New statistics from the Association of Issuing Bodies show that the demand for renewables reached 530 TWh at the close of Q2 2020. This is the highest figure recorded, even compared to previous full years – with the year 2019 being the only exception.
“The demand for renewable energy documented with Guarantees of Origin shows record growth during the first half of 2020, despite the negative effect COVID-19 is having on global and local economies. The fact that especially corporate demand for renewables seems unaffected is truly inspiring during these unusual and trying times,” commented Tom Lindberg, managing director in ECOHZ. Demand in 2020 is up by 15% compared to the same period in 2019.
Demand for renewables documented with Guarantees of Origin has steadily increased every year, and the annual growth (CAGR) is a robust 16% during the period from 2012 to 2020. A continued growth of 15% in 2020, is especially impressive given the presence of the COVID-19 pandemic. Assuming that the market suddenly does not deflate, we will likely experience a record figure for the full 2020 as well.
Much of the continued growth is still likely coming from strong ambitions among a growing group of corporates with extensive energy use across international markets. We are also seeing the effect of numerous market and policy changes deployed the last few years. Among these are EU’s new Renewable Directive strengthening and clarifying the use of Guarantees of Origin. We also see a stronger emphasis to report and document sustainability results on global and local levels. In Europe specifically we see countries implementing various forms of Full Disclosure (FD) policy, with Holland deploying FD at the energy consumer level. This policy change creates increased transparency and will again result in increased demand. New platforms for allowing access to renewables have also appeared in 2019 and 2020, including various auction concepts in a select group of countries. Lastly, a nascent development to purchase and report renewables on a monthly basis, and in some cases on shorter time intervals (e.g. day, hour) also contributes to a more robust market. There are very few reasons these developments will not continue.
Figures published by AIB (Association of Issuing Bodies) suggest that the supply side also continues to grow during 2020, across most national markets and all renewable technologies. Wind and solar has doubled, hydro has also grown and still dominates the market supply.
“Even with a strong growth in the supply, market demand easily outpaced supply in 2019. Demand volumes was up by 18.5%, ending at 621 TWh and breaking the “600-barrier” for the first time”, remarked Lindberg. The 2019 growth is even more impressive given that the historical annual growth (CAGR) is 15.6% in the period from 2010 to 2019.
With a total supply of 667 TWh and demand at 621 TWh in 2019, the market surplus shrunk to 46 TWh - the lowest since 2015. This may indicate a development where the market will enjoy a better balance, and where prices again could start to rise.
Hydropower has provided much of the renewable energy with Guarantees of Origin in Europe and still has a big share, but changes are occurring rapidly. Hydropower’s share fell from 64% in 2018, to 61% in 2019. The hydropower share was approximately 90% 10 years ago. The falling share of hydro can primarily be explained by increased availability of both solar and wind.
The corporate sector is the main driver of market growth because more corporations see sustainability as necessary for future competitiveness. Several initiatives exist to support corporate sustainability ambitions. Two notable initiatives are WeMeanBusiness and RE100.
The RE100 initiative now has over 260 members – the world’s most influential businesses that have made a commitment to go '100% renewable'. Global reporting initiatives like CDP and Greenhouse Gas Protocol are enabling this movement. Also, EU with the REDII is strengthening the Guarantees of Origin system by further embedding it into European legislation.