investment and market trends for a low carbon transition motoi.pdf · lower energy prices and...
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© OECD/IEA 2016 © OECD/IEA 2016
Irish Renewable Energy Summit, Dublin
13 December 2016
Investment and Market Trends for a Low Carbon Transition
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© OECD/IEA 2016
The context
Investment is the lifeblood of the energy system, which determines long-term trends of supply, emissions and fuel demand
Investors face new challenges and opportunities from recent trends
Macroeconomic uncertainty and structural change affects demand patterns
The energy sector faces accelerated technological change
Lower energy prices and increasing inter-fuel competition reshape investment
Global energy investment declined in 2015, mainly due to lower oil and gas spending
Share of renewables in investment boosted by technology progress, strong policy support and growth in good resource markets
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Power Generation
23%Biofuels and Solar
Heat1%
Renewables 17%
USD 1.8 trillion
Investment flows signal a reorientation of the global energy system
An 8% reduction in 2015 global energy investment results from a $200 billion decline in fossil fuels, while the share of renewables, networks and efficiency expands
Oil & Gas46%
Coal 4%
Electricity Networks
14%
Energy Efficiency
12%
Global Energy Investment, 2015
Thermal Power
7%
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USD (2015) billion
0 50 100 150 200 250 300 350
India
Russia
EuropeanUnion
UnitedStates
China
Energy supply investment in 2015, selected markets
Top five markets comprised over half of global energy supply investment
Boosted by record power sector spending, China regains its position as top investment market, while the US declines due to sharply lower oil and gas investment
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0
100
200
300
400
500
600
700
800
9002
01
0
20
11
20
12
20
13
20
14
20
15
20
16
20
17
USD
(2
01
5)
bill
ion
Unprecedented wave of investment cuts in the upstream oil and gas industry
Global upstream capital spending 2010-2017
Cost deflation, efficiency improvements and reduced activity levels might lead for the first time to three consecutive years of investment decline
-24%
-25%
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Renewables investment buys much more electricity
Investment in renewables-based capacity more than covers 2015 global electricity growth. Wind leads, surging 35% in 2015 on economics and record offshore growth
0
50
100
150
200
250
300
350
2011 2013 2015
USD (2015) billion
Hydropower Solar PV Wind Other renewables
0
50
100
150
200
250
300
350
400
2011 2013 2015
TWh+33%
+0%
Global renewable power investment Generation from investment in capacity
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Capital cost developments across the energy spectrum
Massive cost deflation is reshaping competition between fuels and technologies
But some other technologies, such as nuclear power, carbon capture and storage and energy-efficient building renovations risk falling behind in the future
0
20
40
60
80
100
120
2008 2009 2010 2011 2012 2013 2014 2015 2016
20
08
= 1
00
Upstream oiland gas
Onshorewind
Grid-scalebatteries
Solar PV -utility scale
LEDs
g
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A diverse regional investment picture for renewables
China – the largest destination for investment
Renewables investment by country/region
0
25
50
75
100
1252
00
0
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
USD
(2
01
5)
bill
ion
China European Union United States Japan
India Rest of OECD Rest of non-OECD
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
2010 2011 2012 2013 2014 2015
USD
(2
01
5)
bill
ion
0
50
100
150
200
250
300
2015
USD
(2
01
5)
bill
ion
In electricity networks, batteries accelerate though grids comprise most investment growth
Global grid-scale battery storage investment Total networks investment
x10
0.4%
Grid-scale battery storage spending has expanded tenfold since 2010. Their value lies most in complementing grids that constitute the bulk of investment
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0
200
400
600
800
1 000
1 200
Gas Coal
20
15
(U
SD)
mill
ion
0
10
20
30
40
50
60
70
Gas Coal
20
15
(U
SD)
bill
ion
Subcritical
High efficiency
0
10
20
30
40
50
60
70
Gas Coal
20
15
(U
SD)
bill
ion
Infrastructure investment cost for a 1 GW power plant in AsiaCoal and gas-fired power investment in Asian markets (2015)
Infrastructure costs favour coal power over gas in Asian energy importers
Asian markets comprised 85% of global coal power investment, while N. America and Middle East, with robust infrastructure, favoured gas for new fossil fuel power
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Global nuclear investment remains robust due to China
Economics and public concerns remain a challenge to significant nuclear expansion
Nuclear construction starts, 2000-2015
0
2
4
6
8
10
12
14
16
18
202
00
0
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
GW
Rest of world China
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Are we decarbonising the power sector fast enough?
At 420kg CO2/MWh in 2015, generation investments slowly reduce emissions intensity of existing power fleet, but remain well above 100kg/MWh to meet 2DS
0
100
200
300
400
500
600
700
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
kgC
O2
per
MW
h
Global average CO2 emissions per MWh from new power generation capacity
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Conclusions
Global energy investment in 2015 is 8% lower. The share of oil & gas declined, while that of renewables, efficiency and nuclear rose
Massive cost deflation across the entire energy spectrum is reshaping competition between fuels and technologies
Unprecedented cuts in upstream investment are shifting the geography of oil production
Renewables investment accounts for more than two-thirds of power generation and more than covers global electricity demand growth
The IEA will continue to measure investment flows and assess their implications for the global energy sector