Global energy transitions

Transcription

1 4th European Energy Forum On The Way to COP21 Global energy transitions Presentation Paris, March 12, 2015 Florian Haslauer

2 Agenda for today Lessons learned from the German Energiewende Global Energy Transitions Conclusion A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 2

3 Lessons learned from the German Energiewende Germany has set ambitious targets in relation to the energy transition Objectives of energy transition in Germany Consumption Primary energy consumption has to decrease by 20% by 2020 by 50% by 2050 Power consumption has to decrease by 10% by 2020 and by 25% until 2050 Renewable energy The share of renewable energy in the total energy consumption should reach 18% by % by % by % by 2050 In power generation, the share of renewable energy to gross power consumption should be 40-45% by % by % by % by 2050 CO 2 The CO2 emissions should compared to 1990 fall by 40% by % by % by % by 2050 Nuclear phase-out, installed capacity to decrease to 21.5 GW by GW by GW by 2023 Source: BMU; A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 3

4 Lessons learned from the German Energiewende The main instrument in German policy is the Renewable Energy Sources Act (EEG) Feed in tariff from EEG and subsidies KWK 1 In ct/kwh ,6 9,3 9,1 50,7 9,5 9,1 50,3 9,5 9,1 2,6 49,1 9,4 9,1 2,6 50,8 9,7 9,0 2,4 53,0 10,8 9,0 2,4 53,0 12,3 8,9 2,3 52,0 13,6 8,8 2,3 50,2 14,2 8,8 2,1 48,0 16,1 8,8 2,1 43,6 16,9 8,9 2,1 40,2 19,2 9,2 2,1 36,2 18,3 10,1 2,4 32,9 18,7 9,9 2,4 31,7 18,1 9,7 2,4 31,7 18,7 9,6 2,4 EEG: law for the development of renewable energy Feed in tariff guaranteed for 20 years Priority feed in of renewables Biomass Wind energy (Onshore) Photovoltaic KWK Facilities with a capacity between 50kW 2MW, from 2012 capacity between 250kW-2MW Source: BMWi, KWKG A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 4

5 Lessons learned from the German Energiewende Update to the EEG released by the new German government contains downward revision of renewables growth targets Released changes to the EEG Reduction of Growth targets of renewables (in case of over delivery the subsidies will be reduced) PV 2500 MW annually Onshore wind 2500 MW annually (net, i.e. after deduction of shut down sites) Offshore Wind 6500 MW cumulative until 2020 adapted to reality, previous target was 10,000 MW Biomass 100 MW annually Integration of renewables into the market Mandatory Direct marketing for new plants over 500 kw, this threshold is to be reduced to 100 kw by 2017 Starting 2017 the auction procedures should partially replace compensation for electricity fed into the grid with piloting for PV already in 2015 Capacity market Further capacity mechanisms should be decided by 2016; a recent study of the German Federal Ministry of Economics views the capacity market rather skeptical EOM market should become more flexible, demand-side management measures should be expanded Source: A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 5

6 Lessons learned from the German Energiewende Energy consumption in Germany is stagnating, or even decreasing in certain years; but CO2 emissions still raise slowly Total Energy Consumption in Germany (in Mtoe) CO2 emissions (in MtCO2) / % +4% The Energy consumption stagnates in Germany for several years In spite of high subsidies for the renewables in Germany, CO2-Emissions continue to raise Source: Enerdata, UBA, Statista, A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 6

7 Lessons learned from the German Energiewende Power consumption in Germany is experiencing a slight decrease, also due to increasing self generation of PV Power consumption in Germany ( , in TWh) % 26% % 26% 1.23% % 22% 22% 27% 26% 26% % 26% % 26% % 26% -0.16% % 23% 26% 27% % 26% % 26% % 26% -0.75% % 26% 500 Assumption is long term economic growth of 1.0% Increasing decoupling between economic output and energy consumption Efficiency gains, especially in the household sector 48% 47% 47% 47% 47% 47% 47% 47% 47% 44% 46% 47% 47% 46% Constant consumption in the industrial sector Agriculture Transport Business, trade, services Households Industry 1. Estimate Source: EWI Referenzszenario, A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 7

8 Lessons learned from the German Energiewende With the help of subsidies renewables power generation capacity increased sevenfold between 2000 and 2014 Development of renewables in Germany Renewables subsidies EUR billion Installed Capacity GW EEG is driving the growth of renewables in Germany Hydro Biomass Feed in tariffs guaranteed for 20 years take market risks away from investors Photovoltaic 80% of subsidies in renewables capacities are not invested from traditional utilities, investors are funds, private investors, and others Wind Source: Monitoring Bericht 2013, BDEW, Bundesnetzagentur, ENTSO-E, A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 8

9 Lessons learned from the German Energiewende High proportion of subsidized renewable energy supply has a significant impact on the energy-only market Total cost of electricity generation in Germany Wholesale market plus EEG stimulation, EUR bn Impact of capacity markets Overall, rising costs Further displacement of competition and reduction in the efficiency of the system EEG differential costs Sales of electricity on EEX The EOM in Germany is not producing the right price signals anymore Source: EEX, BDEW, A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 9

10 Lessons learned from the German Energiewende Non-market-indicated expansion of renewables with feed priority leads to situations with "extreme prices" Fluctuations in the power supply from wind and solar 1 MW Highest power from wind and PV at 37.4 GW Highest ever performance of PV with 24.2 GW PV generation (sample days 2014) Wind generation (sample days 2014) Renewables Feed-in priority for renewables Disregard of compensation cost Sunday, May 11, 2014 Friday, June 6, 2014 Power price EPEX Spot (EUR/MWh) Negative power prices of up to -65 EUR/MWh Electricity prices between 25 and 38 EUR/MWh Merit order effect: Renewables can be set with negative marginal costs Price effect: Negative prices in hours of high wind and PV feed 1. Quarter-hourly feed in Germany and Austria Source: EEX Transparency, A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 10

11 Lessons learned from the German Energiewende The price development in the electricity market sets conventional generation under pressure Development of EEX Base spot and futures prices EUR/MWh, Spot market Financial crisis EEX-Base EEX-Peak Expected range Derivatives The German power market has a significant impact on other european markets Source: EEX, A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 11

12 Lessons learned from the German Energiewende Further development of renewables will lead to significant excess capacity in the German market Forecast: electricity generation and capacity in Germany 1 Installed Capacity by technology 2 (in GW) Electricity production by technology 2 (in TWh) % 78% 16% 72% Maximum load Target power consum ption Geothermal Hydro Biomass and waste Photovoltaic Wind Conventional Geothermal Hydro Biomass and waste Photovoltaic Wind Conventional Share of renewables 1. BMU Lead Study Scenario A 2. Figures exclude pumped storage and other Source: BMU, AGEE Stat 2012; ENTSO-E; A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 12

13 Lessons learned from the German Energiewende The German Energiewende is going to loose it s role model status Conclusions for the european energy systems The German Energiewende ist too costly in order to be a case example for an european or global energy transition, but experiences from Germany are highly relevant to find the best solutions Energy policy should be led by one and not several targets. CO2-reduction is the common denominator in Europe and in the whole world. For Europe that means reviving the emission trading scheme by reducing the warrants Energy policy cannot be done against the evolutions in the global commodity markets. In spite of high subsidies for the renewables in Germany, the generation of electricity by coal-fired plants increases due to the trends in the coal and gas prices, and the CO2-Emission raises. Only market-based systems can secure an economic meaningful restructuring of the system : Reduction of the grants to customer or investor towards technology development No feed-in subsidies but grants for investment on an auction based system Central assets -> European-wide auctions Decentralized assets -> national / regional auctions Integration of the renewables in the market through the abolition of the feed-in priority system and the obligation of direct marketing Source: A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 13

14 Agenda for today Lessons learned from the German Energiewende Global Energy Transitions Conclusion A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 14

15 Global energy transitions In a global perspective Energy policy is not so much driven by climate policy as in Europe Objectives of Energy-/Climate- Policy globally Key drivers Security of Supply Install new capacities und diversify the energy mix Reduce import dependency Managing Growth of Energy Demand Expand supply to meet rising energy demand while keeping costs low Electrification of households in emerging countries Optimize Cost of Energy Supply Substantially increased energy efficiency Increase competitiveness by using least-cost approaches for supply expansion Reduction of C02-Emissions Low CO 2 power generation mix with global growth of conventional, nuclear and renewables in varying speeds Reduce local air pollution Key players' moves Regulation & Politics Innovation Customer behavior The Ukraine crisis will change the situation in Europe and increase the importance of Energy policy with the objective of security of supply A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 15

16 Global energy transitions Several countries face a public debate regarding energy costs Electricity price (in USc05/kWh at ppp 1 ) Electricity price in industry (in USc05/kWh) CAGR 20 Brazil Germany 0.5% 4.5% 15 Germany 15 China 0.6% 10 Brazil 10 5 South Africa USA -0.5% 0.4% 5 China USA South Africa Saudi Arabia -2.2% Saudi Arabia High burdens for end consumers also in emerging countries High prices in Germany only partly compensated by higher efficiency in consumption 1. Purchasing power parity (ppp): a value given in ppp allow comparing prices internationally, thereby representing the real cost for end customers Source: Enerdata ( A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 16

17 Global energy transitions Only Germany could reduce its electricity consumption of households, while efficiency is increasing almost everywhere Electricity consumption of households (in kwh/cap) Final Energy Intensity (in koe/us$05 at ppp 1 ) CAGR 0,55 CAGR USA Saudi Arabia 0.8% 3.9% Germany South Africa Brazil China -0.1% 1.2% 2.8% 15.9% 0, China South Africa Saudi Arabia Brazil USA Germany -5.2% -1.2% 1.3% 0.4% -1.8% -2.0% Only the US and Germany could maintain or even reduce their electricity consumption Efficiency improved significantly in almost all countries 1. Purchasing power parity (ppp): a value given in ppp allow comparing prices internationally, thereby representing the real cost for end customers Source: Enerdata, World Energy Council Energy Efficiency Indicators, A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 17

18 Global energy transitions Global energy transitions are fact, but motives and objectives differ significantly across countries 1 Overview of motives and objectives of global energy transitions USA Reduction of energy costs and dependency on imports Focus: Expansion of shale gas and renewables Brazil Improved security of supply Objectives of least-cost expansion and inflation control Germany Climate protection and nuclear phase out So far main focus on renewables expansion China Coverage of energy demand and industrial policy Central expansion objectives for renewables Saudi-Arabia Increase of value creation along the oil value chain Expansion of renewables, nuclear and shale gas South Africa Coverage of energy demand and job creation Expansion program for renewables Security of supply as well as objectives related to industrial policy and economic development are the main motives for global energy transitions Climate protection is an important argument in all transitions but globally not the key motivation behind the change Nuclear exit is not an explicit target in most countries, but cost considerations favor renewable energies Germany is not the only country facing fundamental changes in energy supply. But most other countries have a different motivation behind similar objectives Source: Enerdata ( A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 18

19 Global energy transitions National governments influence the energy transition strongly across all countries renewables are supported everywhere 2 Overview of drivers and governance of renewable energies USA Patchwork of defined quotas on state level and nationwide tax reliefs for renewable energy Shale gas driven by industry Brazil Technology-open auctions make onshore wind power possible State influence via price interventions Germany Main driver is nationwide EEG, enabling grass roots investment Aiming at market integration and cost reduction China State-defined, planned targets supported by incentives and financing Saudi-Arabia Influence through investment decisions of state-owned companies Driven by regional development concepts South Africa Integrated state plan with rolling adjustment of targets Auctions for renewables Main driver for change in the energy sector is government policy Various forms of government support, e.g. quotas, tax reliefs or auctions, are being tried worldwide Germany can learn from the experience of other countries, e.g. with regard to auctions. With the exception of the US, a global trend towards central governance can be observed Source: Enerdata ( A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 19

20 Global energy transitions The need to overcome similar challenges and access to new energy resources provide a global opportunity 3 Overview opportunities and threats USA Shale gas as chance for long-term energy supply Uncertainty about political priorities and patchwork of basic conditions Brazil Wind and solar power underdeveloped No certainty regarding investments due to political price interventions Germany Dynamic expansion and high competencies Stabilization of system and cost control China Access to cheap technologies Overcoming air pollution Saudi-Arabia Opportunities in diversification through renewables and shale gas Reduction of subsidies as basis for increasing efficiency South Africa High energy potential through renewables and shale gas Acute capacity constraints due to investment bottleneck Globally, there are enormous, untapped energy potentials Fundamental change in cost structures brings along massive uncertainty which complicates investment decisions Global energy transitions open up opportunities for companies which are able to manage the uncertainties related to energy transitions Source: Enerdata ( A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 20

21 Agenda for today Lessons learned from the German Energiewende Global Energy Transitions Conclusion A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 21

22 Conclusion This study highlights a global energy transition, with important differences as well as strikingly similarities among countries. Conclusions from the Global Energy Transition The countries analyzed can learn from important parallels and differences in terms of policy making, technology deployment and business-model evolution In a global perspective, climate protection is an important argument in all transitions but globally not the key motivation behind the change as it is in Europe & Germany Security of supply as well as objectives related to industrial policy and economic development are the main motives for global energy transitions Four key opportunities appear : Global resource abundance Global learning curves in technology development Maturing policy making based on global experience Global business opportunity for companies that provide relevant technologies, services and know-how to implement energy transitions successfully Such a cross-country perspective on energy transitions can bring significant benefits to the countries and the businesses engaging in the exchange. Source: A.T. Kearney A.T. Kearney 10/47086d/YvwrWeQkllxGGlnG1R 22

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