Renewables 2019

Market analysis and forecast from 2019 to 2024
Renewables 2019

Heat

Summary

Accounting for 50% of global final energy consumption in 2018, heat is the largest energy end-use and contributes 40% of global carbon dioxide (CO2) emissions. About 50% of total heat produced was used for industrial processes, another 46% was consumed in buildings for space and water heating and, to a lesser extent, for cooking, while the remainder was used in agriculture, essentially for greenhouse heating.

Fossil fuels continue to dominate heat supplies, while modern renewables (i.e. excluding the traditional use of biomass) met only 10% of global heat demand in 2018. Renewable heat consumption expands 22% during the outlook period (2019‑24), with its share reaching 12% by 2024. Overall, this projected deployment is not in line with global climate change targets. Greater ambition and stronger policy support are needed to ramp up the use of renewables for heat and to improve energy efficiency in both buildings and industry.

Renewable heat consumption, 2007-2024

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Bioenergy remains by far the largest renewable heat source and is expected to lead growth with a 12% (1.7 EJ) increase during 2019-24. The industry sector consumes two-thirds of total modern bioenergy, mainly for industrial processes.

Owing to the combination of heat electrification and the increasing penetration of renewables in the power sector, renewable electricity use for heat increases 41% (1.6 EJ) globally over the period, showing similar absolute growth to bioenergy, with buildings accounting for more than two-thirds of it. 

Following rapid deployment during 2005-13, solar thermal market growth has since slowed, with a decline in new capacity additions for the fifth year in a row last year due to shifting market dynamics in China. Despite this slowdown, solar thermal heat consumption is expected to remain strong at an increase of almost 50% (+0.7 EJ) over 2019-24, of which 90% will be in buildings owing to relatively low costs. 

Although the direct geothermal share in global renewable heat consumption remains limited, it is projected to increase more than 40% (+0.3 EJ) over the outlook period, with China, the United States and the European Union together responsible for more than 80% of additional consumption.

Growth in renewable energy consumption for heat, 2013-2024

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Renewable heat consumption by technology for selected countries, 2012-2024

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Policy attention and support for the uptake of renewables in the heating and cooling sector remains limited despite its large share in final energy consumption. Very few national heat policies were implemented, revised or extended in 2018, and new policy developments for renewable heat in industry were scarce.

However, at the subnational level an increasing number of cities and local governments are using their regulatory and purchasing authority to encourage the use of renewables through municipal mandates and policies for buildings, and through their management of urban district networks. Given the local nature of the heat sector, subnational governments have a key role in scaling up renewables use for heat.

Modern bioenergy

Modern bioenergy accounted for more than two-thirds of global renewable heat consumption in 2018, with a higher penetration in industry than in buildings. Bioenergy is expected to lead renewable heat expansion, its use rising 12% during 2019‑24, with almost two-thirds of this increase in industry.

Bioenergy consumption for heat, world, 2012-2024

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Growth in bioenergy consumption, 2013-2024

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In the industry, the majority (86%) of renewable heat used is bioenergy, used mostly in sectors that produce biomass waste and residues (i.e. pulp and paper, wood products, food and tobacco, and sugar and ethanol). Its contribution is projected to increase from 8.9 EJ in 2018 to 10 EJ in 2024 (+12%); however, its share in industrial heat consumption remains under 9% because global industrial heat demand is expected to grow strongly.

Owing to the extensive use of bagasse in its sugar, ethanol and food industries, India is expected to nearly catch up with Brazil as the largest industrial bioenergy consumer by 2024, whereas the United States, using considerable bioenergy in its pulp and paper industry, remains the third-largest consumer. The largest absolute increases in industrial bioenergy heat consumption are anticipated to come from India (+296 PJ) and China (+195 PJ), particularly in the cement industry for the latter, with notable expansion in the European Union as well (+80PJ).

In buildings, direct and indirect uses of bioenergy together account for roughly half of total renewable heat consumption globally. Modern bioenergy use has increased only 10% globally in the past decade, due partly to a lack of policy support. With 9% growth expected during 2019‑24, modern bioenergy contributes less than one-fifth of the 2.6 EJ growth in buildings sector renewable heat consumption. Nonetheless, it remains the main renewable heat source over the next six years.

The European Union is expected to be responsible for more than half of the increase in bioenergy consumption in buildings, owing to the deployment of woodchip and pellet stoves as well as bioenergy consumption for district heating. Indeed, EU bioenergy use in buildings rises 0.28 EJ over the outlook period, to meet 20% of overall building heat demand, stimulated by the updated RED’s indicative target for member states to increase the share of renewable energy in heating and cooling by 1.3 percentage points per year. Following the European Union, the United States consumption of bioenergy in buildings is expected to increase 14% (+60 petajoules) during 2019-24 owing to various state-level incentives.

Solar thermal

Having expanded 82% since 2013, solar thermal energy accounted for around 7% (1.5 EJ) of global renewable heat consumption in 2018, with most applications being small-scale thermal systems for domestic water heating. However, gross annual capacity additions registered a decline for the fifth year in row.

This decline is attributed mostly to China, which still dominates the market, and where reduced construction activities for new buildings, market saturation and competition with electric systems (e.g. heat pumps) are curtailing demand for new systems. With system replacement accounting for a substantial part of gross additions, cumulative global operating capacity increased by just 1.4% (6.5 GWth) in 2018, reaching an estimated 480 GWth at the end of the year.

Solar thermal gross capacity additions, 2006-2018

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Global solar thermal consumption is expected to increase more than 45% (+620PJ) over the outlook period, mostly in buildings, of which it is expected to meet 2.2% of the heat demand in 2024. With solar thermal expansion supported by current government targets to 2020 as well as by incentives aimed at controlling air pollution under the 13th FYP, China is still expected to account for 40% of this growth, followed by the United States and the European Union. Significant acceleration is also expected in the Middle East and North Africa, as well as in India, Brazil and Mexico.

Although its current share in global industrial heat demand is still negligible (less than 0.02%), solar heat for industrial processes (SHIP) continues to be an expanding niche market. In 2018, at least 108 new systems (about 37.6 MWth) were commissioned, bringing the worldwide installed capacity to 567 MWth (+7%) at the end of the year.

Growth in solar thermal consumption in selected regions, 2013-2024

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Geothermal

Meeting about 0.3% (0.13 EJ) of global heat demand, direct geothermal, although on the rise, is currently the smallest renewable heat source. Deployment of geothermal systems remains confined to a limited number of countries, with China and Turkey alone accounting for about 80% of global geothermal heat consumption in 2017 and responsible for most of the growth in recent years.

Worldwide installed thermal capacity expanded by an estimated 1.4 GWth in 2018, totalling 26 GWth at the end of the year. Direct geothermal use is projected to increase more than 40% (+0.3 EJ) globally over the outlook period, with almost two-thirds of this growth in China (where air pollution concerns are expected to stimulate the development of geothermal district heating) and the United States.

In the European Union, direct geothermal energy consumption is anticipated to increase almost 270% during 2019 24, albeit from a small basis, with district heating remaining a key application. Policy support in the form of risk guarantees (e.g. available in France and the Netherlands) or investment grants (e.g. available in Poland) can help mitigate the investment risks associated with high upfront costs and uncertain drilling operation outcomes.

Direct use of geothermal energy, world, 2012-2024

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Growth in geothermal energy consumption in selected countries, 2018-2024

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Renewable electricity for heating and cooling

The amount of renewable electricity used for heat is projected to increase 41% over the projection period, accounting for one-fifth of global renewable heat consumption by 2024 as the share of renewables in electricity generation rises and more electricity is used for heat generation. In absolute terms, this increase (two-thirds of which is in buildings) is almost equivalent to bioenergy expansion.

Renewable electricity consumption for heat for selected countries/regions, 2012-2024

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Growth in renewable electricity for heat, 2013-2024

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China, the European Union and the United states together are responsible for almost two-thirds of this growth. Drivers vary across regions, however: in China, renewable electricity consumption for heat increases as heat production is electrified and electrically driven heat pumps become more widespread. In the European Union and the United States, rapid expansion in the share of renewables is the key reason for higher renewable electricity consumption for heat. 

Factors contributing to higher renewable electricity use in selected regions, 2013-2024

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Following bioenergy, renewable electricity is the second-largest renewable heat source in buildings, supplying 3% of total heat demand in 2018. The European Union was responsible for 25% of this consumption, with the United States and China together accounting for another 28%, followed by Canada and Brazil.

With the electrification of heat in buildings (through electric heaters and heat pumps) and increasing shares of renewables in electricity generation, renewable electricity has been the largest contributor to renewable heat uptake in buildings in the past decade in absolute terms. This trend is set to continue, with an additional 1.1 EJ of renewable electricity consumption expected over 2019‑24, amounting to 42% of global renewables expansion in buildings – more than double bioenergy growth. The European Union (+0.33 EJ) is expected to lead the way, followed by China (+0.22 EJ) and the United States (+0.16 EJ).

In industry, renewable electricity is also the second-largest renewable energy source, although it met less than 1% of global industrial heat demand in 2018. Worldwide consumption increased 34% in the last six years, and it is projected to continue rising at the same pace over the outlook period.

China, which accounted for 29% of the world total in 2018, remains the primary industrial consumer of renewable electricity, with more than 60% growth over 2019 24 anticipated from both electrification of industrial heat and a greater share of renewables in the electricity mix. This latter factor is the main reason for growth in the European Union (+68 PJ) and the United States (+38 PJ), which together continue to account for one-quarter of global industrial renewable electricity consumption over the next six years.

On a single-country basis, India demonstrates the second-largest absolute growth in renewable electricity consumption (+53 PJ) after China (+184 PJ), as its industrial heat demand rises dramatically (+39%) over the outlook period, especially for steelmaking. With expanding shares of renewables in electricity generation, electrification is a promising option for industrial decarbonisation. 

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