renewables: where do we stand€¦ · © oecd/iea 2014 renewables: where do we stand cédric...

© OECD/IEA 2014

Renewables: where do we stand

Cédric Philibert

Renewable Energy Division

International Energy Agency

IEA ENERGY DAY at COP20, Lima, Peru, 5th December 2014

© OECD/IEA 2014 Medium-Term Renewable Energy Market Report 2014

Renewable electricity projected to scale up by 45% from 2013 to 2020

Strong momentum for renewable electricity

Global renewable electricity production, historical and projected

0%

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5001 0001 5002 0002 5003 0003 5004 0004 5005 0005 5006 0006 5007 0007 500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

TWh

Hydropower Bioenergy Onshore wind

Offshore wind Solar PV Geothermal

STE/CSP Ocean % total generation (right axis)

Historical data and estimates Forecast

Natural gas 2013

Nuclear 2013


Increasing risks are expected to slow renewable growth

Renewable power annual net capacity additions, historical and projected

Policy and market risks threaten to slow deployment momentum for renewables

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GW

OECD Other non-OECD China


Role of renewable use in heat also increasing, but policy support still limited

Modern renewable heat continues to grow, providing 9% of world final energy use for heat in 2020 Broader adoption of support policies for renewable heat could reduce

energy consumption and enhance energy security

Countries with targets and support policies for renewable heat

This map is without prejudice to the status of 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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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020

(2DS)

2025

(2DS)

Billion

litres

Biodiesel (advanced)

Ethanol (advanced)

Biodiesel (conventional)

Ethanol (conventional)

Biofuels share in total

transport (energy content)

Transition to advanced biofuels for transport threatened by policy uncertainty

Conventional biofuel production continues to grow, and will provide 4% of road transport fuel demand in 2020

First commercial-scale advanced biofuel plants coming on line Without adoption of long-term policy framework, advanced biofuels sector

faces grim future

Projected biofuel production versus targets in IEA 2°C Scenario (2DS)

Historical Projection Scenario


Renewables are major source of new generation

Renewables account for 80% of new generation in OECD

Limited upside in stable markets with slow demand and growing policy risks

Cumulative change in gross power generation by source and region, 2013-20

Renewables are largest new generation source in non-OECD, but meet only 35% of growth

Large upside for dynamic markets with fast-growing demand

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2013 2014 2015 2016 2017 2018 2019 2020

TWh

OECD

Renewable generation Conventional generation

2013 2014 2015 2016 2017 2018 2019 2020

Non-OECD

Renewable generation Conventional generation


Solar PV annual capacity additions (GW)

Stronger outlook for solar PV

Strong growth in emerging markets and some OECD areas

Policy debates over distributed PV a source of forecast uncertainty

This map is without prejudice to the status of or sovereignty over any territory to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.


Renewables becoming a cost-competitive generation option in more cases

In some dynamic markets with country-specific conditions and market frameworks, new onshore wind is the economically preferred option versus new fossil fuel plants (e.g. Brazil, Chile and South Africa) But fossil fuel subsidies can distort this picture

Germany LCOEs versus wholesale prices

Notes: Onshore wind full load hours are assumed at 2000 and that for CCGT is 3500.

Source: IEA analysis with day-ahead average base-load wholesale prices for 2013

from Bloomberg LP.

In some stable markets, onshore wind with good financing cheaper than new CCGT plants But market design based

on wholesale pricing may not provide adequate remuneration

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3% 5% 7% 9% 11% 13% 15%

USD

2013

/MWh

Weighted average cost of capital (real)

Germany onshore wind LCOE

Germany CCGT LCOE

Wholesale price (2013 average)

Typical CCGT LCOE

Typical onshore wind LCOE


Generation costs for solar PV falling rapidly

Historical and projected LCOEs for typical solar PV systems, beginning year

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USD

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/MWh

Utility ground-mounted

Global reference

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Commercial rooftop

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Residential rooftop

Projections Projections Projections

Growing economic competitiveness of utility-scale solar PV, with fewer incentives, versus other bulk power sources

At present, the combination of low financing costs, low system prices and excellent resources remains exceptional

Large ranges still exist between markets, i.e. China at low end, Japan at high end


Higher solar PV under enhanced case

With certain market and policy enhancements - Fair rules and appropriate electricity rate design for allocating the costs and benefits from

fast-growing distributed solar PV

Greater implementation of ambitious policy aims (e.g. Middle East)

Faster-than-expected decreases in solar PV costs

Solar PV capacity could top 500 GW globally in 2020

Solar PV cumulative capacity, baseline versus enhanced case

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2013 2020 2020

Baseline Baseline Enhanced High

Cumulative capa

city (GW)

Rest of World Australia France United Kingdom India Italy United States Japan Germany China


Biomass power generation to increase 50%

Ambitious plans for agricultural residue use, and waste-to-energy projects, lead to tripling of capacity in China

Targets for biomass power in the European Union remain an important driver, despite growth in some markets slowing down

Bioenergy electricity generation


Other technologies growing slowly

Potential of offshore power remains high, but technical, financial and grid connection issues pose challenges

Storage adds value to CSP, but deployment hampered by relatively high costs

Offshore wind generation Solar thermal electricity generation

0 10 20 30 40 50 60 70 80 90

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2006 2008 2010 2012 2014 2016 2018 2020

TWh

OECD Americas OECD Asia Oceania OECD Europe Africa Non-OECD Asia China Non-OECD Europe Non-OECD Americas Middle EastMTRMR 2013

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OECD Americas OECD Asia Oceania OECD Europe Africa Non-OECD Asia China Non-OECD Europe Non-OECD Americas Middle EastMTRMR 2013


Non-OECD Americas growth driven by hydropower and wind

Total RE capacity seen rising by almost 40%, from 163 GW in 2013 to 221 GW in 2020

Hydropower leads additions (Brazil, Ecuador, Colombia), followed by wind (Brazil, Peru, Uruguay)

Large potential for solar PV; bioenergy developments led by new bagasse-fired generation in Brazil

Annual additions (GW) Generation (TWh)

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Generatio

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Two dynamic markets for renewables in Latin America

Chile Mexico

Power Market Dynamic with high prices,

need new generation

Dynamic with high prices, need

new generation

RE target Share of non-hydro 20% by

2025

Clean energy target 30%

(nuclear inclu.) by 2024

RE policy/support Portfolio standard Green certificates

Grid Integration Connection problems and

congested grid

Connection problems and lack

of interconnection between

regions

Competitiveness Wind and solar competitive

with fossil fuel plants in some

locations

Wind and solar competitive with

fossil fuel plants in some

regions

Financing Findings PPAs with large

consumers/distributors is

challenging

New electricity reform and

uncertainty of implementation

RE policy

© OECD/IEA 2014

Power: a share reversal is needed

Today:

Fossils: 68%

Renewables: 20%

Global electricity generation by technology

2011 6DS 2DS hi-Ren

By 2050

Renewables: 65 to 80%

Fossils: 20%


2. Make better use of

what you have

Op

erati

on

s

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

©

OECD/IE

A 2014

17

Investm

ents


Main messages to policy makers Solutions to future development rest in policy makers’ hands

Policy risk main barrier to investment

Policies to focus on cost-efficiency But policy changes must be predictable, and retroactive changes must be

avoided

Given capital-intensive nature, renewables require market context that assures reasonable and predictable returns

Muddled signals may send the wrong messages about renewables at a time when newer markets have opportunity to leapfrog to more flexible and cleaner energy systems

renewables: where do we stand€¦ · © oecd/iea 2014 renewables: where do we stand cédric...

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