IEEJ：October 2017 © IEEJ2017

IRENA Insights for Energy
Transition
Dolf Gielen
Director Innovation and Technology

Institute of Energy Economics, Japan
6 October 20171

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Structure of the Presentation• IRENA overview• Status and trend for renewable energy
g and highg RE cost in Japanp• Costing• Grid integration of renewables in the Japanese context• Renewable energy support schemes

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Introduction» Established in 2011
» Headquartereddd iin Abub Dhabi,h bi UAE» First global intergovernmental organisation headquartered in Middle
E tEast» IRENA Innovation and Technology Centre in Bonn, Germany» Permanent Observer to the United Nations – New York» Around 200 staff

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Global Membershipp152 Members
28 States inAccession

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Overview
MandateTo promote the widespread adoption and sustainable use of all forms ofrenewable energy worldwide
Objective
To serve as a network hub, an advisory resource and an authoritative,
unified, global voice for renewable energy
Scope
All renewable energy sources produced in a sustainable manner

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Thematic Areas Work Programme 2016-2017• I.

Planning
g for the renewable energy
gy transition

 Global transition roadmap and macroeconomic impact analysis
 Power sector transformation
 Technology status and outlook• II.

Enabling investment and growth Project development support, auctions and other policy tools
 Standards and quality control
 MarkedM k dd
designi andd policyli• III. Renewable energy access for sustainable livelihoods
 IOREC conference
conference, RE for refugee camps• IV. Regional action agenda
 Clean Energy Corridors• V.

Islands: lighthouses for renewable energy deploymentg
 SIDS Lighthouses• VI. Gateway to knowledge on renewable energy
 Energy statistics, costing data6

IEEJ：October 2017 © IEEJ2017

Close Cooperation with Government of Japan•

Various ministries METI,, MAFF,, MOFA,, MOE

Some recent topics:•Electricity storage study (released yesterday at ICEF)•Standards for renewable technologies in harsh environments (ongoing)•Fukushima related events (next WFES January 2018)•REmap energy transition roadmaps•Bioenergy potential assessments, conversion technologies development, environmental
impact assessment – Africa, South East Asia

•Pacific Island State workshops, capacity building, training

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STATUS AND TREND FOR
RENEWABLE ENERGY8IEEJ：October 2017 © IEEJ2017

Ongoinggg powerp
sector transformation
Share of renewables in total
capacity additions [%]Since 2012 >50% of total
capacity additions
2016

Source: IRENA statistics

2006 GW RE power generation
capacity in place
Annual RE capacity addition 161 GW(+8%/yr)of which:71 GW solar
51 GW wind
30 GW hydropower
9 GW biomass◉ Around 25% renewable power generation share worldwide◉ Growing by 0.7 percentage per year
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Renewable energy in the global energy mix
Renewable energy share in TFEC

Total final renewable energy use (EJ/yr)
80
17.3%
70

17.8%

17.9%

18.1%

18.3%

18.5%

18.8%

20%

16.6%

60

15%

50
40

10%

30
205%

10
00%

1990

2000

2010

Solid biofuels traditional
Liquid biofuels
Solar20112012

Solid biofuels modern
Geothermal
Waste

2013

2014

2015

HydroWindBiogas

During 2010-2015, renewable energy share grew from 17.8% to 18.8% intotal final energy consumption – 0.17%/yr growth.

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REmap – Roadmap forRRenewable
bl Energy
Ef tfuture»»

IRENA’s Global Renewable Energy Roadmap»Support the G20 in determining pathways for operationalising Paris Agreement withdecarbonisation scenarios analysis to 2050, report released in March 2017»

Next Update April 2018»

Identifies concrete technology options forcountries and sectors»»

Assesses policy and investment implications»»»

In cooperation with 70 countries

Shows feasible, cost-effective ways to increase renewable energy deployment in world’s energy
mix by 2030 in line with SDG7

Outlines benefits (economic, social,environmental)

30 publications to date and datasets
12 individual country reports forf major
economies – Japan is still missing
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A global view to 2050 –EEnergy
TTransition
itiTo meet 2 °C climate target
g set at COP 23 in Paris 2015
◉ Carbon intensity of energy:needs to fall by 85% in2015-2050◉ Energy-emission budget:790 Gt CO2 from 2015 till
2100

Total energy CO2 emissions from all sectors (Gt CO2/yr)
4540353025201510502015
2030
Energy efficiency

Electrification with RE power

Renewable energy

10%
48%
14%
29%

2050Others◉ G20 has formulated energy and climate action agenda◉ Global energy in transition towards decarbonisation
IRENA/IEA, 201712

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A global view to 2050 –EEnergy
TTransition
iti
Renewable energy and energy efficiency can account for more than 90% ofemission mitigation◉ Renewables acceleration:needs an 8-fold increase
compared to recent years◉ Renewables in 2050:represent 2/3 of the energy
supp ysupply◉ Efficiency gains: need to rise
to 2.5%2 5% per year in 20152015
2050 (from 1.8%/yr in 2015)

Source: IRENA analysis

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EEconomici bbenefits
fi#REmap

Source: IRENA analysis◉ Decarbonising the energy sector in line with REmap increases global GDP byaround 0.8% by 2050 compared to the Reference Case
◉ That is the equivalent of almost 19 trillion USD in increased economic activity
between today and 2050.
14◉ Policy benefits exceed the cost by a factor 2-6.

IEEJ：October 2017 © IEEJ2017

The global energy system is alreadytransitioningi i i with
i h promising
i i benefits
bfi
Job creation can potentially increase to 26 million in 2050

Source: IRENA (2017),
Perspectives for theenergy transition:
investment needs for alow‐carbon energysystem.

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Renewable energy jobs globally today
Employment
p ybyy CountryyIIncluding
l di LLarge
Hydropower

1.1%
Excluding Large
Hydropower
Source: IRENA (2017), Renewable Energy and Jobs – Annual Review 20172 8%2.8%16

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A different approach forclimate change: Systemic
innovation in renewableenergy• IRENA Innovation Week
2nd edition Q2 2018

Sector
Coupling

Enabling
Infrastructure•
Enabling
policy andfinanceMarketregulation

Innovation Landscapep Reportp– Q1 2018

SystemOperationBusinessModels• Innovation Outlook Series• Forthcoming studies inElectric Vehicles & Thermal Storage• Technology Briefs: Over 25 studies
on RE technologies and its functionalities
In cooperation with others such as IEA-ETSAP17IEEJ：October 2017 © IEEJ2017

Climate change action:
Unlocking financing for RE
p jprojects

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COSTING AND HIGH RE COST IN
JAPAN19

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IRENAʼs project cost information database:
Scope and coverage
Power: 15 000 utility-scale projects,¾ million small-scale solar PV
7000 utility-scale PPAs
Smaller dataset on biofuels/EVs
Stationary applications being added
Power: database concentrated in non-OECD
as more publicly available information((e.g.
g multi-lateral financing,g, development
ppprojects,j, etc))

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So what does 15000 projects look like?

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Auction and tender database

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LCOE – Global Overview
Most remarkable results forsolar PV

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Rapidly falling cost
Global purchasing power agreement
overview

PV & WindFIT Japan
p24

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Wind ppower costs arefalling….

Highercapacity
ffactors
fromf
improved
technology

Wind turbine
cost
reductions

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Onshore Wind: Rotor Diameters &Nameplate Capacity

Rotor Diameters & Nameplate Capacity in Key Markets

Rotor diameters haveincreased markedly
between 2000 and2014 while nameplate
capacity is expected toiincrease
ffurtherth iin kkey
markets up to 2025

IEEJ：October 2017 © IEEJ2017

Onshore Wind: Capacity
Factors
Global Weighted Average Capacity Factors – 1983 - 2015

Global averagecapacity factors grewby 35% between 1983
and 2014, rising froman estimated 20% in
1983 to 27% in 2014 (a35% increase)

IEEJ：October 2017 © IEEJ2017

Global Onshore Wind Learning Curve

Levelised cost of electricity
1983-201628

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Solar PV costs are falling….
Higherefficiency
modulesModulecostdeclines

IEEJ：October 2017 © IEEJ2017

Solar PV utility-scale projects
LCOE

Global weighted average
LCOE 2010-16

-68%

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Residential solar PV:
Cost differentials persist

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Country prices breakdown
Japan at the upper end of the range
Wholesale module prices 2010-2015
2010 2015

Utility scale
Balance of systems 2015

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COST BREAKDOWN33

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By category and by country
JapanGermany34

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ACTIONS FOR COST REDUCTION••••••

Optimize installation work• Mounting system design• Training of installers• Reduce installation time (better trained installers, otherfoundations)
Lowering cost of Japanese PV manufacturers,manufacturers which is also
important for overseas markets such as Middle East, US, and SouthAmerica.
IImprove
PV systemtdesignd i tot reduce
dcost,t andd learnl
fromf
thethGerman experience.
Utility-scale projects have been the main driver of the Japanesemarket. The residential market has not grown so much, so there is
still room for market growth.
A changeg to a market driven system
yand self-consumption
pwill lower
PV system costs.
Reductions in incentive scheme will result in consolidation and costreductions.

IEEJ：October 2017 © IEEJ2017

RENEWABLE ENERGY SUPPORTSCHEMES36

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Renewable energy investment
requirements and challenges•The energy transition requires scaling up current investments to 500 billion
USD per year up to 2020 and to USD 900 billion per year up to 2030

•Public fundingg is unlikelyy to increase above its current level of 15% andprivate finance will have to supply the lion’s share of new investments

Key challenges in unlocking renewable energy investment from the private sector

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Targets in the global renewable energy landscape
173 countries haveat least one type of renewableenergy target– up from 43 in 2005

Source: IRENA (2015), Renewable Energy Target Setting.

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Types of renewable energy policies and measures

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Trends in renewable energy support policiesNumber of countries with renewable energy policies, by type

10080

FIT60

RPO40

AUCTIONS
20020052010

2016

Implemented auctions and a feed-in
feed in tariff simultaneously
Used feed-in tariffs to set price cap for auctions

Used auctions to set feed-in tariffs

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Auctions Strengths and weaknesses ‐ Keeping pace withrapidly decreasing costs
Auctions

Strenggths

Flexibility in the design according to conditions andobjectives

Number of countries that have adopted auctions
706050Permit real price discovery
Provide greater certainty regarding prices and quantities

4030
20

Enable commitments and transparency
py10Weakn
nesses0

Are associated with relatively high transaction costs forboth developer and auctioneer

20052006

20072008

20092010

2011

2012

2013

2014

2015

2016

Based on REN21 Global Status Report (2005 to 2016)

Risk of underbuilding and delays

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Policyy adaptation
pto reduce the cost ofsupport
The move from FIT to FIP to Auctions in Germany♦ USD 117.5/MWh support paid under the FIT in 2014.
♦ The support level is the sum of the average monthly wholesale price at the energy exchange (EPEX) anda floating premium.
premium♦ What is paid to the auction winner is the difference between the monthly average market value of thegenerated electricity from PV installations and the auction price.

Source: based on data ffrom BNetzA, 201742

IEEJ：October 2017 © IEEJ2017

GRID INTEGRATION OF
RENEWABLES43

IEEJ：October 2017 © IEEJ2017

Three VRE integration challenges» Surplus VRE generation due tomismatch demand and supply» Flexibilityy due to fast changeg inthe VRE output» Transmission capacity due torapid increase in the VRE
generation and location specificity

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Power sector transformation•••••

Planning for the power system of the future: from capacity expansion to operations
Flexibility toolkit for RE integration
Electricityy storage:
g technology,
gy market outlook, business case
The role of electric vehicles and heatpumps in the power sector transformation
Advisory service and workshops:

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Flexibility

Transmission

Flexible Thermal
Generation

Demand SideMManagementtPower2Grid (Heat, gas…)

Flexible Hydro
Generation

Energy Storage Systems

System operation practice and market design can activate flexibility potentials

IEEJ：October 2017 © IEEJ2017

No lack of innovations –but what is relevant for the local context?
We need to map and understand the implications of these innovations for the power sector

Value
Vl spatial
ti lcomplementarities interconnections

Electrification of othersectors

Valuecomplementarities
in VRE
Encourage Flexibility

Decentralized system

Electric Vehicles

SystemOperationRE
Tech

Marketregulation.

Enabling
Infrastructure

Storage

Blockchain

Digitalization - IoTBusinessModels

Aggregators- VPP

Platform business model

IEEJ：October 2017 © IEEJ2017

Emerging Innovations Power Sector Transformation –E-mobility
Storage and Electric Vehicles Smart Charging (mobile storage)

Provide flexibility to the grid

Grid Services:• Primary and secondary reserves:• Enhanced Frequency Response• Frequency Containment Reserve• Frequency Restoration Reserve• Energy
EShifti
Shifting
Behind-the-meter:• Solar self consumption• Community Storage• Increased Power Quality• Peak shaving

Grid to Vehicle (G2V):• Load management: peak shifting
Vehicle to Grid (V2G):• Primary and secondary reserves• Other
Oth ancillaryillservicesi• Energy shifting
Vehicle to Home (V2H):• Solar self consumption• Increased Power Quality• Peak shaving

IEEJ：October 2017 © IEEJ2017

Battery Energy Storage Systems (BESS)
B tt
BatteryElElectricityt i it St
Storage CCostst anddM
Markets
k t tto 2030 – launchedlh d yesterdayt dDetailed descriptions of 13 storage technologies including their required balance of system
Strengths and weaknesses of each technology are highlighted, possible development paths including
opportunities and threats are discussed
Comprehensive technology overviews for stationary storage systems available on the market today
Typical system designs for 12 typical storage applications
Excel Tool to calculate the Cost of Service of all storage technologies in different applications

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Small-scale: rapidly falling prices
Home storage

Li-ion 60%
reduction!

Source: IRENA, EuPD ResearchMedian prices for lithium-ion based residential storage system offers in Germany have declinedroughlyg y 60% Q4 2014 to Q1 2017

Note: Horizontal bar shows median offer price, grey range 10th and 90th percentile.

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Potential cost evolution

50-66% reduction

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Asia Interconnections
Asia Super Grid - International project to send
electricity from wind firms in Mongolia all the way toJapan

Japan – Korea 220 km
Netherlands – Norway 320 km
existing
g HVDC subsea cable since 1990’s
Payback 6 months
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Thank you!
ywww.irena.org

www.twitter.com/irena

www.facebook.com/irena.org

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H b id policies
Hybridli i ‐ TheTh case off IIndiadiHistorically higher prices in India compared with Peru, the United States and South Africa♦ Developers account for inflation risks♦ Guarantees to hedge against off‐taker risks in some states♦ Increasingly affordable finance♦ Government fund to hedge against currency exchange risks♦ Domestic content requirements in some state auctions
India’s actual and adjusted solar prices

The trends of solar auction prices. 2010-2017

Sources: Based on BNEF (2016); Bridge to India (2017); Elizondo‐Azuela et al. (2014); MNRE (2010) and MNRE (2012).

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IEEJ：October 2017 © IEEJ2017

OBSERVATIONS
••
•

••

Japan still shows significantly higher installation cost than
Germany in all three analysed sectors.
Installation times are still higher in Japan than Germany• Japan mainly uses earth screws, while Germany mainly usedpile driven foundations.
Higher module cost in Japan
Japan, because a large percentage ofmodules is by Japanese Producers.
• According to REI the cost disparity has shrunk in the last 2-3years.
Design standards are higher in Japan than Germany due todifferences in the natural environment.
Japan has higher solar irradiance, which gives lower LCOE despite
higher CAPEX of PV systems.

IEEJ：October 2017 © IEEJ2017

Many flexibility options

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Contact :report@tky.ieej.or.jp