© OECD/IEA 2012

IEA Training Week 2013

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Overview

IEA work on energy technology

Energy Technology Perspectives 2012

Energy modeling – why and how?

ETP online resources

© OECD/IEA 2012

IEA Energy modelling and scenarios

Next 5 years: Medium-term market reports

Next 25 years: World Energy Outlook

Next 50 years: Energy Technology Perspectives

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IEA energy technology work

Sector studies

Technology assessments

Technology Road Maps

Policy analysis

Statistics and indicators

Implementing Agreements

Energy Technology Perspectives the flagship product.

© OECD/IEA 2012

ETP objectives

The ETP should:

Identify efficient pathways to a low carbon energy system.

Identify and assess policy options that can bring about the necessary changes.

Provide near term guidance, based on long term analysis.

ETP 2012 – Choice of 3 Futures

© OECD/IEA 2012

6DS where the world is now heading with potentially devastating results

The 6°C Scenario

4DS reflecting pledges by countries to cut emissions and boost energy efficiency

The 4°C Scenario

2DS a vision of a sustainable energy system of reduced Greenhouse Gas (GHG) and CO2 emissions

The 2°C Scenario

Clean energy: slow lane to fast track

© OECD/IEA 2012

Progress is too slow in almost all technology areas Significant action is required to get back on track

Cleaner coal power

Nuclear power

Renewable power

CCS in power

CCS in industry

Industry

Buildings

Fuel economy

Electric vehicles

Biofuels for transport

Renewable power generation

42% Average annual

growth in Solar PV

27% Average annual growth in wind

75% Cost reductions in

Solar PV in just three years in

some countries

Renewables provide good news

All technologies have roles to play

© OECD/IEA 2012

0

10

20

30

40

50

60

2009 2020 2030 2040 2050

Gt C

O2

Power generation efficiency and fuel switching 3% (1%)

Nuclear 8% (8%)

End-use fuel switching 12% (12%)

End-use fuel and electricity efficiency 42% (39%)

Renewables 21% (23%)

CCS 14% (17%)

Technology contributions to reaching the 2DS

© OECD/IEA 2012

Decoupling

Reducing the energy intensity of the economy is vital to achieving the 2DS.

Centralised fuel production,power and storage

A smart, sustainable energy system

© OECD/IEA 2012

A sustainable energy system is a smarter, more unified and integrated energy system

Centralised fuel production,power and storage

Renewable energy resources

EV

Co-generation

Smart energysystem control

Distributedenergy resources

Surplus heat

H vehicle2

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

2009 2020 2030 2040 2050

Other

Wind

Solar

Hydro

Nuclear

Biomass and waste

Oil

Gas with CCS

Gas

Coal with CCS

Coal

Low-carbon electricity: a clean core

© OECD/IEA 2012

Renewables will generate more than half the world’s electricity in 2050 in the 2DS

TW

h

Global electricity generation in the 2DS

© OECD/IEA 2012

The OECD electricity fleet is aging

Ageing infrastructure is the challenge in many OECD countries, whereas emerging economies have to cope with a growing demand for electricity.

© OECD/IEA 2012

Natural gas in global power generation

Natural gas-fired power generation must decrease after 2030 to meet the CO2 emissions projected in the 2DS scenario.

0

2 500

5 000

7 500

10 000

2009 2020 2030 2040 2050

TWh

4DS

OECD Non-OECD

0

2 500

5 000

7 500

10 000

2009 2020 2030 2040 2050

2DS

Natural gas as a transitional fuel

© OECD/IEA 2012

The CCS infant must grow quickly

© OECD/IEA 2012

Note: Capture rates in MtCO2 /year

Mt CO2

Mt CO2

Mt CO2

Mt CO2

Mt CO2

Mt

CO

2

0

1

2

3

4

5

6

7

8

2010 2012 2014 2016 2018 2020

mill

ion s

ale

s/y

ear

Manufacturers production/sales

Projection (Estimated from each country's target)

0

1

2

3

4

5

6

7

8

mill

ion s

ale

s/y

ear

Projection (Estimated from each country's target)

Translating targets into action

© OECD/IEA 2012

Government targets need to be backed by policy action

2010 2012 2014 2016 2018 2020

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What about the money?

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The sums are large

140 36 Trillion USD in investment required under the 2DS.

Note: Numbers for total investments are more uncertain than additional, and do not include baselines investment in buildings

Total 2DS Additional

© OECD/IEA 2012

Investment needs shift over time

0

4

8

12

16

2010 - 20 2020 - 30 2030 - 40 2040 - 50

USD

tri

llio

n

Industry

Commercial

Residential

Transport

Power

To 2020, investments in buildings sector dominates in all regions, highlighting importance of energy efficiency

© OECD/IEA 2012

Size and construction time matter

Low carbon technologies often capital intensive

Low carbon technologies come at very different sizes

Lead times for project construction also differ widely

Investors range from home owners to very large consortia.

5 kW solar PV

rooftop

500 MW wind

off-shore

10 GW

large hydro

€10 k €1.75 bl €15-20 bl

© OECD/IEA 2012

Cost of capital is critical

The financing regime is key for RE economics

Note: Simplified calculation for illustration. Assumptions: Gas: 800 USD/kW; annual O&M: 2.5% of capex; FLH: 5000 h/y; 8 USD/Mbtu; 50% thermal efficiency Wind: 2200 USD/kW; 2.5% O&M; 3000 h/y PV: 3000 USD/kW; 1% O&M, 1500 h/y

0

5

10

15

20

25

30

0% 5% 10%

ct

US

D/k

Wh

Cost of Capital

PV Wind CC Gas

© OECD/IEA 2012

Clean energy investment pays off

© OECD/IEA 2012

Every additional dollar invested in clean energy can generate 3 dollars in return.

- 120 - 80 - 40 0 40

10%

Undiscounted

Fuel savings

Additionalinvestment

Tota

l sa

vin

gs

USD trillion

Power

Industry

Transport

Residential

Commercial

Biomass

Coal

Oil

Gas

Fuel savings

Additional investment

© OECD/IEA 2012

Recommendations to Governments

© OECD/IEA 2012

1. Create an investment climate of confidence in clean energy

2. Unlock the incredible potential of energy efficiency – “the hidden” fuel of the future

3. Accelerate innovation and public research, development and demonstration (RD&D)

© OECD/IEA 2012

A few words on innovation

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The innovation landscape is changing

© OECD/IEA 2012

IEA RD&D spending

Energy RD&D has slipped in priority in OECD countries.

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Clean energy patents have increased sharply since 2000, driven by solar PV and wind

The US, Japan and Germany are the top three inventor countries for most technologies, but China has been catching up.

© OECD/IEA 2012

Develop a national energy strategy with clear priorities

Increase R&D funding

Create mechanisms to fund capital-intensive demonstration

Design policies to support early deployment and drive private investment

Expand international collaboration

Building from national leadership

© OECD/IEA 2012

So how do we do it?

And can you trust us?

© OECD/IEA 2012

Why energy modelling?

Technology/Energy carrier level

Market forecasts

Long-term nature of planning decisions (e.g. lifetime of power plants)

Future development of technologies

Comparative assessment of technologies

System level

Infrastructure for energy (e.g. T&D for electricity)

Interdependencies of technologies and sectors (e.g. electric heat pump or EVs with power sector)

Integration of variable renewables

Policy level

How to reach policy goals

Effectiveness and impacts of individual policy measures

Communication

Energy system does not allow for real-world experiments

Scenarios: Exploring the future

Models: Developing consistent scenarios

© OECD/IEA 2010

Characteristics:

Sectoral coverage or Entire energy system

Single region or Multi regions

Short term or Long-term

Recursive dynamic or Perfect foresight

Simulation Optimization Computational

General Equilibrium

Econometric

Integrated Assessment

Models Climate Models

Energy Models

Bottom-up models Top-down models

Attempt to link

model types

Characteristics:

Single region or Multi regions

Recursive dynamic or Perfect foresight

Universe of energy models [1]

© OECD/IEA 2012

ETP-TIMES model

Primary

energy

Conversion

sectors Final energy End-use

sectors

End-use service

demands

Electricity

production

Fossil

Renewables

Nuclear

Refineries

Synfuel

plants

Coke ovens

etc.

Electricity

Gasoline

Diesel

Natural

gas

Electricity

Coke

etc.

Industry

Buildings

Transport

Material

demands

Heating

Cooling

PKM

TKM

etc.

ETP-TIMES model MoMo model

© OECD/IEA 2012

The cost of emitting a tonne of CO2

Marginal abatement costs reach USD 150 in 2050 and increase rapidly as reductions get deeper.

Marginal abatement cost curve in electricity generation in 2050

© OECD/IEA 2012

Marginal abatement costs change over time

The marginal abatement costs decrease as learning improves over time.

Passenger LDV marginal abatement cost curves in 2DS

© OECD/IEA 2012

The core policy mix

Carbon price, energy efficiency policy and technology support are the backbone of a least-cost package to achieve 2DS.

© OECD/IEA 2012

Energy models provide a consistent analysis framework Energy models are simplified representation of the real-world system

Level of detail depends on questions to be addressed

Choice of model type depending on analysis question Energy system models: focus on role of technologies and interactions

within the energy sector

Economic models: focus on interdependencies of the energy sector with the remaining economy

Know the limits of models.

Choose your weapon carefully...

© OECD/IEA 2012

www.iea.org/etp

For much more, please visit

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Exploring the 2DS

Use the ETP visualisation tool to answer the following questions:

What is the largest primary energy source in 2050 globally?

Which end-use sector is the strongest growing energy consumer from now to 2050?

Which sector and which technology in that sector are the most important to decarbonise the Chinese energy sector until 2050?

© OECD/IEA 2012

Additional slides

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Assumptions- GDP and population

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Assumptions- fossil fuel prices

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Carbon prices (model result)