STRATEGIC PLAN OF THE WORKING PARTY ON RENEWABLE ENERGY TECHNOLOGIES FOR THE PERIOD OF 1 JULY 2016 TO 30 JUNE 2019 1. Background a) Renewable Energy in the World Energy Context 1. The world energy system is evolving very rapidly, posing policy makers in front of dramatic changes and complex trade-offs. Many industrialised countries have started de-coupling economic growth from energy consumption, thereby increasing their energy productivity. Meanwhile, many developing countries have been facing a major increase in energy demand to improve energy access and to meet rising economic growth. Costs of renewables have been significantly decreasing and annual additions of renewable power generation capacities have overtaken the annual net additions of coal or gas power capacities worldwide. At the same time, fossil fuel prices, in particular oil and gas prices, have fallen to very low levels compared with market prices only a few years ago while coal prices are now at their lowest since the financial crisis. This has raised questions about the competitiveness of renewables and appetite for energy efficiency. Still significant concerns remain about energy security and affordability, given the many political instability areas and conflicts with potential impact on energy supply sources and routes. 2. In the Paris Agreement concluded at the 21 st Session of the Conference of the Parties under the United Nations Framework Convention on Climate Change (COP21) in Paris in December 2015, all countries committed to limit the increase of the global average temperature to well below 2 C above preindustrial levels and called for all efforts even to limit global warming to a temperature increase of 1.5 C. This means a decarbonisation of the energy sector within the coming 50 years. The Conference of Parties noted that much greater emissions reduction efforts will be required than those associated with the intended nationally-determined contributions in order to achieve the targets. The IEA warmly welcomed the Paris Agreement and defined it as "nothing less than a historic milestone for the global energy sector". 3. The Paris agreement was partly made possible because countries were prepared to put forward ambitious Intended Nationally Determined Contributions (INDCs) which relied heavily on energy efficiency and on the enhanced deployment of renewables. This was possible in part because of the rapid progress in the deployment of renewable energy technologies in the last ten years and the impressive levels of cost reductions. These recent advances were therefore critical elements in the overall success of the climate negotiations. Advancement and deployment of renewables is expected to accelerate after COP21. The further rapid expansion of renewable energy in all sectors is a crucial means to meet global decarbonisation targets, as also recognised by IEA climate change mitigation scenarios. 4. In the IEA s World Energy Outlook 2015 1, the contribution of renewables to world energy needs grows significantly in all scenarios, increasing from 14% in 2013 to 19% of global primary energy demand by 2040 in the New Policies (NPS) Scenario and to 29% in the 450 Scenario which is designed to constrain emissions to levels compatible with a 2 C rise in global temperatures. The contribution to global electricity supply is particularly important in these scenarios, rising from 22% in 2013 to 34% in the NPS Scenario and to 53% in the 450 Scenario in 2040. 5. Although costs have been significantly decreasing and renewable energy has become mainstream in several energy markets, a number of important barriers and challenges still persist. The robust market 1 Ref: IEA World Energy Outlook, 2015 1
growth has depended on stable renewable support policy implementation. Renewable markets have also shifted to emerging and developing economies, with China becoming a major player. Achieving high shares of renewable energy in those energy systems requires significant efforts to address persistent barriers, including facilitating grid integration, improving market access, strengthening financing conditions and implementing credible policies. Furthermore, renewables in the heating and transport sectors have been growing slowly compared with the successful growth in the electricity sector. Finally, lower oil and fossil fuel prices will likely challenge renewable energy technology development and deployment, and make an adjustment of policies necessary. b) IEA modernisation and institutional developments 6. At the IEA Ministerial meeting which took place in November 2015, ministers recognised that a transformation of the world s energy system is essential if global common economic development, energy security and climate change goals are to be achieved. The Chair s Summary noted that energy ministers play a central role in facilitating and accelerating a transformation to low-carbon energy system developments. This includes policies that enable economically feasible solutions at scale, substantially accelerating technological innovation, employing a wide diversity of clean and sustainable energy solutions, and fully leveraging the financial assets and deployment capabilities of the private sector. 7. Ministers supported the Executive Director s objective of modernisation of the IEA under three pillars: enhanced engagement with major emerging economies, strengthened and broadened commitment to energy security, and greater focus on clean energy technology, including energy efficiency. 8. Noting the increasing significance of key emerging economies in global energy supply and demand, ministers welcomed the activation of the IEA Association process. China, Indonesia and Thailand are the first countries to become Association countries. As noted in the Summary of the Chair, other countries such as Brazil, India, and South Africa continue to actively review this initiative. The enhanced engagement under Association will include an initial focus in the areas of energy policy analysis, with equal importance attached to energy technologies, renewables, and grid integration. It is expected that Association countries will participate in certain renewable energy activities of the IEA and the REWP. At the same time the REWP may consider organising meetings or events in Association countries and is planning to hold the REWP 70 meeting in China in Autumn 2016. 9. IEA activities on energy efficiency and clean energy are expected to further increase under the new leadership and vision for modernisation. A key asset of the IEA is its capability to assess all energy technologies including renewables - in the overall system context. The focus on system integration will increase, also allowing broadening the concept and scope of energy security beyond oil, including gas and electricity security. 10. In terms of renewables, the IEA has an increasingly targeted Programme of Work, focusing not only on technology status, but also on policy developments and energy systems integration issues. The flagship annual publication is the Medium-Term Renewable Energy Market Report which assesses market and policy changes, grid integration and other drivers and barriers and translates those into a forecast of five year deployment. This publication will be complemented by other books and reports on specific topics, including systems integration, policy assessment and technology development. 2
11. There have been a number of recent developments in several institutions all over the globe, which have implications for REWP and the IEA Programme of Work on renewables. They include: The Paris Agreement in the COP21 notes that much greater emissions reduction efforts will be required than those associated with the intended nationally determined contributions 2. The agreement decides to strengthen the works relating to technology research, development and demonstration. The International Renewable Energy Agency (IRENA) has analysed (within its REmap2030 study) the United Nations (UN) SE4ALL objective of doubling the global share of Renewables by 2030. REmap 2030 determines a realistic potential for countries, regions and the world to scale-up renewables in order to ensure a sustainable energy and provides plans to double the share of renewable energy in the world s energy mix between 2010 and 2030. The G7 Energy Ministerial in Hamburg in 2015 noted in its communiqué that there are a number of challenges as energy systems change and related greenhouse gas emissions are reduced, one of which is how to integrate growing shares of variable renewable energy into electricity systems. In the communiqué in the G20 Energy Ministers meeting in Istanbul in October 2015, the ministers highlighted the importance of innovation, technologies, and knowledge-sharing to encourage the increased uptake of renewables in the energy mix, and the central role played by systems integration, and by stable national policy and regulatory frameworks, with the understanding of existing specific national circumstances. Mexico s Secretary of Energy, in its role of host of the Sixth Clean Energy Ministerial in 2015 declared that it is up to us that renewable energies become a synonym of equality, and a powerful force to build a cleaner, fairer and sustainable world. 3. The Transforming our World: the 2030 Agenda for Sustainable Development announced by the UN in September 2015 demonstrates the scale and ambition of the new universal agenda. The Agenda sets out as its 7 th goal to ensure access to affordable, reliable, sustainable and modern energy for all, substantially increasing the share of renewable energy in the global energy mix by 2030. 4 The Mission Innovation 5 was established on the margin of the COP21 in Paris aiming at reinvigorating and accelerating public and private global clean energy innovation by making clean energy widely affordable. COP21 also gave light to the Breakthrough Energy Coalition. Private investors and companies will join public-private partnerships between governments, research institutions etc. c) REWP Development 12. During the last three years covered by the previous Mandate, the work of the REWP has evolved in light of the changing context, and technology and market status as discussed above, with increasing attention to policy and market issues. The profile of REWP has been raised, particularly through the series of high-profile conferences on key policy questions, organised each Spring in Paris. Efforts took place to 2 http://unfccc.int/documentation/documents/advanced_search/items/6911.php?priref=600008831 3 http://www.cleanenergyministerial.org/events/cem6/cem6outcomes 4 http://www.un.org/ga/search/view_doc.asp?symbol=a/res/70/1&lang=e 5 http://mission-innovation.net/ 3
further strengthen the dialogue with industry, via the successful development and expansion of the Renewable Industry Advisory Board (RIAB), which has senior representation from leading companies from the private sector. The work of REWP has also already benefitted from the substantial participation of Association countries, such as China and Indonesia, and Partner countries such as Brazil, India, and Russia, with representatives attending REWP workshops and meetings. This broadening international focus mirrors the growing participation of IEA non-member countries within the TCPs which fall under REWP s aegis. The REWP intends to continue to support and strengthen all of these aspects going forward. d) Key Challenges 13. While the whole renewable sector has been growing rapidly, the challenge of maintaining momentum must not be under-estimated. This needs to realise at the best possible cost, the ambitious levels of renewable energy technology deployment associated with future sustainable energy scenarios. The principal challenges for renewable energy can be summarised under the five main headings below: 14. Policy Unlocking the potential of renewables to reach the climate goals established with COP21. Widening the recognition by policy makers of renewable energy as an increasingly costcompetitive component of a secure and low carbon future. Sustaining policy commitments in face of declining budgets and overall economic situation in balance with affordability. Avoiding uncertainty and abrupt policy changes that increase risk of investment, cost of financing and can undermine renewables competitiveness Continuing to review and adjust policies to ensure these are as efficient and cost-effective as possible, particularly in light of falling technology costs but also against volatile/dropping prices for fossil fuels. 15. Integration Addressing system integration issues including grid and market integration and ensuring investment in enabling technologies such as grid extensions and storage when relevant. Tackling the overall market design issues needed to ensure investment in the overall technology portfolio associated with a low carbon energy system including an appropriately high share of renewable energy in all end-use sectors. 16. Technology From low Technology Readiness Levels (TRL) to market readiness: Maintaining support for the R&D and particularly for the demonstration and commercialisation phases needed to achieve significant cost-reduction and bring promising but less mature technologies to full commercialisation. 17. Financing Reducing technology, policy and market risks and mobilising sufficient finance to allow the deployment of the technologies at the scale and pace needed in a world of low-energy prices. 4
18. Diffusion of Technology and Policy Best Practice Broadening the number of countries with active large scale renewable energy deployment programmes, particularly via support for capacity building and transfer of best practice in policy development to countries commencing the deployment journey. 2. The IEA Working Party on Renewable Energy Technologies: Mission and Vision a) The Working Party 19. The International Energy Agency (IEA) Working Party on Renewable Energy Technologies, often referred to as the Renewable Energy Working Party (REWP), has served since April 1982 as the principal advisory body to the IEA Committee on Energy Research and Technology (CERT) on all matters relating to renewable energy. 20. Within the new energy context and the revised IEA goals and strategies, the REWP is expected to add value to IEA Secretariat s work on renewables, in particular by: providing guidance and support to the Programme of Work of the Renewable Energy Division, with a specific focus on the Medium-Term Renewable Energy Market Report (MTRMR), publications on systems integration and on renewable energy technologies, including renewable energy technology roadmaps; sharing and exchanging analysis and best practices on renewable technologies and policies, and market deployment data; overseeing, supporting and adding value to the RD&D efforts of TCPs related to renewable energy and hydrogen; stimulating and facilitating the exchanges and collaboration among TCPs under different WPs; contributing to the enhancement of the impact of IEA s work in both Member and non-member countries, in particular Association countries and Partner countries and help the implementation of IEA s outreach strategy; and presenting IEA activities to relevant external parties when appropriate, and through pro-active cooperation with international bodies and organisations according to a number of functions and actions outlined below. b) Mission 21. The mission of the REWP is to help achieve a steady and significant increase in renewable energy's technological performance, economic competitiveness, systems and market integration and market share, taking into account the dynamic developments in the end-use sectors, through the design and implementation of appropriate, effective and cost-efficient policy frameworks. c) Vision 22. Recognising that all environmental and economical sustainable forms of renewable energy must and will increase dramatically in order to play a leading role in mitigating climate change, enhancing energy security, and fostering economic development, the REWP believes that renewables will contribute, in their various forms, to at least 50% of the world s energy needs by 2050. 5
3. REWP Objectives, functions and key actions 23. The overarching aim of the REWP is to enhance the quality and impact of IEA s work on renewables, both in IEA Member and non-member countries, in particular Association countries and Partner countries, providing relevant information and advice on renewable energy technologies and policies, from R&D to market deployment. 24. To carry out its mission, the REWP has identified five principal functions with associated supporting actions 6 : 25. Function 1: Provide a platform for information exchange and discussion Action 1 (a): Share recent market and policy developments, analysis and roadmaps in renewable energy technologies in IEA Member and Association countries and Partner countries. Action 1 (b): Discuss and analyse good practice to achieve successful and cost-effective large-scale deployment of renewable energy technologies; assess and share best practice for system and market integration of variable renewables. Action 1 (c): Report to CERT and other standing committees as appropriate, and correspond with the Governing Board. Action 1 (d): Involve more Association countries and Partner countries, foster and secure cooperation with existing Association countries and Partner countries. Action 1 (e): Continue to develop and overview RIAB activities and further stimulate opportunities for leading industry players to provide valuable input to the IEA Secretariat and the IEA network. 26. Function 2: Provide advice to CERT and the IEA Secretariat Action 2 (a): Provide annual, oral reports to the CERT. Through this report, REWP will endeavor to highlight any important information, developments, accomplishments and issues relating to the WP and its activities. Action 2 (b): Provide guidance to the Programme of Work of the Renewable Energy Division. Action 2 (c): Contribute to relevant IEA-publications (MTRMR, other RED publications, WEO, ETP, the forthcoming Energy Investment Report, Technology Roadmaps etc.). 27. Function 3: Review, add value to and develop shared key messages from the IEA TCPs which are under the umbrella of the REWP Action 3 (a): Regularly reviewing, assessing and providing feedback on the work and strategy of TCPs assigned to the REWP. Stimulate TCP s participation at REWP meetings (at least once a year). Action 3 (b): Encourage TCPs to: develop and share Annual Briefings with the REWP, provide Status Updates at CERT meetings or workshops and to provide Strategic Documents outlining their proposed future activities. Identify lessons learned and develop shared key messages from the work of REWP and TCPs. Action 3 (c): Respond to TCP s requests for support. Action 3 (d): Looking at the overall picture of the work in the TCPs: address synergies, coverage, gaps and cross-cutting issues. 6 Note that the order does not reflect any order of priority. 6
Action 3 (e): Facilitate awareness of TCP activities within the IEA Energy Technology Network, in particular the CERT, by providing CERT with copies of relevant TCP documents and including updates about TCP activities in REWP Reports to the CERT. 28. Function 4: Contribute to the development of the IEA s Energy Technology Network Action 4 (a): Stimulate and facilitate exchanges and collaboration among TCPs under different WPs. Action 4 (b): Facilitate exchanges with other WPs, particularly with the Working Party on End-Use Technologies (EUWP). 29. Function 5: Enhance the impact of IEA s work Action 5 (a): Contribute to shape the international discussion and continue the series of REWP- Workshops. Action 5 (b): Collaborate with international organisations, in particular the International Renewable Energy Agency IRENA, the Renewable Energy Policy Network for the 21 st Century (REN21), the Global Bioenergy Partnership (GBEP), multilateral partnerships active in renewable energy technologies, and relevant UN institutions as well as the World Bank and other Development Banks. Action 5 (c): Expand interaction with the private sector, notably through the RIAB; facilitate contacts with the IEA Energy Business Council (EBC). Action 5 (d): Act as a communication hub for their countries, utilising the outputs of REWP, their TCPs and RED. 30. The implementation of the above Objectives will be carried out within the Mandate of the REWP, as approved by the IEA Committee on Energy Research and Technology (CERT). 7