© oecd/iea - 2007 renewable energy perspectives roberto vigotti chair renewable energy working...
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INTERNATIONALENERGY AGENCY© OECD/IEA - 2007
Renewable Energy Perspectives
Roberto VIGOTTI
Chair Renewable Energy Working Party
International Energy Agency
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Mapping a Better Energy Future
The Energy Future Absent New Policies: Security of oil supply is threatened Gas security is also a growing concern Investment over the next decade will lock in technology
that will remain in use for up to 60 years CO2 emissions by 2050 will be almost 2.5 times the
current level!
On current trends, we are on course for an “unstable, dirty
& expensive energy future” as the carbon intensity of theworld economy will increase
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7A New Energy Revolution….
Cutting Energy Related CO2 emissions
0
10
20
30
40
50
60
70
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Gt C
O2
/yr
CCS industry and transformation 9%
CCS power generation 10%
Nuclear 6%Renewables 21%
End use electricity efficiency 12%End use fuel efficiency 24%
End-use fuel switching 11%
Power generation efficiency & fuel switching 7%
Improved efficiency and decarbonising the power sector could bring emissions back to current levels by 2050. To achieve a 50% cut we
would also have to revolutionise the transport sector.
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7The priorities areas
Strategies for key technologies to make a difference:
strong energy efficiency gains in transport, industry and buildings;
electricity supply becoming significantly de-carbonised as the power generation mix shifts towards, natural gas, coal with CO2 Capture and Storage (CCS), renewables and nuclear power,
increased use of biofuels for road transport
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7Electricity Generation Scenarios
0
10000
20000
30000
40000
50000
60000
2005 Baseline 2030 Baseline 2050 Advanced Technologies 2050
50% CO2 emission reduction 2050
TW
h
Other renewablesSolarWindBio-CCSBiomassHydroNuclearGas-CCSGasOilCoal-CCSCoal
Renewables would have to play a particularly significant role in the power sector, increasing from 18% today to nearly 50% by 2050. Non-hydro renewables show the
highest growth rate.
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No single solution….a portfolio of technologies is required
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7Average Annual Power Generation
Capacity Additions to achieve a 50% cut in emissions, 2010 – 2050
0 20 40 60 80
CSP
PV
Geothermal
Wind
Biomass
Hydropower
Nuclear
Gas-fired with CCS
Coal-fired with CCS
[GW/yr]
175 million m2
20 CCS gas-fired plants (500 MW)
26 nuclear plants (1000 MW)
1/3 Canadian hydropower capacity
222 CHP Plants (50 MW)
80 CSP plants (250 MW)
38 CCS coal-fired plants (500 MW)
132 Geothermal Units (100 MW)
17,500 Turbines (4 MW)
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Effective policy only in a limited set of countries Sometimes depending on specific technology
Potential and perceived risk, more than profit, is key to policy effectiveness & efficiency
Price support can not be adequately addressed in isolation; non-economic barriers must be addressed concurrently Grid barriers Administrative barriers Social acceptance issues Other barriers (e.g. training, information, financial, etc.)
Effective systems have, in practice, frequently been the most cost efficient Technology-specific support is key for both effectiveness
and cost-efficiency
Main Lessons Learnt
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1. Establish stable support framework - to attract investments
2. Remove barriers to improve market functioning
3. Set up transitional incentives decreasing over time – to foster and monitor technological innovation and move towards market competitiveness
4. Ensure technology-specific support to exploit full RET basket potential
Continuity
Certainty
Key Principles for Effective Renewable Energy Policies
Move towards a combination framework of incentive schemes
in function of technology maturity level in order to foster RETs’ transition towards mass market
integration
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Mark
et
Dep
loym
en
t
TimeDevelopment Niche Niche markets Mass Mass market
Wind offshore
Modern biomass
technologies
Solar PV
Concentrating solar power
Tidal
OceanWave
Wind onshore
Hydro
Traditional biomass
Solar thermal
heat
2nd generation
biofuels
Biodiesel from oil-
seed rape
Sugarcane ethanol
Conventional geothermal
Shallow geothermal
heat
High cost-gap technolo
gies
Low cost-gap
technologies
Mature technologies
Prototype & demonstration
stage technologies
Renewable Energy Renewable Energy Technologies: : Today and Tomorrow….Today and Tomorrow….
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Combination framework of policy incentives versus technology maturity
Mark
et
Dep
loym
en
t
TimeDevelopment
Niche markets Mass market
Imposed market risk, guaranteed but
declining minimum return
Price-based: FIPQuantity-based: TGC
with technology banding
Wind offshore
Modern biomass
technologies
Solar PV
Concentrating solar power
Tidal
OceanWave
Wind onshore
Hydro
Traditional biomass
Solar thermal
heat
Stability, low-risk incentives
Price-based: FIT, FIPQuantity-based:
Tenders
2nd generation
biofuels
Continuity, RD&D, create market attractiveness
Capital cost incentives: investment tax credits, rebates, loan guarantees etc.
Biodiesel from oil-
seed rape
Technology-neutral competition
TGCCarbon trading (EU
ETS)
Stimulate market pullVoluntary (green)
demand
Sugarcane ethanol
Conventional geothermal
Shallow geothermal
heat
High cost-gap
technologies
Low cost-gap technologies
Mature technologies
Prototype & demonstration
stage technologies
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1. Focus on coherent and rigorous implementation of key policy design principles only then can ambitious targets be reached
2. Exploit substantial potential for improvement of policy effectiveness and efficiency: learn from international experiences
3. Remove non-economic barriers first
4. Deploy full basket of available RETs besides exploiting “low-hanging fruit” Minimise time and total costs in the long term
5. Allow a combination framework of incentive schemes in function of technology maturity level
Key question: How to lead the transition from the present system to a
level playing field in an open and fully competitive market
Recommendations
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Public Sector Energy R&D in IEA Countries
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1974 1978 1982 1986 1990 1994 1998 2002 2006
Mill
ion
US
$ (
20
06
pri
ces
an
d P
PP
)
-1%
1%
3%
5%
7%
9%
11%
13%
15%
Sh
are
of E
ne
rgy
R&
D in
To
tal R
&D
Energy efficiency Fossil fuels Renewable energy sources Hydrogen and fuel cells Other Nuclear Share of energy R&D in total R&D
R&D investment is not adequate given the magnitude of the climate challenge. Government spending on energy R&D has fallen, while the private-sector is focused on
projects with short-term payoffs
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Relative Cost of Electricity Generation
from Wind and Solar
Wind power generation can already compete in certain locations,
Concentrated solar power is not far away in the sunbelt.
Solar photovoltaics has costs decreasing by up to 18% with every doubling of cumulative production, but as yet remains economic only in remote locations.
Source: World Energy Outlook 2006 and IEA databases
0 10 20 30 40 50 60 70 80
CCGT
Coal Steam
Wind
Concentrated SolarPower
Solar PV on good sites
US cents per kWh
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7Capital Costs of Renewables-Based
Power Generation Technologies
0
1 000
2 000
3 000
4 000
5 000
6 000
Windonshore
Windoffshore
Hydro Geothermal Biomass Solarthermal
Tide/wave Solar PV
dolla
rs (
2000
) pe
r kW
2002 2030
The capital costs of renewables are expected to continue to fall in the future, with solar PV registering the biggest decline
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7The learning curve effect
Deployment cost can be derived from the learning curves,
Which show a constant reduction of the investment cost to each
doubling of the installed capacity.
Average figures of the learning rate is: CSolarPower: 5% Wind on shore: 7% Wind off shore: 9% Photovoltaics : 20%
i.e. pv investment cost reduces by 20% each doubling of the
capacity installed
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7RE added value to the energy mix
enhancing security of supply - both for geopolitical-concentrated in few countries in critical regions- and infrastructure-power plants, pipeline, sea straits…
allowing energy sources diversification & reducing imports for consumers/ deferring production for exporters
mitigating risks in current energy portfolio and trends, due to volatility and instability of fossil prices;
creating framework for investment, enhancing industrial competitiveness – and opportunities for export,creating new jobs, favouring economic development
advancing environmental targets;providing unique access to energy services;
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7Create fair market rules
Energy prices do not reflect the true costs of generation options - a market failure:
the social and environmental costs of polluting energy are not internalised
the added values of RE for diversification, reduced portfolio risk, job creation, industrial competitiveness not accounted for
there are also massive subsidies to ‘conventional’ energy sources
To acknowledge the benefits of Renewable Energy, supportframeworks are established – not just “subsidies”
they should be viewed as compensation mechanisms for correcting these market failures and
a learning investments to reduce cost and improve performance
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Cheaper than conventional sources
Other costs
Average value of external
costs
GAS
0
2
4
6
8
10
12
14
16
Tensions due to scarcity of other fossil fuels
Price volatility
Resource shortage
Concentrated reserves
Transport, reprocessing and storage of waste
Scarcity of uranium
Geostrategic risks
COAL GAS WIND
+ 0.19
+ 0.51
Nuclear
+ 2.35+ 7.47
Cents $ / kWh
Maximum & minimum. generation
costs
Energy storage
Comparison of costs for different technologies
External costs are expressed as the average value estimated for each technology, based on a 2003 report by the European Commission showing maximum and
minimum external cost figures for electricity production in the EU
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Conclusions
A sustainable energy future is possible with a portfolio of clean
and efficient technologies, RE definitely among them.
The task will take decades and it will require significant investments
costs. But Business As Usual would cost more!! The task is urgent: it must be carried out before a new generation
of inefficient and high-carbon energy infrastructure is locked into place.
Implementing sustainable scenarios will require a transformation in: the way power is generated, the way homes, offices and factories are built and use energy, the technologies used for transport.
It will also take unprecedented co-operation between the
developed and emerging economies to achieve the results implied
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7Contact
[email protected]://renewables.iea.org
http://www.iea.org
Thanks to Enel for the support to IEA