ECF s Roadmap 2050 project: Overview and key findings in ECF s Roadmap 2050 & Power Perspectives 2030 reports

Transcription

1 1 Annex 1 ECF s Radmap 2050 prject: Overview and key findings in ECF s Radmap 2050 & Pwer Perspectives 2030 reprts This annex gives a shrt verview n ECF s Radmap 2050 prject, and prvides mre details n the methdlgy and key findings f the ECF reprts Radmap 2050 and Pwer Perspectives These technical reprts frm the analytical basis fr the deliberatins in the Frm Radmaps t Reality reprt. The missin f Radmap 2050 prject is t prvide a practical, independent and bjective analysis f pathways t achieve a lw- carbn ecnmy in Eurpe, in line with the energy security, envirnmental and ecnmic gals f the Eurpean Unin. Over the years, ECF has invlved a wide range f cmpanies, cnsultancy firms, research centres and NGOs t prvide varius frms f assistance during the different phases f ECF's Radmap 2050 prject. Their willingness t cnsult and t be cnsulted in the curse f the years has ensured the credibility, bjectivity and quality f the different utputs thrughut the prject. The Radmap 2050 prject is an initiative f the Eurpean Climate Fundatin (ECF). The cntent f the studies are the exclusive respnsibility f ECF.

2 2 I. Radmap A practical guide t a prsperus, lw- carbn Eurpe. Backgrund infrmatin The Radmap A practical guide t a prsperus, lw- carbn Eurpe study was published in April It prvides a technical and ecnmic assessment f a series f decarbnisatin pathways fr achieving a pre- defined decarbnisatin gal in 2050 in line with the energy security, envirnmental and ecnmic gals f the EU. The study investigates the technical and ecnmic feasibility f achieving an 80% reductin in GHG emissins (cmpared t 1990) by 2050 under the cnstraint that tday s levels f electricity supply reliability, energy security, and ecnmic grwth are maintained r imprved. Mdeling Apprach The study applies a back- casting apprach by stipulating an end- state f the energy system in 2050 (80% GHG reductin cmpared t 1990 levels and the energy system delivering at least as much as tday, n dependency n internatinal carbn ffsets). It then derives plausible pathways n hw t achieve this gal. These pathways cmprise different shares f a range f lw t zer carbn supply technlgies, which are already cmmercially available, r in a late stage f develpment. The pathways have been defined based n these assumptins: 1) at least 95% pwer sectr decarbnisatin in 2050 (cmpared t 1990), 2) prvisin f electricity supply reliability, and 3) t be credible and plausible, nt necessarily ptimised. Baseline assumptins are based n data frm the Internatinal Energy Agency (WEO 2009, 2030 data extraplated t 2050), CGE mdel prvided by Oxfrd Ecnmics 2007, and PRIMES (shares f energy and pwer demand, and supply by regin). The transmissin system is mdeled by a pwer system analysis framewrk develped by the Imperial Cllege Lndn and KEMA t minimise ttal system csts while maintaining system reliability and respecting perating cnstraints. Scenaris and key assumptins The study cnsiders three decarbnisatin scenaris which all have different mixes f electricity generating surces t achieve a lw- carbn energy system in 2050, against a baseline Business- As- Usual. The share f RES in 2050 in the three scenaris is 40%, 60% and 80% respectively, with the remaining percentage equally split between CCS and nuclear. Generatin technlgies include hydr, cal and gas plants with CCS, slar PV and CSP, wind turbines n- and ffshre, bimass plants and gethermal plants. The baseline scenari assumes verall GDP t grw frm 10 t 22 EUR trillin. Energy demand is prjected t grw by 10% (delinking it frm the GDP grwth); pwer demand increases by 40% ver 45 years with efficiency imprvements f abut 1-1,5% year- n- year, reaching a level f 4,800-4,900TWh in 2050; GHG emissins, which have decreased by abut 10% since 1990 until 2010, are assumed t stay flat until 2050, with significant emissin intensity imprvements. The 2050 pwer demand ( TWh) is similar in bth the baseline and the decarbnisatin pathways. This is due t the fact that the additinal energy efficiency assumed in the decarbnisatin pathways ffsets higher pwer

3 demand frm fuel shifts t pwer 1. In terms f technlgies, a learning rate f 12% is assumed fr every dubling f installed CCS capacity thrugh 2050, which is expected t bring CCS abatement csts dwn t 30-45$ per tco 2. Fr nuclear, cst reductin f less than 10% ver 40 years is assumed. Fssil fuel price prjectins are based n the IEA WEO 2009 and are as fllws fr 2030: il/barrel is $115, cal/tn $109, gas/mmbtu $14, and uranium/mwh $8. This study assumes that fssil fuel prices remain flat beynd In the baseline mdeling, the CO 2 price increases t $43 per tco 2 e in 2015 and $54 in All f the decarbnisatin scenaris are technlgically agnstic, use multiple technlgies and reflect a wide range f technlgically and ecnmically plausible inputs. The csts f fuel are assumed t be same in the decarbnised pathways as in the baseline. In the decarbnized pathways, a glbal carbn market is assumed frm 2020 nwards, assuming $50 per tco 2 e in 2020 and $110 beynd 2030 fr the EU and OECD. Fr ther majr ecnmies (which includes China, Russia, Brazil, Suth Africa and the Middle East) the CO 2 price is assumed t be $65/t beynd The rest f the wrld (ROW) pwer sectr decarbnises less than Eurpe and builds 30% renewables by Key findings The Radmap 2050 reprt demnstrates that by 2050, Eurpe culd achieve an ecnmy- wide reductin f GHG emissins f at least 80% cmpared t 1990 levels. This level f reductin is nly pssible with a zer- carbn pwer supply (pwer sectr which emits nt mre than 5% r less f baseline GHG emissins level), which can be realized by deplying technlgies that are already cmmercially available. Assuming industry cnsensus learning rates fr these technlgies, marked demand fr lw- carbn investment, IEA prjectins n fssil fuel prices and significant expansin f grid intercnnectin between and acrss regins in Eurpe and an average carbn prices f at least 20-30EUR per tco 2 e ver 40 years, the cst f electricity and verall ecnmic grwth wuld be cmparable t the baseline ver the perid The reprt demnstrates that the levelised cst f electricity (LCE) is rughly the same in the three decarbnisatin pathways. The weighted average n the three pathways is 10-15% higher that the LCE fr the baseline ver a perid f 40 years, prir t applying any price f carbn emissin. After applicatin, such a price (20-30EUR) wuld bring the baseline and the three decarbnisatin pathways rughly int equivalence with each ther. The LCE deceases by the end f the perid reflecting cst reductins due t technlgy learning and reducing use f fuel. The full csts f energy fr the end- t- end energy system is lwer in the decarbnisatin pathways due t energy efficiency imprvements, and the use f less il, a relatively cstly primary energy curse. Ptential psitive impact n GDP f 0,5 t 1% increase is pssible due t technlgy develpments but the verall effect n GDP grwth is assessed t be negligible 2. Cmpared t baseline, capital csts will increase significantly ver the next 40 years and 1 Pwer demand will g dwn due t higher efficiency and up due t additinal demand frm transprt and building heating. 2 Indirectly GDP grwth can be expected frm increased prductivity f the ecnmy as a whle in the lnger term due t lwer cst f energy per unit f GDP, plus reduced impact f high carbn prices in the decarbnised pathways. Als shall Eurpe builds and maintains a strng glbal psitin in clean tech, Eurpean exprts f clean tech will add as much as 250EUR billin t the GDP just in the perid f

4 peratinal csts will cme dwn. The capital csts fr the pwer sectr are abut 70% higher than in the baseline, with an additinal 25 billin per year f investment n average ver the perid cmpared t the baseline. The study shws that peratinal csts are highest in the baseline and lwest in the 80% RES pathway. The new effect is a reductin in full cst t sciety f 80EUR billin per year in 2020, rising t 350EUR billin per year in 2050 r 1500EUR per year per husehld, hencefrth the cst f the decarbnised pathways and the baseline are likely t differ less than 250EUR per year per husehld. Using the time available will be f essence. Implementatin f new plicies and regulatins, rderly cnstructin f new plants, and a smth build up f the new technlgy supply chains requires the full perid f abut frty years. In the decarbnisatin pathways the capital spent in the pwer sectr ges up frm abut 30EUR billin in 2010 t abut 65EUR billin a year in When delayed by ten years, the required annual capital spent ges up t 90EUR billin in The transfrmatin requires clser transnatinal cperatin in transmissin infrastructure, resurce planning, energy market regulatin, and systems peratin. An imprtant result appearing in all f the decarbnisatin pathways is that installed generatin capacity is larger with increasing wind and slar PV penetratin due t their variable utput (fr the 60% RES pathway the increase is threefld); transmissin capacity and backup generatin requirements are significant in all decarbnisatin pathways (50 t 170GW). The impact f demand respnse can reduce transmissin investment csts and backup generatin requirements by 20 t 30% in the higher RES pathways. Reserve sharing acrss EU- 27 reduces ttal reserve requirements by almst 40%. The decarbnisatin pathways will reduce direct emissins frm the pwer sectr by 35 t 40% in 2020, cmpared t 20% in the baseline. 4 Cnclusins Pririty areas f actin fr the next 5-10 years are stated as energy efficiency, lw carbn technlgy, grids and integrated market peratin, fuel shift in transprt and buildings, markets (investments in lw carbn technlgies). Increasing intercnnectins between pwer systems, ptimising the use f resurces amngst Member States, and imprving demand respnse thrugh smart grid applicatins als emerge as key prerequisites fr successful decarbnisatin. Particular attentin shuld be paid t implementatin. The magnitude f change required in the sectrs affected is substantial in all f the decarbnisatin pathways tested. Als, funding requirements shift substantially. Within the pwer sectr, abut billin per year f additinal funds are required fr mre capital- intensive generatin capacity and grid investments. Capital fr il, gas and cal supply in Eurpe may cme dwn by 30%. Funding is required fr new investments in energy efficiency measures, heat pumps and alternative drive trains, which may add up t ver 2-3 trillin ver 40 years. Delivery risks exist fr mst technlgies. Nuclear and t sme extent CCS carry public acceptance risks. Onshre wind als faces lcal public acceptance issues, while ffshre envirnments make the cnstructin and maintenance f ffshre wind installatins challenging. Fr bimass, the develpment f a reliable lgistics infrastructure is challenging, as is aviding cmpetitin with fd and water and negative effects n bidiversity.

5 Arguably the tughest challenge f all is t btain brad, active public supprt fr the transfrmatin, acrss cuntries, sectrs and plitical parties. Transnatinal cperatin is required fr regulatin, funding, R&D, infrastructure investments and peratin. 5

6 6 II. Eurpean Climate Fundatin Pwer Perspectives 2030: n the rad t a decarbnised pwer sectr Backgrund infrmatin Pwer Perspectives 2030 builds n the Radmap 2050 reprt, and prvides an analysis f the next steps required in the develpment f the Eurpean pwer sectr twards 2030 in rder t remain n track t full decarbnisatin by Based n extensive analysis cnducted by the ECF, McKinsey, KEMA, Imperial Cllege Lndn, RAP and E3G. The ambitin with Pwer Perspectives 2030 is t analyse what it will take t decarbnise the pwer sectr and what needs t happen in the cming 20 years based n tday s knwledge f the ptins and chices t be made. Mdeling apprach Pwer Perspectives 2030 is a prjectin analysis built arund the cre On Track case, which up t 2020 is based n the full implementatin f the existing plans fr the pwer sectr. The analysis mdels several sensitivity scenaris that alter key parameters f the pwer system and cmpares these against the On Track case. All scenaris are based n generatin mixes cnsisting f technlgies that are already cmmercially available tday r in late develpment stage, and each cuntry is expected t be self- sufficient in the 2020 and 2030 timeframe. Pwer demand is an input based n the Reference scenari in PRIMES reprt EU energy trends t 2030 (2009, assuming the 20% energy saving target is met), and adjusted upwards t reflect electrificatin frm transprt, industry and heating sectrs based n Radmap 2050 estimates. Prductin mix in 2030 is built by the mdel, and nt back- cast as in Radmap Up t 2020 bth capacity and prductin are based n NREAPs. Beynd 2020 the mdeling f the EU- 27 prductin mix uses this 2020 RES deplyment pattern as a starting pint, extraplated t 2030 and leading t a share f 50% in the On Track case. Scenaris and key assumptins The main scenari the On Track case is based n the full implementatin f the existing renewable and grid plans up t 2020 and further prjects a pwer prductin mix twards 2030 in line with the arund 60% emissin reductin trajectry set by the Eurpean Cmmissin in the Lw Carbn Ecnmy 2050 Radmap. The carbn prices used in the mdeling are 38/tn fr 2020 and 85/tn fr 2030 and beynd, based n IEA WEO scenari. The carbn price is nt a variable in the mdel and hence des nt reflect the trading nature f the ETS. Fuel prices are updated accrding t IEA WEO 2009, same as Radmap 2050 (i.e. fr 2030: il/barrel is $115, cal/tn $109, gas/mmbtu $14, and uranium/mwh $8) 3. 3 The fuel and carbn price assumptins are used in the KEMA/ICL hur- by- hur dispatch mdel, influencing the dispatch f technlgies based n shrt- run marginal csts.

7 In terms f technlgies, a 15% learning rate cst reductin fr each dubling f capacity fr slar PV is assumed, leading t a 32% decrease in the capex required fr whereas, fr ffshre wind - a 4.5% learning rate fr each dubling f capacity is assumed, leading t a 19% decrease in capex required fr CCS demnstratin plants f MW are expected t cme n line arund 2015 and t ramp it up fr larger plants f MW. Capital csts will cme dwn by the time f cmmercialisatin (currently standing at 3-4EUR millin per MW) t make the technlgy cmpetitive with ther lw- carbn slutins. The analysis mdels several sensitivity scenaris that alter key parameters f the pwer system (with alternative mdeling fr RES, nuclear, CCS deplyment and demand respnse activatin) and cmpares these against the On Track. The Higher RES scenari assumes 60% renewables in In Less Transmissin a 50% undershting f ENTSO- E plans is mdeled. In Less Crdinated RES Deplyment, the generatin mix is based n the cuntry- lead RES deplyment in line with current trends up t The On Track case prjects the need f majr investment fr bth new lw- carbn generatin and transmissin grids, up t 2020 arund 628EUR billin fr the frmer, and 68EUR billin between 2020 and 2030 fr the later t enable 109GW f additinal transmissin capacity near dubling f tday s existing capacity. 7 Key findings Pwer Perspectives 2030 finds that existing plans fr renewables, and transmissin grids up t 2020, if fully implemented, cnstitute an adequate first step t decarbnisatin but that the transitin needs t accelerate twards 2030 in rder t remain n track t the 2050 CO 2 abatement gal fr the pwer sectr. This acceleratin implies a near dubling f investments in lw- carbn generatin and a near dubling f electricity grid capacity in the decade after Hence, in the current decade, the Eurpean Unin, its Member States and the relevant cmmercial undertakings need bth t ensure the implementatin f current cmmitments and t establish an adequate plicy and legal framewrk t steer the decarbnisatin f the pwer sectr beynd Fr new lw- carbn generatin the investment required up t 2020 in the On Track case is arund 628EUR billin (f which 567EUR billin fr generatin, 15EUR billin fr back- up capacity and 46EUR billin fr transmissin expansin). The deplyment f lw carbn technlgies beynd 2020 wuld require 1,153 EUR billin capital expenditure (Capex), which brings the ttal capex fr the next tw decades tgether t 1,781EUR billin r 0.5% f EU- 27 GDP 4. Fr grids, the amunt beynd 2020 is an estimated 68EUR billin fr 109 GW f additinal transmissin capacity (On Track case) 5. The additinal intercnnectins are prjected acrss 4 Capex fr in PP2030 is apprximately 550EUR billin higher than estimated fr this perid in Radmap Mre than half f the difference is due t higher pwer demand assumptins w/ inclusin f extra Energy Efficiency measures and 20% t increased scpe. 5 The ENTSO- E have a ten- year netwrk develpment plan requiring an increase in transmissin lines

8 brders: e.g. UK- Ireland 13GW; France- Spain 9GW but inter- cuntry transmissin upgrades are als needed: NW- W Germany 10GW; N- S UK 8GW 6. Grid transmissin als enables sharing f reserve and respnse, less reserve sharing reduces pex by 24EUR billin fr at n additinal capex csts. Sticking t natinal prvisins f reserve and respnse increases the reserve requirements frm 86GW t 122GW in In all scenaris, gas- fired generatin will play an imprtant rle ging frward bth as a flexible baselad and as a back- up resurce. In the On Track case, gas- fired plans prvide 22% f the annual pwer demand in 2010, 25% in 2020 and 28% in 2030 (3% f which gas- with- CCS). The analysis shws back up and flexible lad capacity f ttal f 42GW by 2020 and 206GW by 2030 is needed n the On Track case. Other ptins fr back- up than building new plants culd be preferred, fr example decmmissining CCGT plants. The analysis als demnstrates that demand side resurces reduce the balancing challenges in a decarbnised pwer system. A realistic DR ptential in 2030, shifting up t 10% f daily lad in respnse t availability r supply, decreases the need fr grid capacity by 10% and back- up capacity by 35% and thus helps in managing the risk f insufficient grid transmissin and saving respectively 7EUR billin and 25EUR billin. This lwers the need fr transmissin infrastructure f apprximately 23GW. DR als reduces the vlatility f prices by 10-30% cmpared t the On Track case and by mre than 50% cmpared t a scenari with less transmissin capacity. Als, in terms f energy efficiency, reducing verall demand t 2030 alng similar lines as the energy savings targets fr 2020 wuld stabilize demand at +0.3% per year. This differs frm +1.8% demand grwth in the On Track case and resulting in a 50% decrease in transmissin investment and a 31% decrease in back- up investment, saving 299EUR billin in investment (30% lwer capex). Twards 2030 the levelised cst f electricity (LCE) fr new builds is similar t the LCE in this decade: 89EUR/MWh (2020) and 85EUR/MWh (2030), including CO 2 prices which is nly a small increase cmpared t the estimated 82EUR/MWh prir t applicatin f such price. This shws that it is feasible t keep LCE under cntrl thrugh the decades f transitin t a fully decarbnised pwer sectr. The increase in upfrnt investment will have t be incentivized apprpriately but will pay ff thrugh decreased perating csts. 8 Cnclusins Pwer Perspectives 2030 shws that t remain n track t achieve the 2020 and 2050 energy and climate bjectives, existing instruments and targets represent a sund and adequate first step and the EU and its Member States must first fully implement them. Accrding t the study, beynd 2020, the decarbnisatin f the Eurpean pwer sectr will need t accelerate t remain n track (t achieve the gal set fr 2050). Hence, already in this decade, a strnger sense f the directin twards 2030 is needed t supprt f 64 GW frm 2010 t 2020 a 30% capacity increase ver the existing netwrk 6 The extent f the required grid enhancement will depend n the generatin deplyment in the scenari, with the lw case f an additinal 30EUR billin assuming energy efficiency imprvements reduce ttal energy demand frm 4,800 TWh t 4,100 TWh by 2030, and the high case f an additinal 138EUR billin assuming a higher share f RES (60% versus 50% by 2030 in the On Track case).

9 investments and enable markets t supprt the transfrmatin t a decarbnised pwer sectr. A new stable plicy framewrk aiming at 2030 is required, fit t ensure investments in challenging areas: 1. Building mre and imprved transmissin grid infrastructure is essential t balance a decarbnised pwer system cst- effectively. Beynd 2020, the rate f cnstructin has t duble cmpared t the rate needed in the current decade. 2. Demand side resurces like energy efficiency and demand respnse (despite stalling plitical cmmitment and n- the- grund prgress at present); demand respnse and energy efficiency are attractive levers t reduce backup needs as well as grid requirements. 3. Flexible generatin and back up. Hw renewables and gas based generatin capacity can interplay will be f imprtance fr the decarbnisatin prcess. Re- purpsing sme lder plants can minimize required investments. 4. The way frward fr different srts f renewables beynd 2020 needs t be srted ut. Deplyment is cmplicated by a number f factrs, csts are difficult t predict and in sme cases incentive schemes have tended t be inefficient t drive dwn the csts. By deplying renewables acrss the EU, rather than fllw a cuntry- by- cuntry apprach, it will be pssible t achieve substantial gains frm a pwer system perspective. 5. If the CCS ptin (mainly beynd 2030) is t be kept pen mre need t be dne t drive technlgical develpment. A physically and cmmercially integrated Eurpean electricity market cmbined with a sufficiently restrictive carbn price can achieve far- reaching emissin reductins (60% arund 2030 cmpared t 1990 levels) affrdably, reliably and securely. The ETS trajectry needs t be aligned t reach cnsistence with these decarbnisatin bjectives. The current whlesale electricity market mdel can cntinue t remunerate cnventinal generatin adequately even with high shares f variable and lw- marginal- cst resurces. Fr the market t wrk, hwever, a number f critical cnditins must be satisfied, prgress n several f which is well shrt f what is needed. Decarbnisatin is t a big extent abut investments, and will nt happen withut sciety having a strng influence n investments made by market players ver a lng time perid. The verall challenge is t run a step- wise transfrmatin and gradually build a strnger platfrm t reach the bjective. There are n simple chices. Public supprt and acceptance will be f decisive imprtance. 9