Renewable Energy 1

Renewable energy sources (RES) provide 17 percent of the world’s primary energy. Most

renewable energy is provided by traditional biomass (9 percent) and large hydropower (6

percent). The so-called “new” renewables, i.e. “modern biofuels, wind, solar, small hydropower,

marine and geothermal energy” (UNDP, UNDESA, WEC 2000: 480) provide 2 percent of

world’s primary energy of which 1.2 percent is used to generate electric power and the rest to

produce hot water/heating, 0.7 percent, and biofuels, 0.2 percent (REN21 2005a). Despite this

modest share (or perhaps therefore) renewable energy technologies (RETs) have shown the

fastest growth rate among the different energy sources since the 1990s.

There is a discussion about how to define renewable energies. The discussion basically centers

on under what circumstances hydropower and biomass should be defined as renewable

energies. Small hydropower is universally accepted as a renewable energy, yet some countries

set the threshold for small hydropower differently - e.g. Brazil 30 MW, China 25MW, Japan

50 (Chen 2004). Lately the 10-MW-threshold seems to become the most accepted. Further, it

is discussed the convenience of including large hydropower as a renewable energy because of

the serious environmental problems and social disruptions caused by several large

hydroelectric projects. To avoid further discussion, authors and energy reports define large

hydropower as a “conventional” energy.

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The debate on biomass concentrates on whether this resource is used in a sustainable way “and

whether the use carries negative impacts on for example human health or ecological

destruction” (Chen 2004: 36). Fundamental is then the way biomass is produced, collected and
used. According to this and the efficiency of the energy conversion, biomass can be classified

in traditional and modernized use (op. cit.).

Developing countries and poorer regions are the main biomass consumers; in fact, it seems to

be a direct relation between poverty and biomass consumption. In the developing world most

biomass in the form of firewood, charcoal, crop residues, and dung is exploited in a traditional

way. These uses are almost always unsustainable ecologically and can even harm human

health. Thus, its classification as a renewable energy is controversial. Yet, biomass energy

efficiency and sustainability can be enhanced through the so-called “improved traditional

biomass energy technologies” (Karakezi, Lata, Teixeira Coelho 2004).

Modern use of biomass implies the conversion of energy contained in biomass to other forms

of energies like liquid and gaseous fuels, and electricity. This form of energy is increasing its

share in many industrialized countries. Nevertheless, world statistics usually do not make any

distinction between traditional and modern biomass making its classification as a renewable

and sustainable energy source questionable.

In this research, following the practice of the Renewable Energy Policy Network, the use of

renewable energy sources, or simply renewable energies, refers to “new” renewable energies.

Renewable energy is defined here as the

…energy…derived from natural processes that are replenished constantly. In its

various forms, it derives directly from the sun, or from heat generated deep within the

earth. Included in the definition is electricity and heat generated from solar, wind,

ocean, hydropower, biomass, geothermal resources, and biofuels and hydrogen derived

from renewable resources (IEA 2002: 9).

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Thus, the concept of renewable energy includes a broad type of sources which – with the

exception of geothermal energy – originates in the sun and/or its interaction with the earth.

Every source can be exploited through different technologies that can be used to produce the

services required by the society: electricity, heating/cooling, and transportation. In this study I

am focusing in the renewable energy technologies that generate electricity both grid-connected

and for off-grid purposes from the wind and the sun.

The first section of this chapter will describe the status, main features and development lines

of renewable energy technologies (RETs) in general. This should give a general ground for the

discussion. In the second section a more detailed look at the relevant technologies will be

taken: wind power and solar photovoltaic. In the final section, benefits of using renewable

energies will be discussed. Then, main drivers that stimulate support for renewables

worldwide will be introduced. Finally, the barriers that hinder the successful introduction of

RETs will be presented.

IV. 1. RES: Characteristics, Status, and Trends

The renewable energies’ flexible, modular nature is one their principal features. RETs can be

used for rural electrification off-grid, for stand-alone applications, or for grid extension

complementing centralized power generation, as fuel for transportation, for power generation,

or heating. Every renewable energy technology is unique in its features and trends; however

there exist common characteristics to all.

Put together, all new renewable energies have a small share in the energy mix globally. RES

have high up-front investment costs. Except biomass, RES have no fuel costs, therefore capital

cost depreciation and interest rates are the main variables influencing generating costs.

Operating and maintenance costs are low “compared to conventional power generation” (IEA
2002: 18). Generating costs for all renewable technologies have steadily fallen in the last two

decades because of increasing efficiency rates and technology improvements. Depending on

the technology, specific local conditions, and/or site renewable energies are already cost

competitive compared with traditional primary sources for power generation in the grid retail

electricity market and sometimes even in the wholesale market. For stand alone and off-grid

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purposes and applications is sometimes the most reasonable economic and environmental

option (IEA 99 and 2002, REN21 2005a, ESMAP 2005).

The picture of actors involved in renewables varies from country to country depending on

factors like the institutional structure of the respective energy sector, its history (e.g. when

were introduced RE), strength of non-government organizations, development degree of the

RE industry and connected activities (e.g. are RET imported or are they locally produced?),

consumers influence degree, etc.

In general, the set of actors involved in the renewables market includes in the first place the

government, which provides an adequate policy framework as incentives and different

measures to promote RE. Second, the renewable energy manufacturing industry constitutes a

very heterogeneous actor mostly formed by small but very enthusiastic manufacturers;

however, in the last decade large multinationals have increasingly entered the market. Third,

the RE service industry: distributors, retailers, installers, and consultants. Fourth, established

power utilities and other energy supply companies, which are starting to use or can be in the

near future the major vehicles for RE use. Fifth, the energy and environmental nongovernment
organizations, which have pushed both at the national and the global level to

increase RE share in the energy mix. Sixth, consumers of energy services, which appropriate
informed about the benefits of using RE have been and can be – especially in developing

countries – decisive for increasing their utilization (IEA 99). These actors are either pushing

(the first five) or pulling (the last one) the adoption and development of renewables (IEA

2002).

Moreover, in the most developed RE markets, RE manufacturers, service providers,

environmentalists, academics, and researchers have come together to found advocate

associations with visions that go beyond the industrial horizon. In Europe national associations

have formed Europe-wide federations while in the US national associations have state

chapters. Thus, RE advocates can present and defend their views at regional, national, and

supranational levels through public communications, publications and research (IEA 99). At

the global level several international organizations are working to disseminate RES use;

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however, “there is currently no dedicated global institution that is mandated in a

comprehensive way to assist developing countries and economies in transition with the

development of various forms of renewable energy” (WEHAB Working Group 2002:12).

At present, investment in RES is skyrocketing and some technologies are already well

established in international markets. Around the world US$ 38 billion were invested in

renewable energy capacity and installations in 2005, US$ 8 billion more than in the previous

year. That represents more or less a 15 percent of the total average annual investment in power

generation worldwide. Wind power (37 percent) took the largest share, followed by solar PV

(26 percent), solar hot water (11 percent), small hydropower (11 percent), biomass power and

heat (7percent) and geothermal power and heat (7 percent). Most investments were made in

Germany, China, the United States, Spain, Japan, and India (REN21 2005a and 2006).
Renewable energy power capacity was 182 GW in 2005. That is a 13.75 percent higher than in

2004 but it represents no more than 5 percent of the installed capacity worldwide for all power

generation. Wind energy had 59 GW, small hydro 66 GW (38.5 GW alone in China), biomass

44 GW, and grid-connected solar PV 3.1 GW. China (42 GW), Germany (23 GW), the United

States (23 GW), Spain (12 GW), India (7 GW), and Japan (6 GW) were the leading countries

(REN21 2006).

Annual growth rates of

cumulative installed capacity

are equally impressive but it

must be considered that all

renewable energy technologies

start from a small base.

Throughout the 1990s wind

power grew at 24.2 percent

annually, solar PV at 17.3

percent, and geothermal at 4 percent. Conventional primary sources grew at an annual rate that

ranged between 1.9 percent (natural gas) and -0.5 percent (coal). During the six-year-period

Source:

REN21

Figure IV. 1: Renewable Energy Contribution to Global

Primary Energy, 2004

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from 2000 to 2005 solar PV grew on average annually 63 percent and wind power 27 percent.
Other more mature renewables like small hydro and geothermal grew on average between 2

percent and 4 percent (own calculations based on REN21 2005a and 2006). Thus, not all

renewable energy technologies show a similar increase pace. Depending on their maturity

renewable energies describe three growth patterns (IEA 2003, WWI 2000):

• Traditional, mature technologies like small hydropower, geothermal power, and

biopower grow at an annual rate ranging between 1percent and 9percent.

• New established technologies like wind power and solar PV depict a vigorous annual

growth rate ranging between 20percent and 40percent.

• New technologies that still have to prove their performance like concentrating solar

power electricity which was introduced about two decades ago but interest subsided for

about a decade.

No source of energy managed ever to establish without state support. The renewables’

impressive annual growth rates worldwide correlates with the supportive policy environment

for the industry introduced in many countries (see next chapter). Besides environmental

considerations, one of the main causes of the increasing government support of renewables is

their high potential for creating jobs. All RETs can create “more jobs per unit of energy

produced and per dollar spent than fossil fuel technologies do” (Renner 2000, WWI 2006: 10).