Renewables after COP-21 A global perspective. Dr. Fatih Birol Executive Director International Energy Agency

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1 Renewables after COP-21 A global perspective Dr. Fatih Birol Executive Director International Energy Agency 17 th Symposium, Syndicat des Énergies Renouvelables, Unesco, Paris, 4 February 2016

2 The start of a new energy era? Universal agreement from COP21 is an historic milestone Pledges of 180+ countries account for 95% of energy-related emissions Record renewables capacity additions in 2014 and 2015 In 2015, lowest-ever prices announced for wind and PV Sustained technology improvement and economies of scale Reduced cost of financing in countries with sound regulatory and market frameworks But 2015 has also seen lower prices for all fossil fuels Oil & gas could face second year of falling upstream investment in 2016 Coal prices remain at rock-bottom as demand slows in China

3 2010 = 100 Innovation and scale-up are driving costs down 120 Indexed generation costs Onshore wind Solar PV - residential Solar PV - utility scale High levels of incentives are no longer necessary for solar PV and onshore wind, but their economic attractiveness still depends on regulatory framework and market design

4 Lower costs on the horizon Recent announced long-term contract prices for new renewable power Onshore wind Utility-scale solar PV Morocco USD 35-40/MWh Germany USD /MWh Germany USD 96 /MWh United States USD 47/MWh United States USD 65-70/MWh Canada USD 66/MWh Turkey USD 73/MWh China USD 80 91/MWh India USD /MWh Brazil USD 81/MWh Brazil USD 49/MWh Jordan USD 61-77/MWh United Arab Emirates USD 58/MWh Chile USD 65-68/MWh Uruguay USD 90/MWh South Africa USD 51/MWh South Africa USD 65/MWh Egypt USD 41-50/MWh This map is without prejudice to the status or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area Australia USD 69/MWh Best results occur where price competition, long-term contracts and good resources are combined

5 G W Renewables set to dominate new power generation capacity additions World net additions to power capacity Analysis from the IEA Medium-Term Renewable Energy Market Report 2015 and the New Policies Scenario of the World Energy Outlook Fossil fuels Nuclear Hydropower Non-hydro renewables The share of renewables in net additions to power capacity continues to rise with non-hydro sources reaching nearly half of the total

6 Deployment shifting to emerging markets and developing countries Shares of net additional renewable capacity, India 9% Africa 4% Brazil 5% Rest of non-oecd 9% EU-28 13% United States 9% Japan 5% Rest of OECD 8% China 38% As the OECD slows, non-oecd countries account for two-thirds of renewable growth, driven by fast-growing power demand, diversification needs and local pollution concerns

7 GW RE deployment prospects are improving around COP World renewable power capacity growth, historical Historical Accelerate d Policy enhancements can ensure continued renewables deployment growth and put the power sector back on track to meet long-term climate change goals

8 GW RE deployment prospects are improving around COP21 World renewable power capacity growth, accelerated vs post-cop21 case Historical Accelerate d Policy enhancements can ensure continued renewables deployment growth and put the power sector back on track to meet long-term climate change goals

9 Towards high shares of variable renewables Share of variable electricity generation in 2014 and 2020 Denmark Ireland Germany ESP & PRT UK Italy Sweden Australia Brazil India China France USA Japan 0% 10% 20% 30% 40% 50% 60% Share wind 2014 Share PV 2014 Share Wind 2020 Share PV 2020 Source: IEA estimates derived in part from IEA Medium-Term Renewable Energy Market Report 2015.

10 Gt A 2 C pathway requires efforts well beyond INDCs and Baseline (NPS including INDCs) 450 Scenario 17.9 Gt Energy efficiency Fuel & technology switching in end-uses Renewables Nuclear CCS Other A peak in emissions by around 2020 is possible using existing policies & technologies; technology innovation and RD&D will be key to achieving the longer-term goal.

11 Three pillars of system transformation Technology spread 1. Geographic Let wind and spread solar play their part Design of power plants System friendly VRE 3. Take a system wide-strategic approach to investments! 2. Make better use of what you have Investments Operations

12 Subsidies to fossil fuels dominate over carbon pricing Energy-related CO 2 emissions, 2014, shares of coverage by CO 2 prices or subsidies

13 A decisive moment for the future of renewables Paris Agreement accelerates virtuous circle already started before COP Increasingly affordable renewables are set to dominate the growing power systems of the world Sharp cost reductions of RE change policy and market design needs From providing financial support to creating a framework for investment Long-term remuneration crucial to attract financing Innovation must extend from renewable technology to system integration While variability of renewables is a challenge energy systems can learn to adapt to, variability of policies poses a far greater risk Low fossil fuel prices are a good time window to introduce robust longterm carbon pricing and make progress in phasing out fossil fuel subsidies