IEEJ: April 2012 All Right Reserved

Paolo Frankl
Head Renewable Energy DivisionInternational Energy Agency
Institute of Energy Economics, Japan (IEEJ) Energy Seminar
Tokyo, 7 March 2012
© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved• Analyses market and policy
trends for electricity, heatand transport• Investigates the strategic
drivers for RE deployment• Benchmarks the impact
and cost‐effectiveness ofeconomic support policies• Provides best practice
policy principles• Covers 56 countries and allworld regions• Book and 3 supporting
information papers© OECD/IEA, 2011

IEEJ: April 2012 All Right Reserved

Strong Growth in RE Electricity …
and shift to Asia

© OECD/IEA, 2011

WindBioenergy

Solar PV

Hydroother

Generation2010 [TWh]338296313503

74

CAGR 2005‐2010 [%]

26.5%

8.8%

50.8%

3.1%

4.6%

IEEJ: April 2012 All Right Reserved

Costs are Reducing• Hydro and somebiomass andgeothermal alreadycost‐competitive• Additional
technologies gettingcompetitive in a
broader set ofcircumstances• Opens up new
deployment
opportunities© OECD/IEA, 2011

PV decreasing costs by‐19% for each doubling of
cumulative installed capacityData from Breyer and Gerlach, 2010

IEEJ: April 2012 All Right Reserved

Policies could radically alter
the long‐term energy outlook

Mtoe

World primary energy demand by scenario
20 000Current Policies
Scenario

18 000

New Policies
Scenario

16 000
14 000450 Scenario

12 000
10 000
8 000
6 000
1980

1990

2000

2010

2020

2030 2035

In the New Policies Scenario, demand increases by 40% between 2009 & 2035
© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved

Low‐carbon power technologies
come of age

GW

Global installed power generation capacity
in the New Policies Scenario
10 000Fossil‐fuel additions
Nuclear additions

8 000

Renewable additions
6 000

Existing 2010 capacity

4 000
2 00002010

2015

2020

2025

2030

2035

Renewables & nuclear power account for more than halfof all the new capacity added worldwide through to 2035
© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved

Efficiency gains can contributemost to emissions reductions

Gt

World energy‐related CO2 emissions abatement in the450 Scenario relative to the New Policies Scenario
38
New Policies Scenario

36

Abatement
2020 2035
Efficiency
72% 44%
Renewables
17% 21%
Biofuels
2%4%Nuclear
5%9%CCS
3% 22%
Total (Gt CO2) 2.5 14.8

3432302826
24450 Scenario

22202010

2015

2020

2025

2030

2035

Energy efficiency measures – driven by strong policy action across all sectors – account for
50% of the cumulative CO2 abatement over the Outlook period© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved

Moving towards cleaner forms ofelectricity generation

100%

7 000
6 000

80%

5 000
4 000

60%

3 000

40%

2 000
20%

1 000

Share of electricity generation

TWhElectricity generation by selected low carbon technology &share of electricity generation by scenario, 2009 and 2035
2009
Incremental to2035 over 2009:
New PoliciesScenario
450 Scenario

0%0Nuclear Hydro Wind Biomass Solar Other CCS
PV renew.

Lowcarbon

Low‐carbon generation increases 2.5 times between 2009 & 2035 in the New Policies Scenario& almost quadruples in the 450 Scenario© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved

Less nuclear means
more of everything else

TWhPower generation by fuel in the New Policies Scenario
and Low Nuclear Case
14 0002009

12 0002035:
New Policies Scenario

10 0002035:
Low Nuclear Case

8 000
6 000
4 000
2 0000
Nuclear

Coal

GasRenewables

The biggest chunk of the lost nuclear generation is replaced by power generation from coal,leading to a 6% increase in CO2 emissions in the power sector© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved

The majority of energy subsidies
still go to fossil fuels
World subsidies to fossil fuels consumption & renewable energy
600

Fossil fuelconsumption

500

Renewable energy
production

400
300
200
10002007

2008

2009

2010

Fossil‐fuels subsidies amounted to $409 billion in 2010 – down from the peak of $550 billion
in 2008 but still much larger than subsidies to renewables, which reached $66 billion in 2010
© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved

The overall value of subsidies
to renewables is set to rise

Billion dollars (2010)

Global subsidies to renewables‐based electricity and biofuelsin the New Policies Scenario
250BiofuelsElectricity

200
150
1005002007 2008 2009 20102015 2020 2025 2030 2035

Renewable subsidies of $66 billion in 2010 (compared with $409 billion for fossil fuels), needto climb to $250 billion in 2035 as rising deployment outweighs improved competitiveness© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved

The door to 2°C is closing,but will we be “locked‐in” ?

Gt

World energy‐related CO2 emissions in the Current Policies and 450 Scenariosand from locked‐in infrastructure in 2010 and with delay
50
45
40
35
30
25
20
15
1050
2010

6°C trajectory

2°C trajectory
Delay until 2017
Delay until 2015
Emissions fromexisting infrastructure
2015

2020

2025

2030

2035

Without further action, by 2017 all CO2 emissions permitted in the 450 Scenario
will be “locked‐in” by existing power plants, factories, buildings, etc.
© OECD/IEA 2011

IEEJ: April 2012 All Right Reserved

Measuring Policy Impact ‐ Methodology© OECD/IEA, 2012

IEEJ: April 2012 All Right Reserved

Are Policies Successfully Encouraging
Deployment? Example: Onshore Wind

© OECD/IEA, 2012

IEEJ: April 2012 All Right Reserved

Are payments for Generators in a
Reasonable Range? Ex: Onshore Wind 2009

© OECD/IEA, 2012

IEEJ: April 2012 All Right Reserved

Impact vs Cost‐Effectiveness
Example: Onshore Wind

© OECD/IEA, 2012

IEEJ: April 2012 All Right Reserved

Emerging Policy Challenges ‐ PVCumulative global PV capacity

Sources: IEA, EA PVPS, EPIA

Concentrated booming PV growth raises policy cost concerns inseveral EU countries• Policies are not adapting quickly enough• However, pressure will reduce as new markets emerge•© OECD/IEA, 2011

IEEJ: April 2012 All Right Reserved

Adjust Tariffs – On time & Often
Solar PV in Germany

Key point: Gap between incentives and costs andlarge, one‐off tariff decreases can trigger “sales rush”© OECD/IEA, 2011

IEEJ: April 2012 All Right Reserved

Importance of var‐RE
WEO 450 Scenario electricity projections – EU

4%17%

© OECD/IEA, 2011

15%
32%

25%

29%

46%

51%

IEEJ: April 2012 All Right Reserved

Emerging challenges: grid integration
Variability is not new, but it does get bigger
DemandDemand net ofwind and solar© OECD/IEA, 2011

Source: Western Wind and Solar Integration Study, GE Energy for NREL (2010)

IEEJ: April 2012 All Right Reserved

Flexibility is key
There are 4 flexible resources

Dispatchable
power plants

Demand side
Response(via smart grid)

Energy storage
facilities

Interconnection
with adjacentmarkets

Industrial© OECD/IEA, 2011A biomass‐fired
power plant

residential

A pumped hydrofacility

Scandinavianinterconnections

IEEJ: April 2012 All Right Reserved

Grid integration of var‐RE
Snapshot of present penetration potentials© OECD/IEA, 2011

IEEJ: April 2012 All Right Reserved

Best‐Practice Policy Principles• Predictable RE policy framework, integrated
into overall energy strategy• Portfolio of incentives based on technology
and market maturity• Dynamic policy approach based onmonitoring of national and global markettrends• Tackle non‐economic barriers• Address system integration issues© OECD/IEA, 2011

IEEJ: April 2012 All Right Reserved

Policy Priorities: Changing Over Time

DeploymentInception•

Clear RE
strategy andtargets•

Attractivesupport•

Set upregulatory
framework

Take‐off

Consolidation•

Predictable
and rapidly
adaptive
incentives•

Systemintegrationand transfor‐
mation•Focus on non‐economicbarriers•Market designand expose
RE tocompetition•

Manage total
support costs•

PublicacceptanceTime© OECD/IEA, 2011

IEEJ: April 2012 All Right Reserved

Market Expansion Opportunities

New opportunities

Leading countries

New opportunities© OECD/IEA, 2011

IEEJ: April 2012 All Right Reserved

Conclusions• Policies have started delivering in terms of RE
deployment and cost reduction• RE getting competitive in a broader set of circumstances• However major economic and non‐economic barriers
persist and sustained policy effort is still needed• Deploying Renewables identifies best‐practice policy
principles© OECD/IEA, 2011•

Cost‐effective, dynamic, integrated approach•

Aims to help sharing best practice internationally so thatcountries can learn from each otherIEEJ: April 2012 All Right ReservedLinks• www.iea.org• RE Publications– Home > Publications > Search per Topic: Renewables• RE Policy Database
http://renewables.iea.org• Contacts
paolo.frankl@iea.org
renewables@iea.org© OECD/IEA, 2011

Contact: report@tky.ieej.or.jp