这一目标将公司、员工、客户和股东联系在一起，将经济业绩与对人类和地球的积极影响协调起来。ENGIEs的行动要在整个过程中进行评估。
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2020 EditionENGIE Renewable Energy Sources OutlookENGIE Renewable Energy Sources Outlook|Foreword2ForewordI am pleased to share with youthis first edition of our ENGIE renewable Outlook which encompasses both a strategic view on renewable resources and solutions as well as a documented approach on energy transition challenges.The strong trends to fight climate change,the real urge for a low carbon economy,the clear shift towards a greener energy paradigm,have not been derailed by Covid.They have been reaf-firmed despite the health and economic crisis,pushing many stakeholders to align on a trajec-tory for carbon neutrality during the first half of the century.Challenges linked with climate change are a concern for our societies as a whole:they will require engagement from territories,institutional players,companies,industrial players and from individuals.In this report we intend to give an update on energy transition and to describe what still needs to be done to meet our collective envi-ronmental imperatives.In many ways,the pandemic has shown us the way to build a more sustainable system tomor-row.It notably emphasised the key role that renewable energy solutions could play to make our energy system more resilient should it be through power production,storage,green gases or green hydrogen.This report will also explore how those solutions could be used,developed and combined to draw a sustainable future.Of course,strong efforts will be needed to stop and reverse the increase of CO2 emissions.There will be struggles and the battle is far from being won to contain the rise in global tempera-tures below 2C.Nevertheless,we can already notice that the approach on energy has changed with a global awareness on social and environ-mental challenges,with a drop in production costs for renewables,with technological break-throughs that have made green,sustainable energy reach a whole new dimension.And what we can already say is that this trend is set to continue and to intensify.Gwenalle Avice-Huet,Executive Vice President,responsible for the Global Renewable Business LineENGIE Renewable Energy Sources Outlook|Foreword3Since 2000,global installed renewable capa-city has more than tripled,and if we look speci-fically at wind and solar:installed capacity has been multiplied by almost 70.Several factors are driving this tremendous growth of renewable energy,among them:government policies.Over the last few years,almost all countries have adopted renewable energy targets and,today more than ever,we see strong policy initiatives to support renewable development.In a post-co-vid context,the EU 750 billion recovery pac-kage,with funds at European level,is a first of a kind with 30%of this package to fight against climate change.This is a clear choice to invest in a green,digital and resilient Europe,including in ambitious,innovative technologies like Hydrogen.We see daring ambitions in other continents too,notably pushed by the newly elected US President to reach carbon neutrality by 2050.And its not only about states and about public engagement:private sector and corporate also play their part of the game and set strong targets.There is a strong surge in corporate sustainability commitments around the world.Nearly 400 com-panies around the world committed to setting a science-based target in 2019,more than dou-bling the total number of firms with these goals.These firms have pledged to reduce their emis-sions in line with the Paris Agreement,and clean energy will be an essential part of this strategy.Of course,the Energy sector has a specific responsibility when it comes to environmental targets as 75%of greenhouse gases come from energy combustion.But at the same time,the sector could provide a large proportion of the solutions.Thanks to the commitment of a wide range of stakeholders,including ENGIE,the steps that need to be taken are now clearly identified.At ENGIE,we are engaged to increase the development of renewable energy capacities,keeping notably in mind one of the learnings of this crisis:namely the importance of local energy resources and production,favoring short supply chains.But we are also convinced that no decar-bonisation pathway is achievable without signi-ficant deployment of energy efficiency measures.Should we talk about buildings,cities,industry,transports.Through energy efficiency we could potentially reduce global energy consumption by over a third.A decarbonised energy system in a secure,and cost-effective manner will require a full range of solutions,including district cooling and heating or energy storage.Finally,to reach a zero-carbon world and com-plement the deployment of renewables well also need to link up technologies across energy car-riers:well notably need low carbon energy vec-tors(hydrogen,biogas,etc.)and sector coupling to make our future power systems stronger,cost-effective and reliable.We dedicate a large portion of this document to explore the wide range of solutions which will play a part in the energy transition,describing their potential and current stage of development.Our analysis has notably benefited from the enlightened views of renowned expertise centers that responded to our invitation to comment on energy transition.Obviously,at the end of the day,the energy transition agenda will be subject to different approaches depending on geography and local or national priorities.But to reach the ambitious global long-term targets that the world needs well have anyway to push,combine and accele-rate the implementation of effective solutions including efficient technologies,green finance,innovative business models and incentivising policy measures.And that way,well be able to make it.I hope this report can bring new angles to your thoughts on the energy challenges ahead and interesting inputs to your work towards new solutions.Wishing you a nice read.ENGIE Renewable Energy Sources Outlook|Summary4SummaryMain references p.63Notes p.64ANNEX:Abstract of the Dashboard of Energy Transition-2020 Edition p.68Setting the scenep.5Panorama of renewable solutionsp.17Enablers in a decarbonised energy systemp.40Renewables in COVID timesp.565Setting the sceneWith the Paris Agreement,the international community set the objective to limit the increase in global temperature to well below 2C1.Reaching this objective will require a sharp reduction in greenhouse gas emissions(GHG).Aspirations of consumers towards low-carbon solutions are growing,and countries are pushing for increasingly ambitious regulations.This environmental consciousness places the energy sector as a whole in the limelight.Whereas electricity generation only represents 25%of global greenhouse gas emissions,the use of the combustion energy of fossil fuels altogether represents around 75%of GHG emissions2.The energy sector therefore has a major role to play,not only in reducing its own emissions but also in enabling emission reductions for all the different usages of energy.While energy-effjciency remains the fjrst objective,another fundamental component of lowering GHG emissions will be the decarbonisation of energy vectors.This will require a full range of solutions,from the further deployment of renewable electrical and thermal energies,to the greening of gas,and the search for local,system-oriented solutions within a circular economy approach.ENGIE Renewable Energy Sources Outlook|Setting the scene6Panorama of renewable energy sources development Whether solar,wind,hydro or biomass based,energy is now increasingly green.This section provides an overview of the current state of renewable energy deployment since early 2000s.It looks at the expansion of renewable energy across technologies and world regions.The section also emphasises the drivers for the expansion of renewable energy as well as the increasingly important role of green gas in the future of decarbonisation.MASSIVE ACCELERATION OF RENEWABLE DEVELOPMENT AROUND THE WORLD Massive acceleration of renewable develop-ment around the world is driven by growing societal expectations,increasingly stringent regulations and falling costs.The rela-tionship to energy has changed drastically in the past ten years,with a global aware-ness of social and environmental challenges and increasing regulation.The drop in pro-duction costs and technological break-throughs have made renewable energy more competitive and this trend is set to continue.Significant acceleration over the past decadesOver the past decades,global installed renewable energy sources(RES)capacity has more than tripled,going from 754GW in 2000 to 2,537GW in 20193.As a result,ins-talled RES capacity was enough to provide an estimated 27%of global electricity genera-tion at the end of 20194.The International Energy Agency(IEA)projects an even greater increase in renewable capacities worldwide,with 1,123 additionalGW for wind and solar by 20255.In terms of technologies,hydro-power accounts for more than 50%6 of cumu-lated RES capacity in 2019(1,308GW out of 2,537GW).Yet wind and solar power have accounted for more incremental capacity than hydropower and have attracted most of the RES investments since 2015.More recently,the production of biogas and biome-thane has experienced a significant growth.These green gases can be used in a variety of applications such as electricity,heating,and transport.Global installed capacity of bio-gas-based electricity generation has more than doubled,from 8.2 GW in 2009 to 18.1GW in 20187 and another estimated 700 plants upgrade biogas to biomethane8 for injection into the gas grids.Overall,although fossil-fuel generation capacities still domi-nate the global energy mix,renewable energy grew faster than any fossil fuel.Fig.1Emerging economies are becoming leading playersAttention is more and more being focused on emerging economies as the growth in RES developments moves beyond Europe and the U.S.to new markets.For almost a decade,China has been a leader in the glo-bal deployment of renewables.The country is the largest market for solar PV globally,with a cumulative installed capacity repre-senting more than 30%of the global market in 2019.Solar PV capacity in the country rose significantly,from 0.8GW in 2010 to 204.6GW in 2019 at a compound annual growth rate of 85%.As for India,it is now among the world top emerging markets for clean energy investment9.Installed renewable capacity is today at 83GW10,plus 31GW under development and a further 35 GW out for tender.In particular,the aggressive drive to bring solar capacity up to 100GW by 2022 has seen solar capacity more than triple since 2015 mostly due to ENGIE Renewable Energy Sources Outlook|Setting the scene7GW2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201908,0007,0006,0005,0004,0003,0002,0001,000Fig.1-WORLDWIDE ELECTRICITY CAPACITY PER TECHNOLOGY,2000-2019 Other renewables Geothermal Solar Wind Biomass&waste Hydroelectricity Nuclear Gas Oil Coal Sources:Enerdata,IEA.government-backed auctions.In America,Brazil has also achieved a visible presence as it stands as a world reference for the develop-ment of biofuels and because of the major role of hydropower in its electricity genera-tion mix,resulting in very low emissions from its power sector.Regarding biogas and biome-thane,currently over 60%of biogas produc-tion capacity lies in Europe and North America,with some countries such as Denmark and Sweden having more than 10%shares of biogas/biomethane in their total gas sales11.Still,countries outside Europe and North America are catching up quickly,with the number of upgrading facilities in Brazil,China and India tripling since 2015.Fig.2Regulatory push created markets for RES Several factors are driving this tremendous growth of renewable energy.Leading among these are government support policies and targets.These policies can have numerous goals,from combating global warming and reducing air pollution to ensuring energy security,providing local jobs and access to energy for all.By the end of 2019,166 countries had renewable power targets12.Falling costs also play a major part in RES development.Indeed,policy incentives in combination with substantial technology developments,boosted RES investment,allowing for economies of scale and driving down costs for many renewable technolo-gies.The most telling example is that of solar and wind.In ten years,electricity costs from utility-scale solar PV fell 82%and declined about 39%for onshore wind and 29%for offshore wind13.In the end,this will allow government support mechanisms to be progressively phased out.But if power generation has been a key focus of renewable energy policies,renewable incentives also contributed to the rise of the green gas industry.These alter-native fuels have progressively come to the forefront in debates about the future of decarbonisation.GREEN GASES ARE ESSENTIAL TO THE ENERGY TRANSITION“Green gases”encompass gas products ori-ginated from sustainable inputs,i.e.biogas,biomethane,renewable hydrogen and syn-thetic methane.Green gases constitute a double lever essential to the energy transi-tion.Not only do they contribute to the greening of uses that are highly dependent on fossil fuels(mobility,heat,industrial pro-cesses),they are also ultimately set to play a role in balancing a low-carbon electricity system at low cost,thanks to their flexibi-lity.Their growth has been boosted by the need to decarbonise the electricity sector and the overall energy system,owing to their distinctive ability to permeate all energy sectors.Biogas and biomethane have a key role to play As flexible energy carriers,biogas and bio-methane have a key role to play for decar-bonisation.The biogas market largely SpainFranceChinaUnited StatesBrazilIndiaGermanyCanadaJapanItaly26575914212812510197555553Fig.2-LEADING COUNTRIES IN INSTALLED RENEWABLE ENERGY CAPACITY WORLDWIDE IN 2019(GW)Sources:IRENA(2020),Renewable Capacity Statistics 2020;&IRENA(2020),Renewable Energy Statistics 2020,The International Renewable Energy Agency,Abu Dhabi).ENGIE Renewable Energy Sources Outlook|Setting the scene8transport sector.This energy source has also many positive externalities.Studies conduc-ted for the French market estimate the value of positive externalities of biomethane between 55-75 EUR/MWh17.Chiefly among them,the recovery of agricultural waste and the reduction in the use of chemical fertili-sers by using the digestate from the fermen-tation process.Social and economic externalities are also important,such as job creation in rural areas to ensure the deve-lopment and operation of facilities and addi-tional income for farmers.Biogas and biomethane technologies thus create a vir-tuous link with the agricultural sector,contribute to local employment and rural development and put in practice the concept of a circular economy.Renewable hydrogen is at the heart of the carbon-neutral economy While still in its infancy,renewable hydrogen opens significant market opportunities for RES and is at the heart of the carbon-neutral industry of tomorrow.Hydrogen is a very versatile energy carrier and feedstock which can tackle various critical energy challenges and has the potential to become a true strategic value chain.It is,moreover,the basis for synthetic gases(e-methane)and liquid fuels,which will be a crucial decarbo-nisation option for“hard-to-abate sectors”.Historically,hydrogen was mainly used as a feedstock for industrial processes.Currently around 70 million tonnes(70 Mt,or around 2,800 TWh of energy equivalent)of Germany.In Britain,recent initiatives also illustrate this growing trend towards green gas production.The five main gas network operators called for their Government to unlock 900m in switching Britains gas grid from using methane natural gas to hydrogen and biomethane16.Fig.3As a flexible energy source,biogas has the potential to be used not only for renewable electricity but also for heat and,if upgraded to biomethane,to replace a portion of natu-ral gas demand or to be used in the developed out of strong policy support and incentives along with regulations mandating certain levels of adoption.IEA statistics show that biogas and biomethane14 produc-tion in 2018 was around 35 million tonnes of oil equivalent(35 Mtoe or around 407TWh of energy equivalent),only a frac-tion of the estimated overall potential15.Full utilisation of the sustainable potential could cover around 20%of todays worldwide gas demand16.Europe,the leading biogas-pro-ducing region,has around 20,000 biogas plants,with the majority situated in hydrogen are produced globally each year 18,coming essentially from dedicated pro-duction from fossil fuels(mainly natural gas)or as a co-product of the oil industry.Hydrogen produced from renewable electri-city via electrolysis(“green hydrogen”)represents less than 1%of all hydrogen pro-duction19.Yet,in the future,these figures are expected to change dramatically.First,hydrogen can bring renewable energy to sectors(heat,industry,heavy transport)for which complete reliance on electrification would not be cost-efficient or even techni-cally possible.Moreover,hydrogen from renewables has the potential to balance renewable power supply and demand as green hydrogen makes it possible to store variable renewable energies in big quanti-ties.The gas infrastructure can accommo-date large volumes of electricity converted into hydrogen.Hydrogen can be recon-verted into electricity via fuel cells,injected into the natural gas grid or transformed into synthetic methane through methanation.This methane is indistinguishable from natu-ral gas.The hydrogen molecule will there-fore represent a critical intermediate step in the supply of the specific energy best suited to each need and an essential raw material for industry.According to the IEA,low-car-bon hydrogen is expected to raise to an esti-mated 7.92 Mt(300TWh)by 203020.Fig.3-BIOGAS AND BIOMETHANE PRODUCTION IN 2018 AGAINST THE SUSTAINABLE POTENTIAL TODAY Biomethane potential 730,0 MtoeBiogas potential 570,0 MtoeActual production 35,0 MtoeSource:IEA(2020),Outlook for biogas and biomethane:Prospects for organic growth,IEA,ParisENGIE Renewable Energy Sources Outlook|Setting the scene9AUCTIONS AND CORPORATE PPAS ARE BOOMINGAround the world public subsidies are gra-dually being phased out and the use of auc-tions is spreading to a growing number of countries.The recent development of corpo-rate PPAs is also part of this fundamental movement in the energy transition by which states limits their commitments and,in return,businesses and local authorities are increasingly involved.2020 is even set to become the biggest year to date for corpo-rates buying clean energy21,with corporate PPAs being mainly concentrated in the U.S.and in Europe.Countries wind down subsidies for renewables projectsGrowing renewable energy capacity and fal-ling investment costs are pushing countries to wind down subsidies for renewables pro-jects.In most countries,support schemes were a key driver for renewable energy deployment.Two main types of policies were widely used to encourage RES development.First,regulatory policies such as feed-in tariff(FiT),renewable portfolio standards(typi-cally requiring that a percentage of electric power sales comes from renewable energy sources),net metering,biofuels or heat obli-gation/mandate and tendering.Second,various fiscal incentives have been imple-mented,from tax incentives(e.g exemption,tax credits),to direct incentives(e.g capital subsidy,grant,or rebate).Europe was a pioneer in implementation with Germany being the first European country to adopt a feed-in tariff program,followed by Denmark and Spain.FiTs cover different types of energy technologies(e.g,from residential rooftop PV to CSP plants).Yet the tariffs differ across countries or geographical loca-tions,type,and size of technology.For exa-mple,German feed-in payments are technology and scale-specific,with larger projects receiving a lower feed-in tariff rate to account for economies of scale.In the United States,a mix of policies that includes several federal government incentives(tax credits,grants,and loan programs),net mete-ring and renewable energy certificates helped renewables deployment22.Nevertheless,while many countries all over the world have implemented this type of programs,some market grew too fast(e.g.PV)incurring significant costs and,in some cases,electricity supply-demand imbalances,calling for system optimisation and better regulation.Therefore,even if support mecha-nisms still play an important role in the deve-lopment of renewable energy,they are gradually being reduced or phased out.This has led to more RES commercialisation,inclu-ding via market-based auctions.Auctions for large-scale,centralised projectsMany countries are using competitive auc-tions instead of feed-in policies for large-scale,centralised projects.Renewable projects around the world are increasingly willing to take fluctuating market prices.In Global trends in renewable energyAt a time when climate emergency is increasingly integrated into decision-making processes at global,national,and local levels profound changes can be observed in the energy sector.The fjrst major trend over the past few years has been a shift away from public subsidies towards zero-subsidy projects.Another crucial trend is that the energy transition is now increasingly being driven by corporates and local authorities.In addition,as the energy sector is responding to societys demands to more decentralised and green energy,integrated solutions are emerging to replace conventional services.ENGIE Renewable Energy Sources Outlook|Setting the scene10In 2010,energy was contracted at a global average price of almost USD 250/MWh for solar and USD 75/MWh for wind26.With fal-ling technology costs,in 2019,global ave-rage solar PV prices reached USD 57/MWh27 and onshore wind prices USD 48/MWh.Concentrated solar power(CSP)was most notably auctioned in the United Arab Emirates(e.g Dubai awarded 700MW at a price of USD 73/MWh28).As for biomass auc-tions,they were concentrated in South America and Europe.For instance,Argentina awarded 143MW of biomass at an average price of USD106.7/MWh29.Overall,auctions have proven to be an effective mechanism for large RES generation,less so in the case of for small and medium-sized installations.A growing number of countries are thus adopting a combination of policies to deve-lop renewable energy sources on a more tailor-made basis to adapt to technologies and applications.PPAs are on the rise PPAs are on the rise as more corporates and local authorities strive to“go green”while controlling their energy costs.In recent years,there has been a growing trend in projects that do not fall within the framework of direct or indirect subsidies granted by the states.This movement started in the United States,continued in Latin America and recently in Europe.The answer to guarantee the development of such projects and their long-term viability are corporate PPAs.PPAs are long-term contracts(typically 10 to 20 years)under which a purchaser offtaker(e.g.a supply company)agrees to purchase electricity directly from a power producer(e.g.a wind or solar plant).The interest of cities and large companies is twofold:ensuring their supply of green energy while benefiting from long-term visibility on prices.Born from the GAFA30 for the supply of their data centers with energy,this movement today extends far beyond.An illustration of this trend is RE100,a collaborative,global initia-tive with over 260 businesses committed to 100%renewable electricity31.To achieve this goal,they must match on an annual basis 100%of the electricity used across their global operations with renewable elec-tricity biomass(including biogas),geothermal,solar,hydro and wind either sourced from the market or self-produced32.Likewise,C40 a group of 97 of the worlds leading cities is focused on tackling climate change and driving urban action reducing greenhouse gas emissions and climate33.Overall,over the years,global corporate PPA volumes have experienced a tremen-dous growth,from 0.1GW annual volume in 2010 to 19.7 GW in 2019 and already 15.9GW in 2020(ahead by 0.5GW com-pared to last year at the same point in time)34.ENGIE was the No.1 world seller of clean energy Corporate PPAs in 201935.The Group signed over 2,000MW in 2019 mostly in the U.S.but also in Spain and aspires to sign 4,500MW by 2021.Fig.5the first half of 2020,13 countries awarded almost 50GW of new renewable capacity to become operational during 2021-24,the highest amount to date23.Chinas solar PV auction awarded 25GW in June 2020,mar-king the trend globally24.In 2019,at least 68 renewable energy auctions or tenders were held across 41 countries at the national or state/provincial level25.The ensuing compe-tition through auctions triggered record low bid levels for new solar PV and wind power.Fig.4Fig.4-RENEWABLE ELECTRICITY AUCTION RESULTS BY TECHNOLOGY,2018-2020GW50403020100H1201820192020H2H1H2H1H2Source:BNEF,Corporate PPA Deal Tracker,October 2020.Fig.5-WORLDWIDE CORPORATE PPA VOLUMES,BY REGION Solar PV Onshore Wind Hydroelectricity Offshore Wind OthersSource:IEA(2020),Renewables 2020,IEA,Paris.3,42,53,99,115,88,60,81,11,12,32,65,20,61,32,11,32,20,20,30,10,30,31,02,34,74,36,213,619,715.901020304050607080024681012141618202008200920102011201220132014201520162017201820192020Annual volume(GW)APAC EMEA AMER CumulativeENGIE Renewable Energy Sources Outlook|Setting the scene11DECENTRALISATION OF THE ENERGY SYSTEM Decentralisation of the energy system a source of resilience is accelerating and leading to progressively more integrated solutions.The development of new techno-logies and the increasing disintermediation of actors is also enabling the decentralisa-tion of energy production.From private individuals to industrial operators,cus-tomers are now looking for customised and comprehensive solutions.A more and more local energy production With the rapidly falling costs of RES and sto-rage,energy production is becoming more and more locally embedded.Historically,the operation of energy systems relied on large electricity production plants and vast gas fields,along with electricity and gas trans-mission and distribution networks.Ultimately,some of the energy needs will be produced at the consumption site(indivi-dual housing,companies,industrial sites,local authorities).Individual consumers,both private and industrial,become energy producers(“Prosumers”).A decentralised energy system is characte-rised by the integration of energy produc-tion and consumption in a common location.Decentralisation is occurring for various reasons throughout regions,materialising very differently.In Europe or North America,decentralisation comes along with an energy transition targeting climate change mitiga-tion.Other drivers also contribute to this decentralisation process such as a willin-gness of consumers to have access to a cheaper and more reliable energy.In regions such as Africa or a large part of Asia Pacific,access to energy in remote rural areas is a big challenge.There,it is more a conse-quence of an economic trade-off between decentralised generation costs and grid extension costs.For example,where there is no grid access for heat and electricity,decentralised applications of biogas in rural zones are promising as the needed wet bio-mass input is local and rural.Biogas is thus recognised for its easy access(local resource,production on site,consumption on site).A lot of programs for biogas development are emerging in rural areas in developing coun-tries(e.g Tanzania Domestic Biogas Programme to install 10,000 biogas plants)36.This revolution has been facilitated by the development of distributed energy resources(DER),which include dispatchable technologies like cogeneration units or bio-gas plants,variable renewable energy sources like wind and solar as well as energy storage(e.g batteries)and demand response(DR).These technological breakthroughs are changing business models and require infrastructure and offerings to be adapted to the coexistence of centralised and decentra-lised production systems.All this being said,while decentralised pro-duction will certainly continue to increase,studies indicate that by far most of the new renewable energy investments in the next decades will be in utility-scale renewable energy production,and mega-scale renewable energy projects(1000MW)will become more and more common in regions with excellent renewable resources.Opportunities for integrated energy solutionsThe growth of decentralised generation pro-vides opportunities for integrated energy solutions.With the appearance of“behind-the-meter”solutions next to centralised renewable energy projects,new business opportunities are emerging.More and more cities and corporates are asking partners that can advise,design,install,operate,and finance integrated energy solutions.Integrated solutions including equipment financing and on-site production,excess heat and cooling,storage,as well as large-scale central assets can support the uptake of decentralised energy systems.For ins-tance,optimal and coordinated integration of decentralised production and storage assets with smart energy management and electric vehicle charging solutions are some of the essential steps towards energy-effi-cient,smart building.To adapt to these new needs in the car-bon-neutral transition,ENGIE offers com-plete and integrated services,with tailored and co-financed solutions(energy,lighting,mobility,etc.)combining the latest techno-logies with a multi-disciplinary approach.For example,in 2017,the Group launched a 50-year partnership with Ohio State University in the United States to manage the sustainability,operations,and supply of their energy assets.ENGIE invested 1.2 bil-lion euros and will be responsible for mana-ging the universitys energy systems with guaranteed energy efficiency improvements covering 485 buildings.ENGIEs expertise in facility management,supply,distributed generation,and efficiency helped develop a portfolio of custom-made solutions to address Ohio States plans of a 25crease in campus buildings energy consumption by 2025.ENGIE Renewable Energy Sources Outlook|Setting the scene12MAINTAINING A RESILIENT AND COST-EFFECTIVE ENERGY SYSTEMThe power sector has already made great achievements toward decarbonisation.However,wind and solar generation is variable by nature,requiring flexibility and back-up solutions to keep the power system in balance and ensure security of supply while continuing to decarbonise in a cost-ef-ficient way.Making full use of green gases will play an important role in maintaining a resilient and cost-effective energy system.More flexibility is needed The share of renewable generation techno-logies in the electricity sector is growing continually.However,some renewables are variable,and the cost of accommodating a rising proportion of RES is growing.Flexibility needs increase strongly with RES penetration.To address these challenges,flexibility sources are multiple.Among them,demand-side management(energy efficiency and time-based management)and storage are complementary and poised to grow rapidly.Demand side management consists in reshaping customer load profile by using its flexibility.In particular,Demand Response(DR)is a competitive source of capacity and flexibility with a large market potential(it could represent 10-20%of the peak demand).It consists in valorising flexi-bility by curtailing or shifting part of the load,that can be used to release the constraints of the power system,take advantage of the market context(arbi-trages)and sell customers innovative offers.But if demand-side management surely has a role to play,storage solutions are just as essential.Several storage technologies exist,at different scales and different maturities.Large scale technologies include for instance pumped hydro storage and compressed air storage.For short duration storage use cases,batteries will likely lead the way.One of batteries key advantage is that they are versatile and modular.The current Lithium-ion(Li-ion)batterys dominance has been largely driven by declining costs following the increase in production to meet growing demand for consumer electronics and elec-tric vehicles.Li-ion batteries are indeed the most suitable solution for battery electric vehicle(BEV),with their high energy den-sity per volume and good power/energy ratio.However,the family of battery tech-nologies is very large and other technolo-gies than lithium-ion might be preferred for stationary storage.Moreover,for some uses(e.g.requiring large capacity of long dura-tion storage),batteries will not be the most affordable solution.Other flexibility sources are therefore indispensable,in particular the conversion of electrical energy into che-mical energy(hydrogen,e-methane,).An energy transition relying on multiple energy An energy transition relying on multiple energy carriers including green gases-is more resilient and more cost-efficient.Going forward:the role of renewables in a decarbonised economy Renewables have a key role in the decarbonisation of power,building,industry and transport sectors.Driven by public support over many years and enabling regulatory frameworks,electricity generation from renewables makes an important contribution to an increasingly decarbonised power mix.There remains,however,sectors for which decarbonisation is a challenge.Renewable heating(and cooling)still offers vast unexploited potential for buildings and industry.Achieving ambitious levels of RES is also particularly challenging for transportation,which began to decarbonise with e-mobility,bio-CNG and bio-LNG and a rapidly growing role for hydrogen fuel cell.In each of these sectors,renewable gases,renewable electricity,and a more integrated use of energy carriers are required for the emergence of a carbon-neutral world.ENGIE Renewable Energy Sources Outlook|Setting the scene13therefore expected to accelerate their deve-lopment.Clearly,energy efficiency will be a component of the equation,but in addition to energy savings,different technologies(district heating,green gas,electrification)will have to play a major role.Fig.6Renewable energy met less than 12%of total energy demand in buildings in 202041.Yet a wide range of renewable technologies exist to raise renewable heat consumption.Among them figures district-level energy.District heating and cooling(DHC)networks distribute heat for domestic hot water,space heating or cooling in buildings,and indus-trial processes42.It is an old and well proven technology,which historically developed in Europe,in the United States,in Russia and in Asia(mainly China).While it used to rely mainly on fossil fuel-based energy supply,DHC can today use many different energy sources such as green gas and other RES which allow DHC to play a key role in the energy transition,as an integrator of many Green gases have a much-needed role in the energy transition.They can use existing infrastructure and do not have variability issues.Biomethane has already started to substitute natural gas in various developed countries.Also,hydrogen and synthetic fuels can be a solution to the challenges of variable renewable energy production via Power-to-Gas.Electricity is converted to hydrogen using an electrolyser,then pressu-rised and injected into a natural gas grid.This technology is expected to be deployed on a mass scale starting in 202537 and ENGIE has been coordinating two major experi-mental projects since 2013:the GRHYD pro-ject near Dunkirk(Cappelle-la-Grande)which tests the injection of green hydrogen into the gas distribution network and the production of hythane(a blend of hydrogen and natural gas)for NGV buses;and the Jupiter 1000 demonstrator in Fos-sur-Mer,the first project at industrial scale in France where ENGIE tests the production of methane from renewable electricity.In addi-tion to being a great medium for long term storage,green gas is the“missing link”for coupling the electricity,gas and heat sectors thus ensuring a decarbonised energy sys-tem.Indeed,while the power sector demonstrates the most important RES share,other sectors,such as buildings,industry and transport still rely largely on fossil fuels.To decarbonise these sectors,a mix of electrification and substitution of the fossil fuels by green gases,along with synthetic fuels,is necessary.Unexploited potential in buildings and industryHeat is the largest energy end-use,accoun-ting for 50%of global final energy consump-tion,significantly more than electricity(20%)and transport(30%)38.Yet fossil fuels continue to lead heat supplies.Therefore,the use of renewable energy systems for both industrial and domestic heating(and cooling)applications is receiving increasing attention.According to the IEA,heat gene-rated from renewable energy is set to expand by one-fifth between 2019 and 202539.Buildings should account for 24%of global renewable heat growth,followed by industry(15%).Several technologies exist to tackle the colossal task of incorporating renewable energy into these sectors.For buildings,mature renewable heating and cooling technologies using biomass,solar,geothermal or green gases are available to reduce CO2 and fossil fuel use.For industrial applications,hydrogen and synthetic fuels could play a key role.A wide range of renewable technologies to decarbonise heating and coolingWhile heating and cooling are currently lar-gely served by fossil fuels,a wide range of renewable technologies exist to decarbonise these applications.Industrial processes accounted for 50%of total heat consumed in 2020,while another 47%was consumed in buildings40.With rising temperature,cooling is also a major driver of energy demand.Renewable heating and cooling are 7Q%94%6%6#%50w%4W#2bD1%6%907%5%9%6%6%0 0Pp0%ChinaDenmarkGermanyPolandSwitzerlandJapanUSAKuwaitUAEFig.6-BREAKDOWN OF HEATING AND COOLING ENERGY USE TODAY*:SHARE OF TOTAL HEATING AND COOLING DEMAND District energy Electricity Gas Oil-based Coal Renewable energy OthersSource:IRENA(2017),Renewable Energy in District Heating and Cooling:A Sector Roadmap for REmap,International Renewable Energy Agency,Abu Dhabi.*Cooling is included for Japan,the U.S.,Kuwait and the UAE.ENGIE Renewable Energy Sources Outlook|Setting the scene14different energy solutions.District heating systems also become increasingly integrated with other parts of the energy system.Either through waste heat from industry,cogenera-tion solutions,and use of electricity in large-scale heat pumps during hours of high production of variable renewable energy.Renewable energy sources are also available for district cooling system(e.g via electric or absorption chiller with RES,free cooling sources such as rivers or lakes etc.).Furthermore,thermal storage can help to develop RES in district heating and cooling.DHC can therefore represent an important source of flexibility to integrate variable electric renewable energy sources.Worldwide growing urbanisation should reinforce the interest for DHC,especially in developing countries as population growth and urbanisation are projected to add 2.5 billion people to the worlds urban popula-tion by 2050,with nearly 90%of the increase concentrated in Asia and Africa.At the house level,insulation and individual heating system will still play a major role in the energy transition.Most buildings in Europe are connected to the gas grid and many of them already have gas boilers ins-talled making renewable methane an easy and competitive solution to decarbonise hea-ting systems.Hence,keeping a water loop in buildings is important as green gas repre-sents an opportunity to make use of existing gas infrastructure.Green gas is also an attrac-tive option for new buildings both from an individual financial perspective and from a system-perspective as it avoids an increase of power peak demand and corresponding investments in the power system.For ins-tance,hybrid heat pumps(coupling of an electric heat pump and high-performance gas boiler)are a solution to combine renewable power and efficiency with highly efficient gas heating thus shaving peaks and provi-ding flexibility to the power grid.GHG emissions can be significantly reduced GHG emissions from industry can be signifi-cantly reduced with renewable and decarbo-nised gases.In industry,the share of renewables in heat consumption globally is projected to remain almost unchanged at 10%in 202043.The wide range of tempera-tures and processes make the industry sector difficult to decarbonise.Electrification is challenging(or even not possible for some applications with temperatures above 200C)and the sector is anticipating stron-ger constraints on CO2 emissions,resulting in a real demand around the CO2-free factory.A promising solution consists in replacing natu-ral gas and grey hydrogen by renewable and decarbonised gases,including bio-/e-me-thane and renewable hydrogen.Indeed,industries are important consumer of natural gas,mainly for combustion processes(e.g.in industrial cogeneration or high temperature applications)but also as a feedstock(produc-tion of hydrogen via SMR,methanol,ammo-nia etc.).Hydrogen(H2)is already the key ingredient to make ammonia,but the vast majority of H2 today is made from fossil fuels making the ammonia sector responsible for around 1%of global greenhouse gas emis-sions.In the ammonia chemical industry,hydrogen could be substituted with renewable hydrogen,thus removing virtually all carbon emissions from the ammonia pro-duction process.In the steel sector,hydrogen could potentially displace part of the need for fossil fuels by acting as a feedstock for the chemical reaction necessary to reduce iron ore to pig iron,and also by providing high-temperature heat for the steel-making process,thereby eliminating coal or replacing gas-based processes.ENGIE Renewable Energy Sources Outlook|Setting the scene15A RECONFIGURATION IN THE TRANSPORT SECTOR A profound reconfiguration is needed in the transport sector,requiring a system-based approach,not only in the vehicle fleet,but in the energy infrastructure and energy car-riers.Despite sustained growth in biofuels and electric vehicles(EVs)as well as energy efficiency improvements,transport remains the sector with the lowest share of renewable energy,at only 3.3D.Most of its energy needs are still met by oil and petroleum pro-ducts.Yet with cities increasingly taking strong measures to solve their problems of air pollution and urban congestion,greener mobility solutions are emerging.E-mobility will play an important role,notably for passenger cars,light commercial vehicles and progressively heavier vehicles(buses,trucks)for peri-urban uses.Electrification of long-distance trucks or coaches is however extremely challenging both for technical/operational reasons and economic reasons.Already today,alternative solutions exist.Biomethane-fueled vehicles offer a pathway to reduce the carbon and polluting effects of the road transport sector,in particular public transportantion and goods transporation.Vehicles powered by renewable hydrogen could also be used to develop vehicles with no harmful emissions,able to run for substantial periods without refuelling.The transport sector needs a profound reconfigurationFaced with high levels of CO2 emissions,fos-sil fuels depletion,and population growth,the transport sector will undergo a profound reconfiguration.Mobility alone accounts for 20%of global energy consumption,24%of global CO2 emissions45,and a 95pen-dency on oil.In addition,with more than half of the worlds population now living in urban areas,local air pollution(particulate matters)is a key local concern.Governments will be instrumental in shifting green mobility from a vision into a reality,from establishing stringent CO2 emissions targets to providing incentives.Some countries are planning to ban petrol and diesel cars from sales in a near future(Austria,Germany,India,Norway etc.).At a more local level,several cities are already taking strong measures to solve their problems of air pollution and urban conges-tion.Examples of local initiatives include the Global Covenant of Mayors for Climate&Energy46,which aim to be the worlds largest coalition of mayors promoting and suppor-ting voluntary action to combat climate change and move to a low-carbon economy.By 2030,Global Covenant cities and local governments could account for 2.3 billion tons CO2eq of annual emissions reduction47.To achieve these goals,improving energy efficiency of combustion technologies will clearly not be enough.Cleaner solutions need to offer cost-effective and convenient trans-portation for users.Not all solutions are sui-table for all types of mobility,so it will be necessary to adopt a mix of technologies and make them co-exist.ENGIE Renewable Energy Sources Outlook|Setting the scene16E-mobility will play an important role While most car still run on fossil fuels,the present dynamics in electric mobility are set to change this situation.Traditional engines will lose market share in favour of electric drive systems.The transitional solution will move from hybridisation to plug-in hybrid vehicles,and then 100%electric due to strong political support.By 2030,over 100 million electric cars are expected on the roads48.Half of the electric vehicles should circulate in China,the second half in India,in the United States and in Europe(15%of the vehicles transporting passengers in Europe could be electric vehicles).E-mobility will play an important role for light vehicles,but electrification of heavy vehicles is a lot more challenging.Fig.7However,as electric vehicles develop,their contribution to the integration of renewable energies raises many questions which remain open today.A growing number of EV can lead to a challenging situation for the electricity grid if charging of those vehicles is uncoordi-nated,thereby increasing the stress on the electricity network.Smart charging will be key to avoid network issues at peak hours and vehicle-to-grid(V2G)can become a source of flexibility to the power grid.But V2G is only at the beginning of its develop-ment.Moreover,other barriers such as long recharging times,weight of the battery and high CAPEX of electric trucks remain a challenge and still limit e-mobility potential for some applications.Mobility powered by green gasGas vehicles(CNG and LNG)operating with an increasing share of biomethane offer many benefits in transport.Among them,comfortable driving range,fast refuelling times,cost competitiveness with diesel and petrol,reduction of noise and air pollution,etc.As for fuel cell electric vehicles(FCEVs)-powered by hydrogen they are currently at their beginnings but are believed to be a game changer in the next decades,notably thanks to high vehicle autonomy and short refuelling time.If hydrogen is produced from RES,it does not generate any greenhouse gases,nor does it emit NOx,Sox or particu-late matter.Going forward,technological breakthroughs in the field of synthetic fuels(e-methane and others)could further transform the transport sector.Synthetic fuels are different than bio-fuels as they do not rely on agriculture crops.They require the conversion of H2 and CO2 to fuels,via Fischer Tropsch conversion or methanol synthesis.This combination of gases including hydrogen and hydrogen-de-rived synthetic liquid fuels could be used for heavy-duty vehicles,and no modification of the ICE would be needed as the synthetic fuel nature is the same as the fossil one.Other sectors are under study,such as rail travel,river transport,cruise ships and aviation.For instance,maritime transport today relies strongly on heavy fuel oil,and LNG is the only available decarbonisation option in the short term.Still,in the medium term,fossil LNG could increasingly be mixed with liqui-fied renewable methane.In the longer term,liquid hydrogen could also be a suitable option.However today,available solutions for producing,storing,and transporting liquid hydrogen are limited.ENGIE has launched a research program that aims to halve the costs of producing and transporting hydrogen by developing new liquefaction processes.Projects are also ongoing in South America to provide industry with hydrogen-based maritime transport solutions49.020406080100201520202025203020352040MillionFig.7-WORLDWIDE ANNUAL PASSENGER VEHICLE SALES BY DRIVETRAIN Battery electric Plug-in hybrid Gas Fuel cell Internal combustionSource:BNEF,Electric Vehicle Outlook 2020,May 19,2020.17Panorama of renewable solutions Renewables account today for 2,537GW of installed capacities across the world50.Massive fjnancial support,improving technologies,economies of scale and increasingly competitive supply chains have enabled the cost-competitiveness of renewable power generation to reach historic levels.Since 2010,electricity costs from utility-scale solar PV fell 82%,followed by a 47cline in concentrating solar power(CSP),with onshore wind at 39%and offshore wind at 29Q.But if the share of renewables in global electricity generation reached almost 27%in 201952,these energies are by nature variable,requiring fmexibility and back-up solutions to preserve the balance of the electricity system and guarantee the security of supply.To achieve a truly sustainable energy system,fmexible low-carbon energy vectors(biogas,biomethane,hydrogen)constitute a double lever essential to the energy transition.They contribute to the greening of uses that are highly dependent on fossil fuels(mobility,heat,industrial processes)and they are ultimately set to play a role in balancing a low-carbon electricity system at low cost.This chapter 2 provides a panorama of the different renewable energy solutions,highlighting key facts and fjgures and showing examples of ENGIEs expertise in each of them.ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 18NEW OPPORTUNITIES IN WIND ENERGY While onshore wind appears today as one of the most competitive sources of electricity,rapid development of the technology opens new opportunities for offshore wind power projects.Wind power describes the process by which wind turbines harness the strength of the wind to convert its kinetic energy into mechanical energy,which is then used to generate electricity.This technology has been improving rapidly,with larger turbines increasing from 30kW to 10MW in just 30 years56 allowing better energy capture.These improvements are reflected by the costs of generation of both onshore and offshore wind,which have plummeted by 39%and 29%respectively over the past ten years.In 2019 alone,electricity costs from onshore and offshore wind both declined by about 9%,reaching$0.053/kWh and$0.115/kWh,respectively57.Offshore wind is particularly promising as this technology offers higher capacity fac-tors compared with onshore58.The technical potential for offshore wind worldwide is huge,representing more than 120,000GW,with the capability to generate 420,000TWh of electricity per year(more than the total amount of electricity consumed world-wide)59.However,a large share of offshore wind resource is in deep waters,off the coasts of South America,the United States(where 61%of offshore wind resource are deeper than 100m),Japan,Korea and parts of Europe.Several innovations are thus being tested to realise the full potential of wind.For instance,floating foundations aim to overcome technical and financial challen-ges of deep water.While they are not a subs-titute of offshore fixed foundations,floating structures allow projects to be installed fur-ther from the coast in areas of great depth(50m).As for airborne wind energy(AWE),it can also unlock suitable wind resources unreachable by conventional wind turbines as it is capable to fly at altitudes of 300m.At such high altitudes,the capacity factor is estimated to reach between 50 and 70%.Another challenge has to with practical constraints(e.g.securing legal and physical access to grid)and in integrating higher levels of variable wind power into the grid.In this regard,offshore-generated hydrogen could be a promising solution as hydrogen can be transported in both pipelines and ships.In large-scale offshore wind farms in the German North Sea and other locations,producing hydrogen from wind could improve energy security,lower price volati-lity and be a solution to curtailment 60,thus offering further market growth opportuni-ties for wind.Wind power Between 1990 and 2019,wind power increased from 3.8TWh to 1427TWh,achieving an average annual growth rate of 23%.This is the second fastest growth rate of renewable electricity after solar photovoltaic 53.Owning to technology improvements and cost decline,onshore wind is now one of the most competitive sources of electricity available,consistently delivering electricity for$0.05 to$0.12/kWh without fjnancial support(compared to a range of$0.045 to$0.14/kWh for fossil fuel power54).In the coming years,offshore will be the most promising wind segment as its global cumulative installed capacity is expected to increase almost ten-fold by 2030(from 29GW in 2019 to 228GW in 2030)55,with emerging markets in Asia taking the lead in the coming decade.Technical potential for offshore wind:120,000GWoffshore wind worldwide420,000TWhof electricity production per yearENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 19OFFSHORE WIND,THE ENERGY OF TOMORROW In 2019,the wind energy market reached a record of 651GW global cumulative ins-talled capacity.Globally there is just over 29GW of offshore wind installed capacity,accounting for a tiny 5%of global wind capa-city.Yet,going forward,it is the segment that provides the most potential for expansion.Offshore wind is expected to grow much fas-ter than onshore at 15a over the next 10 years against a compound annual growth rate of less than 2%for onshore wind.Fig.8 By 2030,163GW of new offshore wind capacity and 631 GW of new onshore 3839414536526455545160159198238283319370433487540591651010020030040050060070020092010201120122013201420152016201720182019GWFig.8-GLOBAL WIND POWER CAPACITY AND ANNUAL ADDITIONS 2009-2019 GW595352515654575961636679101215161717191920010203040506070809010020202021202220232024202520262027202820292030Fig.9-GLOBAL ANNUAL WIND CAPACITY ADDITIONS BY TECHNOLOGY capacity are projected to be installed,making the cumulative capacity of wind reach more than 1,400GW62.Fig.9In Europe,Denmark,Germany and the United Kingdom were pioneer markets for wind and remain established leaders with the United States.Europe saw a 30%growth in new installations in 2019,which is prima-rily due to strong demand in Spain,Sweden and Greece.But in terms of annual capacity additions,Asia Pacific ranks as the No.1 in onshore wind with 27.3GW in 2019(largely in China)and also appears as the most pro-mising offshore market,growing at the fastest rate with the most capacity(Asia pacific is expected to add 58.6 GW of offshore wind capacity over the next 10-years).Previous years capacity Annual additionsSource:REN21.2020.Renewables 2020 Global Status Report(Paris:REN21 Secretariat).Onshore OffshoreSource:Guidehouse Insights,Global Wind Energy Database,2Q 2020.ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 20ENGIE:THE EMERGENCE OF A SUSTAINABLE INDUSTRIAL SECTORENGIE is investing in major projects and actively participates in the emergence of a sustainable industrial sector.The leader in wind energy in France,with 2.57GW installed capacity(100%),ENGIE has launched numerous projects worldwide.The Group has a total of 8.5GW onshore wind installed capacities,across the 5 continents and aims to achieve more than 12GW of installed capa-city in wind by 2021 62.To capture the tremendous potential of offshore wind,ENGIE is investing in major projects,including the worlds largest floating offshore platform,Windfloat Atlantic,in Portugal.As an integrated operator,ENGIE plans,builds,operates,and manages wind generation assets.z In France,the Caudresis Wind Farm was commissioned in January 2020.With a generation capacity of 50.4MW and 14 wind turbines,it is a joint project with Predica Energie Durable(PED)a subsidiary of Prdica,Groupama and la Caisse des Dpts.z In Belgium,a key project of the Group is the Maldegem Eeklo Kaprijke wind complex.It has a 21MW generation capacity(commissioned in 2020)and 9 wind turbines operated by a 50:50 joint venture with Conquest.z In Brazil,ENGIEs largest wind project is the Umburanas Wind complex.It counts 605MW of generation capacity(of which 360MW commissioned in 2019)with 144 wind turbines across 18 wind farms.z In Morocco,ENGIE operates Africas largest wind farm in terms of capacity:Tarfaya.The farm has a 316MW generation capacity with 131 wind turbines.Commissioned in December 2014,it is operated by a joint venture with Nareva.z In Egypt,ENGIE operates the countrys largest wind farm:Ras Ghareb(262.5MW).The Ras Ghareb project started commercial operation in October 2019.It is the first wind farm tendered on a Build-Own-Operate(BOO)scheme in the country.Offshore wind power represents a strong area of development.ENGIE operates through two technologies:fixed and floating offshore wind.z In January 2020,ENGIE established Ocean Winds,a 50 50 joint venture with its Portuguese peer EDP Renewables.The objective is to create a world leader in offshore wind energy,reaching between 5GW and 7GW of projects in operation or under construction and between 5GW and 10GW in advanced deve-lopment by 2025.The joint venture allows faster growth,large scale projects and improved operational efficiency.In Portugal,25MW of floating offshore wind were commis-sioned in 2020 for the worlds largest wind turbine on a floating platform.In France,two offshore wind farms off the coasts of Dieppe-Le Trport and the Yeu and Noirmoutier islands with a total capa-city of approximately 1,000MW will produce the equivalent of the energy consumption of 1.5 million inhabitants.In the United Kingdom and in Belgium,two offshore projects Moray East(United Kingdom)and SeaMade(Belgium)are in construction for a total of 1.5GW.ENGIE is the leader in wind energy in France,with 2.57GWENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 21SOLAR ENERGY CAN BE USED IN A MULTITUDE OF APPLICATIONSOne of the key advantage of PVs is that they can be deployed in a modular way almost everywhere on the planet.The PV techno-logy is exceptionally scalable,ranging from watt-scale to hundreds of megawatts.Photovoltaics cost fell by 82%,between 2010 and 201964,with the lowest levelised cost of electricity(LCOE)of utility-scale solar PV now reaching 10 euros/MWh,under best possible sites.These cost improvements were driven by a 90%reduction in module prices,along with declining balance-of sys-tem costs and should continue to drop over the next decade65.In addition,the distributed use of PV is raising the prospect of industrial plants and other businesses to generate their own electricity.But despite attractive econo-mics there remain significant technical and logistical barriers to solar projects,from energy yield to land requirements and pressures on critical materials(silicon,gal-lium,germanium,indium and selenium66 etc).To address these challenges,module and sys-tem components innovation are continuing to increase energy efficiency and push LCOEs lower and lower.Bi-facial modules might potentially increase the energy yield at sys-tem level by 5-10%without optimisation of designs67.Another example of innovation are thin films and organic solar cells,driven by the need for low-cost,lightweight,and easy to manufacture PV68.As for the challenge of competition for land,several concepts have emerged,such as floating PV which are already being developed on lakes and dams as well as agri-photovoltaics(“agrivol-taics”)a solution combining food and solar energy production on the same area of land.Finally,possible actions to avoid raw mate-rial shortages include increasing recycling or substitution of critical materials whenever possible and economically feasible69.On top of PV,solar power can also be used in form of concentrated solar power(CSP).While photovoltaics generate electricity directly from sunlight,CSP plants concen-trate solar irradiation to heat a fluid,which runs a turbine and an electricity generator.Costs for CSP still less-developed than PV fell 47%over the past 10 years,now amoun-ting to USD 0.182/kWh on average70.CSPs significant advantage is that it can integrate low-cost thermal energy storage to generate electricity,thus enabling the production of dispatchable electricity.Yet systems need to be large(tens of megawatts or larger),implying large land requirements and they can only exploit direct solar radiation.CSP is therefore of most interest in power genera-tion in sun-rich regions,thus restricting the land base suitable to regions in Africa,the Middle East,the Mediterranean,and in the United States(California).A STRONG GROWTH IN DISTRIBUTED INSTALLATIONSCurrently,the global cumulative solar capa-city is estimated at 633GW,with 627GW for solar PV and only 6.2GW for CSP.This represents an impressive increase Solar energySolar power generation increased from 753 GWh in 1990 to 697 TWh in 2019,achieving a 27%annual growth rate,the fastest of all renewable electricity technologies63.Over the last decade,the PV market has changed dramatically,from being dominated by Europe to becoming an Asia dominated market.Going forward,PV should continue to drive the growth of renewable,accounting for almost 60%of the expected growth of renewable power capacity by 2024.Along with PVs,concentrating solar power(CSP),has entered the market as another option for the generation of solar electricity.When backed up by thermal storage facilities,CSP offers fjrm,fmexible electrical production capacity to utilities and grid operators.697 TWhelectricity from solar in 2019 27%annual growth rateENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 22compared to 2010,when solar PV accounted only for 40GW and CSP for 1.2GW71.In 2019 alone,the PV market increased 12%,with 115GW new additions.Even though CSP is much less deployed,its capacity still grew 11%in 2019,with 600MW of capacity added.Fig.10Regionally,the past decade has seen strong demand for solar PV in Europe and the United States,but since 2015 China is the country with the largest PV power capacity,with more than 200 GW.The European Union follows with a cumulative installed PV power of 130GW.Looking forward,an estimated 1,955GW of solar PV is expected to be installed between 2019 and 202872.Currently,annual addi-tions are largely driven by utility-scale pro-jects but the deployment of distributed solar PV systems has increased significantly in recent years and should continue,with steady growth in commercial and industrial applications.Distributed solar PV is expec-ted to account for about 1,028GW,or just over 52.5%of overall capacity additions.Utility-scale installations are anticipated to make up the remaining 927GW or 47.5s.Fig.11As for CSP,development remains slow,des-pite interest.The United States and Spain are the two largest markets in terms of cumula-tive capacity(Spain with 2.3GW,U.S.with just over 1.7GW).The pipeline in other coun-tries is strong,with 230MW commissioned in Israel in 2019,followed by China with 200MW(the country has a target of 10 GW operational CSP plants by the end of 2020)and South Africa with 100MW(Kathu plant).GW23,841,272,7103,5141,4182,3232,7310,8413,9517,6633,2010020030040050060070020092010201120122013201420152016201720182019 PV CSPSource:REN21.2020.Renewables 2020 Global Status Report(Paris:REN21 Secretariat).Source:Guidehouse Insights,Market Data:Solar PV Country Forecasts,3Q 2019.Fig.11-GLOBAL ANNUAL SOLAR PV INSTALLED CAPACITY BY TYPE OF INSTALLATION:2019-2028Fig.10-GLOBAL SOLAR CAPACITY PER TECHNOLOGY,2009-2019 Total Residential Total Commercial Total Institutional Total Industrial Total Utility ScaleGW0501001502002503002019202020212022202320242025202620272028ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 23ENGIE HAS CAPABILITIES IN A WIDE RANGE OF SOLAR TECHNOLOGIESOver the years,ENGIE has made solar energy a key pillar,increasing from 621MW installed in 2015 to 2.6GW in 2020,and the objective of more than 4GW by 2021.The Groups portfolio covers photovol-taic and concentrated solar power,centralised,and decentralised production,combined with energy storage.ENGIE continues to invest in testing and validating new technologies.ENGIE R&D tests and validates new PV technologies to further reduce the LCOE of solar power,develop new techniques to operate and maintain solar farms at record-low costs and meet customer needs.z ENGIE operates a large test infrastructure in the Atacama Desert,in Chile,a region where solar power radiation is the highest in the world.The site is ENGIEs most important R&D facility for solar energy.Bi-facial solar panels,autonomous cleaning robots and sun tracker are all examples of market available products and future emerging technologies being assessed or compared here.z ENGIE is also testing the feasibility of organic photovoltaic films through several pilots and demonstration projects,in collabora-tion with industrial partners.The Group invested in Heliatek,a German industrial start-up specialised in the manufacture of organic photovoltaic film for buildings.This technology matches ENGIEs ambition to become an“energy architect”and growing clients demand for carbon neutral buildings.z In South Africa,the Kathu solar park is a landmark project for the Group.This concentrated thermal power plant,in the Northern Cape province,is the first CSP project for ENGIE,using parabolic troughs with more than 100MW capacity and equip-ped with a molten salt storage system that allows 4.5 hours of thermal energy storage,thereby limiting the variable nature of solar energy.ENGIE is also developing solar energy and mini-grid projects for energy access purposes,with ENGIE PowerCorner activities in sub-Saharan Africa.z Concerning PowerCorner,ENGIE is leading the development of solar mini-grids for rural communities in Africa.The Group is supplying electricity to the village of Ketumbeine,Tanzania,which has 800 residents.The gradual installation of such mini-networks,which will progressively expand,fulfills one of the Groups key objectives:to provide rural populations with access to eco-friendly energy.ENGIE installed2.6GWof solar energy in 2020ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 24HYDROPOWER,A FLEXIBLE AND RELIABLE ENERGYDue to the maturity and dispatchability of the technology,hydropower can be very attractive provided that the right location can be found.Hydroelectric power plants generate electricity using the kinetic and potential energy of water.The water drives turbines that in turn drive generators which convert mechanical energy into electricity.Hydropower plants can be divided into three main categories,based on the diffe-rent kinds of water storage:z Storage(or reservoir)hydropower is a type of hydropower in which the water is stored in a reservoir and released when needed to satisfy the energy demand.Such a scheme can be a multipurpose pro-ject allowing energy generation,flood control,water storage for domestic,indus-trial,agricultural uses,navigation,or recreational activities.z Run-of-river is a type of hydropower with no or very little storage capacity.This implies that the water released by the hydropower plant is equal to the natural flow of the river.z Pumped-storage is a type of hydropower project which aims to store energy,like a huge battery.The water is pumped from a lower reservoir to an upper reservoir for storage and can later be used for electri-city generation.Hydropower facilities accompany the deve-lopment of other RES,meeting demand when variable sources are not available and allowing energy storage when there is a sur-plus.Indeed,hydropower can be switched on rapidly to produce electricity at times of peak demand,and switched off at other times.This flexibility of operation makes it an important adjustment lever.Naturally,hydropower project are characterised by large upfront capital expenditure during construction.But this is followed by a very long period of operation(possibly more than 50 years)with low maintenance costs.Reservoirs also provide crucial water mana-gement services(such as protection from the impacts of unpredictable floods and droughts).Overall,with its 90ficiency in converting the kinetic energy to electricity,and the fact that no fuels are burnt and no direct emis-sions are released into the atmosphere,hydropower is commonly considered as a clean renewable energy.Greenhouse gas emissions from hydroelectricity are mainly due to the use of cement(depending on the type of cement and its production method)and,in the form of methane(the decomposi-tion of the flooded biomass),during the first years of filling reservoirs in tropical areas.HydropowerHydropower is a mature technology which has been developed for more than a century.It produces one of the cheapest renewable energy,as the LCOE of large-scale hydro projects can be as low as USD 0.020/kWh74.Hydropower is part of a logic of autonomy and sustainability,since the longevity of hydroelectric plants spans several decades.Yet,if hydropower is still by far the worlds largest renewable electricity technology,with 1,308GW installed globally 75,no major growth is anticipated.In fact,hydroelectric power is nearing its potential capacity limit in most developed countries 76,due to strong geographical constraints.Growth is mainly driven by China,which accounted for a spectacular 51.7%of the hydropower increase between 1990 and 2018.Hydropower is by far the worlds largest renewable electricity technology,with 1,308 GW installedand 4,306 TWh of electricity generation globallyENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 25Going forward,a major constraint for deve-lopment is that available sites for these types of projects are limited.Moreover,large hydropower projects can raise social acceptance issues and environmental aspects are always more considered.As a result,hydropower is moving beyond using large-scale dams with what is known as“run-of-the-river”plants.These hydropower projects use the natural flow of rivers and small turbine generators to produce energy.In recent years,they have emerged as a viable,low-impact alternative to existing large-scale projects.HYDROPOWER,THE WORLDS LARGEST SOURCE OF RENEWABLE ELECTRICITY Hydropower is the worlds largest source of renewable electricity generation and is expected to remain so in the coming years.In 2019,total global hydropower installed capacity reached 1,308GW and hydropower facilities generated a record 4,306TWh of electricitry77.This corresponds to around 16%of the total electricity produced in the world and more than 60%of electricity generated from renewable energies.During the year 2019,17GW of new installed capa-city were added,including 304MW of pum-ped storage78.Fig.12Geographically,the trio of China,North America and Brazil remain the worlds big-gest producers.China is the leader with a total of 356GW installed capacity,represen-ting 1/4 of the global hydropower installed capacity.Its Three Gorges Dam is the worlds largest hydropower station in terms of ins-talled capacity(22,500MW).The country is far ahead of the Brazil(about 8%of the glo-bal hydropower installed capacity),the United States(8%)and Canada(6%).However,development in China has slowed significantly over the past few years,as costs have increased due to resource availa-bility and social acceptance79.Interestingly some smaller countries appear to be among the leaders for hydroelectricity,for example Norway(32.6GW)or France(25.5GW)due to their specific geographical features.Fig.13Growth prospects for new hydropower capacity remain(121 addedGW by 2024)but the pipeline of projects is concentrated in emerging economies.Pumped storage hydropower capacity is expected to increase 26GW by 202380,with the largest growth happening in China driven by the increased need for system flexibility to reduce wind electricity curtailment and optimise coal and nuclear plant operations 81.121112451267129113080200400600800100012001400GW20152016201720182019Source:International Hydropower Association,Hydropower Status Report,2020.Fig.12-HYDROPOWER INSTALLED CAPACITY GROWTH,2015-2019Fig.13-DISTRIBUTION OF WORLDWIDE HYDROPOWER CAPACITY AS OF 2019,BY MAJOR COUNTRYChina 28%Brazil 8%United States 8nada 6%Russia 4%India 4%Norway 3%Turkey 3%Japan 2%France 2%Rest of world 32%Source:International Hydropower Association,Hydropower Status Report,2020.ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 26ENGIE HAS OPERATIONS IN 6 COUNTRIES ENGIE,with its 16.2GW82 installed capacity,has gained national and international recognition in the development and operation of hydroelectric plants.The Group is currently reinforcing its pre-sence in Portugal,adding 1.7GW of hydro capacity83 in the next months,totaling 18GW of hydropower installed capacity at the end of 2020.This flexible green capacity allows ENGIE to perfectly complement other existing renewable assets.ENGIE is the second largest national producer in France.In France,ENGIE is contributing to the promotion of hydropower through its two subsidiaries,Compagnie Nationale du Rhne(CNR)and La Socit Hydro Electrique du Midi(SHEM).z CNR operates hydroelectric facilities on the Rhne,mainly run-of-river plants.z SHEM operates hydroelectric installations in the Pyrenees,mainly reservoir power stations.In the United Kingdom,ENGIE operates Dinorwig,one of Europes largest pumped storage facilities and the fastest power generation asset in the UK,able to deliver 1.7GW in 16 seconds.In South America,ENGIE is Brazils leading independent power producer,operating 13 hydroelectric plants.In Brazil:z The Estreito plant,of 1,087MW,produces enough electricity to supply power to 4 million residents.z The run-of-the-river Jirau dam has a capacity of 3,750MW.It makes it possible to meet the countrys growing demand for energy with the guarantee of a secure supply.z The Ita hydroelectric plant cover 90%of Paraguays electricity demand and 19%of Brazilian consumption.In Chile,ENGIE led the construction of the Laja hydroelectric plant,the countrys first run-of-the-river power plant.A system of tur-bines installed at the foot of the dam avoids the need to divert the river and minimises the dams environmental impact.This project is one-of-a-kind in Chile.18GWof hydropower installed capacity by ENGIE at the end of 2020ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 27GEOTHERMAL ENERGY IS A LOCAL,STABLE AND RENEWABLE SOURCE OF ENERGYThe term geothermal energy encompasses all the applications that make it possible to reco-ver the thermal energy contained in the sub-soil or groundwater(steam or hot water in aquifers or faulted reservoirs).Generally,the geothermal fluid is produced through wells drilled to tap the geothermal resources and reinjected at a lower temperature after ther-mal energy recovery.Boreholes(closed-loop system)are also used to recover the heat from the earth where a suitable geothermal reservoir is not available.The thermal energy can be used directly or converted into elec-tricity(through steam or organic rankine cycle turbines),hotter water or cool water through heat pumps.There are two main types of geothermal energy,and associated applications:z Shallow geothermal energy,which can be used with ground-source heat pumps for heating and/or cooling residential and commercial buildings as well as eco-dis-tricts or industrial process.Located less than 200m below ground level,these geo-thermal resources below 10 and 25C are well adapted to meet heating and cooling demands ranging from 200kW to 3MW.z Deep geothermal,which can be used directly or through heat pumps for district heating and cooling,agriculture,aqua-culture,and in industrial process heating with temperatures above 30 C.Deep geothermal can also be used for power generation if temperatures reach more than 110 C.These resources are usually found from 500 m to 4500 m below ground level,depending on site location and geology.Among the strengths of geothermal energy compared to other renewable energies:z It is a continuous resource,not affected by seasons or wheather,usable 24/7 for baseload production;z As most of the production facilities are underground,footprint of geothermal production facilities is limited;z As a local energy,it does not require any supply chain and is not exposed to market price variability;z It can be coupled with underground energy storage solutions to enhance effi-ciency or thermal solar.On a general basis,compared to other renewables,geothermal energy requires higher investment costs but thanks to limited operational costs and higher load factor with Geothermal energyGeothermal energy(i.e.“heat from the earth”)is a continuous,renewable and local source of energy.It offers a considerable potential to achieve a carbon neutral future:Through power generation,where high temperature resources are available.Unlike solar and wind,geothermal power is a stable energy that can provide high capacity baseload power and ancillary services to the network.Through renewable heat and cold production for urban networks,eco-districts,buildings,and multiple industrial and agricultural applications.Geothermal energy is:a local source of energy a continuous resource that can provide high capacity baseload power a competitive solution on different markets ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 28baseload production,it is a competitive solu-tion on different markets.The main challen-ges for geothermal development are subsurface uncertainties and longer develop-ment time especially for deep geothermal resources that need to be confirmed.On top of specific technical expertise required in geosciences and drilling,risk mitigation funds or insurance schemes are available in many countries to reduce the financial risk at the early stage of geothermal development.Extensive R&D programs are on-going wor-ldwide with a focus on innovative techniques to improve resource assessment,and drilling technologies to reduce costs and risks.GEOTHERMAL HAS CONSIDERABLE POTENTIAL FOR GROWTH After decades of slow development,the past few years have seen a revival of interest in geothermal applications in terms of electri-city generation and direct uses of heat(e.g district heating)84.Worldwide,about 13.9 GW geothermal power generating capacity were installed by end 201985.Geothermal electricity genera-tion totalled around 95TWh,while direct useful thermal output reached around 117 TWh86.In terms of geographies,the United States,Indonesia and the Philippines lead the world for cumulative installed capa-city87.But over the past few years Turkey and Indonesia have been the most active geothermal markets88.Fig.14Looking forward,geothermal global installed capacity is 7%to 16.5GW by 2022,with Indonesia,Kenya,Turkey and the Philippines responsible for two-thirds of this growth89.In Europe,electricity generation from geother-mal resources has also a huge potential,esti-mated at 34 TWh,or about 1%of the projected total electricity supply in the EU in 203090.Fig.15The potential for development of geother-mal energy for heating and cooling by direct-use or through heat pumps is also tremendous worldwide and should play a significant role in a future low carbon world for cities or industries.With 5.5GWth ins-talled capacities,deep geothermal for dis-trict heating is already significantly developed in Europe,especially in Iceland,Turkey and France,and the dynamic for new geothermal DHC is particularly strong in countries such as Netherlands and Germany.The potential for development in North America(cities,campus,)is huge,as well as the use of geothermal energy for district cooling.The use of shallow geothermal,already widespread in some European coun-tries(Finland,Denmark,Norway,Austria and Switzerland),should also rise in many countries worldwide in answer to meet energy transition targets.Fig.14-NEWLY INSTALLED GEOTHERMAL POWER CAPACITY IN 2019,BY COUNTRY Fig.15-PROJECTED GEOTHERMAL POWER CAPACITY IN 2025 615275455160182232GermanyUnited StatesMexicoJapanCosta RicaKenyaIndonesiaTurkeyMW59161250631455762197478CaribbeanSouth AmericaOceaniaAfricaEuropeNorth&LatinAmericaAsiaMWSource:REN21.2020.Renewables 2020 Global Status Report(Paris:REN21 Secretariat)Source:Gerald W.Huttrer,Geothermal Power Generation in the World 2015-2020 Update Report,World Geothermal Congress,May 2020.ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 29ENGIE,A STRONG PLAYER IN GEOTHERMAL SOLUTIONS ENGIE is one of the few players combining all the competences to develop geothermal solutions on all energy markets worldwide.Geothermal is already embedded in the DNA of ENGIE,through a strong historic position in France for direct-use in district heating(Paris and Ile-de-France region,more recently Bordeaux),a new dynamic in Europe(Netherlands,Belgium)and promising oppor-tunities in the United States(especially for campuses).In power generation,ENGIE has developed in Indonesia,one of the most dynamic markets for geothermal power,two projects from explo-ration to operation(Muara Laboh,85 MW,operating since December 2019 and Rantau Dedap,which shall be commissioned in Q1 2021)in a challenging environment.Storengy,100filiate of ENGIE,masters all subsurface compe-tences in geosciences and drilling to develop geothermal energy bringing innovation to geothermal solutions through a dedicated R&D program and is developing a geothermal project portfolio focusing on the most promising opportunities within ENGIEs geo-graphical footprint,combining all ENGIE skills in renewables and customer solutions.Power generation:ENGIE works on pilot projects to demonstrate innovative concepts.A zero-emission power plant in the geothermal fields of Tuscany,Italy:the project consists in developing,building,and operating a geothermal power plant of 5MW.It will be a zero-emission plant thanks to an innovative solution:extracted geothermal fluid will be reinjected in the same reservoir together with non-condensable gases(CO2 and others),sustaining a production cycle without atmospheric emissions.When it is fully operational,the geother-mal plant will reach 40,000MWh per year(enough to supply elec-tricity to 14,000 families),generating also important economic benefits for the local communities.Direct use for District Heating:the first geothermal doublet in the French Aquitaine Region.In 2017,the city of Bordeaux,France,selected ENGIE,led by Storengy and ENGIE Solutions,to design,build and operate a new district heating network in central Bordeaux under a 30-year public service delegation contract.The flagship of the project was an innovative well design to carry out the exploration of an unknown deep reservoir and secure a fall-back position to a pro-ven one.A special case:Marine geothermal energy.Marine geothermal energy makes use of the difference in tempe-rature between warm surface water and cold water found on the seabed.In Marseille,France,the Thassalia marine geothermal power station is the first in France,and even in Europe,to use the seas thermal energy to supply linked buildings with power for heating and cooling over an area which will eventually comprise 500,000m while reducing greenhouse gas emissions by 70%.Geothermal is already embedded in the DNA of ENGIE,through a strong historic position in France for direct-use in district heating ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 30BIOMASS IS A VERSATILE FEEDSTOCK Biomass is a versatile feedstock that can be converted into energy using a wide range of conversion technologies.The term“solid biomass”encompasses a broad range of organic material such as trees,plants,and dry agricultural and urban waste91.It can be used for heating,electricity generation,and transport fuels and is generally classified as follows:z Primary biomass:from forestry(wood)and agriculture(including algae,oil&sugar biomass).z Secondary biomass:by-products from the 1st conversion of primary biomass(mainly wood pellets,wood chips).z Tertiary biomass:post consumer organic material(waste)like recycled wood,refuse derived fuels from municipal waste and solid recovered fuel from sorted orga-nic waste.The use of solid biomass is typically catego-rised as either“traditional”or“modern”.Traditional use of biomass is the use of solid biomass with basic technologies for cooking or heating.Modern biomass relies on more advanced technologies,mainly in electricity generation and industrial applications.A multitude of biomass feedstock can be converted using a wide range of conversion technologies:z Direct combustion is the usual method of converting ligneous biomass(logging slash,straw or energy crops)into energy.Biomass is burned in a boiler to generate heat,electricity,or both(cogeneration).z Another family of processes consist in converting biomass into green gases,through anaerobic digestion of wet bio-mass,or gasification of dry biomass(the section on biogas and biomethane will provide more details on these types of solutions).Biomass is considered to have a neutral car-bon balance,as the carbon released when solid biomass is burned will be re-absorbed during tree growth92.Yet,the use of biomass still questions about its carbon neutrality,resource availability and impacts on the environment,biodiversity.The carbon balance of biomass to heat and power depends on a wide range of factors,inclu-ding forest management,harvest area and source of biomass(i.e.waste from other forest activities or specific tree felling).The time lapse for the carbon released during combustion to be stored through forest growth can also vary,from years to decades Solid biomassBiomass,mainly in the form of wood,is the oldest form of energy used by humans.This energy makes it possible to produce heat by the combustion of organic materials(wood,plants,dry agricultural waste such as straw etc)and electricity when that heat is converted to steam.Biomass is a fmexible and dispatchable source for heat and power generation.Solid biomass can be used for heating,electricity generation,and transport fuels ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 31and the value chain emissions depends on conversion technology,fuels used,transport etc.Moreover,biomass use may compete with other,non-energy uses of agricultural residues such as straw,or with wood proces-sing industry(i.e.pulp and paper).Lower resource availability due to population growth and deforestation as well as climate change could also impact biomass feedstock.There are however several ways to address these risks and to meet increasing energy demands.These include increasing the area of managed forests,getting access to more efficient primary resources(e.g harvesting residues),using the best technology avai-lable to increase efficiency,increasing the use of secondary resources,developing use of tertiary resources and the principle of the cascading use of biomass,whereby it is used more than once,with energy conversion typically as the last step.Energy poly-gene-ration(e.g tri-generation of electricity,heat,and cooling)is also an interesting option for biomass energy conversion as it may subs-tantially increase the efficiency of energy conversion.In addition,international trade of biomass will likely play a role in meeting the increasing global demand.MARKETS FOR BIOMASS-DERIVED ENERGY Markets for biomass-derived energy are expected to increase in the long term.In 2019,bioenergy accounted for 12%(or 45.2 EJ,12,555 TWh),of final energy consumption 93.Yet,around two thirds of the biomass is consumed in developing countries for cooking and heating.Excluding the traditional use of biomass,modern bioe-nergy provided 19.3EJ(5,361TWh)or 5.1%of total global final energy demand in 2018.This corresponds to around half of all renewable energy in final energy consump-tion.Modern bioenergy provided around 13.9 EJ for heating(8.6%of the global energy supply used for heating),3.7EJ in transport(3.1%of transport energy needs)and 1.7EJ to the global electricity supply(2.1%of the total).Fig.16Today,the largest and most well-established global market for solid biomass is that of wood pellets.Europe is currently the largest consumer,the largest producer and the lar-gest importer of wood pellets in the world.North America follows in second place94.However,in recent years,the sector has declined in Europe as governments have reached tighter regulation of emissions and biomass sustainability95.Going forward,the greatest deployment is anticipated in areas with access to biomass resources and poli-cies to phase out coal-fired boilers to improve air quality.Asia in particular is set to be among the most promising markets.China has recently introduced a new clean-heat initiative that is expected to raise the deployment of biomass-and waste-fuelled co-generation plants96.5%3%2(%0%Pu0%Heat,buildingsHeat,industryTransportElectricitySource:REN21.2020.Renewables 2020 Global Status Report(Paris:REN21 Secretariat).Fig.16-ESTIMATED SHARES OF BIOENERGY IN TOTAL FINAL ENERGY CONSUMPTION,BY END-USE SECTOR,2018 Traditional biomass Modern bioenergy Non-bioenergyENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 32ENGIE SUPPLIES,TRADES,TRANSPORTS AND HANDLES BIOMASS With over 50 sites in Europe,the United States and Brazil,ENGIE supplies,trades,transports and handles 2.5 million tons of bio-mass a year.ENGIE is a player in all parts of the biomass to energy value chain and follows a strict policy of sustainable forest management and promotion of biodiversity.In France,ENGIE is building a biomass combined heat and power plant(Novawood project).The 14.6MW biomass combined heat and power plant will replace two coal-fired boilers in Laneuville-devant-Nancy(France).To consume less energy and use it better,the project will use sustainable reclaimed wood as fuel,60%of it collected in the Grand Est region and 40%coming from replaced railway sleepers from the national rail network.It will produce 115GWh of green electricity annually,equivalent to the consump-tion of 50,000 homes.In addition to reducing CO2 emissions,it will create more than 100 jobs in plant operation and fuel preparation97.In Switzerland,to help the Nutrition&Health company DSM Nutritional Product reduce its carbon footprint,ENGIE supplies steam and power through a single biomass cogeneration unit under a 20-year contract.The biomass steam generation plant runs on locally sourced wood chips(within a 100km radius maximum)and supplies green energynot only to DSM,but also to several other manufacturers as well as the equivalent of 17,500 local households.The plant generates 67GWh of steam and 42GWh of renewable electricity per year and is one of Switzerlands largest and efficient biomass plants.ENGIE is a recognised leader in biomass trading,logistics and sto-rage and has a 10%market share in the global trade in industrial wood pellets(2.5MT).In Japan,in 2018,ENGIE signed a 15-year biomass supply contract with Mitsui&Co.The contract secures the delivery of 4.2million tons of wood pellets over a period of 15 years to a power plant being constructed by Kansai Electric in the port of Kanda,which is expected to begin operations in 2021.75%of the wood pellets is expected to be sourced from Australian suppliers,using sustai-nable fibre from certified and sustainably managed forest.ENGIE supplies,trades,transports and handles2.5 million tonsof biomass a yearENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 33BIOGAS AND BIOMETHANE:CREATE A VIRTUOUS CIRCULAR ECONOMY Biogas and biomethane are an opportunity to build a new filire and create a virtuous circular economy with local stakeholders.Biogas is a gas mixture composed mainly of methane(CH4)and carbon dioxide(CO2).Biogas production plants can process a wide range of organic materials,including sewage sludge,animal and vegetable by-products,household biowaste and crops.Biogas can also be upgraded to produce biomethane after removal of the CO2 and other impurities.Biogas and biomethane can be produced using different technological pathways:z Anaerobic digestion is the conversion of wet biomass(e.g agriculture residues,manure,industrial/municipal wastes.)or microalgae into biogas through a disinte-gration process.Biogas can be used direc-tly for cooking and lighting,for combined heat and power(CHP)or be upgraded to become biomethane,which can be injec-ted into the grid or used as biofuel for transportation(bioNGV).z Gasification is an alternative technology consisting in the gasification of lignocellu-losic(dry)biomass inputs(such as woods,forests,bio-wastes)and non-recyclable waste such as Solid Recovered Fuels into a range of end-products,and in priority syngas.Syngas can be used directly for power and heat,be transformed into bio-methane(grid use or bioNGV)thanks to the methanation process or into other products such as liquid biofuels for trans-port or industry like biokerosene or methanol.There have been three generations of bio-methane to date.These three generations involve different production techniques and biomass resources and can be fed into exis-ting gas networks.z 1st generation biomethane(in industriali-sation phase):produced by methanisation from organic,domestic,farming or was-tewater plant waste.z 2nd generation biomethane(at the pilot stage):produced by gasification followed by methanation from lignocellulosic bio-mass(wood,straw)and Solid Recovered Fuels(plastics,textile,foam,etc.).z 3rd generation biomethane(emerging technology under R&D):produced from micro-algae.Fig.17Biogas and biomethaneAs a fmexible energy source,biogas has the potential to be used not only for renewable electricity but also for heat and,if upgraded to biomethane,to replace a portion of natural gas demand.Moreover,with modern societies producing ever-increasing quantities of organic waste,biogas and biomethane can be an answer to the major challenge of waste incineration,energy recovery and to the development of sustainable agriculture.Biogas and biomethane technologies can create a virtuous link with the agricultural sector,contribute to local employment and rural development and put in practice the concept of a circular economy.ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 34Despite its potential,biomethane produc-tion costs are still significant compared to that of natural gas.The global average cost of biomethane from anaerobic digestion varies between 70/MWh and 90/MWh(0.65/m3 to 0.90/m3)in 202098.Biogas purification represents at least 30%of the biomethane production costs.Studies conducted for the French market estimate the value of positive externalities of biome-thane between 55-75 EUR/MWh99.Among these externalities,the recovery of agricul-tural waste and the reduction in the use of chemical fertiliser.There are also social and economic externalities,such as job creation in rural areas to ensure the development and operation of facilities.Engaging in bio-methane production can turn into additional income for farmers(15,000 to 20,000 euros)as they can diversify their activity while contributing to the greening of the energy mix.In France,job creation due to the deve-lopment of anaerobic digestion represents nearly 5,000 jobs.Moreover,where there is no grid access for heat and electricity,decentralised applications of biogas in rural zones are promising as needed wet biomass input is local and rural.Future technological developments will imply to industrialise the technology for larger scale.In this regard there is a growing interest in solid fuels(bio-mass,waste,)gasification.Production costs are relatively high today,above 100MWh(1.0/m3),but costs could come down if large facilities are deployed100.Fig.17-BIOGAS AND BIOMETHANE PRODUCTION PATHWAYS Pyrolysis gasification in low oxygen contentResources1G3G2GTechnology conversionMethanation(Anaerobic)ValuationAgricultural residues(straw,)ManureUrban and industrial waste(from food industry,)Woody biomassFood and agriculture residuesSolid recovered fuelAlgaeDigestateBiogasSyngasHydrogenBiomethanePurificationPurification/methanationHeat and electricity production,separately or in cogenerationInjection into the gas networkFuel for vehicule(urban Mobility,goods transports)DigesteurSource:ENGIE Impact study on biogas cost curves.In France,job creation due to the development of anaerobic digestion represents nearly5,000 jobsENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 35BIOGAS AND BIOMETHANE HAVE SIGNIFICANT POTENTIAL FOR FURTHER GROWTHThe biogas market has made tremendous advances in development since the early 2000s.It is expected to continue to grow with a large and relatively established mar-ket in Europe and a rapidly growing market in Asia Pacific101.Currently,Europe,China and the United States alone account for 90%of the global biogas production102.There is around 18GW of installed power generation capacity running on biogas around the world and capacity increased on average by 4%per year between 2010 and 2018103.In 2018,biogas and biomethane production was around 35 million tonnes of oil equiva-lent(35 Mtoe or around 407TWh of energy equivalent).The biogas market largely deve-loped out of strong policy support and incentives along with regulations mandating certain levels of adoption.As for biome-thane,its production is also growing expo-nentially.Since 2010,global biomethane production has increased from 0.5 billion cubic meters(4.8TWh)to almost 3 bcm in 2017(29.3TWh)104.Most of the growth has happened in Europe,but biogas upgrading is expanding around the world.Growth drivers in this market include government regula-tions,increasing demand for renewable energy,emission reduction targets as well as a growing need to treat urban and rural wastes.While it is already significant,it is only a fraction of the estimated overall potential.According to the IEA.full utilisa-tion of the sustainable potential could cover some 20%of todays global demand for gas105.Fig.18The consumption of biogas will increase considerably until 2030 and beyond.The potential for biomethane is also enormous.Biogas and/or biomethane can be produced in every part of the world and the availabi-lity of sustainable feedstocks for these pur-poses is set to grow by 40%by 2040,according to the IEA106.Fig.18-OUTLOOK FOR GLOBAL BIOGAS CONSUMPTION BY SECTOR:HISTORICAL,STATED POLICIES,AND SUSTAINABLE DEVELOPMENT SCENARIO According to the IEA,Biogas and biomethane production was around407TWhof energy equivalentFull utilisation of the sustainable potential could cover some20%of todays global demand for gasMtoeStated PoliciesSustainableDevelopment35030025020015010050 20182030204020302040 Upgrade to biomethane Industry Buildings and agriculture Power and heatSource:IEA(2020),Outlook for biogas and biomethane:Prospects for organic growth,IEA,Paris.All rights reserved.ENGIE Renewable Energy Sources Outlook|Panorama of renewable solutions 36ENGIE WORKS PROACTIVELY TO DEVELOP BIOGAS ENGIE works proactively to develop biogas(mainly for upgrading to biomethane)and is positioned throughout the value chain from project development,in close collaboration with farmers,to sales to end customers.With its long-lasting natural gas expertise,strong local foothold,and
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