Renewables 2018

Analysis and forecasts to 2023

Heat

Heat is the largest energy end‑use. Providing heating for homes, industrial purposes and other applications accounts for around 50% of total energy consumption. Just over half of heat produced was consumed in industry – for example, for process heat, drying and industrial hot water uses. Another 46% was used for space and water heating and cooking in the buildings sector. The remainder was used in agriculture. In 2017, only 10% of heat was produced from renewables.

Renewable heat consumption is expected to grow 20% between 2018 and 2023, with bioenergy contributing the most. However, this would increase the share of renewables in the heating sector to only 12% by 2023, highlighting the need for more policy action to deliver greater deployment. Most renewable heat is currently produced from bioenergy although in recent years there has been a significant expansion in solar thermal, geothermal, and the use of renewable electricity for heat.

Two-thirds of global renewable heat growth to 2023 is expected to take place in China, the European Union, India, and the United States. Targets and policies are important drivers for renewable heat growth. Over the last year, the European Union has agreed on a new target for renewable heat, while China has released a new clean heating plan. A number of countries have extended support measures or introduced new ones. However, despite some positive developments, fewer countries have policies for renewable heat than they do for renewable electricity and transport. 

Renewable heat consumption by source, 2017 and 2023

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Renewable heat consumption by country/region, 2017-2023

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Modern bioenergy – which excludes the traditional use of biomass – produced almost 70% of direct renewable heat in 2017. Bioenergy penetration is higher in industry than in buildings. It currently meets 8% of industrial heat demand, mostly in sectors that produce biomass waste and residues.

Bioenergy consumption in industry is anticipated to grow 13% by 2023. There is significant untapped potential to increase bioenergy use in the cement subsector and in the sugar and ethanol industry. Around two-thirds of bioenergy used in cement production is from waste. In the cement sector, projected growth of almost 40% will raise the share of bioenergy from 5% of the sector’s energy demand to 7% by 2023. In addition, a further increase to 13% could be achieved if key cement producing countries were to introduce robust frameworks for waste management.

Renewable energy generation from the sugar and ethanol industry could be significantly increased if all sugar cane-cultivating countries exploited the potential of high-efficiency co-generation, sugar cane straw, and new energy cane varieties.

In buildings, bioenergy use grows 8% to 2023, less than the 16% growth seen in the past six-year period. In the residential sector, the European Union accounts for an even greater share of global bioenergy consumption (54%), with France, Germany and Italy consuming the most. Italy leads the European pellet stove market. The United States remains the largest single consumer of bioenergy in the buildings sector.

Modern bioenergy consumption for heat by end-use sector, 2012-2023

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Most solar thermal systems are small-scale systems for domestic water heating. These systems have seen rapid growth over recent years, especially in China. While the Chinese market has slowed down, cumulative solar thermal capacity still grew 3.5% in 2017 to reach 472 GWth – or 20% higher than the total installed solar PV capacity in power generation. Over the outlook period, solar thermal consumption in buildings is expected to rise more than 40% to 46 Mtoe by 2023.

While individual solar water heating installations dominate the global market, large-scale solar thermal plants connected to district heating systems or to large buildings have been expanding in several countries, led by Denmark. By the end of 2017, roughly 300 large-scale (>350 kWth) solar thermal systems were in operation, with a total capacity of 1 140 MWth. The economics of such large-scale systems are generally more favourable than for smaller systems.

There is also vast potential for using solar thermal in industrial applications, especially in regions in which low-temperature heat demand is growing for industrial uses such as foods and beverages, textiles, agriculture, and chemicals. 2017 was a record year for solar heating in industrial processes, with 124 projects in 17 countries adding over 130 MWth (an increase of 46%), led by the first 100‑MWth phase of the Miraah project for enhanced oil recovery in Oman.

Solar thermal consumption growth in buildings in selected countries, 2012-2023

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Solar thermal gross capacity additions, 2006-2017

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Only a limited number of countries use geothermal energy directly for heat production, with China and Turkey alone accounting for 80% of consumption in 2017. Over 2012-17, global consumption almost doubled, mostly due to rapid growth in China. Over the outlook period (2018-23), growth is expected to be lower at 24% but to remain important in a number of countries and sectors.

While most geothermal heat is used for bathing (45%) and space heating (34%), agriculture (primarily for heating greenhouses) has long been an important end-use sector in some countries. Over recent years, the energy-intensive greenhouse sector in the Netherlands has expanded geothermal use due to strong policy support, and the country has become the fourth-largest user of geothermal heat in the agriculture sector after China, Turkey and Japan.

Elsewhere, new geothermal heat developments have focused mainly on district heating. In the European Union, nine plants were put into operation in 2017, with 75 MWth of new capacity in France, Italy and the Netherlands.

Geothermal energy consumption for heat by end-use sector, 2012-2023

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Electricity accounts for around 7% of global heat demand, mostly in buildings. Electrification of industrial processes is gaining in popularity, while the use of heat pumps in buildings is becoming more widespread. The use of electricity for heat is expected to grow 20% in the industry sector and 11% in buildings through 2023. With this growth, renewable electricity for heat is expected to have the second-largest absolute growth after bioenergy. This is because 1) the use of electricity to produce heat is increasing at a faster rate than total heat consumption growth, and 2) the share of renewables in the electricity sector is expanding rapidly.

The number of efficient heat pumps, which mostly run on electricity, has also been increasing. Annual heat pump sales around the world more than doubled, from 1.8 million units in 2012 to over 4 million in 2017, with year-on-year growth of 30%. More than 90% of this growth was in China, with most of the rest in the European Union, Japan and the United States. In the European Union, heat produced by heat pumps counts as renewable, subject to certain energy performance requirements.

Cooling currently accounts for 6% of energy consumption in the buildings sector but is growing rapidly. Cooling is mainly supplied by electric fans or air conditioners, although some direct renewable cooling options exist (for example, large-scale solar thermal collectors combined with adsorption chillers). For small and medium-sized cooling systems, the combination of solar PV and air conditioners/reversible heat pumps offers great potential since solar PV generation and cooling demand operate in a complementary way.

Renewable electricity consumption for heat by end-use sector, 2012-2023

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