IRENA May Bulletin - Strategic Overview

The first quarter of 2018 showed that global cooperation to advance the energy transformation is accelerating.

In January, IRENA held the Eighth Session of the Assembly, where almost 1,200 delegates confirmed that the transition to sustainable energy has never been more important or relevant. In the weeks and months following, a series of international forums such as the 2018 World Government Summit in Dubai and the Global Conference on SDG7 in Thailand confirmed that global cooperation to advance the energy transformation is picking up pace. The SDG7 conference marked the start of a review of SDG7, culminating at the UN High-Level Political Forum on Sustainable Development in July, where IRENA will chair a panel to examine the role of renewable energy in meeting a wide spectrum of sustainable development challenges.

The first quarter of 2018 saw notable developments in a number of key markets. China, which installed 60% of all new renewable energy capacity worldwide in 2017, continues to make rapid progress, and the IRENA Director-General’s discussions in March in Zhangjiakou with Xu Qin, the Governor of Hebei Province, only reinforce this. IRENA has been asked to help the city deliver a low-carbon 2022 Winter Olympics, at the same time turning Zhangjiakou into China’s first energy transition pilot city. IRENA has also partnered with China State Grid Corporation to support grid system development in developing countries, building on China's experience of connecting more than one billion people to the grid.

India also saw progress during Q1, signing its biggest-ever renewable energy deal, with the acquisition of Ostro Energy by ReNew Power, to create a company with more than 5,600 MW of domestic renewable power generation capacity.  News that the country is looking to develop its first-ever offshore wind farm, a 1 GW project off the coast of Gujarat is also significant, as was the first summit of the International Solar Alliance in March, which the IRENA Director-General attended.

For renewables to grow in the country, however, India’s grid infrastructure must be strengthened, and the investment climate supported to bring down the cost of finance.  IRENA’s new joint report with the International Energy Agency and Ren21, Renewable Energy Policies in a Time of Transition, is a useful tool in this respect.  It provides policymakers with a comprehensive understanding of the diverse policy options available across various country contexts, technologies, and market structures.  Progress on renewables is critical to reduce water withdrawal intensity for electricity generation in India, as our recent joint study with the World Resources Institute shows. 

Pakistan, where IRENA launched the country’s Renewables Readiness Assessment (RRA) in April, has a significant, yet untapped, renewables potential, also stands to benefit from the report. The RRA shows the importance of IRENA continuing to provide tailored solutions to transition planning that strengthen the enabling environment and consider how to support multiple economic, social and environmental objectives.

The March announcement that Japan’s SoftBank is backing Saudi Arabia to build a solar power project so huge that it is 100 times as large as the next largest currently planned project, set the stage for an important series of discussions that the IRENA Director-General had in Tokyo recently with Ministers, government officials and private sector representatives.  As Japan navigates its place within the global energy transformation it faces a paradox of being the world’s biggest financier of foreign renewable energy projects and one of the world’s top three cleantech hubs, while having domestic renewables penetration below other developed countries. As we highlight in the below article, however, the country’s boundless capacity for innovation is opening new possibilities for renewable energy growth.  

IRENA launched the European Union REmap study in February, in cooperation with the European Commission, where we found that the EU could cost-effectively double the renewable share in its energy mix to 34% in 2030.  IRENA launched the report in Brussels with EU Climate Action and Energy Commissioner Miguel Arias Cañete, who, as the below article shows, views the Paris Agreement and global energy transformation as an opportunity for Europe.  The study’s findings are an important door opener for renewables businesses in Europe, part of an overall picture of significant economic gains that the energy transformation can bring in the region. News that Scotland’s Hywind, the world’s first floating wind farm, is exceeding performance expectations will further support growth of European renewables manufacturing.

In Latin America, new applicant for IRENA Membership Brazil announced the lowest-ever wind pricesrecorded in the country in April at US$20.23/MWh. Brazil was one of the largest installers of new renewable power generation capacity in 2017 and, as former President of Brazil Fernando Affonso Collor de Mello pointed out during a recent visit to IRENA, Brazil is serious about showing leadership in renewables, including through stronger engagement with the Agency. In Mexico, a portion of Enel’s massive new solar PV park in Coahuila state came online which, when completed, will be the largest solar PV farm on the continent, generating around 1,700 GWh of electricity each year. Globally, solar installations are on pace to surpass last year’s record-breaking 94 gigawatts (GW) of new capacity.

IRENA’s new study, Renewable Energy Auctions in Sub-Saharan Africa, finds that auctions can be a successful means of bringing down renewable energy prices in the continent. This builds on knowledge from the IRENA workshop, risk mitigation in structured finance in Africa.  Renewables financing in Africa was given a further boost with a new US$1 billion renewable energy facility for Sub-Saharan Africa from the African Trade Insurance and European Investment Bank. With no shortage of innovative new renewable projects, like the continent’s first floating solar PV plant in Seychelles, or the two new IRENA/ADFD-backed solar PV projects in Mauritius and Rwanda, African policymakers have a lot of momentum behind them.

Finally, during the first quarter of 2018 renewables in transport received a significant boost with the adoption, for the first time, of a climate change strategy in line with the Paris Agreement from the International Maritime Organization.  Backed by legally-binding measures, it aims to halve shipping emissions by 2050.  This will call for a much larger supply of biofuels, and, as we explore in the below article, it is possible to sustainably meet this demand.

If the first quarter of this year is any indication, global progress on renewables is proceeding at lightning speed.  A new energy system is taking shape that offers more transparency and freedom of choice for consumers, as well as the necessary tools to include and protect the most vulnerable. In doing so, it is enabling economic and social progress in communities that considered energy access an unattainable goal only a decade ago.

This will have a profound impact, far beyond the energy sector. The Global Commission on the Geopolitics of Energy Transformation, launched earlier this year, will examine the immediate and long-term geopolitical implications of the global energy transformation, and will report its findings at the 9thSession of the IRENA Assembly in January 2019.