World Bank Power Projects:Crossroads on Renewable Energy
David WheelerKevin Ummel
Center for Global Development
Kyoto, 1997
Copenhagen, 2009
What Has ChangedSince Kyoto?
• Carbon Emissions
• Climate Impact
• The South’s Role
• Clean Technology Fund
• Carbon Pricing
• New Technologies
CO2 Emissions: Greater Than Predicted
20,000
40,000
60,000
80,000
100,000
120,000
1990 2010 2030 2050 2070 2090
25,000
30,000
35,000
40,000
1990 1995 2000 2005 2010 2015
IPCC Worst-Case Scenario
Projected
Actual
1990 - 2100
Climate Impacts: Faster Than Predicted
"The situation is so desperately serious that any delay could push us past the tipping point”
Ban Ki-Moon – Bali, 2007
• Ice Cap Melting• Greenland• West Antarctica
• Extreme Weather Events• Droughts• Floods• Cyclones
2005
2007
Texas +California
Developing Countries’ Role Has Changed
Kyoto Protocol (1997)
• The North Caused Global Warming• The North Should Fix It• The South Should Focus on Poverty
“We don’t accept the idea that the emerging nations are the ones who have to make sacrifices, because poverty itself is already a sacrifice.”
Brazil’ President da Silva, G8 Meeting, June, 2007 1900 2000 2100
Current Situation
CO2 Emissions, 1900 - 2100(History + IPCC)
South North
Developing-Country View
300
350
400
450
500
550
600
1980 2000 2020 2040 2060 2080 2100
Year
Global
South
300
350
400
450
500
550
600
1980 2000 2020 2040 2060 2080 2100
Global
South
300
350
400
450
500
550
600
1980 2000 2020 2040 2060 2080 2100
Global
South
Atm
osph
eric
CO
2 C
once
ntra
tion
(ppm
)
*IPCC Scenario A1F1IPCC
Critical Threshold
RealCritical
Threshold?
A Carbon-Intensive South Faces Environmental Disaster,No Matter What the North Does
Implications for the 2009 Copenhagen Conference
• North – South: All Countries at the Table• Efficient Mitigation• Rapid Clean Technology Diffusion• Support for Adaptation
CleanTechnology
Fund
Carbon Pricing (1)
Operating:European Union Emissions Trading System
(EU Allowance Units)Price Per Ton of CO2Current: $35.33Expected (New Climate Action Plan): $50.00
ProposedAustraliaUS (Warner – Lieberman, others)
Expected Price Per Ton of CO2: $20 - $40(Citigroup, JP Morgan ChaseMorgan Stanley, Bank of America)
Cap-and-Trade Systems
IMF Fossil Fuel Price Indices, 2004 - 2008
0
50
100
150
200
250
300
350
400
2004M1 2004M7 2005M1 2005M7 2006M1 2006M7 2007M1 2007M7 2008M1
Coal (Australia)
Coal (South Afr.)
Gas (Indonesia)
Oil (Combined)
Carbon Pricing (2)
William Nordhaus, Yale $8 700Current CDM $15US Warner-Lieberman Bill $20-40EU cap-and-trade (now) $35EU (after new reform) $50Martin Weitzman, Harvard $50Thomas Schelling, Maryland $50Sir Nick Stern, LSE $80 550James Hansen, NASA $200+ 350
Carbon Charges: Prices and Consequences
ChargeCO2
Concentration
0
5
10
15
20
25
30
2007M3 2007M5 2007M7 2007M9 2007M11 2008M1
Coal Price Increase Since 2007 Q1:Equivalent Charge for CO2 Emissions ($/Ton)
We Have NoShortage ofEnergy
Annual Solar Radiation:80,000 Terawatts
Total Energy Need in 2050:50 Terawatts
New Technologies(Example: Solar Thermal)
(1)ReflectorsMove With
the Sun
(2)Water Boils
In Fixed-PipeReceivers
(3)Heat StorageFor 24-HourOperation
(4)-(5)Steam Turbine
Generation
(6)Water
CondensationAnd Re-Use
Source: Ausra, Inc.(www.ausra.com)
Solar Thermal Technology(Compact Linear Fresnel Reflector)
Solar Thermal TechnologyArea ( ) Required to Power the Entire US*
* Khosla and O’Donnell (2007)
Solar Thermal Power: Status in the US(Similar in Europe)
San Luis Obispo County
175 MW CapacityStartup in 2010
Example:PG & E, California with Ausra, Inc.
500 MW Operating2 Gigawatts Under Agreement
Worldwide Solar Energy Supply
Direct Normal Radiation: Average daily KWh per square meter
0 - 1 1 - 2 2 - 3 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9
Data from NASA’s Surface Meteorology and Solar Energy Database
Necessary for solar techs…
Possible Learning Curves for Solar Thermal Power
Static Project Analysis
Dynamic Program Analysis
4
6
8
10
12
14
0 5000 10000 15000 20000
10%
15%
20%Cos
t (ce
nts/
kWh)
Cumulative Capacity (MW)Supercritical Coal Cost7.65 ¢/kWh
• Private Investors Look at Present Value(Capital, Operations & Maintenance, Fuel)
• CDM Credits Are Available for Emissions Averted • Clean Technology Fund Covers the Remaining Difference
Static Project Analysis
Dynamic Program Analysis
CLFR Solar Thermal
vs.
Supercritical Coal
0
500
1,000
1,500
2,000
0 5 10 15 20
Program Costs ($Million)
Program Year
456789
1011121314
0 5 10 15 20
Program Year
Cos
t
Solar Thermal Coal
Solar Learning Curve
Costs Reach Parity in Year 6
With CDM Credit of $15/Ton CO2,Subsidy No Longer Needed by Year 5
PresentDiscountedCost
Static Project Analysis
Dynamic Program Analysis
Program Benefit
Year
010,00020,00030,00040,00050,00060,00070,000
0 5 10 15 20 25 30
Tota
l MW
Expansion Field: 650,000 MW
0102030405060
0 5 10 15
Year
500
MW
Uni
ts
Solar Generators Operating
Program Ends Cost Parity Program Ends
Year YearProgram Ends Program Ends
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
0 5 10 15
01,000,000,0002,000,000,0003,000,000,0004,000,000,0005,000,000,000
0 5 10 15 20 25 30
CO2 Emissions Averted
Tons Discounted Discounted
Learning Rate (% Cost decline when cumulative output doubles) 15% 15% 15% 15%
Levelized Costs (cents/kWh) CLFR Solar Thermal (cents/kWh) 10.53 13.42 16.31 16.31 Supercritical Coal (cents/kWh) 7.65 7.65 7.65 5.82
Switching Charge ($/Ton CO2)Static Switching Charge $31.47 $63.05 $94.64 $114.64Dynamic Charge - Program Only $7.85 $15.31 $24.96 $28.50Dynamic Charge - Full Impact $0.42 $1.28 $3.21 $9.45
ResultsProgram Years 1 4 7 14Years to Cost Parity 3 6 12 24Total Payment Required ($Million) 547 3,048 8,945 21,712Total Tons CO2 Averted (Million) 12,823 22,379 23,857 15,727Social Rate of Return (%) 6,960 2,241 835 217
Dynamic Program Assessment:Some Results
Conclusions
• Critical Problem: Rapid Carbon Abatement• Critical Sector: Baseload Power• Ultimate Objective: Renewable Cost<Coal Cost• Solar Thermal Power is a Viable Candidate• Excellent Solar Potential in LDC’s (esp. Africa)• Static Cost Differential Has Narrowed• Dynamic Program Analysis Conclusions:• Cost Parity with Coal in 5-10 Years• Very High CO2 Abatement Potential• Very Low CO2 Switching Charges