© OECD/IEA 2016© OECD/IEA 2016
Renewables after COP-21 A global perspective
Cédric Philibert
Renewable Energy DivisionInternational Energy Agency
Energy Change Institute, Canberra, 5 May 2016
© OECD/IEA 2016
COP21 a historic milestone
Universal agreement on:
“GHG emissions peak asap”
Stay “below 2°C” temperature increase, get close to 1.5
Reach “carbon-neutrality” in second half of this century
Renewables around COP21
Renewables explicitly referred to in around 100 pledges
Record renewable capacity additions in 2014 and 2015
Lowest-ever announced wind and solar prices
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
© OECD/IEA 2016
The share of renewables in net additions to power capacity continues to rise with non-hydro sources reaching nearly half of the total
Renewables set to dominate additions in power systems
World net additions to power capacity
Analysis from the IEA Medium-Term Renewable Energy Market Report 2015and the New Policies Scenario of the World Energy Outlook 2015.
0
200
400
600
800
1 000
1 200
1 400
1 600
2008-2014 2014-20
GW
Fossil fuels Nuclear Hydropower Non-hydro renewables
© OECD/IEA 2016
As the OECD slows, non-OECD countries account for two-thirds of renewable growth, driven by fast-growing power demand, diversification needs and local pollution concerns
Deployment shifting to emerging markets and developing countries
Shares of net additional renewable capacity, 2014-20
EU-28
13%
United States
9%
Japan
5%
Rest of OECD
8%
China
38%
India
9%
Brazil
5%
Africa
4%
Rest of
non-OECD
9%
© OECD/IEA 2016
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
© OECD/IEA 2016
Recent announced long-term contract prices for new renewable power to be commissioned over 2016-2019
Wind and Solar PV prices declining sharply
Onshore wind Utility-scale solar PV
ChileUSD 65-68/MWh
BrazilUSD 81/MWh
United StatesUSD 65-70/MWh
PeruUSD 49/MWh
MexicoUSD 35+5/MWh
IndiaUSD 67-94/MWh
United Arab EmiratesUSD 58/MWh
South AfricaUSD 65/MWh
United StatesUSD 47/MWh
BrazilUSD 49/MWh
PeruUSD 38/MWh
South AfricaUSD 51/MWh
AustraliaUSD 69/MWh
TurkeyUSD 73/MWh
ChinaUSD 80–91/MWh
GermanyUSD 67-100/MWh
EgyptUSD 41-50/MWh
JordanUSD 61-77/MWh
UruguayUSD 90/MWh
GermanyUSD 87 /MWh
CanadaUSD 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
MoroccoUSD 30-35/MWh
Best results occur where price competition, long-term contracts and good resource availability are combined
Note: Values reported in nominal USD includes preferred bidders, PPAs or FITs. US values are calculated excluding tax credits. Delivery date and costs may be different than those reported at the time of the auction.
© OECD/IEA 2016
High capex: WACC matters
Market and regulatory risks can increase weighted average cost of capital and undermine competitiveness of PV and Wind power
Impact of cost of capital on the levelised cost of solar PV
(assuming same system costs and same resource…)
Dubai
Central
AfricaX
2X
© OECD/IEA 2015
Greater efforts are still needed to reach a 2 °C pathway
In a 2° C Scenario, energy efficiency and renewables, notably solar and wind, deliver the bulk of GHG emission reductions
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
© OECD/IEA 2016
Global power mix needs a shift reversal
2011 6DS 2DS hi-Ren
Generation today: Fossil fuels: 68%
Renewables: 20%
Generation 2DS 2050: Renewables: 65 - 79%
Fossil fuels: 20 - 12%
Source: Energy Technology Perspectives 2014
© OECD/IEA 2016
Where CST fits in the picture
1. Generate dispatchable electricity
2. Provide high-temperature industrial process heat
3. Manufacture energy vectors as « solar fuels »
© OECD/IEA 2016
PV takes all light
PV almost everywhere
Scalable from kW to GW
Variable and mid-day
Peak & mid-peak
Smart grids
STE takes direct light
STE only in semi-arid countries
Mostly for utilities
Firm, dispatchable backup
Peak to base-load storage
HVDC lines for transport
}{
Firm & flexible CSP capacities can help integrate more PV
Solar Electricity
© OECD/IEA 2016
Integrating large shares of PVis challenging
Flexibility of other
power system
components
Grids Generation
Storage Demand Side
- expected evolution of the value of PV and CST
California:
- expected evolution of the net load of a typical spring day
Source: California ISO, 2014
Source: Jorgenson, Denholm & Mehos, 2014
© OECD/IEA 2014
Complementary roles of PV and STE
©
Thanks to thermal storage, STE is generated on demand when the sun sets while demand often peaks and value of electricity increases
© OECD/IEA 2014
New roadmap vision for solar electricity
Together, PV and STE could become the largest source of electricity worldwide before 2050
0%
5%
10%
15%
20%
25%
30%
0
2 000
4 000
6 000
8 000
10 000
12 000
2015 2020 2025 2030 2035 2040 2045 2050
Shar
e of
tota
l ele
ctric
ity ge
nera
tion
Glob
al ge
nera
tion
in T
Wh
Solar PV Solar CSP Share of PV Share of PV+STE
© OECD/IEA 2016
Future possible interconnections
Source: Adapted from STE Roadmap 2010
© OECD/IEA 2016
Power from CST compares with…
Distributed PV + battery(e.g. Germany)
Utility-scale PV + pumped-hydro storage(e.g. Chile)
PV + wind…(e.g. South Africa)
© OECD/IEA 2016
… or PV + CST!
Today (almost)(e.g. South Africa)
Lesedi, Jasper and Redstone Power Projects. Source: SolarReserve
Tomorrow?(e.g. ARPA-E’s Focus programme, USA)
© OECD/IEA 2016
Cost matters, but value too!
Ten years ago, LCOE of CST power was half that of PV
Now, the reverse holds true
CST power will not beat PV on costs, but compares withPV + storage
Time-of-delivery payments reflect the true value of storage
CST Power was born in the 1980s in California thanks to time-of-delivery energy and capacity payments
CST is being developed in South Africa thanks to a x2.7 multiplier of Base Price during 5 hours a day
© OECD/IEA 2015
Share of non-hydropower in renewable electricity generation is expected to increase significantly
Renewable electricity generation is more than a hydropower story
Renewable generation by technology (2005-20)
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gene
ratio
n (TWh)
Hydropower Bioenergy Onshore wind Offshore wind Solar PV Geothermal STE Ocean
10%
25%
37%Share of non-hydro renewables in overall RE generation
Natural gas 2013
Nuclear 2013
Share of renewables in overall electricity generation
22%
26%
18%
© OECD/IEA 2015
Persistent challenges slow growth in heat and transport
Historical and forecast share of renewables in electricity, heat and
transport sectors 2005-20
Growth of renewable electricity generation is increasing, while renewable heat and transport are falling behind.
0%
5%
10%
15%
20%
25%
30%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Share of renew
ables in sector deman
d Renewable
electricity
Renewable heat
Biofuels in road
transport
Forecast
21
2050 Low-Carbon Economy Roadmap
0%
20%
40%
60%
80%
100%
1990 2000 2010 2020 2030 2040 2050
0%
20%
40%
60%
80%
100%
Current policy
Power Sector
Residential & Tertiary
Non CO2 Other Sectors
Industry
Transport
Non CO2 Agriculture
80% GHG decarbonisation in 2050 (cf global 2°C objective)
Source: European Commission 2050 Roadmap, 2011
© OECD/IEA 2016
Industry next to power, mostly heat
Global CO2
emissions
Germany (final energy
consumption)
© OECD/IEA 2016
Electric heat technologies
Least efficient: resistances (Joule)
• Could play a transitory role in parallel withexisting fossil fuel boilers
Industrial heat pumps
• Commercially available to 100°C output
• Reaching 140°C output would double potential
Induction heating and smelting
Microwaves (food, rubber, plastics)…
Foucaut currents, electric ovens, electric arcs, plasma torches, etc…
Photo Credit : SAIREM
© OECD/IEA 2016
Source: SolarWall.
Solar air drying of coffee beans (Columbia)
Experimental mid-size industrial solar oven (France)
Solar heat for industries
Source: AEE INTEC.
Solar water heaters in a service area (Austria)
Source: Deepak Gadhia
Cooking with Scheffler dishes (India)
© OECD/IEA 2016
Oil men turn to solar to save gas
Mirrah, Oman, 2017: 1 GWth for EOR
Glasspoint technology
© OECD/IEA 2016
Solar fuelsFrom hydrocarbon or water
H2 can first be blended with natural gas
Can be converted into various energy carriers: methane, methanol, DME, ammonia…
Other options based on redox cycles, flow batteries…
Source: PSI/ETH-Zürich.
© OECD/IEA, 2011
© OECD/IEA 2016
Solar thermal electro pr
Various CST paths to carbon-free ammonia, steel, cement…
Source:
Licht et al.
Including process CO2 emissions
Also to support CO2 capture from coal plants (ARENA), biomass
plants or perhaps from air
© OECD/IEA 2016
Interconnections reconsidered
© OECD/IEA 2016
Subsidies to fossil fuels dominate over carbon pricing
Energy-related CO2 emissions, 2014, shares of coverage by CO2 prices or subsidies
© OECD/IEA 2016
A decisive moment for the future of renewables
Sharp cost reductions of RE change policy and market design needs
• From providing financial support to creating a framework for investment
• Long-term remuneration crucial to attract financing
• Innovation must extend from renewable technology to system integration
While variability of renewables is a challenge energy systems can learn to adapt to, variability of policies poses a far greater risk
Low fossil fuel prices are a good time window to introduce robust long-term carbon pricing and make progress in phasing out fossil fuel subsidies
Paris Agreement accelerates virtuous circle already started before COP
Increasingly affordable renewables are set to dominate the growing power systems of the world
© OECD/IEA 2016
© OECD/IEA 2016
Note: Load data and wind data from Germany 10 to 16 November 2010, wind generation scaled, actual share 7.3%. Scaling may overestimate the impact of variability;combined effect of wind and solar may be lower, illustration only.
0
10
20
30
40
50
60
70
80
1 10 20 30 40 50 60 70 80 90 100 110 120 130 140Hours
Net
load
(G
W)
0.0% 2.5% 5.0% 10.0% 20.0%
Larger rampsat high shares
Higher uncertainty
Larger and more pronounced changes
Illustration of Residual power demand at different VRE shares
Lower minimum
Integrating larger shares of VRE: the balancing challenge
© OECD/IEA 2016
Netload implies different utilisation for non-VRE system
Integrating larger shares of VRE: the utilisation challenge
Note: Load data and wind data from Germany 10 to 16 November 2010, wind generation scaled, actual share 7.3%. Scaling may overestimate the impact of variability;combined effect of wind and solar may be lower, illustration only.
0
10
20
30
40
50
60
70
80
90
1 2 000 4 000 6 000 8 000
Net
load
(G
W)
Hours
0.0% 2.5% 5.0% 10.0% 20.0%Maximum
remains high: Scarcity
Lower minimum:
Abundance
Changed utilisationpattern
Base-load
Mid-merit
Peak
Mid-merit
Peak
Mid-merit
Base-load
-
-
© OECD/IEA 2016
System-friendly VRE deployment
Source: adapted from Agora, 2013
Complementarity of wind and solar generation in Germany
System-friendly design of wind turbines reduces variability
© OECD/IEA 2016
Importance of grids
4 000 km4 000 km 4 000 km
Continental DimensionEUROPE
Interconnected continental-scale balancing areas smoothen out variability and allow to exploit complementarities
BRAZIL
© OECD/IEA 2016
Self-use and self-sufficiency
0 500 1 000 1 500 2 000 2 500 3 000 3 500
Consumption
Generation
Consumption
Generation
3 kW
Residen
tial
.13
kW R
esiden
tial
0 100 000 200 000 300 000 400 000 500 000 600 000
Consumption
Generation
120
kW C
ommercia
l
Annual kWh
Consumption from the grid Generation surplus Prosumed
94% self-use
29% self-sufficiency
100% self-use
4% self-sufficiency
37% self-use
35% self-sufficiency
Comparison of self-use and self-sufficiency shares by system size and customer(A temperate country example)
© OECD/IEA 2016
Self-consumption: 40% With DSI: 50%
… with DSI and small storage: 60%
Self-consumption with DSI and small storage
In most places, the hard limit to
solar penetration in power system
is the seasonal imbalance, as inter-
seasonal storage is usually
expensive
© OECD/IEA 2016
Depending on the time match demand vs. sunshine, grid costs may be reduced or increased
T&D costs 30-50% of retail costs, but only 0-15% recovered through fixed payments for efficiency/equity reasons
Self-consumers pay less but still benefit from the grid
Net-energy metering only increases the size of the issue
Recovering grid costs over lesser sales may require tariff increase, but this leads to cross-subsidies, and further incentivizes self-consumption
“Load-defection” will not (likely) lead to “grid defection”, but financing of grid development is a real issue. Grids have high value to integrate large shares of variable renewables
Grid cost issues with self-consumption and net-metering
© OECD/IEA 2016
Regional power mixes differby 2050 in 2DS hi-REN
Differences in resources but also in load shapes lead to quite different technology mixes
Source: Energy Technology Perspectives 2014
