Low-CarbonEnergy:TheScience,theReality,andtheFuture

iSEECongress2016UniversityofIllinoisatUrbana-Champaign

September13,2016

KennethGillinghamYaleUniversity

FourMainPointsAbout“theReality”and“theFuture”

Whenfocusingonlow-carbonelectricity,severalpoints:1.  Therehasbeenunprecedentedinvestmentinthepast

fiveyearsinrenewables-ThiscanbeexpectedtoconTnue

2.  Thecostofsolarisdroppingrapidlywhileothertechnologiesaredroppingmoreslowly

3.  RenewablesaresTllasmallshareofelectricityproducTon,butaregrowingataremarkablepace

4.  Thefutureoutlookisbright,buttherearechallengesinthehorizon

UnprecedentedInvestment

Globalnewinvestmentinrenewableenergy(B$)

Globalnewinvestment,2014-2015(B$)

Venturecapital/privateequitynewinvestment,2015(B$)

Public-financednewinvestment,2015(B$)

Globalnewrenewablesinvestmentbyregion(B$)

MissionInnovaTon&BreakthroughEnergyCoaliTon

•  MissionInnovaTon-OnNov29,2015,20countriescommidedtodoublecleanenergyR&Doverfiveyears

•  BreakthroughEnergyCoaliTon–28highnetworthindividuals,ledbyBillGates,commidedtobringinginnovaTonstocommercializaTon

RecentPriceDeclines

Globalaverage[unsubsidized]levelizedcosts($/MWh)

U.S.uTlity-scalesolarPPApricesaredecliningfast($/MWh)

U.S.onshorewindPPApriceshavebeendecliningrelaTvetowholesale

powerprices($/MWh)

YetEIAforecastsunsubsidizedpricestoconTnuetobeabovefossilenergy

$0

$100

$200

$300

$400

$500Co

nv.C

oal

Advanced

Coa

lw/CCS NG

CC

Advanced

NGC

Cw/CCS

Conv.C

ombu

stion

Turbine

Advanced

Nuclear

Geothe

rmal

Biom

ass

Wind

Wind–Offsho

re

SolarP

V

SolarT

herm

al

Hydroe

lectric

Note:Shadedregionreflects minimumandmaximumofrange.Source:EnergyInformation Administration.

Figure21:TotalSystemLCOE ComparisonAcrossGenerationTechnologies(Unsubsidized),2020Forecast

2013 DollarsperMegawatthour

Dispatchable Intermittent

Source:CEA(2016)

Small—ButGrowing—Share

Globalrenewablesshareisgrowingrapidly,butissTllsmall

TheU.S.issTlldominantlycoalandnaturalgas

Source:NREL(2016)

Coal33%

Nat.Gas33%

Nuclear19%

Hydro6%

Wind5%

UPV0.57%

DPV0.30%

CSP0.08%

Geo0%

Other3%

2015U.S.Genera.on4.1TWh

Coal26%

Nat.Gas41%

Nuclear9%

Hydro8%

Wind7%

UPV1.08%

DPV0.78%

CSP0.16%

Geo0%

Other7%

2015U.S.Capacity1.1TW

Theshareofrenewablesisgrowingrapidly

0

2

4

6

8

10

2000 2003 2006 2009 2012 2015

Figure17: MonthlyShareofNon-HydroRenewablesinNetElectric PowerGeneration

Percentof TotalNetGeneration

Note:Dotted lineisasmoothedtrend,showntodampenthestrongseasonalpatterns(theshareofnon-hydrorenewablesdropsduringthewinterandsummer-bothseasonsofhighpowergenerationdemand).Source:EnergyInformationAdministration.

Source:CEA(2016)

Globally,morethanhalfof2015ofcapacityaddiTonsarerenewables

U.S.capacityaddiTonsaremorethanhalfrenewables

Wind,8,186

NaturalGas,5,952

CSP,110

UPV,3,380

DPV,2,938

Other,536

U.SGenera.onCapacityAddi.ons,2015(Total21.1GW)

0

5

10

15

20

25

30

35

U.S.C

apacity

Add

i.on

s(GW)

Other

Hydro

Nuclear

Oil

Coal

Gas

Wind

CSP

UPV

DPV

Sources:NREL/Sunshot(2016)basedon2004-2010(exceptsolar):EIA.U.Sinstalledcapacity,Form860.2011-2013:FERC:"OfficeofEnergyProjectsEnergyInfrastructureUpdateforDecember2012/2013/2014/2015."2011-2013Solar,GTM/SEIA,U.S.SolarMarketInsightQ42014,usingPVconvertedtoACusing.8333deratefactor.2014-15Solar,SEPA“2014/2015SolarMarketSnapshot”

Windandsolarcombinedwere70%ofnewcapacityintheU.S.in2015

SomeevidenceofthegrowthinConnecTcut

Source:Gillinghametal.(2016)

GoingForward

BNEFfutureprojecTonsarebrightAmajorfactorinthedirecTonofthecoalmarket

Muchdependsonpolicy

UnsubsidizedcostsaresTllhigh•  Currentimplicitorexplicitsubsidies:–  Investmenttaxcredit(ITC)–extendedinDec2015toapplytosolarprojectsbeginningconstrucTonbefore2022,steppingdowngradually

–  ProducTontaxcredit(PTC)–extendedinDec2015andnowstepsdowngraduallytoapplytowindprojectsbeginningconstrucTonbefore2019(only2yearsformostotherrenewablesandforsecond-genbiofuels)

–  EPACleanPowerPlan–  StateRenewablePorroliopolicies–  Netenergymeteringpolicies

CleanPowerPlanEmissionsCuts

Source:BNEFandBusinessCouncilforSustainableEnergy

StatePolicyBarrierstoNetEnergyMeteringin2015

Source:BNEFandBusinessCouncilforSustainableEnergy

AhighpenetraTonsofrenewables,intermidencystartstoreallymader

Source:CEA(2016)

Notaissueyet,butwillopenopportuniTesfornewtechnologies

Source:CEA(2016)

FinalThoughts•  2015wasawatershedyearforrenewablesinboththeUnitedStatesandglobally.–  AlsoarecordyearforcoalreTrements

•  TentaTvesignsofapermanentshis–  Naturalgasandrenewablesdisplacingcoal–  ConTnuedtrendupwardsofrenewablebuilds–  Powersectoremissions18%below2005levels

•  Largestthreats–  Short-run:conTnuedlownaturalgasprices–  Short-andlong-run:ConTnuedpolicysupport–  Long-run:Developmentofenablingtechnologiestodealwithintermidency