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INTERNATIONALENERGY AGENCY© OECD/IEA - 2008
Deploying Renewables: Principles for Effective
Policies
Press Conference, OECDBerlin, 29 September 2008
Dr. Paolo FranklHead, Renewable Energy
UnitInternational Energy
Agency
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8Global Power Generation MixScenarios
46.5%
Renewables
[Source: ETP 2008]Renewables would have to play a particularly significant role in the power sector, increasing from 18% today to nearly 50% by 2050. Non-hydro renewables show the
highest growth rate.
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Comparative assessment of effectiveness and efficiency of renewables support policies (market deployment and RD&D policies)
OECD countries plus Brazil, Russia, India, China, South Africa
Electricity, Heat and Transport Fuel sectors
Distillation of the best policy practices and of main challenges encountered
‘Learn from success stories but also from failures’
Co-funded by German BMU, Japanese NEDO, and Enel
Global Renewable Energy Markets and Policies Programme (GREMPP)
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Incremental RE generation in a given year
Remaining additional realisable potential (by
2020)
Quantitative Analysis
Chosen policy effectiveness indicator on a yearly basis:
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Achieved (by 2005) and Additional realisable mid-term potential (by 2020) for RES-Electricity
Achieved (2005) and additional realisable mid-term (up to 2020) potential for RES-Electricity by country (OECD+BRICS) – in absolute
terms (TWh)
0
500
1000
1500
2000
US
A
Can
ada
Mex
ico
Japa
n
Kor
ea
Aus
tral
ia
New
Zea
land
Icel
and
Nor
way
Sw
itzer
land
Tur
key
Rus
sia
Chi
na
Indi
a
Bra
zil
Sou
th A
fric
a
EU
27
Rea
lisab
le R
ES
-Ele
ctri
city
_ g
ener
atio
n p
ote
nti
al u
p t
o 2
020
[TW
h/y
ear] Additional potential
up to 2020
Achieved potential2005
Source: IEA & EEG, 2008
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8Effectiveness & EfficiencyWind On-shore 2005 (OECD & BRICS)
Source: IEA & Fh-ISI, 2008
DEU
ESP
IRL
PRT
NLD
AUT
LUX
JPN
KOR
ITAGBRIND
BELUSA
AUSSWE
NZL
POLFRANOR
CHN
BRA FINTURRUS ZAF MEX
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00
Eff
ect
ive
ne
ss in
dic
ato
r 20
04
/20
05
Annualised remuneration in [US cent / kWh]
u OECD - EU Other OECD p BRICS
Long-term predictable incentives(FIT or FIP)
+Appropriate framework
Higher risk (TGC)+
Non-economic barriers
Efficiency
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NLD
SWE
DNK
BEL
GBRHUN
JPNDEU
ITANZL PRTPOL
BRA
AUT
RUSESP
INDCHN AUS MEXUSACAN CHECZE
IRL GRCISL LUXNORSVK
FRAZAF KOR TURFIN
-5%
0%
5%
10%
15%
20%
25%
30%
0 2 4 6 8 10 12 14 16 18
Eff
ect
iven
ess
ind
ica
tor 2
00
4/2
005
Annualised remuneration in [US cent / kWh]
u EU Countries Non EU OECD p BRICS
Effectiveness & EfficiencySolid biomass el. 2005 (OECD+BRICS)
Source: IEA & Fh-ISI, 2008
TGC
FIT/FIP
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LUX
DEU
JPNCHE
NLDAUS AUT USAIND ESPCANZAF ITAMEX KORDNKBELFINCHN GBR FRAPRT GRCSWERUSNORBRA CZEHUNIRLISLNZL POLSVKTUR0%
1%
2%
3%
4%
5%
6%
7%
0 10 20 30 40 50 60 70 80
Eff
ect
iven
ess
ind
ica
tor 2
00
4/2
005
Annualised remuneration in [US cent / kWh]
u OECD - EU Other OECD p BRICS
Effectiveness & EfficiencySolar PV 2005 (OECD & BRICS)
Source: IEA & Fh-ISI, 2008
FIT
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Main Lessons Learntand
Conclusions
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Effective policies only in a limited set of countries Sometimes depending on specific technology
Perceived risk, more than profit, is key to policy effectiveness & efficiency
Price support can not be adequately addressed in isolation; non-economic barriers must be addressed concurrently Grid barriers Administrative barriers Social acceptance issues Other barriers (e.g. training, information, financial, etc.)
Effective systems have, in practice, frequently been the most cost efficient Technology-specific support is key for both effectiveness
and cost-efficiency
Main Lessons Learnt (1)
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Main Lessons Learnt (2)
Move beyond ‘Feed-In Tariff vs. Quota Obligation System/ Tradable Green Certificate’ debate Both systems show success and failures depending
on specific country and technology
Precise design criteria and fine-tuning are key
Signs of convergence: Feed-In Tariff: Premium tariff option, time
digression Quota System/Tradable Green Certificate:
Technology banding
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1. Remove non-economic barriers to improve market functioning
2. Establish predictable support framework - to attract investments
3. Set up transitional incentives decreasing over time – to foster and monitor technological innovation and move towards market competitiveness
4. Ensure specific support in function of technology maturity to exploit potential of large RET range
5. With increasing mass-scale RET penetration impact on overall energy system must be taken into account
Continuity
Certainty
Key Principles for Effective Renewable Energy Policies
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8Fostering RE’s transition towards mass market integration
Niche markets Mass market
Low cost-gap
(e.g. wind onshore)
High cost-gap
(e.g. PV)
Mature tech
(e.g. hydro)
Prototype & demo stage
(e.g. 2nd gen biofuels)
Time
Mar
ket D
eplo
ymen
t
Development
1. Development
RD&D financing,
capital cost support,
investment tax credits, rebates,
loan guarantees
4. Technology-neutral competition TGC, Carbon trading (e.g. EU ETS)
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1. Realise urgency to implement effective policies to exploit major potential of RETs in terms of energy security and climate change mitigation
2. Remove and overcome non-economic barriers first
3. Exploit substantial potential for improvement of policy effectiveness and efficiency: learn from good practice
4. Focus on rigorous and coherent implementation of key policy design principles with regard to long-term cost efficiency and national circumstances
5. Create level playing field by pricing in GHG emissions and other externalities
6. Allow a combination framework of incentive schemes in function of technology maturity level
Urgent action for Energy Technology Revolution
Recommendations