The global energy outlook to 2025 and the megatrends impacting energy markets beyond that Sydney, 16 September 2015 Keisuke Sadamori Director
OECD/IEA - 2013 Slide 2 Demand/Supply Balance until 4Q16* mb/d 98 mb/d 3.5 96 94 92 90 88 86 2.5 1.5 0.5-0.5-1.5 84 1Q09 3Q10 1Q12 3Q13 1Q15 3Q16 Impl. stock ch.&misc (RHS) Demand Supply* *OPEC production assumed at 31.7mb/d (most recent 3 month average) through forecast period -2.5 Source: OMR September 2015
OECD/IEA - 2013 Slide 3 Total Non-OPEC Supply, y-o-y Change mb/d 3.0 2.5 2.0 1.5 1.0 0.5 0.0-0.5-1.0 1Q12 1Q13 1Q14 1Q15 1Q16 Other North America Total Source: OMR September 2015
OECD/IEA 2014 Instability in the Middle East a major risk to oil markets mb/d +15 +10 Oil production growth in United States, Canada, Brazil & the Middle East +5 Increase to 2040: 14 mb/d 2013 2015 2020 2030 2040 Net decline in output from other producers -5 2013 2015 2020 2030 2040 Middle East Increase to 2040: 14 mb/d Brazil Canada United States The short-term picture of a well-supplied market should not obscure future risks as demand rises to 104 mb/d & reliance grows on Iraq & the rest of the Middle East
Climate pledges shift the energy sector One-quarter of the world s energy supply is low carbon in 2030; energy intensity improves three-times faster than the last decade Renewables reach nearly 60% of new capacity additions in the power sector; two-thirds of additions are in China, EU, US & India Natural gas is the only fossil-fuel that increases its share of the global energy mix Total coal demand in the US, Europe & Japan contracts by 45%, while the growth in India s coal use slows by one-quarter Climate pledges for COP21 are the right first step towards meeting the climate goal OECD/IEA 2015
Gt CO 2 -eq OECD/IEA 2015 Peak in emissions: IEA strategy to raise climate ambition 40 35 30 25 Global energy-related GHG emissions INDC Scenario Bridge Scenario 20 2000 2014 2020 2025 2030 Upstream methane reductions Renewables investment Savings by measure, 2030 Fossil-fuel subsidy reform Reducing inefficient coal Energy efficiency Five measures shown in a Bridge Scenario achieve a peak in emissions around 2020, using only proven technologies & without harming economic growth 15% 17% 10% 9% 49%
GW Dollars per kw Million Dollars per kwh Lock in the vision: What more does it take for 2 C? 100 Cost reductions & deployment of all solar PV 2 800 Cost reductions & deployment of electric vehicles 200 400 75 2 100 150 300 50 1 400 100 200 25 700 50 100 OECD/IEA 2015 2015 2020 2025 2030 2035 2040 Capacity Capital costs Solar PV additions Solar PV (right axis) 2015 2020 2025 2030 2035 2040 Vehicle sales Battery costs Total Internal combustion Electric vehicles Electric (right axis) An emissions goal would give greater clarity & certainty to the energy sector, strengthening the case for RD&D investment & technology transfer
Slide 8 Onshore wind USA 48 $/MWh USA 75 $/MWh Chile 87 $/MWh Brazil 81 $/MWh Brazil 54 $/MWh Utility PV Source: IEA analysis as of July 2015 Recent progress in RE generation costs Recent long-term remuneration contract prices (e.g. auctions and FITs) STE Ireland 69 $/MWh Morocco 160 $/MWh UK >120 $/MWh UK 122 $/MWh South Africa 65 $/MWh Germany 67-100 $/MWh South Africa Base 124 $/MWh Peak 335 $/MWh South Africa 51 $/MWh Turkey 73 $/MWh Egypt 41 $/MWh China 80-100 $/MWh India 88 $/MWh Dubai 60 $/MWh Australia 65 $/MWh Combination of technology cost reduction, better resources, appropriate regulatory framework attracting financing Long-term PPAs and price competition effective drivers for reducing costs
OECD/IEA 2015 Slide 9 Overview of results solar PV and wind Source: Projected Costs of Generating Electricity 2015
1 8 15 22 29 36 43 50 57 64 71 78 85 92 99 106 113 120 127 134 141 148 Energy security risks of renewables Slide 10 Net-load at different annual VRE shares Higher uncertainty 80 000 70 000 20% 10% 5% 2.50% 0% Smoothing effect at low shares Larger and more pronounced changes Load level [MW] 60 000 50 000 40 000 30 000 20 000 10 000 Larger ramps at high shares More frequent up and down at high shares 0 Note: Load data and wind data from Germany 10 to 16 November 2010, wind generation scaled, actual share 7.3%. Scaling may overestimate the impact of variability; combined effect of wind and solar may be lower, illustration only. Hours Source: The Power of Transformation 2014
Gas struggles to compete against coal and renewables TWh OECD/IEA 2015 1 400 1 200 1 000 800 600 400 200 0 Incremental generation growth, 2014 20 Gas Coal Wind+Solar Sol ar Win d Co al
Second wave of additional LNG supply is coming soon Bcm OECD/IEA 2015 70 60 50 40 30 20 10 0 Additional LNG export capacity by year, 2005-20 2005 2007 2009 2011 2013 2015 2017 2019 United States Russia Southeast Asia Qatar Other Middle East
OECD/IEA 2015 Global LNG trade flows will shift Change in LNG net trade: 2014-20 (bcm) 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.
Slide 14 Conclusions Companies that do not anticipate stronger energy & climate policies risk being at a competitive disadvantage. Policies and market designs must adapt to deeper de-carbonization. Well functioning market and diversity will continue to be the core of energy security. RD&D effort for cleaner energy in all fuel sources and improving efficiency is the key OECD/IEA 2014