RENEWABLE ENERGY DEPLOYMENT AND FINANCIAL DE-RISKING

Transcription

1 RENEWABLE ENERGY DEPLOYMENT AND FINANCIAL DE-RISKING A CASE STUDY FOR AFRICA Bob van der Zwaan with Bart Sweerts and Francesco Dalla Longa November 2018, IAMC, Sevilla, Spain

2 GHG EMISSION PATHWAYS Source: IPCC AR5, SPM WG-III, Without more mitigation, global mean temperature may increase by C by the end of the 21st century (median climate response).

3 REGIONAL DIMENSIONS What are the regional dimensions of the GHG emissions reduction needs and corresponding (renewable) energy technology requirements? Some of the questions have been answered, e.g. in terms of costs and timing of technology needs, for the major economies (LIMITS project). Over the past several years at ECN-TNO we have been focusing on the implications of deep GHG emissions reduction in developing countries. We have extensively studied green growth in Latin America (CLIMACAP-LAMP project), and are now researching sustainable development in Africa.

4 AFRICA: TIAM-ECN MODEL

5 TIAM-ECN IS A GLOBAL IAM USA Canada Mexico Brazil Argentina Chile Colombia Venezuela Other Latin America Africa Middle East Western Europe Eastern Europe India China Japan South Korea Australia Former Soviet Union Other Developing Asia

6 NOW 17 AFRICAN REGIONS IN TIAM-ECN

7 GOAL OF OUR AFRICA WORK Investigate low-carbon energy development and technology diffusion in climate change mitigation pathways (2 C). Inspect policy implications of low-carbon development, in terms of energy supply, access, security and independence. Research aspects of the energy-water-food nexus in the resulting energy transition scenarios.

8 AFRICA Population is likely to double between now and Economic growth is high in many African countries (5-10%). Current energy system is under-developed (100 GW for Sub-Sahara). Scenarios REF: reference with energy supply continuing to rely mostly on fossil fuels. CAP: global GHG emissions reduced by 20% in 2050 with respect to TAX: 50 US$/tCO2e in 2020 increasing to 160 US$/tCO2e in 2050 (4%/yr). 2DC: stringent climate control (70% chance of reaching 2C target, RCP2.6).

9 GHG emissions [Gt CO 2 e] GHG emissions [Gt CO 2 e] GHG EMISSIONS World REF CAP TAX 2DC ~7 W/m 2 in Africa REF TAX 1 CAP 2DC GHG emissions in the world (left) and Africa (right) in our four scenarios.

10 stat stat REF TAX CAP 2DC REF TAX CAP 2DC REF TAX CAP 2DC REF TAX CAP 2DC Electricity supply [TWh] ELECTRICITY SUPPLY 4500 Electricity net imports 4000 Others non renew Other renewables Nuclear 3000 Geothermal 2500 Solar Biomass CCS 2000 Biomass w/o CCS 1500 Wind Hydro 1000 Oil with CCS Oil w/o CCS 500 Gas with CCS 0 Gas w/o CCS Coal with CCS Coal w/o CCS Electricity supply in Africa under our four scenarios.

11 Coal Gas+Oil Hydro Solar Wind Coal Gas+Oil Hydro Solar Wind Coal Coal CCS Gas Hydro Solar Wind Coal Coal CCS Gas Gas CCS Hydro Wind Biomass Biomass CCS Solar Average annual new capacity [GW/yr] CAPACITY ADDITIONS History EU / Latin America / Africa Future Africa s s Average EU Average LAM Average Africa Model results Africa Electric power capacity additions: past for Africa, EU and Latin America, and prospects for Africa under the 2DC scenario.

12 INSIGHTS Our analysis fully supports an Africa-led effort (AREI) to substantially enhance the use of the continent s renewable energy potential. The aim of achieving 300 GW additional renewable electricity generation capacity by 2030 is maybe unrealistic we find around 160 GW. We find evidence for leap-frogging, by which renewable energy fulfils most of Africa s growing energy needs, rather than fossil fuels. Such leap-frogging would avoid an ultimately expensive fossil fuels lock-in that would fix the carbon footprint of the content until For Ethiopia and Kenya, we have also explored themes like strengthening of NDCs, energy-water nexus, energy access, and public acceptance.

13 PUBLICATIONS SO FAR Dalla Longa, F., B. van der Zwaan, Do Kenya s Climate Change Mitigation Ambitions Necessitate Large-Scale Renewable Energy Deployment?, Renewable Energy, 113, 2017, van der Zwaan, B., A. Boccalon, F. Dalla Longa, Prospects for Hydropower in Ethiopia: An Energy- Water Nexus Analysis, Energy Strategy Reviews, 19, 2018, Dalla Longa, F., T. Strikkers, T. Kober, B. van der Zwaan, Advancing Energy Access Modelling with Geographic Information System Data, Environmental Modeling and Assessment, in press, van der Zwaan, B.C.C., T. Kober, F. Dalla Longa, A.J. van der Laan, G.J. Kramer, An Integrated Assessment of Pathways for Low-Carbon Development in Africa, Energy Policy, 117, 2018,

14 WHAT IS THE ROLE OF FINANCE? The impact of the cost of capital on the cost of power generation.

15 LCOE SPREAD IN AFRICA Levelized cost of electricity for renewable & fossil technologies in 46 African countries.

16 WACC VERSUS GDP/CAP Weighted average cost of capital against GDP per capita.

17 TIAM-ECN FINANCE SCENARIOS Electricity production projections for Africa until 2050.

18 SYSTEM COST EFFECTS Additional annual energy system costs relative to the Uniform scenario.

19 KEY MESSAGES African countries are in a unique position to reap the socio-economic and environmental benefits of renewable resources. A critical obstacle for the deployment of renewable energy technologies in Africa is the difficulty of attracting sufficient and affordable finance. We show large LCOE variations and disadvantageous current financial practices across multiple energy technologies in 46 African countries. With TIAM-ECN, we show how lowering financing costs results in a much higher deployment of renewables, notably solar energy, in Africa. Moreover, we demonstrate that the effect of changes in financing costs may outweigh the impact of technology learning. IAMs used to guide the design of energy and climate policies in Africa must be enriched, adapted, and/or complemented by financial modelling.