RENEWABLES TARGETS THAT BITE? Comparing renewable energy targets with BNEF’s New Energy Outlook Richard Chatterton Andrea Du Rietz 20 July 2015
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RENEWABLES TARGETS THAT BITE?
Comparing renewable energy targets
with BNEF’s New Energy Outlook
Richard Chatterton
Andrea Du Rietz
20 July 2015
1
● Countries are submitting national emissions plans and targets to the UN in the run up to COP21 in Paris
at year-end. Although emission are the core component of these figures, many countries have also
articulated targets for the growth of renewable energy.
● In this Research Note we compare domestic renewable energy targets by country with the level of
renewables penetration projected in our 2015 New Energy Outlook analysis to assess how ambitious
these pledges are and whether additional policy incentives are likely to be needed in order to achieve
them.
July 2015
INTRODUCTION
Bloomberg New Energy Finance
published its New Energy Outlook (NEO)
on 23 June, our latest long-term global
forecast for the future of the electricity
system out to 2040.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
20122015 2020 2025 2030 2035 2040
Solar thermal
Small-scale PV
Utility-scale PV
Offshore wind
Onshore wind
Biomass/WtE
Geothermal
Hydro
Nuclear
Oil
Gas
Coal
GLOBAL POWER GENERATION BY TECHNOLOGY, 2012-40 (TWH)
NEO 2015 ANALYSIS
Source: Bloomberg New Energy Finance
2
Country Year Target details
BNEF
outlook BNEF verdict
Australia 2020
2020
2020
23% (notional) share of renewable (incl. hydro)
generation
33TWh large-scale, non-hydro renewables generation
4TWh small-scale renewables generation
27%
37TWh
14TWh
Australia will likely achieve its renewables
targets.
Brazil 2030 20% share of non-hydro renewable generation 35% Brazil will likely achieve its renewables
targets.
EU 2030 45% share of renewable (incl. hydro) generation 52% The EU will likely achieve its renewables
targets.
Japan 2030 22-24% share of renewable (incl. hydro) generation 28% Japan will likely achieve its renewables
targets.
China 2030 40-50% share of zero-emission generation 46% The ambition of China’s target depends on
growth in the economy as a whole.
Mexico 2024
2035
2050
35% share of zero-emission generation
40% share of zero-emission generation
50% share of zero-emission generation
32%
44%
n/a
Mexico will almost hit its 2024 target, and
likely achieve its 2035 target.
India 2022
2022
2022
2022
100GW solar capacity
60GW wind capacity
10GW biomass capacity
5GW small-scale hydro capacity
74GW
57GW
9GW
n/a
India will likely not achieve its renewables
targets.
US 2020 20% share of non-hydro renewable generation 16% The US will likely not achieve its renewables
target.
July 2015
SUMMARY TABLE
Legend: ambition level of renewable energy targets
Additional policy incentives likely needed to
achieve renewables targets.
Additional policy incentives may be needed to
achieve renewables targets.
Additional policy incentives unlikely needed to
achieve renewables targets.
COUNTRY TARGETS VS BNEF OUTLOOK
4
0
10
20
30
40
50
2012 2015 2020 2025 2030
Target large-scale renewables
BNEF large-scale renewables forecast
BNEF small-scalerenewables forecast
Target small-scale renewables
TWh
0
50
100
150
200
250
300
2012 2015 2020 2025 2030
Small-scalePV
Utility-scalePV
Windonshore
Biomass/WtE
Hydro
Gas
Coal
TWh
July 2015
AUSTRALIA
AUSTRALIA WILL LIKELY ACHIEVE ITS RENEWABLES TARGETS
We expect non-hydro, large-scale renewable generation to increase to 37TWh by 2020, exceeding the 33TWh target. This is, however,
contingent on the policy functioning as it is intended. Generation should then rise further to 53TWh in 2030. A second target of 4TWh from
small-scale renewable sources in 2020 has already been exceeded.
NEW ENERGY OUTLOOK
2015: APAC
COMPARING BNEF’S OUTLOOK WITH AUSTRALIA’S RENEWABLE ENERGY TARGET
● The government intends to increase renewable generation (including hydro) to 23% by 2020.
● For non-hydro renewables, it has set a target to increase large-scale renewable generation to 33TWh, and the target level will remain
flat to 2030. In addition to this, Australia has a notional small-scale generation target of 4TWh by 2020.
● We assume Australia will achieve its 2020 target, but there is a risk that policy design issues could cause it to undershoot. Assuming
that the policy functions, total renewable generation is expected to increase from 13% in 2012 to 27% in 2020 and 37% in 2030.
Source: Bloomberg New Energy Finance
BNEF GENERATION FORECAST, 2012-30
NEO 2015 ANALYSIS
GENERATION TARGET VS BNEF OUTLOOK, 2012-30
Q2 2015 AUSTRALIA REC
MARKET OUTLOOK
5
COMPARING BNEF’S OUTLOOK WITH BRAZIL’S RENEWABLE ENERGY TARGET
● The government has set a target to increase non-hydro renewables generation to 20% of total electricity by 2030.
● We expect the share of non-hydro renewables in the generation mix to more than quadruple to 35% over 2012-30, with wind projected
to grow the most. Hydro generation will increase in TWh but its share of generation will decline from 76% to 55% by 2030.
● Brazil will overshoot its 2030 target by 73%, as the share of non-hydro renewables in the generation mix will rise to 35%. It will reach
the target level of 20% as early as 2017.
0%
10%
20%
30%
40%
2012 2015 2020 2025 2030
Target non-hydrorenewables
BNEF non-hydro renewables forecast
0
100
200
300
400
500
600
700
800
900
2012 2015 2020 2025 2030
Small-scalePV
Utility-scalePV
Windonshore
Biomass/WtE
Hydro
Nuclear
Oil
Gas
Coal
TWh
July 2015
BRAZIL
BRAZIL WILL LIKELY ACHIEVE ITS RENEWABLES TARGETS
Brazil will likely achieve its 2030 target by 2017. Non-hydro renewables will be responsible for 35% of electricity generation in 2030,
according to our analysis, compared with its 20% target. Brazil already has one of the cleanest power sectors globally, and by the end of
next decade renewable sources (including hydro) will generate 90% of Brazil’s electricity.
BNEF GENERATION FORECAST, 2012-30
NEO 2015 ANALYSIS
GENERATION SHARE TARGET VS BNEF OUTLOOK, 2012-30
H1 2015 BRAZIL MARKET
OUTLOOK
NEW ENERGY OUTLOOK
2015: AMERICAS
Source: Bloomberg New Energy Finance
6
COMPARING BNEF’S OUTLOOK WITH CHINA’S RENEWABLE ENERGY TARGET
● The government has set a target to increase zero-emission technologies’ share of total primary energy consumption to 20% by 2030.
● The contribution of these zero-emissions technologies to the generation mix is expected to double from 23% to 46% over 2012-30.
● The relevance of China’s target will depend on how much the power sector accounts for primary energy in 2030. It accounted for 31%
in 2012. If we assume that this will increase to 40% by 2030, China will need to generate 50% of its power using zero-emission
technologies (including nuclear). Should the power sector account for 50% of primary energy, however, this target would only be 40%.
20%
25%
30%
35%
40%
45%
50%
55%
2012 2015 2020 2025 2030
Target range zero-emission technologies
BNEF zero-emission technologies forecast
0
2,000
4,000
6,000
8,000
10,000
2012 2015 2020 2025 2030
Small-scale PVUtility-scale PVWindoffshoreWindonshoreBiomass/WtEHydro
Nuclear
Oil
Gas
Coal
TWh
July 2015
CHINA
THE AMBITION OF CHINA’S TARGET DEPENDS ON GROWTH IN THE ECONOMY AS A WHOLE
China’s 2030 renewables target is not set relative to generation, but is relative to primary energy demand. The ambition of its target in
terms of generation will therefore depend on the growth of primary energy demand and the relative size of the power sector. We forecast
that zero emission sources will contribute 46% to China’s electricity generation by 2030, which is in our estimated target range of 40-50%.
DECARBONISING CHINA:
PEAK BEFORE 2030?
NEW ENERGY OUTLOOK
2015: APAC
Note: zero-emission technologies are renewables (incl. hydro) and nuclear. Source: Bloomberg New Energy Finance
BNEF GENERATION FORECAST, 2012-30
NEO 2015 ANALYSIS
GENERATION SHARE TARGET VS BNEF OUTLOOK, 2012-30
7
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2012 2015 2020 2025 2030
SolarthermalSmall-scalePVUtility-scalePVWindoffshoreWindonshoreBiomass/WtEGeothermal
Hydro
Nuclear
Oil
Gas
TWh
20%
30%
40%
50%
60%
2012 2015 2020 2025 2030
Target renewables (incl. hydro)
BNEF renewablesforecast (incl. hydro)
COMPARING BNEF’S OUTLOOK WITH THE EU’S RENEWABLE ENERGY TARGET
● The EU has set a target to increase the share of renewable energy in the bloc’s energy consumption to 27% by 2030. Meeting this
target would result in a 45% contribution of renewable power in the overall electricity mix, according to the European Commission.
● There will be growth in non-hydro renewables generation in the EU to 2030, and the contribution from other technologies will decline –
from coal in particular. Wind generation is set to more than triple over 2012-30, and its share in the mix will grow from 5% to 16%.
● We expect the EU will overshoot its target by 16%, with renewables (including hydro) accounting for 52% of generation by 2030.
July 2015
EU
THE EU WILL LIKELY ACHIEVE ITS RENEWABLES TARGETS
The EU’s target corresponds to a 45% share of renewables (including hydro) in the electricity mix by 2030, according to the European
Commission. Our outlook for renewables indicates that the EU is on track to overshoot this target, as generation from these technologies
is expected to reach a 52% share by 2030.
Source: Bloomberg New Energy Finance
EU 2030 PACKAGE –
MEANINGFUL TARGETS?
NEW ENERGY OUTLOOK
2015: EUROPE
BNEF GENERATION FORECAST, 2012-30
NEO 2015 ANALYSIS
GENERATION SHARE TARGET VS BNEF OUTLOOK, 2012-30
8
0
25
50
75
100
2012 2014 2016 2018 2020 2022
SolarBNEF
Solartarget
WindBNEF
Windtarget
BiomassBNEF
Biomasstarget
GW
0
100
200
300
400
500
600
700
800
900
2012 2015 2020 2025 2030
Small-scalePVUtility-scalePVWindoffshoreWindonshoreBiomass/WtEGeothermal
Hydro
Nuclear
Oil
Gas
Coal
GW
COMPARING BNEF’S OUTLOOK WITH INDIA’S RENEWABLE ENERGY TARGET
● The government intends to increase the installed capacity of solar to 100GW, 60GW for wind, 10GW for biomass by 2022.
● India’s power sector capacity is forecast to almost quadruple by 2030, as its power sector transforms over the next couple of decades.
This will include an additional 180GW of fossil fuel capacity over 2012-30, as well as another 314GW of non-hydro renewables.
● India is unlikely to meet its targets, despite strong renewables growth, and will struggle with the solar target in particular without
additional policies to boost renewables. We forecast 74GW of installed solar capacity by 2022, which is 26% below the 100GW target.
July 2015
INDIA
INDIA WILL LIKELY NOT ACHIEVE ITS RENEWABLES TARGETS
India has set several renewable energy installed capacity targets for different technologies. However, we forecast that India will struggle to
meet these targets as capital investment and government policy will likely favour coal. India is hoping to reach 170GW of installed solar,
wind and biomass capacity by 2022, but we only expect 140GW to be in place by then.
Source: Bloomberg New Energy Finance
H1 2015 INDIA POWER
MARKET BRIEFING
NEW ENERGY OUTLOOK
2015: APAC
BNEF CUM. INSTALLED CAPACITY FORECAST, 2012-30
NEO 2015 ANALYSIS
INSTALLED CAPACITY TARGET VS BNEF OUTLOOK, 2012-30
9
10%
15%
20%
25%
30%
2012 2015 2020 2025 2030
Government projected range renewables (incl. hydro)
BNEF renewables forecast (incl. hydro)
0
200
400
600
800
1,000
2012 2015 2020 2025 2030
Small-scalePVUtility-scalePVWindoffshoreWindonshoreBiomass/WtEGeothermal
Hydro
Nuclear
Oil
Gas
Coal
TWh
COMPARING BNEF’S OUTLOOK WITH JAPAN’S RENEWABLE ENERGY TARGET
● Government projections indicate that Japan intends to generate 22-24% of its electricity from renewables (including hydro) by 2030.
● Fossil fuels will continue to account for the majority of generation to 2030, but coal’s contribution will fall due to retirements, higher
carbon fuel tax and greater need for flexible gas generators. Nuclear generation will rise, as plants come back online over 2015-18.
● Our forecasts indicate that generation from renewables will likely exceed government projections. We expect the renewables portion
of generation to reach 28% by 2030, up from 12% in 2012. This is 16% above the government’s forecast of a 24% share.
July 2015
JAPAN
JAPAN WILL LIKELY ACHIEVE ITS RENEWABLES TARGETS
The Japanese government’s long-term energy outlook projects the level of renewables generation that can be achieved by 2030, which we
classify as the target. Our forecasts, however, indicate that renewable technologies will contribute more to the electricity mix than the
government expects. We forecast a 28% share of renewables generation by 2030, compared with the government’s range of 22-24%.
Source: Bloomberg New Energy Finance
JAPAN’S LIKELY 2030
ENERGY MIX
NEW ENERGY OUTLOOK
2015: APAC
BNEF GENERATION FORECAST, 2012-30
NEO 2015 ANALYSIS
GENERATION SHARE TARGET VS BNEF OUTLOOK, 2012-30
10
10%
20%
30%
40%
50%
2012 2015 2020 2025 2030 2035
Target zero-emission technologies
BNEF zero-emission technologies forecast
0
100
200
300
400
500
2012 2016 2020 2024 2028
Small-scalePVUtility-scalePVWindonshoreBiomass/WtEGeothermal
Hydro
Nuclear
Oil
Gas
Coal
TWh
COMPARING BNEF’S OUTLOOK WITH MEXICO’S RENEWABLE ENERGY TARGET
● The government intends to increase generation from zero-emission technologies to 35% by 2024, 40% by 2035 and 50% by 2050.
● Mexico’s power generation will grow by 49% over 2012-30, which includes a 44% increase in gas and more than 1000% growth in
non-hydro renewables. Fossil fuel’s total contribution to the energy mix, however, will decline as oil and coal generation falls.
● We expect Mexico to almost meet its 2024 target with a 34% share of renewables and nuclear generation, which is just below the
35% target. By 2035, we forecast that Mexico will overshoot its target by 18%, with clean generation reaching 47% instead of 40%.
July 2015
MEXICO
MEXICO WILL ALMOST HIT ITS 2024 TARGET, AND LIKELY ACHIEVE ITS 2035 TARGET
Mexico has set several zero-emission technology targets for the period 2024-2050. We expect renewables and nuclear electricity
production to reach 34% of total generation by 2024, which is just below the 35% target. Our forecasts also indicate that post 2024,
Mexico will increase its zero-emission generation at a faster pace than the 2035 target trajectory.
Source: Bloomberg New Energy Finance
H1 2015 MEXICO &
CENTRAL AMER OUTLOOK
NEW ENERGY OUTLOOK
2015: AMERICAS
Note: zero-emission technologies are renewables (incl. hydro) and nuclear.
BNEF GENERATION FORECAST, 2012-30
NEO 2015 ANALYSIS
GENERATION SHARE TARGET VS BNEF OUTLOOK, 2012-30
11
0%
5%
10%
15%
20%
25%
2012 2015 2020 2025 2030
BNEF non-hydro renewables forecast
Target non-hydrorenewables
0
1,000
2,000
3,000
4,000
5,000
2012 2015 2020 2025 2030
SolarthermalSmall-scalePVUtility-scalePVWindoffshoreWindonshoreBiomass/WtEGeothermal
Hydro
Nuclear
Oil
Gas
TWh
COMPARING BNEF’S OUTLOOK WITH THE US’ RENEWABLE ENERGY TARGET
● The government has set a target to increase non-hydro renewables generation to 20% of total electricity by 2030.
● The US energy mix will be dominated by fossil fuels to 2030. Coal, however, will start to come off from 2025 due to rising renewables,
falling load and increasing gas. Generation from non-hydro renewable sources will grow from 228TWh to 713TWh by 2030.
● The US is unlikely to achieve its 2030 renewables target, when not taking into account the proposed Clean Power Plan. Our forecasts
indicate that non-hydro renewable technologies will generate 16% of electricity by 2030. This is 18% below the its target.
July 2015
US
THE US WILL LIKELY NOT ACHIEVE ITS RENEWABLES TARGET
The US is unlikely to meet its 2030 non-hydro renewables target of 20% without further policy action. Our forecasts indicate that these
technologies will only contribute to 16% of generation by the end of next decade, excluding the implications of the proposed Clean Power
Plan. Therefore further policy incentives are likely necessary to achieve the desired level of renewables generation.
Source: Bloomberg New Energy Finance
NEW ENERGY OUTLOOK
2015: AMERICAS
US POWER OUTLOOK
2015
BNEF GENERATION FORECAST, 2012-30
NEO 2015 ANALYSIS
GENERATION SHARE TARGET VS BNEF OUTLOOK, 2012-30
12July 2015
RELEVANT BNEF RESEARCH
For more information click on the image below or go to https://www.bnef.com/core/new-energy-outlook
For more information click on the image below or go to https://www.bnef.com/Insight/12475
13
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COPYRIGHT AND DISCLAIMER
July 2015
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