ALPS Symposium
19 February 2019
Insights on electricity transitions
from the World Energy Outlook 2018
Yasmine Arsalane, IEA© OECD/IEA 2018

Context
 Electricity is increasingly important in the modern world, to date: Electricity demand has been growing twice as fast as total energy demand
 Investment in the power sector is larger than that in the oil and gas sector
 The rise of solar PV and wind power is transforming electricity supply Overall energy-related CO2 emissions are back on a rising trend in 2018
 For the first time, the global population without access to electricity fell below 1 billion

 Policy makers need well-grounded insights about different possible futures & how

they come about. The WEO provides two key scenarios: New Policies Scenario

 Sustainable Development Scenario

 The Future is Electric Scenario was introduced to explore the implications of more

rapid electrification of end uses and the digitalization of the economy© OECD/IEA 2018

The new geography of energy
Energy demand
2000
United States
European Union
China

AfricaIndia
Southeast Asia
Middle East
1 000

2 000

3 000

4 000Mtoe

In 2000, more than 40% of global demand was in Europe & North America and some
20% in developing economies in Asia. By
By 2040,2040, this
this situation
situation isis completely
completely reversed.
reversed.
© OECD/IEA 2018

The new geography of energy
Energy demand
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
United States
China
European
United States
Union
China
European Union
China

AfricaIndia
AfricaIndia
Southeast
Middle Asia
East
Southeast
Middle Asia
East
1 000

2 000

3 000

4 000
Mtoe

In 2000, more than 40% of global demand was in Europe & North America and some
20% in developing economies in Asia. By
By 2040,2040, this
this situation
situation isis completely
completely reversed.
reversed.
© OECD/IEA 2018

The new geography of energy
Energy demand
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
United States
China
European
United States
Union
China
European Union
China
India

European Union
AfricaIndia
European Union
AfricaIndia
Southeast
Middle Asia
East
Southeast
Middle Asia
East
1 000

2 000

3 000

4 000
Mtoe

In 2000, more than 40% of global demand was in Europe & North America and some
20% in developing economies in Asia. By
By 2040,
2040, this
this situation
situation isis completely
completely reversed.
reversed.
© OECD/IEA 2018

Fuelling the demand for energy
Change in global energy demand, 2017-2040
Renewables & nuclear

Gas

Oil

Coal

Mtoe 1 500
1 200

Nuclear
Other

600

300

Renewables

900

Other

Power

Industry0

Petrochemical

Other

Cars

PowerCars

Power-300-600
Advanced Developing
economies economies

Advanced Developing
economies economies

Advanced Developing
economies economies

Advanced Developing
economies economies

The increase in demand would be twice as large without continued improvements
in energy efficiency, a powerful tool to address energy security & sustainability concerns© OECD/IEA 2018

Electricity, the fastest growing “fuel”

Thousand TWh

Global electricity demand by region
40

30

Other developing economies
Other developing economies

20

India
China

China

Other advanced economies
Japan
European Union
United States

2000

2010

2017

India

2030

Other advanced economies
Japan
European Union
United States

2040

In 2000, developing economies accounted for one-third of electricity demand,by 2040, their share doubles as they account for most of the electricity growth© OECD/IEA 2018

Solar PV growth outpaces all other technologies

GW

Installed power generation capacity by source in the New Policies Scenario
3 000
HistoricalGas

Projections

Solar PV
Coal
2 000

Hydro
Wind

1 000
Nuclear
Other renewables
Oil
Battery storage
2000

2010

2020

2030

2040

Renewables make up two-thirds of all capacity additions worldwide to 2040,
capturing 70% of power plant investment© OECD/IEA 2018

Two directions for nuclear power
Growth markets

160

GWGW

Without policy changes

Retirementsfrom 2017

1201601202017
2040
8080Additions
to 2040

4040

2017

UnitedStates

EuropeanUnion

Japan

ChinaRussia

India

The contribution of nuclear power could decline substantially in leading markets,
while large growth is coming, as China takes first position within a decade© OECD/IEA 2018

The electricity landscape is transforming
World electricity generation mix by source
2017

2040

80%

60%

Oil

OilGas40%20%

Gas
Coal

Other
Solar

Renewables

Solar

WindWind

Coal

Hydro
Fossil fuels

Other

Nuclear

Fossil fuels

Hydro
Renewables

NuclearCoal and renewables switch roles by 2040, mainly driven by policy support andaccelerated by the improving competitiveness of renewables© OECD/IEA 2018

Flexibility: the cornerstone of tomorrow’s power systems
Phases of integration with variable renewables share, 2017
Integration
phaseAll sourcesof flexibility
needed6

Targeted
investment inflexibility needed

4

Mobilise existing
power system
flexibility

25

European Union

3

10%

Denmark

Germany

United Kingdom
FranceIndia United States
China

10%

20%

30%

40%

50%

60%

70%

80%

90%

Wind and solar PV share of generation

Higher shares of variable renewables raise flexibility needs and call for reforms to deliver
investment in power plants, grids & energy storage, and unlock demand-side response© OECD/IEA 2018

Flexibility: the cornerstone of tomorrow’s power systems
Phases of integration with variable renewables share, 2030
2017
Integrationphase

All sourcesof flexibility
needed6

Targeted
investment inflexibility needed

4

Mobilise existing
power system
flexibility

Denmark

Germany

532

United Kingdom
FranceEuropean Union

United States
India
China

10%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Wind and solar PV share of generation

Higher shares of variable renewables raise flexibility needs and call for reforms to deliver
investment in power plants, grids & energy storage, and unlock demand-side response© OECD/IEA 2018

Our energy destiny lies with governments
Power sector investment to 2040
$20 trillion
Wholesale market pricing 7%

Regulated/contracted(generation and grids)
93%

Power sector investment continues to be driven by regulated market frameworks© OECD/IEA 2018

What if the future is electric?
Electricity demand(thousand TWh)Oil demand(mb/d)

45125

Energy-related CO2 emissions
(Gt)
4040

100

32
Scenario:35752430501625258New Policies
Future is Electric202015 2020

2030

2040

2015 2020

2030

2040

2015 2020

2030

2040

Increased electrification leads to a peak in oil demand, avoids 2 million air pollutionrelated premature deaths, but does not necessarily lead to large CO2 emissions reductions© OECD/IEA 2018

Accelerating action in power is key to the energy transition

GW

Installed power generation capacity by source in the Sustainable Development Scenario
4 500

Solar PVHistorical

Projections

3 000WindGas
Hydro

1 500

200020102020

2030

Coal
Other renewables
NuclearBattery storage
Oil
2040

Coal-fired power capacity without CCUS declines by two-thirds to 2040,
while solar and wind power move in front, reaching half of total installed capacity© OECD/IEA 2018

Can we unlock a different energy future?
Global energy-related CO2 emissions
Gt 36

New Policies Scenario

30
24
18

Sustainable Development
Scenario

Existing and under construction
power plants, factories, buildings etc.

1262017

2025

2030

2035

2040

Coal plants make up one-third of CO2 emissions today and half are less than 15 years old;policies are needed to support CCUS, efficient operations and technology innovation© OECD/IEA 2018

Can we unlock a different energy future?
Global energy-related CO2 emissions
Gt 36

New Policies Scenario

30
24
18

Sustainable Development
Scenario

Existing and under construction
power plants, factories, buildings etc.

126Coal-fired power plants
2017

2025

2030

2035

2040

Coal plants make up one-third of CO2 emissions today and half are less than 15 years old;policies are needed to support CCUS, efficient operations and technology innovation© OECD/IEA 2018

Can we unlock a different energy future?
Global energy-related CO2 emissions
Gt 36

New Policies Scenario

30
2418

Sustainable Development
Scenario

Increased room
to manoeuvre

Existing and under construction
power plants, factories, buildings etc.

126
Coal-fired power plants
2017

2025

2030

2035

2040

Coal plants make up one-third of CO2 emissions today and half are less than 15 years old;policies are needed to support CCUS, efficient operations and technology innovation© OECD/IEA 2018

Conclusions
 The rapid growth of electricity brings huge opportunities; but market designs needto deliver both electricity and flexibility to keep the lights on
 A comprehensive strategy to electrify end uses and decarbonise the power sector isneeded to achieve environmental goals
 There is no single solution to turn emissions around: renewables, efficiency & a hostof innovative technologies, including storage, CCUS & hydrogen, are all required Achieving energy for all is essential for achieving the Sustainable Development

Goals, especially for improving livelihoods, health, gender equality and education
 The future pathway for energy is open: governments will determine where ourenergy destiny lies
© OECD/IEA 2018

iea.org/weo© OECD/IEA 2018