Renewable Energy Has Political Support, Room To Grow

Renewable energy sources enjoy growing political support and have plenty of room to grow in the worldwide energy mix.

And grow they will, according to most projections.

The U.S. Energy Information Administration's (EIA's) International Energy Outlook 1997 says consumption of hydroelectricity and other renewables will increase by 56% during 1995-2015. The renewable share of the total energy mix will remain at about current levels, however.

The EIA projection includes only renewable fuels used in the generation of electricity. It therefore excludes most biomass energy, which the International Energy Agency (IEA), Paris, calls "by far the most important renewable energy source in world energy supply."

Despite the importance of biomass energy, data on consumption of it are sparse. IEA estimates that in the industrialized world, represented by members of the Organisation for Economic Cooperation and Development, the biomass share of primary energy consumption amounts to 3.5%.

But most biomass energy consumption occurs in regions other than the OECD, the former Soviet Union (FSU), and Central and Eastern Europe. In the areas of highest biomass use, good data on consumption are not available.

Also excluded from EIA's projection because of insufficiency of data are "dispersed renewables," a category that includes energy consumed at the site of production, such as solar panels used for water heating.

Small share

Despite its strong percentage growth, energy from hydroelectricity and other renewable sources will continue to represent only 8% of an expanding world energy market, according to the EIA forecast (Fig. 1 [27,304 bytes]).

The costs of installing and generating electrical power from renewable sources have fallen, EIA notes, but not as rapidly as those of energy from fossil fuels.

Because of environmental concerns, however, many countries subsidize renewable energy. Such support is likely to grow as concerns mount over climate changes possibly caused by carbon dioxide released into the atmosphere from combustion of hydrocarbons.

Wind is among the fastest-growing renewable energy sources for electricty generation.

EIA notes large cost declines for wind-based electricity generation in the U.S. (Fig. 2 [19,163 bytes]). By 2010, it says, the cost may be as low as 2¢/kw-hr if favorable project financing is available.

Key growth areas for wind energy are the U.S., India, China, Germany, and Spain, IEA says, citing data from the American Wind Energy Association (Table 1 [8,572 bytes]).

Under a base case that assumes 3.1%/year economic growth-2.5%/year for industrialized countries and 4.7%/year in the developing world-EIA projects total world consumption of hydroelectricity and other renewable energy in 2015 at 46 quadrillion BTU (quads).

With higher economic growth rates, consumption of these forms of energy might reach 51 million quads by 2015. Under lower growth assumptions, consumption would not exceed 40 million quads.

Regional trends

In the EIA base case, consumption of hydroelectricity and other renewable energy used in power generation will reach 26 quads in 2015 in industrialized nations. The growth rate, however, will be only about 2%/year.

Growth will be fastest in countries offering strong incentives, including the U.K. and Germany.

In developing nations of Asia, growth in renewable fuel consumption will average almost 5%/year, EIA says, mainly because of large hydroelectric plants under construction.

India's use of renewables will grow at the rate of 7%/year and cover a variety of fuel types: wind, some photovoltaics, and some hydropower. The Indian government provides incentives for installation of renewable energy facilities.

In the FSU and Eastern Europe, growth in use of renewable energy will average only 1.4%/year through 2015, with most occuring in East Europe as hydroelectric facilities are upgraded and repaired. Continued economic weakness hampers growth of renewables in the FSU.

North American activity

Total consumption of hydroelectricity and other renewables for power generation in the U.S., Canada, and Mexico, at 10.5 quads, accounted for more than 60% of all renewable consumption among industrialized countries in 1995. EIA expects North American renewable use to climb to 16 quads by 2015 (Fig. 3 [25,167 bytes]).

c Biomass leads U.S. renewable consumption for power generation. Electrical energy from biomass will climb to almost 76 billion kw-hr in 2015 from less than 47 billion kw-hr in 1995, mostly from cogeneration in the wood and paper industries. Hydroelectricity's share of total U.S. power generation will fall to 7% in 2015 from 9% in 1995.

Installed capacity for power generation from wind in the U.S. will grow to 5.4 gigawatts in 2015 from 1.8 gigawatts in 1995 under EIA's base-case assumptions. Wind projects, now concentrated in the West and South, are planned in the U.S. Northeast and in Washington, Wyoming, Iowa, and Minnesota.

Hydroelectricity dominates Canada's consumption of renewable energy. But a joint venture involving Japanese and Danish companies plans to build a 100 megawatt wind farm on the Caspe Peninsula from which Hydro Quebec will buy electricity at an initial price of 5¢/kw-hr (Canadian).

Mexico expects to double its use of hydroelectricity and other renewable energy during 1995-2015 to 1 quad. Planned projects will add 47 megawatts of wind capacity this year and 127 megawatts of geothermal capacity during the next several years. Mexican geothermal capacity now totals 753 megawatts.

Mexico has one wind farm at present, a 2 megawatt facility called La Venta. Entec SA, the Mexican wind company, is building two wind projects, one with capacity of 20 megawatts and the other with capacity of 27 megawatts.

Western Europe

Wind accounts for most growth of renewable energy use in Western Europe, where hydroelectricity potential is well-developed. EIA expects West European renewable consumption to exceed 7 quads by 2015.

A European Union study has projected that offshore wind facilities could produce all the electricity needed by Germany, Denmark, and the Netherlands. Interest in offshore plants has increased in response to rising concern about the aesthetics of land wind farms.

PowerGen of the U.K. plans to build a 37 megawatt offshore facility.

Growth in wind power generation in the U.K. comes from funding assistance provided by legislation aimed at boosting renewable energy and reducing consumption of fossil fuels.

Denmark's energy strategy calls for 10% of the country's electricity to come from wind by 2005 and 35% eventually.

Germany's rapid growth in electricity generated from wind stems from incentive legislation that has run into opposition on constitutional grounds. The law requires utilities to buy electricity generated from wind at 90% of its retail price, which EIA says was about 12¢/kw-hr in 1996.

France and Luxembourg also have begun programs to support installation of wind electricity facilities.

Asian developments

Use of renewable energy varies in industrialized Asia.

New Zealand generates more than 75% of its electricity from renewable sources, mostly hydropower and geo thermal. It has opened a 3.5 megawatt wind turbine station at Haunui and plans a wind farm with initial capacity of 30 megawatts at Aokautere.

Australia generates 80% of its electricity in coal-fired plants and only 11% from renewables, all hydropower. As part of an initiative to reduce emissions of greenhouse gases, the government has begun a program to support development of renewable energy.

Japan's government has supported research and development of renewable energies since the 1970s but lately has become more insistent that projects produce returns on the investment.

EIA says Japan's Ministry of International Trade and Industry has spent more than $463 million on a program to promote solar power, coal liquefaction, and other projects.

In developing Asia, rapid economic growth and burgeoning needs for electricity have stimulated development of renewable energy sources.

Largest among several hydroelectric projects under construction in China is the 18.2 gigawatt, $30 billion Three Gorges Dam. Completion is expected in 2009. Wind capacity in China grew 23% during 1995-96 to 36 megawatts.

"There is potential for China to become one of the fastest growing markets for wind power over the next 10 years," EIA says.

India had 565 megawatts of installed wind capacity in 1995 and 1.8 gigawatts of wind capacity in various stages of planning. The country has estimated potential wind capacity of 4 gigawatts in 77 sites.

Although high costs and environmental concerns limit the amount of hydropower potential that India likely will develop, EIA notes that 11.3 gigwatts of hydroelectricity capacity is planned in plants ranging in size from 25 megawatts to 2.9 gigawatts.

The Indian government reports growth in photovoltaic use, mostly in the form of dispersed renewable energy, in response to a range of incentives.

Efforts to develop hydroelectric potential are under way in Malaysia, Viet Nam, Laos, and Thailand.

Rest of the world

In the rest of the world, most renewable energy comes from hydro projects.

Hydroelectricity, for example, is the main source of power generation in Central and South America. EIA says 80% of the regions' net electricity consumption came from hydro sources in 1995, totaling 467 billion kw-hr. Of that total, 245 billion kw-hr was used in Brazil.

Argentina plans to build several hydroelectric plants. The largest one of those projects under construction is the partly complete 2.7 gigawatt Yacyreta facility, a joint venture of Argentina and Paraguay. Most of the output will be exported to Brazil.

Venezuela plans to raise hydroelectric generating capacity on the Lower Caroni River from 13 gigawatts in 1995 to 17.25 gigawatts by 2010. Development of 8.5 gigawatts of capacity on the Upper Caroni River is under study.

Chile's electric utility has finished the 225 megawatt Pangue hydroelectric dam on the BioBio River and is working on the 570 megawatt Ralco dam.

In Eastern Europe and the FSU, energy from hydroelectricity and other renewables will grow from 3.1 quads to 4.1 quads during 1995-2015, according to EIA projections. Nonhydro renewable projects have been limited mainly to small geothermal and wind pilots.

In Eastern Europe, hydroelectricity has strong shares of power markets only in Romania (23%) and Slovakia (13%). Most potential for hydro development is in Albania, Bulgaria, Romania, and the former Yugoslav republics.

In Russia, the potential for development of wind energy is especially strong in remote northeastern and far southern parts of the country now lacking electrical service.