco, the storage capacity planned for the Noor II facility, currently under construction, was increased from three to seven hours.44
Faced by competition from solar PV due to its rapidly declining prices, the CSP industry has focused increasingly on maximising value through TES systems that provide dispatchable power.45 Research conducted by the US National Renewable Energy Laboratory (NREL) on California power markets found that a large fraction of the value of CSP operating with TES appears to be derived from its ability to provide firm system capacity; this is especially the case where the penetration of variable renewables is high, or where there is a shortage of baseload capacity.46
Under South Africa’s competitive bidding process, decreasing price caps coupled with strong competition resulted in a reduction of CSP bid prices by nearly 40% from round one (in late 2011) to round three (in late 2013) of the procurement process.47 This trend was expected to continue with the announcement of new preferred bidders, originally scheduled for early 2016.48 In Morocco, the next phases of the Noor Ouarzazate CSP complex will operate at significantly lower tariffs than other operational facilities in the region as a result of cheaper debt and learnings from the first phase.49 A shift to cheaper component suppliers and the establishment of partnerships between leading CSP technology companies and Chinese counterparts also are helping to reduce costs.50
R&D in the CSP sector is being driven by both private and public entities, often through partnerships between leading CSP firms or between private groups and government programmes. Improvements and cost reductions in TES continue to be strong focus areas of these activities. Related research programmes, some of which focused on novel storage media such as sand and concrete, were under way during 2015 in several countries, including Italy, the United States and the United Arab Emirates.51
R&D programmes backed by the United States and the United Arab Emirates concentrated on improving CSP efficiency through the application of higher-temperature processes, which allow the more efficient transfer of heat and conversion of energy. Related research in 2015 was focused largely on the development of materials capable of housing high-temperature processes.52
Other research was directed towards incremental cost reductions in CSP components, including heliostats and mirrors; the reduction of water usage in both steam/power generation and mirror cleaning; and the reduction of land requirements for CSP systems.53
Solar Thermal Heating
and Cooling
Solar Thermal Heating/Cooling Markets
Solar thermal technology is used extensively in all regions of the world to provide hot water, to heat and cool space, and to provide higher-temperature heat for industrial processes. Global capacity of glazed and unglazed solar thermal collectors continued to rise in 2015. The 18 largest markets in 2015 are spread across all continents and represent 93–94% of total the year's global additions.1 (→See Figure 19 and Reference Table R8.) In 2015, their newly installed capacity totalled an estimated 37.2 GWth (53.1 million m2), down 14% from the 43.4 GWth installed by these countries in 2014.2
The continued slowdown in 2015 was due primarily to shrinking markets in China and Europe. Despite the overall negative trend, significant market growth was reported from Denmark (up 55% over 2014), Turkey (10 %), Israel (9%), Mexico (8%) and Poland (7%).3
Among the top 18 countries, vacuum tube collectors made up 76% of new
installations, flat plate collectors 20% and unglazed water collectors (mostly for swimming pool heating) the
remaining 4%.4 These additions brought
total global solar thermal capacity to an estimated 435 GWth (622 million
m2) at the end of 2015, up from 409 GWth one year earlier.5 (→See Figure 20.) There was enough capacity by year’s end to provide approximately 357 TWh
(1,285 PJ) of heat annually.6
The top countries for new installations in 2015 were China, Turkey, Brazil, India and the United States , and the top five for cumulative capacity at year-end were China, the United States, Germany, Turkey and Brazil.7 (→See Figure 21 and Reference Table R8.) Of the top 18 installers, the leading countries for average market growth between 2010 and 2015 were Denmark (34%), Poland (14%) and Brazil (8%); the most significant market decline over this period was seen in France (-17%), Austria (-14%) and Italy (-14%).8
China again was the largest market by far in 2015, with gross additions of 30.45 GWth (43.5 million m2) – 21 times more capacity than was added in second-placed Turkey.9 At year’s end, China’s cumulative capacity in operation was an estimated 309.4 GWth, or about 71% of the world’s total.10 China’s market contracted for the second consecutive year – falling 17% in 2015, after an 18% drop in 2014 – due to the slowdown in the construction industry and the weak national economy.11 Vacuum tubes continued to dominate the Chinese market in 2015, accounting for 87% of added capacity; however, flat plate collectors were again popular, especially for roof and façade integration in urban areas.12
Even though Turkey provides little policy support for solar thermal technologies, annual installations were up 10% in 2015, to an estimated 1.47 GWth (2.1 million m2). These new installations were delivered by a strong supply chain that includes about 800 sales points and around 3,000 specialised installers.13 The share of vacuum tube collectors increased again in 2015, to 49% (44% in 2014), up from almost zero 10 years earlier.14
Brazil ranked third for new installations in 2015, with 982 MWth (1.4 million m2) of glazed and unglazed collectors.15 However, deployment remained below expectations, with the market down by 3% relative to 2014; this compares with Brazil’s high average annual growth rate of 8% between 2010 and 2015.16 Constraints on the market included the national economic crisis, which reduced investment and purchasing power, and delay in implementing the next phase of the social housing programme Minha Casa Minha Vida.17
India was fourth for new installations. Although there is high uncertainty regarding the market volume in fiscal year 2015–2016, preliminary estimates show that the market was stable compared to the previous year, when 826 MWth (1.18 million m2) of capacity was installed, and the share of vacuum tube collectors was around 80%.18 A temporary reduction in demand has resulted from the suspension of India’s national grant scheme in 2014. As of early 2016, India’s government and solar thermal industry were discussing new support measures and, as a consequence, a renewable heating obligation was being drafted that, if enacted, would be the first of its kind worldwide.19
The United States was the fifth biggest market for solar thermal collectors in 2015 and the world’s largest market for unglazed collectors for swimming pools, followed by Brazil (427 MWth) and Australia (280 MWth).20 The unglazed segment accounted for 87% of US cumulative solar thermal capacity of 17 GWth at the end of 2014.21 In the significantly smaller segment of glazed collectors, a capacity of 119 MWth was added in 2015; this was down 7% (after falling 19% in 2014) in response to low oil and gas prices and an increased focus on solar PV, driven by strong marketing efforts by solar PV system providers.22
In the EU-28, the market volume dropped again in 2015 (down 6%), to an estimated 1.9 GWth (2.7 million m2), following a 7% decline in 2014.23 The EU’s total installed capacity in operation at the end of 2015 was approximately 33.3 GWth, representing around 8% of the world’s total.24
With the exception of Denmark and Poland, all major European solar thermal
markets contracted significantly in 2015: Austria’s market shrank by 12% relative to 2014, and declines also
were seen in Germany (-10%), Spain (-6%), Italy (-15%) and Francei (-33%).25 Following 19% market growth in 2014,
Greece maintained the same volume (189 MWth, 270,000 m2) in 2015, and its
exports increased by another 7% (to 202 MWth,
288,571 m2) thanks to rising demand in the MENA region.26
Low oil and gas prices contributed significantly to the shrinking markets seen in much of Europe. In Germany, for example, low fuel prices drove up sales of gas- and oil-condensing boilers (by 7% and 30%, respectively); by contrast, the solar thermal market contracted by 10% to 100,500 systems, for a total of 564 MWth (806,000 m2) added during the year.27 This significant reduction occurred despite an increase in Germany’s national incentive programme in April 2015.28 Additional challenges for Italy, Spain and France included bureaucratic processes associated with national subsidy schemes, a slowdown in the housing industry and increased competition from other renewable heat technologies.29
i Metropolitan France only, which includes mainland France and nearby islands in the Atlantic Ocean, English Channel and the Mediterranean Sea (not Overseas France).
SOLAR THERMAL HEATING AND COOLING
Figure 19. Solar Water Heating Collectors Additions, Top 18 Countries for Capacity Added, 2015
Over the last five decades, the primary application of solar thermal technology globally has been for water heating in single-family houses; the residential segment accounted for 63% of the total installed collector capacity at the end of 2014 (the most recent data available).30 In recent years, however, markets have been transitioning to large-scale systems for water heating in multi-family buildings and in the tourism and public sectors. In 2014, this commercial sector accounted for only 28% of the total collector capacity in operation worldwide, but it represented 50% of newly installed collector capacity.31 (→See Figure 22.)
The transition from single-family houses to the commercial sector continued during 2015 in many countries around the world.32 The best examples were China and Poland, where the commercial markets grew rapidly, whereas the residential sector declined drastically.33 In China, solar thermal systems for multi-family houses, tourism and the public sector accounted already for 61% of newly installed collector area in 2015.34 In Poland, the major market driver was larger systems in public buildings, financed with international funds. While such projects saw an increase of up to 10% in volume relative to 2014, the residential segment declined significantly in response to the national residential subsidy scheme that favours solar PV.35
The use of solar thermal for space heating also continued to gain ground, particularly in Europe, where an increasing number of large-scale solar thermal systems feeds into district heating grids. As in past years, Denmark dominated Europe’s solar district heating market in 2015. Beyond Denmark, only three other district heating installations larger than 350 kWth went into operation: Austria, Italy and Sweden each brought one plant online.36
Denmark brought 17 new and 3 expanded solar district heating plants (totalling 187 MWth) into operation in 2015; this compares with only 7 MWth of solar water heaters installed in single-family houses during the year.37 At year’s end, Denmark had 79 solar district heating plants in operation, with a combined capacity of 577 MWth; an additional 364 MWth of large-scale solar heating systems was in the pipeline.38 Denmark’s situation is unique in that it has inexpensive and sufficient land in the vicinity of its municipalities; taxes on fossil fuels; and cost-effective mounting systems developed by the domestic industry for large ground-mounted collector fields.39
At the end of 2015, Europe was home to 252 large-scale systems with a total of 745 MWth, making up around 2% of the region’s total operating solar thermal capacity.40 Nearly half (48%) of these large systems are connected to block heating (mostly stand-alone boilers); another 36% are connected to district heating systems; and the remaining 16% are used for other applications, primarily for solar cooling and solar process heat.41 After several years with no new large-scale installations, both Germany and Spain had several large-scale solar thermal systems in the pipeline as of early 2016.42
Solar heat is being used in an expanding range of heat-based industrial processes, such as water preheating, evaporation, cleaning, drying, boiling, pasteurisation, as well as thermal separation. The most popular sectors for solar process heat applications in recent years have been the food and metal processing, textile, beverage and mining industries.43 In 2015, a variety of industries invested in solar process heat installations, among them the Dairy Bonilait (France), the automotive supplier Harita Seating systems (India), an Italian cheese producer, a garment manufacturer in India and the pharmaceuticals producer Ram Pharma based in Jordan.44
The largest investor was Petroleum Development Oman (CPD), which began construction in November of its 1 GWth, USD 600 million Miraah solar steam-producing plant, located next to the Amal West Oil field in Oman.45 Once completed, in 2017, Miraah is expected to be the largest solar steam-producing plant worldwide.46
As of March 2016, at least 188 solar process heat projects, with a combined capacity of 106 MWth, were operating in 32 countries.47 Deployment in the industry sector is a fraction of that in the residential sector, even though the long-term potential for both segments is almost the same.48 Top countries for solar process heat capacity in operation included Austria, Chile, China, the United States and India.49
Figure 22. Solar Water Heater Applications for Newly Installed Capacity, by Country/Region, 2014
Four major barriers have slowed the uptake of solar process heat installations, including: high system and planning costs; the absence of guidelines and tools for planners and engineers; a dearth of business models; and a lack of knowledge among potential customers.50 To address some of these barriers, Australia established a grant to cover 50% of the project costs for solar process heat facilities. The grant programme, combined with educational workshops organised specifically for the dairy industry, resulted in some projects being in the first planning stage as of early 2016.51 Other countries with support mechanisms for solar process heat include Austria, Germany and India.52
An additional barrier in 2015 was low oil and gas prices, which made solar process heat less competitive in many countries by extending system payback periods. In response to low oil prices, Thailand halted its process heat subsidy scheme for 2015–2016.53
Low fuel prices also affected the solar cooling market and, combined with the still high costs and complexity of cooling systems, reduced demand in 2015.54 Demand for solar thermal-driven air conditioning systems also was tempered by rapidly falling costs of solar PV systems in conjunction with split air conditioning systems (especially in buildings with relatively small cooling loads).55 An estimated 125 new solar cooling systems were added in 2014 (the last year for which global statistics are available), for a total of at least 1,175 by year’s end.56 The peak year for new installations was 2012, when around 200 systems were added.57
Even so, several larger solar cooling systems were installed in 2015, or were under construction as of early 2016. These include systems for the European companies Wipotec (Germany) and AVL (Austria), and for the Sheikh Zayed Desert Learning Center in Abu Dhabi.58 There also was growing demand for solar cooling R&D and demonstration plants in China and the Middle East in 2015.59 The main driver of demand for solar cooling technology is its potential to reduce peak electricity demand, particularly in countries with significant cooling needs.60
Absorption and adsorption chillers have long dominated the solar cooling market and account for approximately 71% of capacity in operation. In 2015, they increased their market share, whereas desiccant cooling systems saw their market share decline.61
Solar Thermal Heating/Cooling Industry
Success and crisis were close together in the global solar heating and cooling industry in 2015. Within individual countries, some players failed while others succeeded by changing their business models; and, from country to country, market development and, therefore, industry health varied considerably. For example, collector manufacturers in sunbelt countries with strong demand – such as India, Mexico and Turkey – invested in new production capacity.62 By contrast, in much of Europe, China and some other countries, manufacturers faced declining sales and overcapacity.
In India, component suppliers built new manufacturing facilities in response to the country’s growing demand for concentrating collector systems for industry and large-scale cooking applications, which has been driven by investment subsidies.63 Mexico has evolved into a technology hub in Central America and, in 2015, had two factories under construction, one for polymer collectors and one for vacuum tubes.64 Turkey’s three vacuum tube manufacturers extended their production capacities in 2015 based on rising national demand and plans for increased export.65
The collector industries in Greece and Austria continued to have high export numbers throughout 2015. Greek manufacturers saw their exports increase by 7%, following a 16% rise in 2014, while the Austrian collector industry’s export share remained high, at around 80% in 2015.66
Elsewhere, developments in 2015 were not as bright. Dark clouds were over Chile, for example, where the domestic industry went through a severe crisis. Chile’s new tax credit scheme for the housing industry, originally expected to be approved in early 2015, did not come into effect until February 2016; as a result, several manufacturers and system suppliers were forced to temporarily suspend their solar thermal activities.67
The Chinese industry was troubled by a second year of significant market contraction, driving industry consolidation at all levels of the supply chain. In 2014, Linuo New Material (once the world’s largest manufacturer of glass tubes and vacuum tubes) made the decision to stop production; this was followed, in 2015, by the Sunrain Group’s acquisition of a 30% stake in the large flat plate collector manufacturer Pengpusang.68
Manufacturers in several Central European countries also faced overcapacities and an associated drop in collector prices. This development resulted in serious financial troubles for four high-profile companies: Watt (Poland), Astersa (Spain), Solvis (Germany) and Clipsol (France).69
However, even in this period of declining markets all over Europe, several European solar thermal manufacturers managed to increase their sales in 2015 by developing new business models. In Poland, some system suppliers – such as Hewalex and Ensol – profited from a growing number of public tenders for social housing projects and public hospitals.70 Spanish solar thermal manufacturers offered innovative financing schemes in order to decrease the industry’s dependence on subsidies.71
In addition to the well-established energy service companies (ESCOs) for solar thermal – including, S.O.L.I.D. (Austria) and Nextility (formerly Skyline Innovations; United States) – an increasing number of turnkey suppliers specialised in energy service contracts during 2015 to eliminate the barrier of high upfront costs for potential commercial clients.72 Such suppliers include Sumersol (Spain), Sunti (France), Enertracting (Germany) and Sunvapor (United States).73
In Austria, where market penetration is high and the number of new installations has declined, companies have found new business opportunities in the replacement market.74 This sales segment is gaining importance in countries that have a long history of solar thermal deployment, including also Germany, Greece, Israel and Turkey; in Israel, for example, more than 80% of the collector area installed between 2010 and 2014 was used to replace existing systems.75
Despite the market contraction in Germany throughout 2012–2015, German flat plate collector manufacturers continued to dominate the ranking of the world’s 20 largest manufacturers with regard to collector area produced in 2014 (latest data available). Five German companies were on the list: Bosch, Viessmann, Vaillant, Thermosolar and Wolf.76 China ranked second for number of manufacturers, with four (Five Star, Prosunpro, BTE Solar and Sunrain), and Turkey placed third with three producers (Ezinc, Solimpeks and Eraslanlar). For the first time, a Polish company, Hewalex, was among the top 20.77 The world’s three largest vacuum tube collector manufacturers – Sunrise East Group (includes the Sunrain and Micoe brands), Himin and Linuo-Paradigma – all are based in China.78
Since 2012, the European industry has worked hard to overcome two main barriers that prevent rapid growth in the solar thermal market: high system prices and a lack of transparency in solar yield. To further progress in addressing the first of these barriers, in 2015 the Solar Heating and Cooling Programme of the International Energy Agency (IEA SHC) launched a project to investigate ways to reduce the purchase price of solar thermal systems by up to 40%, covering all aspects of the supply chain.79
Ongoing efforts to reduce prices for high-end consumer systems began to bear fruit in 2015. Several manufacturers have developed standardised and pre-fabricated solutions to reduce post-production costs. For example, Aschoff Solar (Germany) and Sunoptimo (Belgium) focus on solar circuit hydraulics that they pre-mount in containers for on-site installation by overseas clients.80 Other companies are manufacturing domestic hot water supply stations that are pre-mounted to the tank.81 Additional 2015 innovations that attracted regional attention are the switching absorption layer of Viessmann that avoids stagnation temperatures, and a well-designed polymer collector from Sunlumo (Austria).82
Another 2015 development that aids in cost savings in the industry was reached within the Global Solar Certification Network, developed by the IEA SHC.83 Researchers and industry representatives worldwide agreed on a mutual recognition approach that will maintain existing national and regional certification schemes, allowing manufacturers to use test and inspection reports under one certification scheme and to apply for certification in another.84
Labelling of solar thermal systems and collectors also was an important issue in Europe during 2015. After two years of preparation, the labelling of water, space and combi heaters under the Ecodesign Directive (2005/32/EC) became mandatory in all 28 EU Member States in September.85 Even so, there was great scepticism among Europe’s collector manufacturers about whether or not the energy labelling will increase demand for solar thermal systems, since heat pumps receive a high rating even without the use of solar power.86 Also launched in 2015 was a voluntary collector label by the newly established Solar Heating Initiative; the label, Solergy, rates collectors based on their annual energy output.87
An increasing number of small countries worldwide showed interest in joining regional quality infrastructure (QI) schemes (certification procedures, standards, product labels) in 2015, as QI is crucial in emerging markets to promote customer confidence.88 Examples of such schemes include the Solar Heating Arab Mark and Certification Initiative (SHAMCI) in the Arab region, and the initiative of the Pan American Standards Commission (COPANT).89
For medium-temperature process heat applications, parabolic trough remains the dominant collector technology, followed by linear Fresnel collectors.90 An increasing number of companies manufacture concentrating solar thermal collectors; as of late 2015, at least 39 manufacturers were producing 76 collector types in 13 countries worldwide, with the majority of these companies headquartered in Europe.91 Several additional companies that are new to the process heat sector – including Artic Solar and Skyven Technologies LLC (both United States) and Oorja Energy (India) – were developing concentrator collectors as of early 2016.92 Because the industry is still in the early stages of development, product scale and components differ significantly from one linear Fresnel or parabolic trough collector to the next.93
In dense urban environments, where rooftop space is restricted, solar PV / solar thermal hybrid (PV-T) systems have become an option for generating both power and heat.94 As of early 2015, a large variety of PV-T technologies was on the market with different target applications, installed costs and performance characteristics, and dominated by unglazed PV-T elements.95
The global solar cooling industry followed two divergent trends in 2015: a shift towards large-scale systems with a better performance; and the development of plug-and-play system kits with cooling capacities below 5 kW.96 Among the 45 sorption (heat-driven) chiller manufacturers worldwide, several European manufacturers – including Purix (Denmark), Solarinvent (Italy), Solabcool (Netherlands) and Meibis (Germany) – launched or developed a new generation of compact and easy-to-install solar cooling system kits up to 5 kW in size in 2015.97
Compact storage technologies are a key research field in the solar thermal industry.98 With both types of materials used for compact storage – phase-change materials (PCM) and thermochemical materials (TCM) – heat can be stored in a more dense form and with lower losses than is possible with conventional heat storage systems, such as hot water storage tanks.99 In early 2015, the IEA SHC defined measurement standards for PCM and preliminary estimates of their maximum costs.100
Wind Power
Wind Power Markets
Wind power experienced another record year in 2015, with more than 63 GW added – a 22% increase over the 2014 market – for a global total of around 433 GW.1 (→See Figure 23.) More than half of the world’s wind power capacity has been added over the past five years.2 By the end of 2015, more than 80 countries had seen commercial wind activity, while 26 countries – representing every region – had more than 1 GW in operation.3 Wind was the leading source of new power generating capacity in Europe and the United States and placed second in China, and, by one estimate, wind supplied more new power generation worldwide than any other technology in 2015.4
China led for new installations, followed distantly by the United States, Germany, Brazil and India.5 Others in the top 10 were Canada, Poland, France, the United Kingdom and Turkey.6 (→See Figure 24 and Reference Table R9.) Non-OECD countries again were responsible for the majority of installations; most of the new capacity was added in China, which alone accounted for nearly half of global additions, but new markets are opening across Africa, Asia, Latin America and the Middle East.7 Guatemala, Jordan and Serbia all installed their first large-scale wind plants, and Samoa added its first project.8 At the end of 2015, the leading countries for total wind power capacity per inhabitant were Denmark, Sweden, Germany, Ireland and Spain.9
Growth in some of the largest markets was driven by uncertainty about future policy changes; however, wind deployment also was driven by wind power's cost-competitiveness and by environmental and other factors.10 Wind has become the least-cost option for new power generating capacity in an increasing number of markets.11
Asia was the largest market for the eighth consecutive year, accounting for 53% of added capacity, followed by the European Union (20.1%) and North America (16%).12 All regions but Africa saw market growth relative to 2014.13
China added a staggering 30.8 GW of new capacity in 2015, for a total exceeding 145 GW – more wind capacity than the entire EU.14 Nearly 33 GW was integrated into the national grid and started receiving the FIT premium, with approximately 129 GW considered officially grid-connected by year’s end.15 Significant growth was expected in anticipation of reduced FIT levels (as of 1 January 2016), but the market surpassed expectations, particularly in light of China’s economic slowdown.16 The market also was driven by a national government push to improve energy security and, in particular, to reduce coal consumption due to growing concerns about climate change and air pollution.17
At year’s end, Inner Mongolia had 18.7% of China’s cumulative capacity, followed by Xinjiang (12.5%), Gansu (9.7%) and Hebei (7.9%) provinces.18 Difficulties continued in transmitting China’s wind power from turbines to population centres and, combined with slow growth in electricity demand (0.6%), led to significant grid curtailment.19 Curtailment rose in 2015 to an average 15%, up from 8% in 2014, with 33.9 TWh of potential generation kept from the grid.20 In addition, many unused turbines sat awaiting completion of long-distance transmission capacity. In the meantime, some companies were building wind farms at sites in the country’s east and south, with lower wind speeds but closer to demand and with better grid infrastructure.21 Wind energy generated 186.3 TWh in China during 2015, accounting for 3.3% of total electricity generation in the country (up from 2.8% in 2014).22
India installed about 2.6 GW, passing Spain to rank fourth globally for total wind power capacity, with nearly 25.1 GW by year’s end.23 India added less capacity than expected, despite wind’s cost-competitiveness in much of the country and strong national and state-level policy support, due largely to a shortage of available transmission capacity.24 Other Asian countries that added capacity included Japan and the Republic of Korea (both over 0.2 GW), helping to bring the region’s total installations above 175 GW.25 Chinese wind projects also were under construction in Pakistan, although no new capacity came online in 2015.26
The United States ranked second for additions (8.6 GW) and cumulative capacity at year’s end (74 GW) and held onto first place for wind power generation (190.9 TWh) during 2015.27 Wind power was the top source for new US power generating capacity, accounting for over 40% of the total.28 More capacity was added in the fourth quarter of 2015 than in all of 2014; the jump (+77%) in annual additions was driven by short-term extensions of the Production Tax Credit (PTC) in 2013 and 2014.29 In late 2015, a multi-year PTC extension and phase-out promised to provide policy stability for a longer period than ever before.30 Texas led for capacity added (1.3 GW), followed by Oklahoma, Kansas and Iowa; Connecticut installed its first utility-scale project.31
US utilities continued to invest strongly in wind power, with some going beyond state mandates based on favourable economics.32 The cost-competitiveness of wind power also drove corporate and other purchasers, making 2015 the first year in which non-utility customers represented about half of the known (4 GW) US wind power purchase agreements.33 By year’s end, an additional 9.4 GW of capacity was under construction.34
Neighbouring Canada added 1.5 GW for a total of 11.2 GW, ranking sixth globally for additions and seventh for total capacity.35 Although growth slowed relative to 2014, wind energy has remained Canada’s largest source of new electricity generating capacity for five years.36 Ontario continued to lead, adding 0.9 GW (for a total of 4.4 GW), followed by Québec (added 0.4 GW) and Nova Scotia (added 0.2 GW), which installed one of Canada’s largest municipally owned wind projects.37 Wind power capacity at end-2015 was enough to supply 5% of Canada’s electricity demand, with much higher shares in some provinces.38
The European Union saw a new record for annual installations, due largely to Germany, which accounted for nearly half of the region’s market in 2015. The EU brought online some 12.8 GW of wind power capacity, for a total approaching 141.6 GW, including 11 GW operating offshore.39 Offshore capacity accounted for almost one-fourth of 2015 additions, twice the previous year’s share.40 Wind represented the largest percentage of new power capacity in the region (over 44%), followed by solar PV; new fossil fuel power capacity (about 23% of installations) was far exceeded by retirements.41 Between 2000 and 2015, wind increased from 2.4% to 15.6% of total EU power capacity.42 However, these advances and the scale of the EU market mask volatility in many countries due to weakened policy frameworks.43
Germany installed over 6 GW (net 5.7 GW, considering decommissioned capacity), for a total of almost 45 GW.44 These installations reflected the grid connection of a large amount of offshore capacity that was constructed in 2014, and a rush to complete new projects before Germany switches to a tendering scheme in 2017.45 Germany’s gross generation from wind power was 88 TWh – up 53% relative to 2014 due to increased capacity and good wind conditions.46
After Germany, the leading EU installers were Poland (1.3 GW), which overtook the United Kingdom for additions (1 GW), and France (1.1 GW).47 Finland, Lithuania and Poland experienced the highest annual growth rates; Poland’s record additions (nearly three times the 2014 level) were driven by the anticipation of a new policy scheme in 2016.48 Spain continued to rank second in the EU for total operating capacity (23 GW) but did not add wind capacity in 2015.49
After Asia, Europe and North America, Latin America was the next largest installer by region, with nine countries adding nearly 4.4 GW to reach about 15.3 GW.50 Brazil (2.8 GW) was responsible for about 57% of the region’s market, despite its political and economic woes, and ended the year with 8.7 GW.51 About 357 MW of Brazil’s new capacity was commissioned but not yet grid-connected by year’s end.52 Wind power contributed to the avoidance of power rationing and has brought economic revival to Rio Grande do Norte, Brazil’s leading state for wind capacity.53 Brazil was followed by Mexico (adding 0.7 GW to pass 3 GW), Uruguay (adding 0.3 GW) and Panama (adding 0.2 GW).54
Turkey again ranked in the top 10 for new capacity in 2015, adding nearly 1 GW to end the year just above 4.7 GW.55 In the Middle East, Jordan opened its first large commercial wind farm.56 Others in the region advanced projects – including Iran, with as much as 155 MW at year’s end and plans for several additional projects, and Kuwait, which was planning its first wind farm.57
The total African market was smaller than in 2014, due in part to financial difficulties in South Africa.58 Even so, South Africa added nearly 0.5 GW (for a total just over 1 GW) to surpass Morocco and lead the continent past the 3 GW mark.59 Egypt added 200 MW, and Ethiopia installed a large plant (153 MW), nearly doubling the national total.60 Projects in Kenya, including the 300 MW Lake Turkana wind farm, were stalled due to land disputes.61 However, by year’s end there was significant activity under way in Egypt and Morocco, and numerous small projects were being launched across Africa.62
Australia was responsible for nearly all new capacity in the Pacific.63 The country added almost 0.4 GW for a total approaching 4.2 GW, and wind power accounted for about 5% of national electricity consumption in 2015.64
Offshore, an estimated 3.4 GW of capacity was connected to grids in 2015, about double the additions in 2014, for a world total exceeding 12 GW.65 The vast majority of added capacity (89%) and total operating capacity (91%) was in Europe, where a record 3 GW was installed for a total 11 GW of grid-connected capacity off the coasts of 11 countries.66 Germany accounted for about two-thirds of global offshore additions (adding 2.2 GW), counting capacity installed but not grid-connected in 2014.67 It was followed by the United Kingdom (571 MW), China (361 MW), the Netherlands (180 MW) and Japan (3 MW), the only other countries to add capacity offshore in 2015.68 Although policy changes have delayed some development, the United Kingdom continued to lead in total offshore capacity with 5.1 GW at year’s end; it was followed by Germany (3.3 GW), Denmark (1.3 GW) and China (1 GW).69
Deployment offshore has been relatively slow in Asia and North America.70 China is about three years behind its 2015 target to deploy 5 GW, delayed by high costs, challenging environmental conditions, and regulatory and technical issues.71 India approved an offshore wind power policy, opening the door for future development.72 In the United States, construction began on the first project (30 MW).73
Offshore and on land, independent power producers (IPPs) and energy utilities remained the most important clients in terms of capacity under construction and in operation, but interest continues to grow in other sectors.74 The number of private purchasers of wind-generated electricity and turbines rose during 2015, as did the scale of their purchases.75 Corporations increasingly are purchasing wind power from utilities, signing PPAs, or buying their own turbines to power operations – particularly in the United States, but increasingly in other regions – to obtain access to reliable low-cost power.76 Investment funds, insurance companies, banks and institutional players are investing in wind energy because of its stable return.77
WIND POWER
Figure 23. Wind Power Global Capacity and Annual Additions, 2005–2015
Community and citizen ownership also continued to expand in several countries and regions during 2015, including in Australia, Europe, Japan, New Zealand, North America and South Africa.78 (→See Feature.) However, there is concern that policy changes – such as Germany’s shift towards tenders and Nova Scotia’s cancelation of the community tariff under its FIT – could slow future development.79
Small-scalei turbines are used for a variety of applications, including defence, rural electrification, water pumping, battery charging and telecommunications, and they are deployed increasingly to displace diesel in remote locations.80 Following a decline in 2013, the global market grew by 8.3% in 2014 (latest data available), and total capacity was up an estimated 10.9%.81 By end-2014, more than 830,330ii small-scale turbines, or over 830 MW, were operating worldwide (up from 749 MW at end-2013).82 The average size of small-scale turbines continues to creep up, with significant differences among countries, due largely to increasing interest in larger grid-connected systems (in some cases driven by policy structure).83
While most countries have some small-scale turbines in use, the majority of
units and capacity operating at the end of 2014 was in China (343.6 MW), the United States (226 MW) and the
United Kingdom (132.8 MW).84 Other leaders
included Italy (32.7 MW), Germany (24 MW), Ukraine (14.6 MW) and Canada (13.1 MW)iii.85
The US market continued to struggle, reflecting
continuing competition with solar PV and the low cost of other electricity sources, although new leasing models
are building momentum.86 Markets boomed in
both Italy and the United Kingdom during 2014, but UK deployment rates remained significantly below the 2012
level.87
Repowering has become a billion-dollar market, particularly in Europe.88 While most repowering involves the replacement of old turbines with fewer, larger, taller, and more-efficient and reliable machines, some operators are switching even relatively new machines for upgraded turbines that include software improvements.89 During 2015, at least 300 turbines (totalling an estimated 300 MW) were dismantled in Europe, two turbines (0.7 MW) in Japan and one unit (2 MW) in Australia.90 The largest market for repowering was Germany.91 There also is a thriving international market for used turbines in Africa, Asia and elsewhere.92
Wind power is playing a major role in power supply in an increasing number of countries. In the EU, capacity in operation at end-2015 was enough to cover an estimated 11.4% of electricity consumption in a normal wind year.93 Several EU countries – including Denmark (42%), Ireland (over 23%), Portugal (23.2%) and Spain (over 18%) – met higher shares of their demand with wind energy.94 Four German states had enough wind capacity at year’s end to meet over 60% of their electricity needs.95 In the United States, wind power represented 4.7% of total electricity generation and accounted for more than 10% of generation in 12 states, including Iowa (31.3%).96 Brazil reached almost 3%, and Uruguay generated about 15.5% of its electricity with the wind.97 Globally, wind power capacity in place by the end of 2015 was enough to meet an estimated almost 3.7% of total electricity consumption.98
i Small-scale wind systems generally are considered to include turbines that produce enough power for a single home, farm or small business (keeping in mind that consumption levels vary considerably across countries). The International Electrotechnical Commission sets a limit at approximately 50 kW, and the World Wind Energy Association (WWEA) and the American Wind Energy Association define “small-scale” as up to 100 kW, which is the range also used in the GSR; however, size varies according to the needs and/or laws of a country or state/province, and there is no globally recognised definition or size limit. For more information, see, for example, WWEA, Small Wind World Report 2016 (Bonn: March 2016), Summary, http://www.wwindea.org/small-wind-world-market-back-on-track-again/.
ii Total numbers of units does not include some major markets, including India, for which data were not available. Taking this into account it is estimated that more than 1 million units are operating worldwide, from WWEA, Small Wind World Report 2016.
iii Data are for end-2014 with the exception of Canada (year 2011).
Wind Power Industry
The wind power industry had another outstanding year thanks to record installations. Most of the top turbine manufacturers broke their own annual installation numbers.99 By early 2016, manufacturers had full order books, with some receiving record orders for on- and offshore turbines, presaging momentum for future years.100 But rising competition in the global marketplace and fragmentation in the market required that manufacturers and developers be flexible to adapt in different environments.101 Spain’s manufacturers, for instance, survived by exporting 100% of their production.102 Ongoing technology improvements that are increasing capacity factors (such as custom turbine configurations), as well as economies of scale and financing innovations, continued to drive down prices, making onshore wind power directly competitive with fossil fuels in an increasing number of locations.103
Costs vary widely according to wind resource, regulatory and fiscal framework, the cost of
capital and other local influences.104 In
2015, the levelised cost of electricity (LCOE) from onshore wind continued to fall, while the LCOE for new
fossil generation increased.105 Wind was
the most cost-effective option for new grid-based power during 2015 in many markets – including Canada,
Mexico, New Zealand, South Africa, Turkey, and parts of Australia, China and the United States.106 In late 2015, Morocco secured new record-low tender
bids – averaging
USD 25–30 per MWh – for wind capacity that is projected to be in operation between 2017
and 2020.107 Although offshore wind remains
significantly more expensive, the LCOE for offshore wind generation also declined further in 2015.108
As the amount of wind output and its share of total generation have increased, so have grid-related challenges in several countries. Challenges for wind power – both onshore and offshore – include lack of transmission infrastructure, delays in grid connection, the need to reroute electricity through neighbouring countries, lack of public acceptance, and curtailment where regulations and current management systems make it difficult to integrate large amounts of wind energy and other variable renewables.109
Curtailment in China cost the country’s industry an estimated USD 2.77 billion (RMB 18 billion) in 2015.110 To reduce curtailment, China’s government has urged north-western regions to attract more energy-intensive industries and to use wind power for heating (with the added benefit that it can displace coal), among other options; new transmission capacity is under construction, and new pumped storage facilities are being planned.111 In the United States, curtailment is down dramatically in Texas following the completion of new transmission lines.112 Across the globe in 2015, projects were in planning stages or under way in every region to strengthen and expand transmission capacity to efficiently move wind-generated electricity to where it is needed.113
Most wind turbine manufacturing takes place in China, the EU and the United States, and the majority is concentrated among relatively few players.114 In 2015, by some estimates, Goldwind (China) surpassed Vestas (Denmark) to become the world’s largest supplier of wind turbines, marking the first time that a Chinese company has held this spot.115 Almost all of Goldwind’s recent growth (and that of other Chinese companies) has occurred at home, although Chinese companies are increasingly active in new markets.116 Long-term leader Vestas ranked second, followed by US-based GE, which climbed one position due in part to a strong US market and to its acquisition of Alstom (France).117 Siemens (Germany) dropped two positions to fourth (but ranked first in the offshore market), and Gamesa (Spain) was up three positions to rank fifth, followed by Enercon (Germany).118 Others in the top 10 were all Chinese companies: United Power, Ming Yang, Envision and CSIC Haizhuang.119 (→See Figure 25.) Suzlon (India) dropped out of the top 10 due to the sale of subsidiary Senvion (Germany) in 2015.120
The world’s top 10 turbine manufacturers captured nearly 69% of the 2015 market.121 However, components are supplied from many countries: blade manufacturing, for example, has shifted from Europe to North America, South and East Asia and, most recently, Latin America, to be closer to new markets.122 In Africa, major manufacturers are considering new facilities in Egypt, which has set its sights on becoming a regional manufacturing hub.123
Increasing demand for turbines and related technologies led to the construction of new factories in 2015 and plans for further development. In Europe, Vestas announced plans to begin producing 80-metre (260-foot) blades for offshore use at its new factory on the Isle of Wight (UK), and Siemens (Germany) said it would construct a new plant for offshore components – its largest German facility to be built in several years.124 Elsewhere, major manufacturers have scrambled to meet local content requirements, adding capacity to overcome shortages in components.125 For example, several companies announced plans for manufacturing or service plants in Brazil to focus on the local market, and, across the Atlantic, manufacturers are building facilities to provide turbines to meet local content requirements in Egypt and Morocco.126
The year saw a surge in consolidation among turbine manufacturers, developers, data and service companies.127 For example, GE acquired Alstom’s power generation business, gaining a foothold in Europe – including the offshore market – and becoming a leader in the Brazilian market.128 In early 2016, Nordex (Germany) acquired Acciona Windpower (Spain), which focuses on large-scale wind farms and has production plants in Brazil, Spain and the United States, with one under construction in India.129 Vestas acquired servicing firm UpWind Solutions (United States) to expand its North American service operations, as well as German service provider Availon; and EDF Renewable Energy purchased OwnEnergy (United States) to move into the community wind market.130 Investment firm Centerbridge Partners (United States) completed its acquisition of manufacturer Senvion from Suzlon, and asset manager Swiss Energy bought Spanish turbine manufacturer MTOI.131 In late 2015, Gamesa acquired a 50% stake in NEM Solutions (Spain/United States), which leverages data mining to optimise equipment performance.132 Challenges are mounting for companies that only manufacture turbines; remaining pure wind turbine manufacturers (that are not part of large conglomerates) include Enercon, Nordex and Vestas.133
Projects also changed hands – particularly in the United States and Europe – purchased by
companies in the same region or based in Asia and the Middle East.134 In the United States, many utilities moved to
acquire more renewable energy projects to satisfy demand from key corporate customers; an estimated
3.7 GW
of US wind project capacity was acquired in 2015.135 Other players moved into wind projects to expand
their foothold into new regions or new areas of business. China Three Gorges and state-owned SDIC (China) both
acquired UK offshore projects within a few months of each other.136 Canadian pipeline and energy company Enbridge bought
a long-delayed wind project in the US state of West Virginia.137 In addition, the wind industry continued moving into
solar PV (and vice versa) – for example, Suzlon (India) began developing a solar project in India – and several
solar PV-wind hybrid projects were under development as of early 2016.138
Wind energy technology continued to evolve, driven by several factors, including: mounting global competition; efforts to make turbine manufacturing easier and cheaper; the need to optimise power generation at lower wind speeds; and increasingly demanding grid codes to deal with rising penetration of variable renewable sources.139 To meet increasing demand from grid operators for stable feed-in, Senvion launched a new turbine for the German market.140 Also in 2015, GE launched new software to track and collect data from individual turbines for optimising performance and increasing output.141
To reach stronger winds and boost output, there is a general trend towards larger machines – including longer blades, larger rotor size and higher hub heights.142 Such changes have driven capacity factors significantly higher within given wind resource regimes, creating new opportunities for wind power in established markets as well as new ones.143 During 2015, new low-speed turbines were launched by several manufacturers, including Gamesa, GE, Nordex, Siemens and Vestas.144
Capacity ratings continued to rise in 2015, with the average size turbine delivered to market up slightly to 2 MW.145 Average turbine sizes were highest in Europe (2.7 MW) – particularly in Denmark and Germany – followed by Africa (2.4 MW), the Americas (nearly 2.1 MW) and Asia-Pacific (1.8 MW).146 Turbines for use offshore also are growing, as are project sizes, driven by the need to reduce costs through scale and standardisation.147 In Europe, the average capacity of new turbines installed offshore was 4.2 MW, up 13% relative to 2014, due to significant deployment of turbines in the 4–6 MW range.148 By late 2015, there were several orders already on the books for 7 MW and 8 MW machines, and research projects were looking at 10–20 MW turbines for offshore.149
The offshore wind industry differs technologically and logistically from onshore wind.150 In addition to the deployment of ever-larger turbines and projects, the offshore industry continues to move farther out, into deeper waters.151 By year’s end, the distance from shore and water depth of grid-connected projects in Europe averaged 43.3 kilometres and 27.1 metres, respectively (up from 32.9 kilometres and 22.4 metres, respectively, in 2014), due largely to increased deployment in Germany.152
The majority of substructures off Europe in 2015 continued to be monopiles (97%), followed by jackets (3%).153 However, to access winds in even deeper waters – in the Atlantic and Mediterranean, and just off Japan’s shore – the industry continues to invest in the development of floating turbines (anchored by mooring systems), which reduce foundation costs and other offshore logistical challenges.154 In early 2015, a few test turbines were floating offshore worldwide; before the year was out, the world’s largest (7 MW) floating turbine was operating off Japan’s coast, France had launched the world’s first tender for floating turbines, and oil and gas giant Statoil (Norway) had contracted Siemens to build a 30 MW floating wind farm off Scotland.155
The most significant challenge facing the offshore industry is the lack of policy stability in key markets, which is important for achieving the scale and low-cost financing that are necessary to reduce costs to competitive levels.156 In the EU, the lack of co-ordination of regulations across Member States is hampering offshore development.157
The price differential between fossil fuel and offshore wind generation remains significant, and the industry is working to close this gap.158 In early 2015, manufacturers MHI-Vestas and Siemens, and developer DONG Energy signed a joint declaration for a united industry goal to drive the cost of offshore wind energy below USD 112/MWh (EUR 100/MWh) by 2020.159 During the year, Siemens unveiled a new direct current (DC) solution for connecting offshore wind turbines to the grid at lower cost; the solution also increases transmission capacity and reduces transmission losses.160 In addition, the company adapted an existing cargo shipping method for the transport of offshore turbine components that reduces costs by eliminating the need for a crane; the first such ship might be launched by late 2016.161 Another significant development was the diversification of financial structures used during construction and operation: project bonds emerged in 2015 as a competitive financing tool in response to reduced risk perception for offshore projects.162
In the small-scale wind industry, five countries (Canada, China, Germany, the United Kingdom and the United States) accounted for more than 50% of turbine manufacturers as of 2014; aside from China, developing countries still play a minor role.163 UK and US manufacturers continued to rely on export markets as a source of revenue, but exports (in terms of units sold) were down significantly for both countries in 2014 relative to 2013.164 To increase the competitiveness of small-scale wind, several leading US small-scale and distributed wind companies have begun offering long-term leases to build on the success of third-party financing for solar PV.165 In early 2016, Statoil and United Wind (United States) announced a joint venture, securing Statoil’s entry into the US small-scale and distributed wind market.166
See Table 2 on pages 82–85 for a summary of the main renewable energy technologies and their costs and capacity factors; see also Sidebar 3 for a discussion of technology cost trends.167
