scaling-up renewables: critical success factors€¦ · wind and solar pv comprise two thirds, or...
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© OECD/IEA 2015 © OECD/IEA 2015
Scaling-up Renewables: Critical Success Factors
Dr. Paolo Frankl Head Renewable Energy Division
International Energy Agency
WBCSD RE LCPTis, COP-21, Paris, 4 December 2015
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INDCs very good first step but not enough
Global energy-related GHG emissions
Five measures to achieve a peak in emissions around 2020; investment in renewables to reach $ 400 bn/y by 2030
20
25
30
35
40
2000 2014 2020 2025 2030
Gt C
O2-
eq
Bridge Scenario
INDC Scenario Energy
efficiency
49%
Reducing inefficient coal
Renewables investment
Upstream methane reductions
Fossil-fuel subsidy reform
17%
15%
10%
Savings by measure, 2030
9%
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Innovation critical to stay below 2°C
Global energy-related GHG emissions by scenario
By 2040, renewables should generate more than half global electricity in the 450 Scenario, with investments reaching $470 bn per year
Five key actions with existing technologies
Innovation to support accelerated transition
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Power mix: towards a shift reversal
Evolution of the global power capacities in the 450 Scenario
Renewables should account for over 50% of global electricity generation by 2040
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The share of renewables in net additions to power capacity continues to rise with non-hydro sources reaching nearly half of the total
Renewables becoming the largest source of new power capacity
World net additions to power capacity
Analysis from the IEA Medium-Term Renewable Energy Market Report 2015 and the New Policies Scenario of the World Energy Outlook 2015.
0
200
400
600
800
1 000
1 200
1 400
1 600
2008-2014 2014-20
GW
Fossil fuels Nuclear Hydropower Non-hydro renewables
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Wind and solar PV reach new lows
Price competition, long-term contracts, good resources and financial de-risking measures create lower-cost deployment opportunities in newer markets
Long-term contract prices for new renewable power to be commissioned in 2016-2019
Utility-scale solar PV Onshore wind
Chile USD 65-70/MWh
Brazil USD 81/MWh
United States USD 65-70/MWh
India USD 88-116/MWh
United Arab Emirates USD 58/MWh
South Africa USD 65/MWh
United States USD 47/MWh
Brazil USD 49/MWh
South Africa USD 51/MWh Australia
USD 69/MWh
Turkey USD 73/MWh
China USD 80–91/MWh
Germany USD 67-100/MWh
Egypt USD 41-50/MWh
Jordan USD 61-77/MWh
Uruguay USD 90/MWh
Germany USD 96 /MWh
Canada USD 66/MWh
This map is without prejudice to the status or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area
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0
200
400
600
800
1 000
1 200
1 400
1 600
Capacity growth Capacity growth New investment New investment
2008-14 2014-20 2008-14 2014-20
GW / U
SD 2
014
billio
n
Ocean Geothermal STE Solar PV Offshore wind Onshore wind Bioenergy Hydropower
More renewables for less money But how much is needed?
Wind and solar PV comprise two thirds, or USD 900 billion, of new investment needs to 2020 and capacity increases are being made at lower cost than in the past
Renewable power capacity – net additions versus new investment
USD 2014 GW
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Enhanced policies can get RE growth back on track to meet climate goals
Policy enhancements can accelerate renewables growth by 25% vs. the main case and increase annual investment to over USD 315 billion by 2020
World renewable power annual capacity additions, main vs. accelerated case
0 20 40 60 80
100 120 140 160 180
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GW
United States Japan EU-28 Other OECD India China Brazil Other non-OECD
Historical Forecast
0
20
40
60
80
100
120
140
160
180
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GW
United States Japan EU-28 Other OECD India China Brazil Other non-OECD Main case
Historical Accelerated case
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VRE share of total annual electricity output
Source: IEA estimates derived in part from IEA Medium-Term Renewable Energy Market Report 2015.
Towards high shares of variable renewables
Share of variable electricity generation in 2014 and 2020
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2. Make better use of what
you have
Operations
1. Let wind and solar play their
part
3. Take a system wide-strategic approach
to investments!
System friendly
VRE
Technology spread
Geographic spread
Design of power
plants
Three pillars of system transformation Investm
ents
More flexible systems increase both diversification and resilience increase energy security
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High Capex: Cost of Capital matters
Market and regulatory risks can increase weighted average cost of capital and undermine competitiveness of PV and Wind power
Impact of weighted average cost of capital on the levelised cost of solar PV
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Policy implications: Enabling environment is crucial
Providing financial support
Cost reduction through • Technology
development • Scale up • Learning
before 2013
Enabling policy and market framework which allows low cost financing
and generation
• Competition • Predictable long-term
income streams • Short-term market value
signals • Portfolio development • System Integration
Cost reduction through • Technology innovation • Financial innovation • New markets with best resources
2014-2020
Main Policy
Key Characteristics
Cost reduction
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Reserve slides
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A decisive moment for the future of renewables Increasingly affordable renewables are set to dominate the growing
power systems of the world. The effect of the lower oil price environment on global renewable growth
is more perception than reality, though biofuels and heat sectors are exceptions in some circumstances.
Yet, wavering policy commitments risk undermining investor confidence and are dampening growth
Further policy action is needed for heat and biofuel sectors, in the face of structural challenges.
While variability of renewables is a challenge energy systems can learn to
adapt to, variability of policies poses a far greater risk.
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As the OECD slows, non-OECD countries account for two-thirds of renewable growth, driven by fast-growing power demand, diversification needs and local pollution concerns
Growth shifting to emerging markets and developing countries
Shares of net additional renewable power capacity, 2014-20
EU 13%
USA 9%
Japan 5%
Rest OECD 8%
China 38%
India 9%
Brazil 5%
Rest non - OECD 13%
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0
50
100
150
200
250
300
2006 2008 2010 2012 2014 2016 2018 2020
USD
2014
/MWh
Brazil PPA Egypt PPA US PPA South Africa Round 4
How quickly can RE costs converge towards best world benchmarks?
Typical onshore wind levelised costs of electricity generation (2006-2020)
Medium-Term Benchmark cost 60-80$/MWh
Great difference in generation costs persist due to different system prices and cost of financing