Renewables in the Changing Energy Situation

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Didier Houssin …

Didier Houssin
Director, Energy Markets and Security
International Energy Agency
27 March 2012

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  • 1. © OECD/IEA 2012 Renewables in the Changing Energy Situation Didier Houssin Director, Energy Markets and Security International Energy AgencyREWP-RIAB Workshop « Renewables – Policy and Market Design Challenges Paris, OECD, 27 March 2012
  • 2. Recent Trends in Renewables 300.00 Strong growth Wind continuing in 250.00 +22.6% 2011 despite 200.00 RoW +22.5 uncertain India GW 150.00 Spain +31.7 economy +28.5 Germany 100.00 US +26.7 China +25.3 50.00 Markets rapidly moving 0.00 2005 2006 2007 2008 2009 2010 2011 to different 80 70 regions Solar PV 60 RoW 50 +70.4 China US PV markets still GW 40 Spain 30 +72.4% concentrated +47.0% Japan 20 Italy in too few 10 +35.5% +70.1% Germany +28.5% countries 0 2005 2006 2007 2008 2009 2010 2011 © OECD/IEA 2012
  • 3. Current context – Full of uncertainty Uncertain economic recovery Geo-political turmoil in North-Africa / Iran and impacts on oil prices Unconventional gas in the US – and elsewhere? Post-Fukushima concerns on nuclear © OECD/IEA 2012
  • 4. Sluggish Electricity Demand OECD power generation, 2007=1.00 Conventional generation is 370 Twh below 2007Total electricity demand in 2011 still below 2007 levels 2 © OECD/IEA 2012
  • 5. Impacts on RE Very different impacts depending on robustness of RE policy support framework In some countries very low energy demand  no additional capacity of any kind needed Cost of capital and access to credit more difficult  higher costs of up-front capital intensive renewables © OECD/IEA 2012
  • 6. Oil price trends and burden on GDP World: Oil Burden & Price $/bbl 9% 115 Nominal Oil Expenditures as % 2nd oil C o ntributing to 105 8% the next sho ck? shock 95 of Nominal GDP 7% 85 6% 1st oil Post- 75 5% shock recession 3rd oil 65 4% recoveries shock 55 3% 45 2% 35 1% 25 0% 15 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Oil Burden Brent (real, 2008 base) Source: IEA 2012 © OECD/IEA 2012
  • 7. Impacts of high oil prices General:  Strong driver for energy security and diversification  Make gas more expensive via indexation  BUT make unconventional production more profitable (oil shale, oil sands, GTL) Electricity  Around 1000 TWh produced worldwide  RES-E attractive Transport  In principle make biofuels more competitive (BUT also production of some biofuels more expensive via high oil and fertilizers price )  Render electro mobility more attractive Heat  Make RES-H applications more competitive (23% of fuels for heat in OECD oil) © OECD/IEA 2012
  • 8. Continuing deglobalisation of gas markets 18 16 14 12 Prices [USD/MBtu] From US 10 to Japan From US 8 to Europe 6 4 2 LNG freight cost 0 Henry Hub (Monthly Average) German Border Price (Monthly Average) Japan LNG (Monthly Average) TTF Source: IEA 2012 © OECD/IEA 2012
  • 9. Unconventional gas in the worldThe 2010 picture North America ~ 420 bcm Europe FSU CBM < 1 bcm Tight ~ 20 bcm CBM < 1 bcm Asia Tight ~ 30 bcm Middle East & Africa CBM ~ 6 bcm Tight: NA Latin America Tight ~ 2 bcm Australia CBM ~ 5 bcm So far, it is essentially a North American gas story... from the production point of view For how long? © OECD/IEA 2012
  • 10. US: gas beats coal in conventional power generation, while renewables nicely growCumulative change in power generation 2005-2011, Share of gas and non-hydro renewables in the USGwh 25.0% 10.0% 300000 24.0% 9.0% 23.0% 8.0% 200000 22.0% 7.0% 100000 21.0% 6.0% 20.0% 5.0% 0 coal gas non-hydro 19.0% 4.0% renewable-100000 18.0% 3.0% 17.0% gas 2.0%-200000 non hydro 16.0% renewable 1.0%-300000 15.0% 0.0% 2005 2006 2007 2008 2009 2010 2011 © OECD/IEA 2012
  • 11. Towards a low-nuclear scenario? Power generation by fuel in the New Policies Scenario and Low Nuclear Case 14 000TWh 12 000 2009 10 000 2035: New Policies 8 000 Scenario 6 000 2035: 4 000 Low Nuclear 2 000 Case 0 Nuclear Coal Gas Renewables Source: WEO 2011  Overall, the biggest chunk of the lost nuclear generation is replaced by power generation from coal, leading to a 6% increase in CO2 emissions in the power sector  Impacts on RE strongly depending on country-specific factors and policies for renewables and climate change © OECD/IEA 2012
  • 12. Conclusions Current uncertain context produces both opportunities and challenges for renewables Impacts strongly vary from country to country Economic crisis and sluggish energy demand outlook has largest impact on RE What will be the most important factors affecting RE outlook? © OECD/IEA 2012