Stockholm, June 21 2012 Markus Wråke, ETP Project Leader, Head of Energy Supply Unit
ETP 2012 Choice of 3 Futures 2DS a vision of a sustainable energy system of reduced Greenhouse Gas (GHG) and CO 2 emissions 4DS reflecting pledges by countries to cut emissions and boost energy efficiency 6DS where the world is now heading with potentially devastating results The 2 C Scenario The 4 C Scenario The 6 C Scenario
A smart, sustainable energy system Co-generation Renewable energy resources Centralised fuel production, power and storage Smart energy system control Distributed energy resources H vehicle 2 Surplus heat EV A sustainable energy system is a smarter, more unified and integrated energy system
TWh Low-carbon electricity: a clean core 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 2009 2020 2030 2040 2050 Other Wind Solar Hydro Nuclear Biomass and waste Oil Gas with CCS Gas Coal with CCS Coal Renewables will generate more than half the world s electricity in the 2DS
EU: Wind and solar must grow quickly Hydro Nuclear CSP PV Wind, offshore Wind, onshore Biomass 2020-50 2010-20 2006-10 Gas with CCS Coal with CCS 0 2 4 6 8 10 12 14 16 GW per year An additional USD 1.2 trillion are needed in the EU power sector, but fuel savings amount to USD 2.7 trillion
Growth in renewable electricity in the 4DS 2020 2030 78% 152% Generation from renewable electricity will grow quickly even in the 4DS.
Power Generation from Natural Gas TWh Natural Gas: a transitional fuel 7 500 5 000 2 500 0 2009 2020 2030 2040 2050 OECD China India Other non-oecd Around 2030, natural gas becomes high carbon
Passenger LDV sales (million) Electric vehicles need to come of age 200 150 100 50 0 2000 2010 2020 2030 2040 2050 More than 90% of new light duty vehicles need to be propelled by an electric motor in 2050 FCEV Fuel Cell Electric Vehicles Electricity Plug-in hybrid diesel Plug-in hybrid gasoline Diesel hybrid Gasoline hybrid CNG/LPG Diesel Gasoline
million sales/year Translating targets into action 8 7 6 5 4 3 2 1 0 2010 2012 2014 2016 2018 2020 Manufacturers production/sales Projection (Estimated from each country's target) Projection (Estimated from each country's target) Government targets need to be backed by policy action
What about the money?
The sums are large Total 2DS Additional 140 36 Trillion USD in investment required under the 2DS. Note: Numbers for total invetments are more uncertain than additional, and do not include baselines investment in buildings
Power generation: annual investments 2DS Investment needs grow; wind, solar, CCS and nuclear dominate in power sector
USD trillion Investment needs shift over time 16 Industry 12 Commercial 8 Residential 4 Transport 0 2010-20 2020-30 2030-40 2040-50 To 2020, investments in buildings sector dominates in all regions, highlighting importance of energy efficiency Power
Infrastructure needs upgrading Total benefits of smart-grid investments outweigh costs but direct benefits of investment may be found in other sectors.
Size and time matter Low carbon technologies often capital intensive Low carbon technologies come at very different sizes 5 kw solar PV rooftop 500 MW wind off-shore 10 GW large hydro 10 k 1.75 bl 15-20 bl Lead times for project construction also differ widely Investors range form home owners to very large consortia.
ct USD/kWh Cost of capital is critical 30 25 20 15 10 PV Wind CC Gas 5 0 0% 5% 10% Cost of Capital Note: Simplified calculation for illustration. Assumptions: Gas: 800 USD/kW; annual O&M: 2.5% of capex; FLH: 5000 h/y; 8 USD/Mbtu; 50% thermal efficiency Wind: 2200 USD/kW; 2.5% O&M; 3000 h/y PV: 3000 USD/kW; 1% O&M, 1500 h/y The financing regime is key for RE economics
Total savings Fuel savings Clean energy investment pays off Additional investment With price effect Without price effect Undiscounted 3% Additional investment Power Industry Transport Residential Commercial Fuel savings Biomass 10% - 160-120 - 80-40 0 40 Coal Oil Gas USD trillion Every additional dollar invested in clean energy can generate 3 dollars in return.
Clouds on the horizon? 50 45 40 35 30 25 20 15 10 5 0 Wind Solar Biomass & Waste Geothermal Small Hydro Marine Biofuels Signs of slowing investment, but numbers should be interpreted with caution Source: BNEF, 2012
To take home... Investment in low carbon technologies need to double current levels by 2020, reaching USD 500 bn annually Balance between ensuring investors confidence and controlling total policy costs Low carbon technologies often capital intensive Risk profile different compared to conventional technologies
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