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Transformation of global power markets led by renewables

wind turbine sunflowers

In 2015, renewables surpassed coal to become the largest cumulative share of global power capacity, and this impressive growth will continue over the next five years. Despite lower fossil fuel prices, renewable power expanded at its fastest-ever rate in 2015. Enhanced policy support in key markets, technology improvements and sharp cost reductions all contributed to renewables now accounting for more than half of the world’s additional electricity capacity. Yet, wind and solar energy producers and distributors face unique challenges in both volumetric and price risks. The remarkable progress being made in renewables requires innovative risk mitigation solutions in order to ensure that the pace of investments continues.

The International Energy Agency (IEA) announced this week that renewables have now surpassed coal as the largest source of installed power capacity in the world. Renewable energy now represents more than half the new power capacity around the world, reaching a record 153 gigawatts (GW), 15% more than the previous year. Record additions in both onshore wind and solar photovoltaics (PV), include approximately a half million solar panels being installed every day around the world last year, and in China, two wind turbines installed every hour in 2015. Contributing to the growth of renewables has been the sharp decline in costs. Average global generation costs for new onshore wind farms fell by an estimated 30 percent in the last five years, and costs for large solar panel plants fell by two-thirds.

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