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© OECD/IEA 2015
RENEWABLE
ENERGY
© OECD/IEA 2015
Can renewables fuel Africa?
Dr. Paolo Frankl
Head, Renewable Energy Division
International Energy Agency
IEA Side Event, SAIREC, Cape Town, 4 October 2015
© OECD/IEA 2015
RENEWABLE
ENERGY
Electricity underpinning economic growth
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OECD Europe
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US
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Western Economies have fuelled economic growth with cheap electricity – largely from coal Can Africa do the same with affordable renewables?
© OECD/IEA 2015
RENEWABLE
ENERGY
Strong global momentum for renewable electricity generation
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1 000
2 000
3 000
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5 000
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Generatio
n(TW
h)
Ocean STE Geothermal Solar PV Offshore wind Onshore wind Bioenergy Hydro
World renewable generation and forecast (TWh)
In 2020, renewable generation reaches over 7 150 TWh, more than today’s combined demand of China, India and Brazil
3
© OECD/IEA 2014
Africa is rich in resources
In the last 5 years, almost 30% of global oil & discoveries were in sub-Saharan Africa;
Hydro
Wind Oil
Oil
Oil
Oil Gas
Gas
Oil
Coal
Gas
Fossil fuels
Solar
the region has vast untapped renewables potential, notably hydropower & solar
© OECD/IEA 2015
RENEWABLE
ENERGY
0
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60
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2008-14 2014-20
TWh
Power demand growth
Renewables can power Africa’s economic growth
With huge resources, improving cost-effectiveness and policy momentum, renewables account for almost two-thirds of demand growth in Sub-Saharan Africa
Sub-Saharan Africa power demand growth versus supply sources
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2008-14 2014-20
TWh
Other renewables Hydropower Fossil fuels
© OECD/IEA 2015
RENEWABLE
ENERGY
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150
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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
© OECD/IEA 2015
RENEWABLE
ENERGY Financing costs can dominate
Market and regulatory risks can increase weighted average cost of capital and undermine competitiveness of PV and Wind power
Dubai
Central Africa
X
2X
Impact of cost of capital on the levelised generation cost of solar PV (assuming same system price and solar irradiation)
© OECD/IEA 2015
RENEWABLE
ENERGY Evidence of lower costs on the horizon
A combination of price competition, long-term contracts, good resources and financial de-risking measures is creating deployment opportunities in newer markets and at lower costs
Recent announced long-term contract prices for new renewable power
Utility-scale solar PV Onshore wind
Chile USD 85-89/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
© OECD/IEA 2015
RENEWABLE
ENERGY
The REIPPP programme - a remarkable example
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BW1* 2011 BW2* 2012 BW3 2013 BW4 2015 Diesel OCGT
USD/
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(Real A
pr 2
015)
OCGT (existing) Solar PV Wind
*Bid windows of the Renewable energy Independant Power Producer Procurement programme
Competitive auctions for long-term power purchase agreements combine with good resources to deliver low prices in just few years
© OECD/IEA 2015
RENEWABLE
ENERGY
More wind and solar will require more flexibility
3) Increase flexibility of other power system
components
1) Foster System-friendly
RE
2) Better market design & operation
Grids Generation
Storage Demand Side
© OECD/IEA 2015
RENEWABLE
ENERGY The value of wind and solar in RSA
There is still room for wind, PV and STE to save costly diesel fuel but also coal use with low capacity factor
© OECD/IEA 2015
RENEWABLE
ENERGY PV and STE can be combined
Lesidi and Jasper PV plants
in operation since 2014.
Redstone CSP plant with
storage (rendered) to be
commissioned in 2018.
Thermal storage allows
generation in later afternoons
early evenings at peak times Figurative power mix in 24 hours
© OECD/IEA 2015
RENEWABLE
ENERGY Policy priorities change over time
• Predictable and rapidly adaptive incentives
• Focus on non-economic barriers
• Manage total support costs
• System integration Market design and expose RE to competition
• Publicacceptance
Time
Deplo
ymen
t
Initiation Take-off Mainstreaming
Gene
ratio
n Pric
es
International benchmark prices
Key
Objective
Critical Mass Reduce Costs System
Integration
Policy Priorities Clear regulatory
framework
Cost convergence
with international
benchmarks
Develop flexible
energy system
Secure financial
support
Introduce
competition Market reform
© OECD/IEA 2015
RENEWABLE
ENERGY
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
stream
• Short-term market value signals
• Portfolio development
• Energy System Integration
Cost reduction through
• Technology innovation
• Financial innovation
• New markets with best resources
2014-2020
Main Policy
Key Characteristics
Cost reduction
