luis s. vargas area de energia departamento de ingenieria electrica universidad de chile

16th EGEDA Meeting, Beijing, PRC – 2 and 3 February 2005 Asia Pacific Energy Research Centre Análisis de Regulación y Normativa Necesarios para la Integración de Pequeños Generadores en los Sistemas Eléctricos Nacionales 2005

LUIS S. VARGASArea de Energia

Departamento de Ingenieria ElectricaUniversidad de Chile

Principales tendencias de las energías renovables en las economías de la cuenca del

Pacífico


OUTLINE

• PRESENT SITUATION IN APEC

• REFERENCE SCENARIO

• ALTERNATIVE SCENARIOS

• FUEL AND CO2 EMISSIONS

• PHASING OUT TECHNOLOGIES

• THE CHALLENGE ON NRE TECHNOLOGIES

• THE POLICY AND MARKET FORCES

• OBJECTIVES OF CURRENT PROJECT

• SUMMARY


APEC REGION

A. Australia, Canada, Brunei Darussalam, Hong Kong China, Japan, New Zealand, Singapore, Chinese Taiwan, USA.

B. Chile, Korea, Malaysia, Mexico.

C. Indonesia, Papua New Guinea, Peru, Philippines, Thailand, Viet Nam.

D. China, Russia.


Solid to Gas in less than 100 years…

Source: Shell 2001

H2 & CH4 to account for more than

30% by 2030


PRESENT SITUATION IN APEC

Coal44%

Oil based5%

Natural gas20%

Hydro14%

Nuclear15%

NRE2%

PROJECTED APEC ELECTRICITY PRODUCTION FOR YEAR 2005

Biomass 50%Geothermal 24%Wind 6%

Other 20% (PV, Small Hydro, Tide, etc.)

NRE still a minor player in the energy arena due to lack of competitiveness under current policy and market rules.

Conventional


ELECTRICITY CONSUMPTION TRENDS

APEC ELECTRICITY CONSUMPTION PATTERN

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

0 10,000 20,000 30,000 40,000 50,000

GDP/capita

Kw

h/c

ap

ita

Australia

Brunei

Canada

Chinese Taipei

Hong Kong, China

Japan

New Zealand

Singapore

United States

Chile

Korea, Rep.

Malaysia

Mexico

Indonesia

Papua New Guinea

Peru

Philippines

Thailand

Vietnam

China

Russian Federation

Curve-Superior

Middle Curve

Curve-Inferior

•S-shape pattern

•Clusters for different regions

•APEC Electricity demand growth is 2.8 percent annually


• 1600 million people have no access to electricity in the world. • 200 million people in APEC region ditto

0 25 50 75 100

Chile

Malaysia

Mexico

Korea

Indonesia

Papu New Guinea

Peru

Philippines

Thailand

Viet Nam

China

Russia

Percentage

0 25 50 75 100

Chile

Malaysia

Mexico

Korea

Indonesia

Papu New Guinea

Peru

Philippines

Thailand

Viet Nam

China

Russia

Percentage

Electrification level (%) in selected APEC economies

Growth will be concentrated in developing economies

ELECTRICITY CONSUMPTION TRENDS


REFERENCE SCENARIO

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

TWh

2000 2025 2050

NRE

Nuclear

Hydro

Natural gas

Oil based

Coal

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

TWh

2000 2025 2050

NRE

Nuclear

Hydro

Natural gas

Oil based

Coal

Reference Scenario 2000-2050

•Coal share around 40 percent, •Oil will decline to a minimum,•Hydropower is kept around 13 percent•Natural gas is nearly one third of the electricity production•NRE becomes 8%

• Oil and gas reserves may prove inadequate to support demand• International agreements may increase pressure for cleaner technologies• Security of supply

BUT:

An alternative scenario is needed


Hydro13%

Nuclear11%

NRE42%

Natural gas26% Coal

8%

Oil based0%

ALTERNATIVE SCENARIO

2050 Scenario• 2050 Scenario to achieve similar level of CO2 emissions as of 1997 in APEC region

• Coal electricity power generation is decreased steadily.

• Oil electricity production is phased out.

• Natural Gas source is similar as the Reference scenario.

• Nuclear is moderately increased (but total share decreases from 15% to 11%)

The main change would come from NRE


FUEL AND CO2 EMISSIONS

NRE technologies will be fully competitive after 2010

Coal power generation is decreased 2% annually starting in 2010

NRE technologies will be fully competitive after 2020

Coal power generation is decreased 3% annually starting in 2020

Delayed Deployment Accelerated Deployment

Fuel Savings

Scenarios

Accelerated Scenario

Delayed Scenario

Coal [million ton]

85,213 67,591

Oil [million bbls]

3,600 0

Natural Gas [BCM]

10,180 10,180

Total Values for

period 2000-2050

Scenarios

Reference

Accelerated Scenario

(1)

Delayed Scenario

(2)CO2 Emissions

[million tons CO2]628,674 374,306 423,050

Estimated Cost [trillion US$]

12.38 4.90 4.03

Estimated Savings with respect to

reference scenario [trillion US$]

- 7.48 8.35


-300

-200

-100

0

100

200

300

400

500

NEW PLANTS

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Reference scenario Early NRE Deployment scenario Late NRE Deployment scenario

DECOMMISSIONING

-300

-200

-100

0

100

200

300

400

500

NEW PLANTS

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Reference scenario Early NRE Deployment scenario Late NRE Deployment scenario

DECOMMISSIONING

# Coal Plants

PHASING OUT TECHNOLOGIES: Example of Coal plants

• There is a political cost for delaying the decision• and also an economical one from decommissioning costs


Mix in Early NR scenario

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Tw

hSolar

Wind

Others

Geothermal

Biomass

• NRE resource availability• Adequate technical development of NRE technologies

NRE Electricity Technology

% AverageGrowth rate2000- 2050

Biomass 8.6

Geothermal 7.4

Others 16.9

Wind 13.2

Solar PV 11.1

CHALLENGE ON NRE TECHNOLOGIES

NRE will have to grow on average above 10% yearly •Implementation of NRE technologies in

real markets

.....


Source: Shell

Significant share of wind and modern biomass by 2030


0 5 10 15 20 25 30

Biofuels

Geothermal

Solar Thermal

Biomass

Wind

Solar PV

Projected growth (shell projection) 2000 - 2010 (%pa)


THE POLICY AND MARKET FORCES

Implementation of NRE technologies requires both political and market changes

GEOTHERMAL

BIOMASS

SMALL HYDRO

MARKET DRIVEN

BIOMASS

SMALL HYDRO

GEOTHERMAL

PV

CO

MP

ETIT

IVE

CO

ST

POLICY DRIVEN

PR

OD

UC

TIO

N C

OS

TH

IGH

WINDWIND


Dissemination of NRE technologies driven by market profit

GEOTHERMAL

BIOMASS

SMALL HYDRO

MARKET DRIVEN

BIOMASS

SMALL HYDRO

GEOTHERMAL

PV

CO

MP

ETIT

IVE

CO

ST

POLICY DRIVEN

PR

OD

UC

TIO

N C

OS

TH

IGH

WINDWIND

$$

$ $$

THE POLICY AND MARKET FORCES


Installed Wind Capacity in Selected APEC Economies

Source :AWEA

0

200

400

600

800

1000

1200

1400

1600

1993 2000 2003

Meg

awat

ts (

MW

)

Malaysia

Indonesia

Chile

Chinese Taipei

Mexico

Russia

Korea

New Zealand

Japan

China

Canada

Australia

7,717

3,267

1,645

Can this growth be sustained through 2030?

… or will it grow more rapidly?


0

100

200

300

400

500

600

700

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Meg

awat

ts (

MW

)

JPN

USA

AUS

MEX

CAN

ROK

Installed PV Capacity Expansion for APEC Economies

What would be the impact of further technological breakthrough by 2030?


Assessing the real costs of providing electricity

A. Externality Costs B. To estimate marginal cost for traditional technologies (Coal,

Gas, and Oil-based) with incorporation of flue gas mitigation processes.

C. To assess different types of subsidy received by conventional energy producers.

Markets for NREA. Market design not suitable for NREB. Explore different approaches to incorporate external costs

in marketsC. To estimate potential market for NRE in APEC

Challenges of Electricity Market Design


Sources: Swezey, B. G.; Porter, K. L.; Feher, J. S. (1994). “Potential Impact of Externalities Considerations on the Market for Biomass Power Technologies. Report No. TP-462-5789. National Renewable Energy Lab, Golden, Colorado. Energy Information Administration (1995). “Electricity Generation and Environmental Externalities EIA Externalities report: Case Studies.” DOE/EIA-0598. Department of Energy, Washington, D.C. http://www.eia.doe.gov/cneaf/electricity/external/external.pdf

EXTERNALITY COSTScents/kWh, $1992


In APEC region electricity markets have different structures:

Centralized monopolyRegulated competitionFully deregulated

Tax and subsidy structure also present a great diversity

Market integration may accelerate deployment process for NRE technologies

Markets for NRE Electricity


Markets for NRE Electricity

No regional integration

Full regional integration

Infrastructural integration

Regulatory integration

Commercial integration

APEC REGION

Desired market with clear rules for NRE

(Distributed Generation) have to

be implemented

Nordpool

Mercosur

Ultimately the market is the main driver for deployment of any technological advance

APEC IN THE FUTURE


APEC has a wide variety of NR policies

Greater deployment of NRE in APEC region requires clear market rules for Distributed Generation

Market structures as a driver for NRE

Diversification of energy sources from NRE improves energy security

Emission reduction: Nuclear or NRE

SUMMARY

luis s. vargas area de energia departamento de ingenieria electrica universidad de chile

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