INTERNATIONALENERGY AGENCY© OECD/IEA - 2008

Opportunities and Challenges in Deploying

Renewables into the Mainstream

demosEUROPA and Danish Embassy Joint Seminar

Warsaw, 19 November 2008

Pieter Boot

Director, Sustainable Energy Policy and Technology

International Energy Agency

© O

EC

D/IEA

- 2

00

8

2005 Baseline 2030

Baseline 2050

ACT Map 2050

BLUE Map 2050

0

10,000

20,000

30,000

40,000

50,000

60,000 Other re-newables

Solar

Wind

Biomass + CCS

Biomass

Hydro

Nuclear

Gas + CCS

Gas

Oil

Coal + CCS

Coal

Glo

ba

l e

lec

tric

ity

pro

du

cti

on

(T

Wh

)

Global Power Generation MixScenarios

46.5%

Renewables

[Source: ETP 2008]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.

© O

EC

D/IEA

- 2

00

8

Solar CSP

Solar PV

Wind-offshore

Wind-onshore

Hydro

Nuclear

Gas-fired with CCS

Coal-fired with CCS

0 10 20 30 40 50 60 70

Current capacity additions BLUE Map

35 CCS coal-fired plants (500 MW)

20 CCS gas-fired plant (500 MW)

32 Nuclear plants (1000 MW)

⅕ of Canada's hydropower capacity

14 000 Wind turbines (4 MW)

3 750 Wind turbines (4 MW)

215 km2 solar panels

80 CSP Plants (250 MW)G

lobal nuclear capacity growth in the 1980s

¼ current Chinese coal capacity increase

½ recent gas fired capacity increase in the U

S

GW/year

Average Annual Power Generation Capacity Additions,

2010 – 2050 An Energy Revolution

[Source: ETP 2008]

© O

EC

D/IEA

- 2

00

8Deploying Renewables:Principles for Effective Policies

Launched on 29 September in Berlin

Contactsamantha.olz@iea.org

Download Executive Summary at

http://www.iea.org/Textbase/npsum/DeployRenew2008SUM

.pdf

© O

EC

D/IEA

- 2

00

8

Achieved (by 2005) and Additional realisable mid-term potential (by 2020) for RES-E

Achieved (2005) and additional realisable mid-term (up to 2020) potential for RES-Electricity by country (OECD+BRICS) – in absolute

terms (TWh)

0

500

1000

1500

2000

US

A

Can

ada

Mex

ico

Japa

n

Kor

ea

Aus

tral

ia

New

Zea

land

Icel

and

Nor

way

Sw

itzer

land

Tur

key

Rus

sia

Chi

na

Indi

a

Bra

zil

Sou

th A

fric

a

EU

27

Rea

lisab

le R

ES

-Ele

ctri

city

_ g

ener

atio

n p

ote

nti

al u

p t

o 2

020

[TW

h/y

ear] Additional potential

up to 2020

Achieved potential2005

© O

EC

D/IEA

- 2

00

8

Effectiveness & EfficiencyWind On-shore 2005 (OECD & BRICS)

Source: IEA & Fh-ISI, 2008

Long-term predictable incentives(FIT or FIP)

+Appropriate framework

Higher risk (TGC)+

Non-economic barriers

Eff

ecti

ven

ess

DEU

ESP

IRL

DNK

PRT

NLD

AUT

LUX

JPN

KOR

GRC

ITAGBRIND

BELUSA

AUSSWE

NZL

POLCAN FRAHUNSVKNOR

CHN

CZEBRA CHEFINTURRUS ZAF ISL MEX

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00

Eff

ect

ive

ne

ss in

dic

ato

r 20

04

/20

05

Annualised remuneration in [US cent / kWh]

u EU Countries Non EU OECD p BRICS

© O

EC

D/IEA

- 2

00

8

Effectiveness & EfficiencySolid biomass elec. 2005 (OECD+BRICS)

Source: IEA & Fh-ISI, 2008

TGC

FIT/FIP

NLD

SWE

DNK

BEL

GBRHUN

JPNDEU

ITANZL PRTPOL

BRA

AUT

RUSESP

INDCHN AUS MEXUSACAN CHECZE

IRL GRCISL LUXNORSVK

FRAZAF KOR TURFIN

-5%

0%

5%

10%

15%

20%

25%

30%

0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00

Eff

ect

iven

ess

ind

ica

tor 2

00

4/2

005

Annualised remuneration in [US cent / kWh]

u EU Countries Non EU OECD p BRICS

© O

EC

D/IEA

- 2

00

8

Main Lessons Learntand

Conclusions

© O

EC

D/IEA

- 2

00

8

Effective policies only in a limited set of countries Sometimes depending on specific technology

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 (1)

© O

EC

D/IEA

- 2

00

8Main Lessons Learnt (2)

‘Feed-In Tariff vs. Quota Obligation System/ Tradable Green Certificate’ debate misleading Both systems show success and failures

depending on specific country and technology

Precise design criteria and fine-tuning are key

Signs of convergence: Feed-In Tariff: Premium tariff option, time

digression Quota System/Tradable Green Certificate:

Technology banding

© O

EC

D/IEA

- 2

00

8

1. Remove non-economic barriers to improve market functioning

2. Establish predictable support framework - to attract investments

3. Set up transitional incentives decreasing over time – to foster and monitor technological innovation and move towards market competitiveness

4. Ensure specific support in function of technology maturity to exploit potential of large RET range

5. With increasing mass-scale RET penetration impact on overall energy system must be taken into account

Continuity

Certainty

Key Principles for Effective Renewable Energy Policies

© O

EC

D/IEA

- 2

00

8

Fostering RE’s transition towards mass market integration

Niche markets Mass market

Low cost-gap

(e.g. wind onshore)

High cost-gap

(e.g. PV)

Mature tech

(e.g. hydro)

Prototype & demo stage

(e.g. 2nd gen biofuels)

Time

Mar

ket D

eplo

ymen

t

Development

1. Development

RD&D financing,

capital cost support,

investment tax credits, rebates,

loan guarantees 2. Stable, low-risk, sheltered FIT, FIP, Tenders

3. Shared/imposed market risk, guaranteed minimum but declining

support FIP, TGC (technology banding)

4. Technology-neutral competition TGC, Carbon trading (e.g. EU ETS)

© O

EC

D/IEA

- 2

00

8

1. Realise urgency to implement effective policies to exploit major potential of RETs in terms of energy security and climate change mitigation

2. Remove and overcome non-economic barriers first

3. Exploit substantial potential for improvement of policy effectiveness and efficiency: learn from good practice

4. Focus on rigorous and coherent implementation of key policy design principles with regard to long-term cost efficiency and national circumstances

5. Create level playing field by pricing in GHG emissions and other externalities & removing subsidies for conventional energy

6. Allow a combination framework of incentive schemes in function of technology maturity level

Urgent action for Energy Technology Revolution

Recommendations