© OECD/IEA 2016 © OECD/IEA 2016
Wind leading global de-carbonisation Opportunities and challenges ahead
Keisuke Sadamori Director, Energy Markets and Security
On behalf of Dr. Fatih Birol
International Energy Agency
Asociación Empresarial Eólica, Madrid, 28 June 2016
© OECD/IEA 2016
The start of a new energy era?
Universal agreement from COP21 is a historic milestone Pledges of 185+ countries account for 95% of energy-related emissions
Renewables explicitly referred to in around 100 pledges
Wind leading to new records for renewables Record renewable capacity additions in 2014 and 2015 – led by wind
Lowest-ever announced prices in countries with excellent resources, sound regulatory and market frameworks
Downturn in prices for all fossil fuels Oil & gas set to face a second year of falling upstream investment in 2016
Coal prices remain at rock-bottom as demand slows in China
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Global energy emissions - peaked?
IEA analysis for 2015 shows renewables surge, led by wind, and improvements in energy efficiency were key to keeping emissions flat for a second year in a row
Global energy-related CO2 emissions
5
10
15
20
25
30
35 Gt
1975 1980 1990 2000 2010 2015
Global economic downturn
Dissolution of Soviet Union Second
oil shock
1985 1995 2005
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Greater efforts are still needed to reach a 2 °C pathway
In a 2°C Scenario, wind generation accounts for the biggest incremental generation of all fuels globally, and accounts for a quarter of CO2 savings from renewables
16
20
24
28
32
36
40
2010 2015 2020 2025 2030 2035 2040
Gt
Trend post-COP 21
2 °C Scenario
17.9 Gt
Energy efficiency
Fuel & technology switching in end-uses
Renewables
Nuclear
CCS
Other
Source: World Energy Outlook 2015
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Other renewable power
Buildings
Nuclear
Transport
Appliances and lighting
Energy storage
Industry
Biofuels
Carbon capture and storage
More efficient coal-fired power
Electric vehicles
Solar PV and onshore wind
Technology Status today against 2DS targets
●Not on track ●Accelerated improvement needed ●On track
Global clean energy deployment is still overall behind what is required to meet the 2°C goal, but
recent progress on electric vehicles, solar PV and wind is promising
Global progress in clean energy needs to accelerate
Source: ETP2016
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Low-carbon technologies and networks require the largest investment
Confidence in remuneration, including through carbon pricing and complementary long-term arrangements, will be critical to finance capital-intensive assets
Source: World Energy Outlook 2015
• Power-sector cumulative investment by type in OECD Europe, 2 °C Scenario, 2015-2040
Coal 85
Gas 116
Oil 2
348
Wind 852
Solar 357
Hydro 143
Bioenergy 126
Other 98
Transmission 184
Distribution 674
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Fossil Fuels Nuclear Renewables T&D
Billion
dollars (20
14)
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Indexed generation costs
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2010
= 1
00
Onshore wind Solar PV - residential Solar PV - utility scale
Innovation and scale-up are driving costs down
High levels of incentives are no longer necessary for solar PV and onshore wind, but their economic attractiveness still depends on regulatory framework and market design
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Growth in renewable capacity shifting to emerging markets
Shares of net additional renewable power capacity, 2014-20
EU 13%
USA 9%
Japan 5%
Rest OECD 8%
China 38%
India 9%
Brazil 5%
Rest non - OECD 13%
Europe faces decreasing market shares and global competition for finance, calling for predictable policies and market design reform
Source: MTRMR 2015
© OECD/IEA 2016 Source: IEA estimates derived in part from IEA Medium-Term Renewable Energy Market Report 2015.
Towards double-digit shares of variable renewables
Share of variable electricity generation in 2014 and 2020
0% 10% 20% 30% 40% 50% 60%
Japan
USA
France
China
India
Brazil
Australia
Sweden
Italy
UK
ESP & PRT
Germany
Ireland
Denmark
Share wind 2014 Share PV 2014 Share Wind 2020 Share PV 2020
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3) Increase flexibility of other power system components
Grids Generation
Storage Demand Side
1) Foster System-friendly RE
Increasing variable RE will need more System Flexibility
2) Better market design & operation
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The ‘Silent Revolution’ – leading to record capacity factors
Capacity-weighted average capacity factor of wind power in 2015 in the US per project vintage
Taller machines with longer blades and large specific swept areas were first installed in lower-speed wind areas, then in better resource areas, reaching high capacity factors
Sou
rce
: IEA
An
alys
is w
ith
dat
a fr
om
Wis
er
and
B
olin
ger,
20
16
in cooperation with
Reaching low shares of VRE(a few percent in annual generation) poses no significant economic or technical challenges
Reaching high shares calls for a coordinated transformation
No-regret options
Must-have options for immediate implementation
e.g. Adequate real-time monitoring, control and forecasts
Short-term improvements for secure system operations:
e.g. System-friendly VRE deployment policies
Future-proofing planning processes for long-term energy security
Electricity security with high shares of VRE
12
2008 2011 2014 2016
GIVAR Programme
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Wind power and other RE increase energy security in Europe
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Fostering system-friendly VRE
Next-generation wind and solar PV need ‘next-generation policies’ focusing on system value and not just costs
Focus on five main areas: System services
Location of deployment
Technology mix
Economic design criteria
Integrating planning, monitoring and revision
Examples of best practice in Denmark, Germany, Spain, US, Mexico, Brazil, China, South Africa
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Final remarks
COP-21 Paris Agreement set to accelerate energy sector transformation
Now the focus needs to be on implementation & raising ambition
Falling cost of renewables calls for paradigm shift in policies towards an enabling environement to attract investments
Based on appropriate market design, system approach and level playing field
Variability of policies remains main barrier to investment, much more than variability of wind (and solar PV)
Stop-and-go policies and retroactive measures should be avoided
