Medium Term Renewable Energy Market Report Michael Waldron Senior Energy Market Analyst Renewable Energy Division International Energy Agency

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1 Medium Term Renewable Energy Market Report 13 Michael Waldron Senior Energy Market Analyst Renewable Energy Division International Energy Agency OECD/IEA 13

Methodology and Scope OECD/IEA 13 Analysis of drivers and challenges for RE

with other fuels, grid integration, etc.

studies on key markets: USA, Canada, Chile, Mexico Japan, Korea, Australia

India, Thailand, Morocco, South Africa Global biofuels production by

Y-o-Y Chg 8% 4% % -4% 9-8% 5 8 11 14 17 TWh 1 8 4 Demand GDP, Y-o-Y (RHS)

2 Methodology and Scope OECD/IEA 13 Analysis of drivers and challenges for RE deployment at country level Regulatory framework, power demand, competition with other fuels, grid integration, etc. Bottom up global RE power capacity and generation forecast, with case studies on key markets: USA, Canada, Chile, Mexico Japan, Korea, Australia Denmark, France, Germany, Ireland, Italy, Spain, Turkey, UK China, Brazil, India, Thailand, Morocco, South Africa Global biofuels production by country Regional breakdown RE for heat TWh Power demand vs GDP Y-o-Y Chg 8% 4% % -4% 9-8% TWh Demand GDP, Y-o-Y (RHS) Power generation Demand, Y-o-Y (RHS) Coal Oil Natural gas Nuclear Hydro Bioenergy Wind Solar PV Geothermal

3 Despite Challenges, strong Renewable Drivers in 1 Total renewable capacity and generation grew strongly in 1 (+8%) Strength partly due to China hydropower Global non hydro capacity grew by 1% year on year Onshore wind and solar PV capacity grew faster than expected Global renewable electricity capacity, by region GW USD billion OECD Americas OECD Asia Oceania OECD Europe Africa Non-OECD Asia China Non-OECD Europe Non-OECD Americas Source: IEA MTRMR 13 Global renewable new investment, by region OECD/IEA 13 Still, some emerging challenges Global investment fell ( 1%) Policy uncertainty in some key countries Grid integration issues emerging Biofuels production growth stalled United States Europe Brazil Other Americas China India Other Asia Middle East and Africa Source: Bloomberg New Energy Finance

4 Positive outlook for renewable electricity TWh Global renewable electricity production, by technology (TWh) IEA C Scenario 3% 5% % 4 15% 3 1 1% 5% % Hydropower Bioenergy Onshore wind Offshore wind Solar PV CSP Geothermal Ocean % Total generation Gas-fired Nuclear generation 16 generation 16 OECD/IEA 13 Renewable electricity projected to scale up by 4% from 1 to 18

Renewable power spreading out everywhere Total Renewable Annual Capacity Additions, by region (GW) OECD/IEA 13 This map is without prejudice to the status of or sovereignty over any territory, to the

5 Renewable power spreading out everywhere Total Renewable Annual Capacity Additions, by region (GW) OECD/IEA 13 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. Emerging markets more than compensate for slowing growth and volatility in markets such as Europe and the US

6 Improving competitiveness Most dynamic technologies onshore wind and solar PV increasingly competitive in a number of markets But market framework matters Deployment with little support occurring in some areas with rising energy needs, good resources, and predictable long term revenues Global levelised costs of power generation ranges (USD per MWh) 5 Utility scale Small scale MRMR OECD/IEA 13 Note: costs reflect differences in resource, local conditions, and the choice of sub technology.

7 Growth accelerating for the whole RE power mix 5 Historical cumulative additions (TWh) 5 Forecast cumulative additions (TWh) Geothermal Solar Bioenergy Wind Hydro Geothermal Solar Bioenergy Wind Hydro Hydro remains the largest increasing single renewable technology But for the first time additional generation from all non hydro sources exceeds that from hydro OECD/IEA 13

8 Global RE capacity additions led by wind Onshore outlook more optimistic than in MRMR 1 Policy uncertainties make additions volatile in some areas Offshore wind outlook more pessimistic than MRMR 1, with financing and integration challenges Total wind (onshore + offshore) annual capacity additions by region (GW) OECD Americas OECD Asia Oceania OECD Europe China Rest of Non OECD OECD/IEA 13

9 Solar PV growing out of Europe PV Annual Capacity Additions (GW) Strong growth seen in China, Africa, Middle East, and Latin America OECD/IEA 13

10 But other technologies lagging behind TWh Wind offshore OECD Americas OECD Asia Oceania OECD Europe Africa Asia China Non-OECD Europe Non-OECD Americas Middle East MTRMR 1 TWh Concentrating Solar Power OECD Americas OECD Asia Oceania OECD Europe Africa Asia China Non-OECD Europe Non-OECD Americas Middle East MTRMR 1 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 13

11 RE largest contributor to total electricity increase in OECD TWh Changes in power generation by source and region, OECD, 1-18 Renewables Nuclear Fossil fuels Others Total OECD OECD Americas OECD Asia Oceania OECD Europe Renewables expected to grow almost like fossil fuels in America, and more than total demand in Europe OECD/IEA 13

12 Renewables to reach 15% of US power generation Drivers state level mandates very good renewable resources ample grid capacity for integration attractiveness of small scale solar PV; financial innovation Challenges uncertainty over federal tax credits some competition with gas scale up of less mature technologies TWh 8 US renewable power generation % 7 14% 6 1% 5 1% 4 8% 3 6% 4% 1 % OECD/IEA Hydro Bioenergy Wind onshore Solar PV Solar CSP Geothermal Ocean Wind offshore % share of RE % non-hydro %

13 China accounts for 4% of global growth Drivers strong gov t backing with FYPs and expected quota system eased rules for grid connection and announced small scale incentives ample low cost finance robust manufacturing Challenges lack of market pricing framework and priority dispatch in general Integration of variable renewables supply chain bottlenecks, lack of deployment for offshore wind, CSP OECD/IEA 13 TWh, 1,8 1,6 1,4 1, 1, China renewable power generation Hydro Bioenergy Wind onshore Solar PV Solar CSP Geothermal Ocean Wind offshore % share of RE % non-hydro 3% 5% % 15% 1% 5% %

14 Renewables and natural gas Gas generation to crowd out renewables? Or vice versa? Renewables and gas can both grow strongly Globally: coal to gas switching can lead to large reductions in CO emissions, but gas is not enough to meet DS USA: some competition, but strong RE drivers even with low power prices; RE enhances diversification, gas helps balance variable RE; large scope for coal replacement Europe: slow demand growth, high gas prices, overcapacity in some markets; RE crowding out gas; still, gas provides important balancing for rising variable RE Asia: portfolio of low carbon solutions needed to meet rapid demand growth; high LNG prices make RE attractive OECD/IEA 13

15 Policy uncertainty is the number one risk 3.5 Spain solar PV + CSP annual additions (GW) Deep financial incentive cuts and cap for solar PV Assumed moratorium on new projects under Special Regime from Jan 1 onwards Abrupt, retroactive policy changes Annual additions Projected additions US onshore wind annual additions (GW) Expiration of federal PTC Uncertainty over PTC renewal at end-1 Assumed expiration of PTC at end-13 Stop & go policies OECD/IEA Annual additions Projected additions

16 Main messages to policy makers Many renewables no longer require high economic incentives But they do need long term policies that continue to provide a predictable and reliable market and regulatory framework compatible with societal goals OECD/IEA 13

17 For further insights and analysis The Medium Term Renewable Energy Market Report 13 can be purchased online at: Thank you for your attention! OECD/IEA 13

Medium Term Renewable Energy Market Report 2013

Medium Term Renewable Energy Market Report 2013 Renewable Energy Market Report 213 Michael Waldron Renewable Energy Division International Energy Agency OECD/IEA 213 OECD/IEA 213 MTRMR methodology and scope Analysis of drivers and challenges for RE