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© OECD/IEA 2012
The Role of Renewables in the Energy Mix ‐ An IEA Perspective
Paolo FranklHead, Renewable Energy DivisionInternational Energy Agency
October 2012
Roberto VigottiVice Chairman, IEA Renewable
Energy Working Party
© OECD/IEA 2012
Contents The context Long‐term scenarios Recent trends Medium‐term (5‐year) market forecast Policy needs
What is the role of renewable energy within our future energy analysis?
What does our recent work say about trends in the renewable energy market and do we expect these recent trends to be sustainable in the medium‐term?
What are the key steps that need to be taken to ensure that momentum is maintained and the potential is realised in terms of sustained investment and business?
© OECD/IEA 2012
Energy demand and emissions have doubled in the past 40 years
Doubled from 6000 Mtoe to 12 000 Mtoe Rapid demand growth outside
OECD
Source: IEA statistics
CO2 emissions doubled from 14Gt to 30Gt
Since 2005, non‐OECD countries emit more than OECD
© OECD/IEA 2012
Emerging economies continue to drive global energy demand
Growth in primary energy demand in the New Policies Scenario
Global energy demand increases by one‐third from 2010 to 2035,with China & India accounting for 50% of the growth
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
2010 2015 2020 2025 2030 2035
Mtoe
ChinaIndiaOther AsiaRussiaMiddle EastRest of worldOECD
© OECD/IEA 2012
5
Mapping a Better Energy Future
The Energy Future Absent New Policies
Security of oil supply is threatened Gas security is also a growing concern Investments over the next decade will lock in
technologies that will remain in use for up to 60 years CO2 emissions by 2050 will be almost 2.5 times the
current level!
On current trends, we are on course for an “unstable, dirty & expensive energy future”
carbon intensity of the world economy will increase
© OECD/IEA 2012
© OECD/IEA 2012
The 450 Scenario illustrates what the 2⁰C goal will requireWorld energy‐related CO2 emissions by scenario
Restricting the greenhouse‐gas concentration to 450 ppm would limit temperature increase to 2⁰C, compared with 3.5⁰C in the New Policies
Scenario & 6⁰C in the Current Policies Scenario
65%
33%
71%
28%
15 Gt
7 Gt
20
25
30
35
40
45
1990 2000 2010 2020 2030 2035
Gt
Current PoliciesScenario
450 Scenario
New PoliciesScenario
Non‐OECDOECD
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Total primary energy demand
Biomass becomes the largest primary energy carrier by 2050 in the 2DS.
0
50
100
150
200
250
300
350
Coal Oil Gas Nuclear Hydro Biomass Other renewables
EJ
2009
6DS 2050
4DS 2050
2DS 2050
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Key technologies to reduce CO2 in the power sector
RE provide more than one third of the cumulative reductions needed to decarbonise electricity supply in the 2DS.
Electricity savings38%
Fuel switching and efficiency
4%CCS12%
Nuclear13%
Hydro4%
Biomass4%
Solar11%
Wind13%
Geothermal1%
Ocean0.4%
Cumulative reductions in the power sector of 474 Gtbetween 2009 and 2050 in the 2DS (relative to the 6DS)
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Large increase in renewables required
0 20 40 60 80 100 120
Coal with CCS
Gas with CCS
Biomass
Wind, onshore
Wind, offshore
PV
CSP
Nuclear
Hydro
GW per year
2030‐2050
2020‐2030
2010‐2020
2006‐2010
2DS average annual capacity additions in GW per year
More than 90% of the global electricity demand in 2050 is supplied by low‐carbon technologies: renewable technologies reach a share of 57% in the world’s electricity mix
© OECD/IEA 2012
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
2009 2020 2030 2040 2050
Other
Wind
Solar
Hydro
Nuclear
Biomass and waste
Oil
Gas with CCS
Gas
Coal with CCS
Coal
Low‐carbon electricity: a clean core
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Renewables will generate more thanhalf the world’s electricity in the 2DS
TWh
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RE electricity generation by regions
Renewables become a major part of the electricity system in 2050 in the 2DS in many countries, with the mix depending on local conditions.
0 1 000 2 000 3 000 4 000 5 000 6 000
US
EU
South Africa
Russia
Mexico
India
China
Brazil
ASEAN
TWh/yr
Hydro Solar PV CSP Wind onshore Wind offshore Biomass and waste Geothermal Ocean
56%
93%
49%
50%
62%
59%
51%
69%
50%
2050
© OECD/IEA 2012
3‐Renewables have seen notable success
Renewable power generation
42%Average annual
growth in Solar PV
27%Average annual growth in wind
75%Cost reductions in
Solar PV in just three years in some countries
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Clean energy: slow lane to fast track
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Progress is too slow in almost all technology areas
The problem is largely in policy – creating the right market framework to unlock private sector investment in widespread deployment
Significant action is required to get back on track
Cleaner coal power
Nuclear power
Renewable power
CCS in power
CCS in industry
Industry
Buildings
Fuel economy
Electric vehicles
Biofuels for transport
© OECD/IEA 2012
The IEA’s Medium‐Term Renewables Report
A new annual publication recognizing the increasing role of a portfolio of maturing renewable technologies in the power mix
Objectives and scope: Bottom‐up, global renewable forecast of renewable electricity
capacity and generation over the next 5 years Detailed analysis of 12 OECD countries (Austria, Denmark, France,
Germany, Italy, Japan, Norway, Spain, Sweden, Turkey, UK, US) and China, India, Brazil (~80% of world renewable electricity)
Completes slate of IEA MT forecasts: oil, gas, coal
© OECD/IEA 2012
Growth in renewable power is forecasted to accelerate + 40% Hydropower remains the main renewable power source (+3.1% p.a.) Non‐hydro renewable sources grow at double‐digit annual
percentage rates (+14.3% p.a.)
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Global renewable electricity production and forecast
Hydropower Wind onshore Bioenergy Solar PV
Geothermal Wind offshore CSP Ocean
TWh
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Growth is led by non‐OECD countries Non‐OECD accounts for two‐thirds of the overall growth
China, Brazil, India lead; others grow significantly as well
OECD growth still largely driven by Europe but Americas and Asia‐Oceania make significant contributions
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TWh Global renewable electricity production and forecast
OECD Americas OECD Asia-Oceania OECD EuropeChina Brazil India Rest of non-OECD
© OECD/IEA 2012
Key trends As a portfolio of renewable technologies matures, global
renewable power generation is forecast to rise 40% Supported by policy/market frameworks and economic
attractiveness in increasing range of countries and circumstances Technology cost developments, grid/system integration,
cost/availability of financing also weigh as key variables High level of economic/policy uncertainty in some countries
This projected growth is an acceleration vs previous period Growth is 60% higher over 2011‐17 versus 2005‐11
Renewable deployment is projected to spread out geographically, with increased activity in emerging markets Deployment spurring economies of scale in some technologies ‐
virtuous cycle of improved competition and cost reductions
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RE Market Expansion Opportunities
Leading countries
New opportunities
New opportunities
Source: IEA. Deploying Renewables 2011
© OECD/IEA 2012
Non‐hydro technology deployment spreads out Number of countries with cumulative capacity larger than 100MW
increases significantly Growth areas include Asia, Africa, Latin America and the Middle East
0
20
40
60
8020
05
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
2005
2011
2017
Onshore wind
Offshore wind
Bioenergy Solar PV CSP Geothermal Ocean
Number of countries with installedcapacity above 100 MW
Non-OECD
OECD
© OECD/IEA 2012
Generation additions over 2011‐17 differ across regions and technology portfolios
OECD Americas (+179 TWh)
Wind onshore
Bioenergy
Solar PV
Other technologies
OECD Asia‐Oceania (+77 TWh)
Wind onshore
Bioenergy
Solar PV
Other technologies
OECD Europe (+365 TWh)
Hydropower
Wind onshore
Bioenergy
Solar PV
Other technologies
Non‐OECD (+1 220 TWh)
Hydropower
Wind onshore
Bioenergy
Solar PV
Other technologies
© OECD/IEA 2012
Analyses market and policy trends for electricity, heat and transport
Investigates the strategic drivers for RE deployment
Benchmarks the impact and cost‐effectiveness of economic support policies
Provides best practice policy principles
Covers 56 countries and all world regions
Book and 3 supporting information papers
© OECD/IEA 2012
Mature Markets Facing New Challenges
Dep
loym
ent
TimeAdequate Possible Problems Progress Blocked
USA – PV
DEU – Solar PV
CHN – Wind onshore
CSP
DNK – Wind onshore
Take-off ConsolidationInceptionHydro
DEU – Wind
© OECD/IEA 2012
Policy Trends
Many more countries putting policies in place, particularly outside OECD than in 2005.
45 of the 56 focus countries now have RE Electricity targets, including 20 non‐OECD members.
53 of the 56 focus countries have electricity support policies in place, compared to 35 in 2005.
© OECD/IEA 2012
Overarching Best‐PracticePolicy Principles
Predictable RE policy framework, integrated into overall energy strategy
Portfolio of incentives based on technology and market maturity
Dynamic policy approach based on monitoring of national and global market trends
Tackle non‐economic barriers
Address system integration issues
© OECD/IEA 2012
Challenges to Maintaining Momentum
Accelerate RE Market Growth while Managing
Policy Costse.g. Solar PV
Enable Integratione.g. power system
flexibility for integration of variable RE; flex-fuel
vehicles against “blending wall”
Enable Integratione.g. power system
flexibility for integration of variable RE; flex-fuel
vehicles against “blending wall”
Complete R,D & D for Key
Technologiese.g. Offshore Wind, Advanced Biofuels,
Enhanced Geothermal , Ocean Energy
Complete R,D & D for Key
Technologiese.g. Offshore Wind, Advanced Biofuels,
Enhanced Geothermal , Ocean Energy
Leaders Leaders
FollowersFollowersExpand RE Market to More Countries
e.g. many countries enacted policies but
deployment yet to occur
Expand RE Market to More Countries
e.g. many countries enacted policies but
deployment yet to occur
© OECD/IEA 2012
© OECD/IEA 2012
WEO 450 global electricity – variable renewables
[Source: IEA World Energy Outlook 2010]
1%
6%13% 17%
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Variability vs flexibility
Variable power plants like wind can not simply be turned off and on like conventional power plants. When the wind is blowing or the sun comes up, the rest of the system will need to respond accordingly – to maintain the balance of electricity supply and demand.
The more quickly and extensively that the system can respond is the measure of its flexibility, and the more wind, solar photovoltaics and so on it can manage. So, to foster variable renewables we need to look at the wider system landscape into which they will be deployed.
© OECD/IEA 2012
Variability and uncertainty are not new At high VRE shares the challenge will be considerable
Residual demand shape is irregular (particularly wind, wave)
Emerging challenges: grid integration
Demand (M
W)
Demand
Residual demand
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There are 4 flexible resources
Dispatchablepower plants
Energy storage facilities
Interconnection with adjacent
markets
A biomass‐firedpower plant
A pumped hydro facility
Scandinavian interconnections
Demand side Response
(via smart grid)
Industrial
residential
Flexibility is key
Source: IEA Harnessing Variable Renewables 2011
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Centralised fuel production,power and storage
A smart, sustainable energy system
© OECD/IEA 2012
A sustainable energy system is a smarter, more unified and integrated energy system
Centralised fuel production,power and storage
Renewable energy resources
EV
Co-generation
Smart energysystem control
Distributedenergy resources
Surplus heat
H vehicle2
© OECD/IEA 2012
Key messages
Variability unlikely to be an issue at low shares, and high shares are manageable No general ceiling on VRE potential
Flexibility is the antidote to variability More flexible resources exist then commonly thought
Gas and hydro, but also coal, even nuclear for extreme cases Demand response, interconnections, storage
A strong, intelligent grid is critical Large, liquid markets using forecasts are better
Balancing costs are likely to be lower
But lost revenue may drive off key flexible plants A flexibility incentive may be the solution Power market (re)design will at the core of future work
© OECD/IEA 2012
Conclusions
Renewables have come of age and will have a key role in a secure and sustainable energy mix
Despite challenges, RE deployment will accelerate in the medium term
Renewables will become more competitive and enter new geographic markets, especially in non‐OECD
Transition will not come alone by itself. It will require A predictable and cost‐effective policy environment Smart, flexible energy systems and adjusted market
frameworks capable to integrate large shares of renewables (variable and non‐variable)
Sustained RD&D investment
© OECD/IEA 2012
What we shall be seeing
Fundamental re‐engineering of the world’s energy industry around low carbon solutions and architecture that will:
Cost trillions and take decades Be heavily policy‐driven (incentives and
disincentives) Inevitable, given economics Be funded by capital markets Be risky to bet against
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