© OECD/IEA 2015 © OECD/IEA 2015

Assessing the Market for Renewable Energy An IEA Methodology (draft)

Istanbul, Turkey

16 June 2015

Adam Brown Renewable Energy Division IEA

© OECD/IEA 2014

RE Assessment Method

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Builds on other assessment methodologies (e.g. WB RISE)

Potential to cover electricity, heat and transport

Covers financial issues in more detail

Scoring of each factor via objective criteria

Traffic light system

No overall score since

factors not additive and weighting is arbitrary

one factor can kill deployment

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What sets the pace and cost of RE market development

Resource Potential

RE Costs

RE Deployment

Overall Policy Framework

Non economic measures

Drivers

Enabling Context

Remuneration Adequacy

Finance

Grid access and integration

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1. Identify priority technologies and market opportunities in a country

2. Look at levels and rate of deployment and costs of energy generation and compare with local and international benchmarks

3. Review enabling framework to identify barriers and best practice examples

Major steps

4

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Technology Priorities – RE Electricty

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RE Electricity

Wind

Solar

Bioenergy

Hydro

Geothermal

Ocean Biogas

Ag residues

MSW

Wood

Sewage

PV CSP

Offshore

Onshore

1-10 MW

>10MW

<1 MW

Wave Tidal

• Residential

• Commercial

• Utility

• Off-grid

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1. Is there a suitable resource to enable significant and cost competitive deployment?

Is there a good physical resource?

Is there a well researched resource assessment

What fraction of resource is already exploited?

2. Leader or follower?

Is the technology widely deployed globally?

Is there willingness to invest in new technology development and deployment?

Priority Setting

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• Predictable and rapidly adaptive incentives

• Focus on non-economic barriers

• Manage total support costs

• System integration Market design and expose RE to competition

• Publicacceptance

Time

Depl

oym

ent

Initiation Take-off Mainstreaming

Gene

ratio

n Pr

ices

International benchmark prices

Key Criteria How is the market growing? How much does it cost?

Where on the deployment journey?

RE Costs

RE

Deployment

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Level of deployment

Generation and growth rate

National target?

International or regional benchmarks?

Deployment Is the market growing in line with expectations?

0

5

10

15

20

25

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

TWh/y

Deployment National Target External Benchmark Trajectory

RE Costs

RE

Deployment

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Price of specific RE source

Benchmark cost (regional, global)

Comparison with alternative supply?

Cost of support as % of market cost

Impact on subsidies or taxes

Cost of RE – National Perspective How do costs of RE compare internationally? Are support costs affordable?

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0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

Aus

tria

Can

ada

Cze

ch R

epub

lic

Den

mar

k

Fran

ce

Ger

man

y

Gre

ece

Hun

gary

Irel

and

Kore

a

Luxe

mbo

urg

Net

herl

ands

Port

ugal

Slov

ak R

epub

lic

Spai

n

Swit

zerl

and

Turk

ey

Aus

tral

ia

Bel

gium Ital

y

Japa

n

Pola

nd

Swed

en

Uni

ted

King

dom

Bra

zil

Indi

a

Chi

na

Finl

and

Nor

way

Sout

h A

fric

a

Uni

ted

Stat

es

Icel

and

Mex

ico

New

Zea

land

Nor

way

Rus

sia

RA

I [U

SD/M

W p

er y

ear]

mainly FITs/FIPs mainly TGCs none

Onshore wind: Remuneration Adequacy Indicator

JapanAustralia

Belgium

Czech Republic

France

Germany

Greece

Italy

Slovak Republic

Spain0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00%

Tota

l pre

miu

ms

[as

shar

e of

who

lsal

e va

lue

of t

otal

ann

ual

gene

rati

on]

Additional share in total generation in 2010

Line for premium of 600% over market price

Line for premium of 800% over market price

Ad

dit

ion

al to

tal p

rem

ium

s

[sh

are

of

wh

ole

sale

valu

e o

f 2

00

9 t

ota

l

an

nu

al

gen

erati

on

Additional PV share in total generation in 2010

RE Costs

RE

Deployment

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Is there a specific ghg target?

Is local air quality a priority?

Is demand growing?

Is energy access an issue?

Energy security?

Importer?

Dependence on particular sources

Economic development

Potential to increase value of exports?

Drivers How can RE contribute to national energy goals?

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Enabling Context

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Is RE included in the national energy plan?

Are there clear targets for short, medium and long term?

Is there a credible and detailed action plan?

Overall Policy Framework

Enabling Context

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National Factors

Ease of doing business

Country credit rating

Currency volatility

Debt and equity finance available locally?

Are national or international development banks active?

Finance Can finance for projects be made available at reasonable rates?

Enabling Context

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Are clear and predictable remuneration levels in place?

Are these sufficient to stimulate investment (i.e. remuneration>LCOE)?

Is the off-taker reliable?

Are there clear indications about future market?

Remuneration – Developer Perspective

Enabling Context

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Is permitting system transparent and efficient?

Is guidance on permitting available?

Are permitting times monitored?

How long does permitting take?

How many agencies involved?

Is a supply chain in place?

Are key components manufactured locally?

Is there local experience of installation and maintenance?

Are standards or certification in place?

Is there a skills base?

Is there a recognised centre of expertise?

Is education and skill training under way?

Is there a public information campaign re renewables?

Non economic measures Are measures to tackle non economic barriers in place?

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Enabling Context

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Grid access and integration Is there fair grid access? Are steps in hand to integrate renewables?

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Initiation Is grid access allowed?

Are grid connection costs transparent?

Are renewables included in grid development plans?

Take off Is the regulatory framework appropriate?

Grid connections codes

Forecasting

Dispatch rules

Has an integration study been carried out?

Mainstreaming Are investment plans in place to ensure sufficient flexibility?

Enabling Context

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Technology Bioenergy Geothermal Solar PV Solar CSP Wind Ocean

Priority

Deployment

Cost

Drivers

Policy

Framework

Finance

Remuneration

Adequacy

Non economic

issues

Access and

integration

Example Assessment - Electricity

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