APEC Energy Demand and Supply
Outlook 8th Edition

Market update on renewable energy development and progress on thenew edition of the Outlook
The 54th Meeting of APEC Expert Group on Renewable Energy and New Technologies
November 10, 2020
Dr. Victor MARTINEZ, ResearcherA year with the biggest pledges to achieve carbon neutrality
Major Asian economies has a commitment to reach a net-zero economy

South Australia (October 2020):~100% solar powered and ~100% wind powered at the same week
Rooftop solar is installed on one-in-three homes in South Australia,
with 2,500 systems installed monthly this year alone.

2020 Electricity generation in a Snapshot (selected economies)
Clear signals of recovery in most economies

Source: APERC, 2020

AUSTRALIA
25 000

5.0%

20 0000.0%

15 000
10 000-5.0%

5 0000Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
AUS(19)AUS(20)-10.0%

CHINA

800 000

200 000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
PRC(19)0.0%

60 000-2.0%

40 000-4.0%

20 000-6.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec-8.0%

120 000
100 000
80 00060 00040 000
20 00000.0%-10.0%

2 000

-5.0%

-15.0%

0-10.0%PRC(20)Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec∆(%)

CHL(19)JPN(19)

10.0%

2 000

-10.0%

200 000

0-20.0%0300 000
100 000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
USA(19)USA(20)∆(%)

60 000-4.0%

40 000-8.0%

20 00050 000-6.0%

30 000-10.0%

10 0000JanFeb Mar Apr May Jun
KOR(19)JulAug Sep Oct Nov Dec

KOR(20)

4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%∆(%)

MEXICO

400 000

0.0%∆(%)

0.0%

∆(%)

USA

500 000

4 000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

JPN(20)

CHL(20)KOREA

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

∆(%)

6 000

NZ(20)

4 000

-2.0%

NEW ZEALAND

NZ(19)

5.0%

JAPAN
2.0%

CAN(20)

6 000

-5.0%

∆(%)

80 000

CAN(19)

10.0%

0.0%

400 000

CHILE
8 000

5.0%

CANADA0

10.0%

600 000

0

Unit: TWh

∆(%)

2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
-10.0%

60 0005.0%

40 0000.0%

20 000-5.0%

0Jan Feb Mar Apr May Jun
KOR(19)Jul Aug Sep Oct Nov Dec
KOR(20)∆(%)-10.0%

2020 Electricity generation produced by renewables (selected economies)
Despite COVID-19 a steady or growing trends is observed in most of the APEC economies
AUSTRALIA

100%

100%

80%

Jul-19Oct-19Jan-20

Apr-20Jul-20CANADA100%

20%0%
Jan-19Apr-19Jul-19Oct-19Jan-20

Apr-20Jul-20

JAPAN

100%

Apr-19Jul-19Oct-19Jan-20

Apr-20Jul-20NEW ZEALAND

100%0%
Jan-19Apr-19Jul-19Oct-19Jan-20

Apr-20Jul-20

USA

100%

0%
Jan-1980%60%60%60%

40%

40%

20%

20%
Apr-19Jul-19Oct-19

Jan-20

Apr-20Jul-20

Apr-20Jul-20Jan-20

Apr-20Jul-20Jan-20

Apr-20Jul-20SOUTH KOREA

Apr-19Jul-19Oct-19MEXICO

100%80%0%
Jan-19Jan-2020%80%0%
Jan-19Oct-19

40%

20%

20%

Jul-19

60%

40%

40%

Apr-1980%60%60%

0%Jan-19100%

80%80%

0%
Jan-1940%

20%
Apr-19Fossil Fuels

60%

40%

20%

USA

80%60%

40%

Renewables

CHILE

100%80%60%0%
Jan-19CHINA[%]

40%20%
Apr-19Jul-19Oct-19Jan-20

Apr-20Jul-200%
Jan-19Apr-19Jul-19Oct-19Source: APERC, 2020Renewable technologies are fully competitive with conventional generation
unsubsidized analysis with prices adjustments

Levelized cost of selected generation technologies (Oct-2020) – [US$/MWh]

Variations in fuel prices canmaterially affect the LCOE
of conventional generation
technologies. (indirect andcross subsidies)
Direct comparisons to“competing” renewableenergy generation
technologies must consider
issues such as dispatch
characteristics:• baseload vs. peaking• Market structure
Source: Lazard, Oct 2020

New ways of structure corporate PPAs
24/7 carbon-free guarantee (hourly and intra-hourly basis)

Transitioning to a low carbon grid with high penetration of VRE
brings operational challenges
Climate is changing making more harder predict weather conditions adding more complexity to the forecast
ISO and TSO needs to work mostly in••••

Assessing ability of theresources fleet and import tomeet the demand in all periods
In near and mid-term ensuring
sufficient peak resources (gas) oroverbuilding renewables tomeet high demand periods
Time of Use rates and demand
response strategies
Incentivize renewable resource
to provide controllability andessential reliability resourcestraditional provided byconventional resources

Source: ERCOT, 2020

APEC economies has ambitions renewable energy targets by 2030 and some relevant
economies has pledge to reach carbon neutrality by 2050-60 (~80% renewables by 2050)

New technologies are critical for the energy transition: electricity cannot
decarbonize entire economies alone
Achieving net-zero emissions requires a radical transformation in the way we supply, transform and use energy
Hydrogen forms a bridge between the power sector andindustries where the direct use of electricity would bechallenging, such as in the production of steel from iron ore orfueling large ships (IEA,2020).
•Green hydrogen will be cost-competitive with bluehydrogen in around a decade and competitive with grayhydrogen at around $1/kg by 2050 (BNEF, 2020).

•Japan, Singapore, Australia and Chile has released
ambitions Hydrogen strategies which combined includes
more than 30 GW by 2030. Saudi Arabia, Russia and Canada
has a relevant role to play too.

Source: Siemens, Power to X, Hydrogen Strategy Chile

A secure and sustainable energy system with net-zero emissions results in a newgeneration of major fuels: Electricity, hydrogen, synthetic fuels and bioenergy

Renewables are on track despite the pandemic and the sustainable recovery has
accelerated the energy transition, but the key challenges remains as harder than usual
From the policymakers' side, increasing renewable deployment requires:
••
•
•
•
•
•

A strong institutional framework to support policies and specific energy targets: i.e., carbon
neutrality policy.

New financial and market mechanisms for low-carbon technologies. i.e., novel tender process(auctions) to support the entrance and uptake of renewables.
Easy access and priority for small-scale renewables developers
Utility obligations/quotas (share) for modern renewables.
Net-metering/ Net-billing implementation for end users.

Gradually incorporation of carbon-tax and associated environmental policies to boost
competitiveness.

Reliability and adequacy in the power system need to be addressed: Flexibility is required tomaximize the efficient integration of VRE.

Reaching net-zero emissions in 2050 would require a much more rapid
deployment of low-carbon power generation
The energy transition is an opportunity to increase the role of renewables in the energymix but there is not a single recipe.
•••••
•
•

Electricity generation would be about 2.5 – 3.0 times higher in 2050 than it is today, requiring a rate of
growth equivalent to adding the entire US power sector every three years.

Annual additions of renewable electricity capacity, would need to average around four times the current
record, which was reached in 2019.
New trends and technological advances are critical to reach the current energy aspirational targets andnew net zero pledges.
Improved technical-economics modeling of energy systems

Working with local communities and strength education in energy, economy and related subjects.

Economical alternatives to carbon-intensive technologies and potential phase-out of inefficient power
plants i.e., subcritical coal power plants.

Direct and indirect effects of decarbonization policies on jobs local communities in the short and mid-term.

Part 2:APEC Energy Demand and Supply
Outlook 8th Edition
Redesigned analysis adding new values and creating new tools for the economies

11

APEC Energy Demand & Supply Outlook
8th edition scenarios
Current Policies

Announced Policies

Climate ChangeThis scenario shows a continuationof current trends and policies ineffect without any additional policy
interventions.

This scenario includes current andannounced policies that have notbeen implemented, and targets
and goals.

This scenario presents a
decarbonization pathway
consistent with a 2DC future under
the Paris Agreement.

It serves as a reference for the twoalternative scenarios.

It identifies the additional level ofambition and policy packages totransition to a low-carbon energy
system.

Notes: all scenarios will use a base year of 2019. Projections are annual through 2050. Macro-economic
assumptions are constant across scenarios.
Current policies are those that are active in law, regulation, and/or implementation. Current policies do notinclude targets, goals, or other policy proposals that may have been announced but not implemented.
Announced policies include targets and goals, and policies that are not yet under implementation. NDCs areincluded.
Additional measures for the Climate Change scenario are bottom-up in nature. Planning for this scenario willcommence later this year, followed by modeling in early 2021.
12

Analysis guiding principles & Knowledge Based Modeling• Consistency in methodology• Increased focus on economics• Improved accessibility and usability• Open source whenever possible• Transparency

13

Data science tools• Python: to automate workflows• Pandas: to manipulate datasets• scikit-learn: machine learning-based demand projections• Pyomo: to generate linear programs• OSeMOSYS: to generate linear program model instances• provides a consistent framework to organize the model elements• Input and output data
• Supply-demand balances• Cost structure• Emissions accounting• Microsoft Excel: data management and charts• Charts are created using Pandas XlsxWriter

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Example:
Preliminary results – Transformation activities
Mexico - Power capacity and electricity generation by fuel, 2017-50
160

Capacity

600→ Projection

140600→ Projection

500

1208020040

2017

2020

2030

2040

2050

0TWh

2020

2030

2040

2050

Coal

Oil

Gas

Nuclear

Hydro

Wind

Bioenergy

Solar

Geothermal & others

Storage

Net imports

Wind60

Solar
Nuclear

40

Hydro

30

1000
2000

70
50200
2017

Geothermal

80300

100

20

Biomass

90

400

300

60

100

→ Projection

TWh

500

400

1000GW

Generation20Gas

10Oil%02010

2020

2030

2040

2050

2017

2050

Coal• Power sector represented by cost-minimizing capacity expansion model(OSeMOSYS), which meets exogenous electricity demand (from demand sectors)• Refinery and Supply sector follows same approach15

21_VN: Power Sector
Electricity generation and capacity by source – preliminary results under consistency review
APERC-7th Edition
140

Capacity420→ Projection

120

Generation

180→ Projection

360

100

2016

2020

CoalOil

2030

Gas

2040

Hydro

2050

0TWh

Wind

Bioenergy

200

60
40

100

200GW
2016

2020

Solar

2030

Storage

2040

2050

Net imports→ Projection

300

8060

Generation

400

10012020→ Projection

120

18040500140240

60

Capacity

160

300

800
GW

APERC- 8th Edition

2017

2020

2030

CoalOilGas

2040

2050

HydroWind0TWh2017

Bioenergy

2020

2030

2040

2050

WasteSolar

Net imports- Similar demand but a larger role of renewables this time

- more renewables  ~ compatibility with LNG Terminal expansion  lower LNG demand?

- Security of supply, margin reserve and peak demand

Source: APERC, 202016

Example:
Preliminary results – Snapshot of selected economies (current policies scenario)
PNG

Peru

Brunei

ChileThailand

Viet-Nam17

Ongoing and future activities• COVID-19 assumptions• We are incorporating short- and long-term impacts by adjusting GDP assumptions (applies toall three scenarios) and commodity prices• Short-term: GDP disruption and recovery projections from IMF• Long-term: return to previous GDP growth rates• Question: what other long-term structural and/or behavioral shifts should be considered?
• Climate Change Scenario• Will begin design late 2020/early 2021
• Question: what new developments or trends should we explore? E.g., Circular Carbon
Economy?
• Expert feedback• We are seeking reviewers for our results and chapters18

Thank you for your kind attention!
victor.martinez@aperc.or.jp
https://aperc.or.jp
https://github.com/asia-pacific-energy-research-centre