Medium and long-term perspectives for PV Dr. Paolo Frankl Division Head Renewable Energy Division International Energy Agency Solar Power Summit, Brussels, 7-8 March 2017
Annual additions (GW) Cumulative installed capacity (GW) 2015: a record year for renewables 2016: another record year for solar PV? Renewable additions (2014-15) and cumulative installed power capacity 180 2500 160 140 2000 120 100 1500 80 60 1000 40 20 500 0 2014 2015 Wind Solar PV Hydropower Other renewables 0 2014 2015 Coal Gas Oil Nuclear Renewables Cumulative renewable capacity surpassed coal at the end of 2015 but coal still remains the largest source (40%) of electricity generation 2
Net additions (GW) New policies underpin a more bullish forecast for renewables Renewable electricity capacity growth (GW) in MTRMR s main case 900 800 700 600 500 400 300 200 100 0 13% Others Brazil India China Japan United States MTRMR 2015 Forecast 2014-2020 MTRMR 2016 Forecast 2015-21 EU28 China remains key growth market for renewable capacity, while the United States surpasses the EU for the first time
Record low price announcements point to further PV cost cuts Recently-announced long-term contract prices for new renewable power to be commissioned over 2016-2019 United States USD 65-70/MWh Germany USD 69 /MWh Denmark USD 56 /MWh Brazil USD 75-81/MWh India USD 55-85/MWh Jordan USD 61-77/MWh Mexico USD 35-45/MWh United Arab Emirates USD 30/MWh Chile USD 30/MWh Uruguay USD 90/MWh South Africa USD 65/MWh Zambia USD 60/MWh Best results occur where price competition, long-term contracts and good resource availability are combined
USD/MWh Solar PV costs continue to decline with increasing competition 500 400 Utility-scale solar PV generation cost and contract prices Forecast 300 200 100 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Global reference Tendered prices: UAE Brazil South Africa Germany Mexico Chile Utility-scale solar PV generation costs to fall by another quarter over 2015-21; competitive tenders may result in even faster cost reductions as examples from Chile and Mexico indicates
Solar PV deployment slowing in Europe but strong growth expected in other regions 140 120 100 80 60 40 20 0 Solar PV net capacity additions by region (GW) EU28 Asia and Pacific China North America Latin America Other regions 2009-15 2015-21 Pending EU legislations concerning 2030 renewable targets, incentive reductions, policy uncertainties at country level and overcapacity remain challenges
Opportunities for distributed generation depend on country policy dynamics Solar PV capacity growth by segment (2015-21) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% EU28 North America China Latin America Euraisa, Middle East, Africa Japan Other Asia and Pacific Off-grid Residential Commerical Utility Utility-scale plants dominate growth in most countries but in Australia, Japan and Europe distributed generation represent majority of new installations
TWh Renewables to meet new generation needs and replace old power capacity 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Global renewable electricity generation 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Ocean STE Geothermal PV Offshore wind Onshore wind Bioenergy Hydropower Between 2015-21 wind generation doubles and solar PV almost triples, with renewables reaching around 27% of total electricity by 2021
GW More ambitious policies could further enhance the outlook in line 2 C target Renewable electricity capacity additions in Accelerated Case vs. Main Case 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Main case Accelerated case Renewables are in line with NDC pledges by 2030 but reducing policy uncertainty and overcoming financing & grid integration challenges remain key to achieve 2 C target
Wind and solar essential in climate change mitigation Global energy-related CO 2 emissions by scenario and additional CO 2 abatement by measure in the 450 Scenario Renewable energy ramps up faster in the 450 Scenario, abating an additional 69 Gt of CO 2 emissions (2015-2040) relative to the New Policies Scenario
TWh TWh Greater policy support boosts prospects for solar PV and wind Solar PV and wind generation, 2040 4 000 6 000 3 000 2 000 1 000 4 500 3 000 1 500 Additional in the 2 C scenario Increase in WEO-2016: Rest of world United States China WEO-2015 Solar PV Wind power Stronger policies on solar PV and wind help renewables make up 37% of electricity generation in 2040 in our main scenario & nearly 60% in the 2 C scenario
Renewables to become the backbone of electricity supply Share of electricity supply from low-carbon sources in selected regions in the 450 Scenario, 2040 In the 450 Scenario, the share of low-carbon electyricy supply exceeds 80% in many markets around the world, with renewables playing the largest role
Increasing shares of variable renewables calls for more flexibility Average annual share of variable renewables in total electricity generation DENMARK IRELAND GERMANY UK BELGIUM SPAIN MOROCCO ITALY SWEDEN AUSTRALIA MEXICO CHILE USA CHINA SOUTH AFRICA THAILAND INDONESIA PV share 2015 Wind share 2015 Additional PV share 2021 Additional wind share 2021 0% 10% 20% 30% 40% 50% 60% 70% Experience has shown that cost-effective system integration of high shares of variable renewables is possible with the right policies & investments Source: Medium Term Renewable Energy Market Report, 2016
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 OECD/IEA 2015
Source: IEA Technology Roadmap (2014) Complementary roles of PV and STE In California, the duck curve of the electric load net of PV over a Spring day reveals the overgeneration risk and steep ramp needs as shares of PV increase. Possible power mix in a sunny country, 2030 Thanks to thermal storage, STE is generated on demand when the sun sets while demand usually peaks. The power mix in this mock sunny country shows how PV and STE (CSP) can complement each other
Policies remain crucial to attract financing Sharp cost reductions of wind and solar costs change policy needs From providing financial support to creating a framework for investment Innovation must extend from renewable technology to system integration Financing system-friendly RE deployment Securing long term remuneration is key to investment and low-cost finance But short term price signals must reflect the value of power Time-structured power purchase agreements, and feed-in premiums combined with spot market prices, are the main options Energy policies must be consistent and extend beyond power Electrification of end-use sectors will ease integration of variable renewable and promote decarbonisation of buildings, transport and industry Removing fossil fuel subsidies and pricing carbon is both easier and more necessary when fossil fuel prices are low