As of end-2015, at least 173 countries had renewable energy targets, and at least 146 had renewable energy support policies at the national or state/provincial level (REN21 2016). While policy design has evolved to continuously encourage the rapid deployment of renewable electricity, equal attention to renewable heat and transport has been lacking.
The most significant policy development over the last few years has been the shift from government set feed-in tariffs (FITs) to competitive auctions with long-term power purchase agreements (PPAs) to deter-mine remuneration for utility-scale renewable power. FIT policies have improved the economic attractiveness of some renewables compared with conventional technologies — driving their initial deployment, tech-nology innovation, and cost reductions, especially for onshore wind and solar PV. But government-set FITs without volume control measures have, in some countries, failed to capture faster-than-expected tech-nology cost reductions and resulted in costly deployment. Although some renewable technologies (onshore wind and solar PV) no longer need high direct financial incentives to attract new investment, they still require a market framework that ensures long-term revenue certainty.
Competitive auctions with PPAs have emerged as the policy option that balances the needs of the investor, by providing a long-term remunera-tion, and the government, by using a competitive price-setting mecha-nism to control support costs.
In 2015 alone, 64 countries held auctions for renewable power (REN21 2016). By 2016, record-low prices were observed in winning bids for solar PV in the United Arab Emirates and Zambia (Dobrotkova, Audi-net, and Sargsyan 2017), onshore wind in Morocco, and offshore wind in the Netherlands. Several technology-neutral auctions delivered winning solar PV and onshore wind bets at record-low prices, particularly in Latin America.
The prices achieved through auctions in some markets suggest that the levelized cost of energy for some renewable energy technologies (mostly for onshore wind and solar PV) have become comparable to fossil fuel alternatives in some geographies (box figure 1). But this com-parable cost does not directly imply that these technologies are fully
competitive. Competitiveness assessments should also consider the time and location of generation and grid-integration costs. Such ele-ments address the “system value” of electricity and are being considered in the next generation of policy designs intended to help integrate vari-able renewvari-ables (IEA 2016d, World Bank 2017).
Meanwhile, policy developments in the heat and transport sectors continue to be insufficient to stimulate rapid deployment of renewable technologies in the face of lower fossil fuel prices. Renewable heat mar-kets are localized and complex, and face multiple economic and non-economic barriers that require targeted policy support. For transport, support policies have focused mainly on biofuels (REN21 2016) though electric vehicles are receiving increased attention, as demonstrated by their rapid deployment in recent years.
BOX FIGURE 1 Renewables have become mainstream in many geographies
Policy support mechanisms at different phases of deployment journey
Loan guarantees
Current renewable energy deployment point in many geographies
Generation prices and deployment
Time Initiation Take-off
Capital grants
Tradable green certificates Feed-in premiums Auctions/tenders
Feed-in tariffs Tax incentives/reliefs
International benchmark prices Mainstreaming
Source: IEA 2015.
Source: IEA 2015; IEA 2016d; REN21 2016; World Bank 2017; Dobrotkova, Audinet, and Sargsyan 2017.
ANNEX 5.1 DEFINITIONS AND METHODOLOGY
Global Tracking Framework 2017 Renewable Energy Definitions Total final energy consumption (TFEC) (in
terajoules [TJ]) Total final consumption of all energy sources excluding nonenergy uses of fuels
Renewable energy consumption (in TJ) Final consumption of all renewable energy technologies: hydro, solid biomass, wind, solar, liquid biofuels, biogas, geothermal, marine, and renewable wastes
Wind energy consumption (in TJ) Final consumption of wind energy Hydro energy consumption (in TJ) Final consumption of hydro energy
Solar energy consumption (in TJ) Final consumption of solar energy, including solar photovoltaic (PV) and solar thermal (electricity and heat)
Geothermal energy consumption (in TJ) Final consumption of geothermal energy (electricity and heat)
Liquid biofuels consumption (in TJ) Final consumption of liquid biofuels, including biogasoline, biodiesels, and other liquid biofuels Biogas consumption (in TJ) Final consumption of biogas
Renewable waste energy consumption (in TJ) Final consumption of renewable municipal waste Marine energy consumption (in TJ) Final consumption of marine energy
Modern biomass consumption (in TJ) Final consumption of modern biomass. Modern biomass is defined as all uses of solid biomass not considered traditional (e.g., consumption of wood pellets in efficient stove, biofuels or biogas consumption).
Traditional consumption/use of biomass (in TJ) Final consumption of traditional uses of biomass. Biomass uses are considered traditional when biomass is consumed in the residential sector in non–Organisation for Economic Co-operation and Development (OECD) countries. It includes the following categories in International Energy Agency statistics: primary solid biomass, charcoal and nonspecified primary biomass, and waste.
Note: This is a convention, and traditional consumption/use of biomass is estimated rather than measured directly.
Modern renewable energy consumption (in TJ) Total renewable energy consumption minus traditional consumption/use of biomass
Methodology
In the Global Tracking Framework 2013 (GTF 2013), it was decided that the monitoring of renewable energy for global tracking purposes should occur as close as possible to the final energy use to remove the influence of the assumptions on the primary energy equivalent for noncombustible sources. This approach corresponds to accounting for renewable energy at the final energy consumption level of the energy balance. The indicator chosen and the methodology developed to calculate it are described below. International Energy Agency statistical data and United Nations Statistics Division data serve as the underlying data used to calculate the indicator. The full
methodology — outlined step by step, flow by flow — is explained in GTF 2015. A brief over-view of the calculations now follows.
Calculating the renewable energy share indicator
The indicator used in this report to track RE within an energy system is the share of RE in TFEC and is expressed as a percentage (%RENTFEC).
This share is calculated as the ratio of final energy consumption of renewables after allo-cation (AFECREN) to TFEC, calculated from the flows in the energy balances.
The denominator (TFEC) is calculated as the sum of total final consumption minus
nonenergy use for all energy sources, or equally, the sum of the energy consumed in the indus-try, transport, and other sectors. The numerator (AFECREN), by contrast, is not a direct summa-tion of the underlying raw data but a series of calculations reflecting the fact that monitoring occurs at the final energy level. At this level in the energy balance, electricity and heat are secondary energy obtained by different primary energy sources, of which some are renewable.
Assumptions need to be made in order to fully account for the renewable component of such secondary sources. It was decided to allocate the final consumption of electricity and heat to renewables based on the share of renewables in gross production.
90 • SUSTAINABLE ENERGY FOR ALL GLOBAL TRACKING FRAMEWORK Progress toward Sustainable Energy 2017
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