Outlook for renewables cost of
electricity
Christian Breyer
Professor for Solar Economy
Lappeenranta University of Technol...
Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
2
Key questions
• What are the cost ...
Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
3
Cost trends for renewable electric...
4 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
Growth of demand: solar PV and Win...
5 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
PV capacity expectations and role ...
Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
6
Demand for solar PV: preliminary N...
7 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
Solar emerges as the least cost en...
8 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
Solar PV Dynamics
Lappeenranta Uni...
In 2030, even at very high discount rates (nominal 10%), solar PV
will provide attractive economics all over the world
• P...
10 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
Very high EV Dynamics
Global EVs ...
11 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
Cost comparison to other power te...
12 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
Cost comparison of ’cleantech’ so...
13 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
What is the key problem?
“Climate...
14 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
New installed capacities in the N...
15 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
Subsidies heavily distort the mar...
16 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
What’s about subsidies? – Case of...
17 Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
Case of Germany – failed market
•...
Outlook for renewables cost of electricity
Christian Breyer ► christian.breyer@lut.fi
18
Conclusions
Guiding questions:
• ...
Thanks for your attention …
… and to the team!
The authors gratefully acknowledge the public financing of Tekes, the Finni...
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Outlook for renewables cost of electricity_Christian Breyer_110516

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Presentation in Electricity markets in disruption Research Seminar, Helsinki, Finland, 11.5.2016

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Outlook for renewables cost of electricity_Christian Breyer_110516

  1. 1. Outlook for renewables cost of electricity Christian Breyer Professor for Solar Economy Lappeenranta University of Technology Electricity markets in disruption Research Seminar by SET, EL-TRAN, BCDC, NCE Helsinki, May 11, 2016
  2. 2. Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi 2 Key questions • What are the cost trends for renewable electricity? • What are the benchmarking costs? • Are costs an indicator for prices?
  3. 3. Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi 3 Cost trends for renewable electricity Cost trends are driven by demand growth!!
  4. 4. 4 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi Growth of demand: solar PV and Wind source: REN21, 2015. Renewables 2015 – Global Status Report
  5. 5. 5 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi PV capacity expectations and role of IEA 2DS hi-Ren NPS 450 2030 2839 GW 1799 GW 1721 GW 1927 GW 728 GW 938 GW 2040 4988 GW 3687 GW 3199 GW 3277 GW 1066 GW 1519 GW source: Greenpeace, BNEF, IEA Key insights: • leading reports show at least 2-4 times higher numbers than IEA WEO for 2030 and 2040 • IEA WEO is lagging behind due to assuming wrong growth • Greenpeace and BNEF had been close to real numbers in the past 10 years • forecasts of fossil fuel companies such as Shell, BP and ExxonMobil are as conservative as the IEA WEO source: EWG, 2015. IEA creates misleading future scenarios for solar power generation, working paper
  6. 6. Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi 6 Demand for solar PV: preliminary NCE results source: Breyer Ch., 2016. First Insights on the Role of solar PV in a 100% Renewable Energy Environment based on hourly Modeling for all Regions globally, Global Photovoltaic Conference, Daegu, April 6 Remark: assuming 100% sustainable energy systems and modeled 2030 results may be finally achieved by 2050 • 13.6 TWp demand for 100% RE and 2030 demand due to integrated scenario • integrated scenario covers only about 45% of total primary energy demand (TPED) • net zero constraint requires almost full electrification of all energy sectors • almost all TPED can be electrified (except some industrial processes) • 26.5 TWp demand for 100% RE and 2030 demand for full sector integration • 2030 TPED may be about 60% of TPED for 10 billion people on current European level • 41 TWp demand by end of 21st century • factor of 100 for long-term demand growth leads to stable learning curve progress
  7. 7. 7 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi Solar emerges as the least cost energy source source: ITRPV, 2014. International Technology Roadmap for Photovoltaic – 2013 Results, ITRPV supported by semi latest tenders in Germany 3rd phase tenders in Dubai
  8. 8. 8 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi Solar PV Dynamics Lappeenranta University of Technology • both systems on the right are part of a 220 kWp commercial solar PV system • it is financially beneficial for the university source: Kosonen A., Ahola J., Breyer Ch., Albó A., 2014. Large Scale Solar Power Plant in Nordic Conditions, 16th EU Conference on Power Electronics and Applications, August 26-28 source: Vartiainen E., Masson G., Breyer Ch., 2015. PV LCOE in Europe 2015- 2050, 31st EU PVSEC, Hamburg, September 14-18
  9. 9. In 2030, even at very high discount rates (nominal 10%), solar PV will provide attractive economics all over the world • PV LCOE based on EU PV Technology Platform report and EU PVSEC 2015 paper (lead author Fortum solar technology manager Eero Vartiainen) Stockholm 52 €/MWh Toulouse 41 €/MWh Malaga 30 €/MWh Texas 26 €/MWh Chile 22 €/MWh 2030 assumptions Utilisation (h) Applied to all locations: Stockholm 1070 CAPEX 470 €/kWp (base case 50 MWp) Toulouse 1380 OPEX 10.5 €/kWp/a (base case 50 MWp) Malaga 1840 Discount factor 10% India 1860 Inflation 2,0% Australia 2100 Lifetime 30 years Texas 2150 Initial degradation 1,0% South Africa 2200 Continued degradation 0,5%/a Chile 2500 Note that performamnce ratios and hence utilisation hours are expected to increase by 7.5% points from 2015 to 2030 South Africa 25 €/MWh India 30 €/MWh Australia 27 €/MWh
  10. 10. 10 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi Very high EV Dynamics Global EVs in use Tesla Model 3: most successful product launch in industrial history, worth 14 bnUSD
  11. 11. 11 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi Cost comparison to other power technologies • utility PV already competitive with new gas and coal fired power plants • solar PV lower in cost than gas and coal from about 2015 onwards • solar PV and wind are the least cost power sources from about 2015 onwards • STEG significantly higher in cost than solar PV • new nuclear already higher in cost than solar PV (despite of nuclear subsidies)
  12. 12. 12 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi Cost comparison of ’cleantech’ solutions source: Agora Energiewende, 2014. Comparing the Cost of Low-Carbon Technologies: What is the Cheapest option; Grubler A., 2010. The costs of the French nuclear scale-up: A case of negative learning by doing, Energy Policy, 38, 5174 Key insights:  PV-Wind-Gas is the least cost option  nuclear and coal-CCS is too expensive  nuclear and coal-CCS are high risk technologies  100% RE systems are highly cost competitive Preliminary NCE results clearly indicate 100% RE systems cost about 55-70 €/MWh for 2030 cost assumptions on comparable basis source: Breyer Ch., 2016. First Insights on the Role of solar PV in a 100% Renewable Energy Environment based on hourly Modeling for all Regions globally, Global Photovoltaic Conference, Daegu, April 6
  13. 13. 13 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi What is the key problem? “Climate Change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen.” N. Stern, Economics of Climate Change, 2006
  14. 14. 14 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi New installed capacities in the Nordic and Finland Key insights • Development in Nordic and Finland rather comparable • Finland significantly more nuclear and coal • Nordic favours more wind and less bioenergy ’old’ public investments in hydro and nuclear heavily distort the market for new investments for private investors
  15. 15. 15 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi Subsidies heavily distort the market Key insights: • global energy subsidies are almost fully allocated for fossil (and nuclear) fuels • fossil fuel subsidies are as large as global expenditures for the health sector • military related cost still excluded • RE would grow much faster if harmful fossil-nuclear subsidies would be phased-out
  16. 16. 16 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi What’s about subsidies? – Case of Germany source: FÖs, 2014. Was Strom wirklich kostet Key insights:  there are subsidies for RE  subsidies for fossil-nuclear are higher  nuclear got AND get the highest subsides per kWh of all technologies  subsides in total are 649 b€ (fossil- nuclear) plus 102 b€ (RE) in 1970-2014  total societal costs of of RE are lower than those of fossil-nuclear energy
  17. 17. 17 Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi Case of Germany – failed market • May 9, highest RE electricity in the system in history (about 90%, no technical failures) • inflexible nuclear and lignite coal did not exit the market • collapse of prices down to minus 130 €/MWh • high exports (e.g. pumped hydro in Austria in charging mode during daytime)
  18. 18. Outlook for renewables cost of electricity Christian Breyer ► christian.breyer@lut.fi 18 Conclusions Guiding questions: • What are the cost trends for renewable electricity? • What are the benchmarking costs? • Are costs an indicator for prices? Conclusions: • Major renewables demonstrate a stable cost decline creating least cost solutions • Supporting technologies boost that trend (first batteries, later PtX) • New ’cleantech’ alternatives cost about two times more than 100% RE systems and for significantly higher societal risks • Electricity markets fully collapsed, mainly due to wrong price signals • Subsidies have to be eliminated, such as CO2 emission subsidy, heavy metal emission subsidy, liability insurance subsidy, cost for military conflicts, etc. • Level playing field for renewables: either full inclusion of fossil-nuclear subsidies or compensation for this failed market! • Investors heavily suffer due to wrong price signals based on failed fossil-nuclear subsidies
  19. 19. Thanks for your attention … … and to the team! The authors gratefully acknowledge the public financing of Tekes, the Finnish Funding Agency for Innovation, for the ‘Neo-Carbon Energy’ project under the number 40101/14.

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