Renewable Intro Slides

Medium-Term Renewable
Energy Market Report 2014

Maria van der Hoeven
Executive Director
International Energy Agency
OECD/IEA 2014
Strong momentum for renewable electricity

Global renewable electricity production, historical and projected
TWh
Historical data and estimates
7
7
6
6
5
5
4
4
3
3
2
2
1
1
Forecast
500
000
500
000
500
000
500
000
500
000
500
000
500
000
500
30%
25%
20%
15%
10%
5%
2005
2006
2007
2008
Hydropower
Offshore wind
STE/CSP
2009
2010
2011
2012
Bioenergy
Solar PV
Ocean
2013
2014
2015
Natural gas 2013

Nuclear 2013
2016
2017
2018
2019
2020
0%
Onshore wind
Geothermal
% total generation (right axis)
Renewable electricity projected to scale up by 45% from
2013 to 2020
Medium-Term Renewable Energy Market Report 2014
OECD/IEA 2014
Renewables are major source of new generation
TWh
Cumulative change in gross power generation by source and region, 2013-20

4
4
3
3
2
2
1
1
500
000
500
000
500
000
500
000
500
0
Non-OECD
OECD
2013
2014
2015
2016
Renewable generation
2017
2018
2019
2020
Conventional generation
Renewables account for 80%
of new generation in OECD

Limited upside in stable
markets with slow demand
and growing policy risks
2013
2014
2015
Renewable generation
2016
2017
2018
2019
Conventional generation
2020
Renewables are largest new
generation source in non-OECD,

but meet only 35% of growth
Large upside for dynamic
markets with fast-growing
demand
OECD/IEA 2014
Increasing risks are expected to slow

renewable growth
Renewable power annual net capacity additions, historical and projected
140
120
100
GW
80
60
40
20
0
OECD
China
Other non-OECD
World
Policy and market risks threaten to slow deployment
momentum
OECD/IEA 2014
Role of renewable use in heat also increasing,

but policy support still limited
Countries with targets and support policies for renewable heat
This map is without prejudice to the status of or sovereignty over any territory to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Modern renewable heat continues to grow, providing 9% of
world final energy use for heat in 2020

Broader adoption of support policies for renewable heat could reduce
energy consumption and enhance energy security
OECD/IEA 2014
Transition to advanced biofuels for transport

threatened by policy uncertainty
Billion litres
400
Projected biofuel production versus targets in IEA 2C Scenario (2DS)

Historical
Projection
Scenario
9%
350
8%
300
7%
6%
250
5%
200
4%
150
3%
100
Biodiesel (advanced)
Ethanol (advanced)
Biodiesel (conventional)
Ethanol (conventional)
2%
50
1%
0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Biofuels share in total

transport (energy content)
2020 2025
(2DS) (2DS)
Conventional biofuel production continues to grow, and will
provide 4% of road transport fuel demand in 2020

First commercial-scale advanced biofuel plants coming on line
Without adoption of long-term policy framework, advanced biofuels sector
faces grim future
OECD/IEA 2014
Main messages to policy makers

Solutions to future development rest in policy
makers hands
Policy risk main barrier to investment
Policies to focus on cost-efficiency

But policy changes must be predictable, and retroactive
changes must be avoided
Given their capital-intensive nature, renewable
investments require market context that assures

reasonable and predictable returns
OECD/IEA 2014
Part Two Snapshots

Technology and Regional Detail
Paolo Frankl
Head, Renewable Energy Division
IEA
OECD/IEA 2014
Renewable investment has risen to

high levels
300
140
250
120
100
200
80
150
60
100
40
50
0
GW
.
USD 2013 billion
Investment in new renewable power capacity
20
2005
2006
2007
Middle East
Asia
OECD Americas
2008
2009
2010
2011
2012
Non-OECD Americas
Africa
Net capacity growth (right axis)
2013
2014
2015
Non-OECD Europe
OECD Europe
2016
2017
2018
2019
2020
China
OECD Asia Oceania
Investment in 2013 relatively steady at USD 250 billion, but
lower than peak in 2011

Slowing capacity growth and falling technology costs limit
investment in new renewable power capacity over medium
term
OECD/IEA 2014
Renewable investment costs falling

Weighted average annual renewable investment costs, historical and projected
USD 2013/kW
6 000
OECD
6 000
China
6 000
5 000
5 000
5 000
4 000
4 000
4 000
3 000
3 000
3 000
2 000
2 000
2 000
1 000
1 000
1 000
0
2010 2012 2014 2016 2018 2020
Hydro
Bioenergy
Other non-OECD
2010 2012 2014 2016 2018 2020

2010 2012 2014
Onshore wind
Offshore wind
Solar PV residential/commercial
2016
2018 2020
Solar PV utility
Notes: Average unit investment costs are based on gross additions, which include capacity refurbishments that are typically lower cost than new capacity. Costs
vary over time due to technology changes as well as where deployment occurs in a given year..
With scale up of deployment and learning, investment costs
of most dynamic technologies (solar PV and onshore wind)

continue to fall
OECD/IEA 2014
Renewables becoming a cost-competitive

generation option in more cases
In some dynamic markets with country-specific conditions
and market frameworks, new onshore wind is the

economically preferred option versus new fossil fuel plants
(e.g. Brazil, Chile and South Africa)
But fossil fuel subsidies can distort this picture
Germany LCOEs versus wholesale prices
In some stable markets,
But market design based

on wholesale pricing may
not provide adequate
remuneration
Germany onshore wind LCOE

Germany CCGT LCOE
Wholesale price (2013 average)
150
USD 2013/MWh
onshore wind with good

financing cheaper than
new CCGT plants
200
100
Typical CCGT LCOE
50
Typical onshore wind LCOE
0
3%
5%
7%
9%
11%
13%
Weighted average cost of capital (real)
15%
Notes: Onshore wind full load hours are assumed at 2000 and that for CCGT is 3500.
Source: IEA analysis with day-ahead average base-load wholesale prices for 2013
from Bloomberg LP.
OECD/IEA 2014
Socket parity emerging as potential

deployment driver for distributed PV
LCOE of residential PV vs variable portion of electricity tariff
1 200
1 000
LCOE
USD/MWh
800
600
Variable
Portion of
Residential
Rate
400
200
0
2010
2013
Australia
2010
2013
France
2010
2013
Germany
2010
2013
Italy
2010
2013
Korea
2010
2013
Mexico
2010
2013
Netherlands
2010
2013
United Kingdom
Economic attractiveness from offsetting electricity bill
requires self-using most of the PV electricity

Currently limits potential, in particular for households
Reaching socket parity is a driver for private actors

But PV may still have significant impact on total system costs, in
particular depending on allocation of fixed network costs
OECD/IEA 2014
Global RE capacity additions led by wind

Still, onshore outlook less optimistic than in MRMR 2013
Policy uncertainties and grid integration challenges weigh upon outlook
Offshore wind outlook also more pessimistic, with financing and
Annual additions (GW)
integration challenges
Total wind (onshore + offshore) annual capacity additions by region (GW)
20
18
16
14
12
10
8
6
4
2
0
2010
GW
World
Onshore
World
Offshore
2011
OECD Americas
2012
2013
2014
OECD Asia Oceania
2015
2016
OECD Europe
2017
2018
China
2019
2020
Rest of Non-OECD
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
37.2
39.1
43.9
34.0
42.9
41.9
39.2
39.7
41.4
42.1
43.1
1.0
1.2
1.3
1.7
1.3
2.2
2.5
3.1
3.5
4.5
4.5
OECD/IEA 2014
Stronger outlook for solar PV

Solar PV annual capacity additions (GW)
Strong growth in emerging markets and some OECD areas

Policy debates over distributed PV a source of forecast uncertainty
This map is without prejudice to the status of or sovereignty over any territory to the delimitation of international frontiers and boundaries and to the name of any territory,
city or area.
OECD/IEA
2014
Higher solar PV under enhanced case

Solar PV cumulative capacity, baseline versus enhanced case
600
Cumulative capacity (GW)
500
400
300
200
100
0
2013
Rest of World
Baseline
Australia
2020
France
United Kingdom
Baseline
India
2020
Italy
United States
Enhanced High
Japan
Germany
China
With certain market and policy enhancements Fair rules and appropriate electricity rate design for allocating the costs and benefits from
fast-growing distributed solar PV
Greater implementation of ambitious policy aims (e.g. Middle East)
Faster-than-expected decreases in solar PV costs
Solar PV capacity could top 500 GW globally in 2020

OECD/IEA 2014
Other technologies growing slowly

Offshore wind generation
Solar thermal electricity generation

40
35
30
25
20
15
10
5
0
TWh
TWh
100
90
80
70
60
50
40
30
20
10
0
2006
2008
OECD Americas
Africa
Non-OECD Europe
MTRMR 2013
2010
2012
2014
OECD Asia Oceania

Non-OECD Asia
Non-OECD Americas
2016
2018
OECD Europe
China
Middle East
2020
2006
2008
OECD Americas
Africa
Non-OECD Europe
MTRMR 2013
2010
2012
2014
OECD Asia Oceania

Non-OECD Asia
Non-OECD Americas
2016
2018
OECD Europe
China
Middle East
2020
Potential of offshore power remains high, but technical,
financial and grid connection issues pose challenges

Storage adds value to CSP, but deployment hampered by
relatively high costs
OECD/IEA 2014
Progress tracked on different scales

Incremental TWh
increase (2013-20)
Average annual growth

(2013-20)
1. China
+ 880
2. Brazil
+ 207
3. United States
+ 180
4. India
+ 127
5. Japan
+ 72
6. Germany
+ 71
7. United Kingdom
+ 52
8. Turkey
+ 45
9. Canada
10. Mexico
Memo: EU-28
1. Saudi Arabia
+ 117%
2. Jordan
+ 65%
3. UAE
+ 51%
4. Qatar
+ 37%
5. Israel*
+ 27%
6. South Africa
+ 25%
7. Cambodia
+ 22%
8. Ethiopia
+ 20%
+ 41
9. Nigeria
+ 15%
+ 38
10. Morocco
+ 15%
+ 251
Note: countries with at least 1 GW of renewable capacity by 2020

* The statistical data for Israel are supplied by and under the responsibility of the
relevant Israeli authorities. The use of such data by the OECD is without prejudice
to the status of the Golan Heights, East Jerusalem and Israeli settlements in the
West Bank under the terms of international law.
OECD/IEA 2014
China accounts for 40% of global growth

Strong generation needs, pollution reduction goals and policy environment with
ambitious targets support Chinas deployment

Renewables comprise 45% of new generation to 2020, ahead of coal
Some emerging challenges
Slower demand outlook than in MTRMR 2013
Integration of large amounts of variable renewables
Uncertainties over favourable economics for distributed PV scale up
Generation (TWh)
2 500
2 000
1 500
1 000
500
0
2012 2013 2014 2015 2016 2017 2018 2019 2020
Coal
Oil
Natural gas
Nuclear
Renewables
Others
2500
Generation(TWh)
3 000
Evolution of Chinas power generation mix, 2012-20

Cumulative change in generation (2012-20)
Renewable generation (2012-20)
2000
1500
1000
500
0
2012 2013 2014 2015 2016 2017 2018 2019 2020
Ocean
Geothermal
STE
Solar PV
Offshore wind
Onshore wind
Bioenergy
Hydropower
OECD/IEA 2014
For further insights and analysis

The Medium-Term
Renewable Energy
Market Report 2014
can be purchased
online at:
www.iea.org
Thank you for your
attention!
OECD/IEA 2014

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Renewable Intro Slides

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Medium-Term Renewable

Energy Market Report 2014

Strong momentum for renewable electricity

Historical data and estimates

Natural gas 2013

Renewable electricity projected to scale up by 45% from

Renewables are major source of new generation

Cumulative change in gross power generation by source and region, 2013-20

Renewables account for 80%

of new generation in OECD

Renewables are largest new

generation source in non-OECD,

Increasing risks are expected to slow

Policy and market risks threaten to slow deployment

Role of renewable use in heat also increasing,

Modern renewable heat continues to grow, providing 9% of

world final energy use for heat in 2020

Transition to advanced biofuels for transport

Projected biofuel production versus targets in IEA 2C Scenario (2DS)

Biofuels share in total

Conventional biofuel production continues to grow, and will

provide 4% of road transport fuel demand in 2020

Main messages to policy makers

Policies to focus on cost-efficiency

investments require market context that assures

Part Two Snapshots

Medium-Term Renewable Energy Market Report 2014

Renewable investment has risen to

Investment in new renewable power capacity

Investment in 2013 relatively steady at USD 250 billion, but

lower than peak in 2011

Renewable investment costs falling

2010 2012 2014 2016 2018 2020

With scale up of deployment and learning, investment costs

of most dynamic technologies (solar PV and onshore wind)

Renewables becoming a cost-competitive

and market frameworks, new onshore wind is the

In some stable markets,

But market design based

Germany onshore wind LCOE

onshore wind with good

Medium-Term Renewable Energy Market Report 2014

Socket parity emerging as potential

Economic attractiveness from offsetting electricity bill

requires self-using most of the PV electricity

Reaching socket parity is a driver for private actors

Global RE capacity additions led by wind

Offshore wind outlook also more pessimistic, with financing and

Annual additions (GW)

Medium-Term Renewable Energy Market Report 2014

Stronger outlook for solar PV

Strong growth in emerging markets and some OECD areas

Higher solar PV under enhanced case

Cumulative capacity (GW)

Solar PV capacity could top 500 GW globally in 2020

Other technologies growing slowly

Solar thermal electricity generation

OECD Asia Oceania

OECD Asia Oceania

Potential of offshore power remains high, but technical,

financial and grid connection issues pose challenges

Progress tracked on different scales

Average annual growth

Note: countries with at least 1 GW of renewable capacity by 2020