Cédric PHILIBERT Energy and Climate Change Analyst IEA (Atoms for the Future 2013)

1. Renewables: challenges and opportunities for the power grid Cédric PHILIBERT Renewable Energy Division International Energy Agency Atoms for the Future, Paris, 22 October 2013 © OECD/IEA 2013

2. Positive mid-term outlook for renewable electricity Global renewable electricity production, by technology TWh IEA 2 ° C Scenario 30% 8 000 7 000 25% 6 000 20% 5 000 4 000 15% 3 000 10% 2 000 5% 1 000 0 0% 2006 2008 Hydropower Of f shore wind Geothermal Gas-fired generation 2016 2010 2012 2014 Bioenergy Solar PV Ocean Nuclear generation 2016 2016 2018 2020 Onshore wind CSP % Total generation Source: Medium-Term Renewables Market Report 2013 Renewable electricity projected to scale up by 40% from 2012 to 2018 Broadly on track with 2020 IEA 2°C scenario targets © OECD/IEA 2013

3. The whole RE power mix accelerating its growth Recent cumulative additions (TWh) Forecast cumulative additions (TWh) Hydro remains the largest increasing single renewable technology But for the first time additional generation from all non-hydro sources exceeds that from hydro © OECD/IEA 2013

4. But other technologies lagging behind Wind offshore TWh 90 Concentrated Solar Power TWh 40 80 35 70 30 60 50 25 40 20 30 15 20 10 10 5 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 OECD Americas Africa Non-OECD Europe MTRMR 2012 OECD Asia Oceania Asia Non-OECD Americas OECD Europe China Middle East 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 OECD Americas Africa Non-OECD Europe MTRMR 2012 OECD Asia Oceania Asia Non-OECD Americas OECD Europe China Middle East Potential of offshore power remains high, but technical, financial and grid connection issues pose challenges Storage adds value to CSP, but deployment hampered by relatively high costs © OECD/IEA 2013

5. Improving competitiveness Most dynamic technologies – onshore wind and solar PV – increasingly competitive in a number of markets But market framework matters Deployment with little support occurring in some areas with rising energy needs, good resources, and predictable long-term revenues Utility scale Small scale 500 MRMR 2012 400 Global levelised costs of power generation ranges (USD per MWh) 300 200 100 0 Note: costs reflect differences in resource, local conditions, and the choice of sub-technology. © OECD/IEA 2013

6. Renewable power spreading out everywhere Total Renewable Annual Capacity Additions, by region (GW) Source: Medium-Term Renewables Market Report 2013 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. Emerging markets more than compensate for slowing growth and volatility in markets such as Europe and the US © OECD/IEA 2013

7. Non-OECD accounts for two-thirds of growth TWh 7 000 Global renewable electricity production, by region 6 000 5 000 4 000 3 000 2 000 1 000 0 2006 2007 2008 2009 OECD Am ericas Africa Non-OECD Europe MRMR 2012 2010 2011 2012 2013 2014 2015 2016 2017 2018 OECD Asia Oceania OECD Europe Asia China Non-OECD Am ericas Middle East In 2018, non-OECD comprises 58% of total renewable generation, up from 54% in 2012 and 51% in 2006 China leads with deployment of a broad portfolio of renewables Other key markets: Brazil (wind, bioenergy), India (wind, solar, bioenergy), South Africa and Morocco (wind, solar), Thailand (bioenergy), Middle East (solar) © OECD/IEA 2013

8. RE largest contributor to total electricity increase in OECD Changes in power generation by source and region, OECD, 2012-18 TWh 1 100 Renewables Nuclear Fossil fuels Others 900 700 500 300 100 - 100 Total OECD OECD Americas OECD Asia Oceania OECD Europe Renewables expected to grow almost like fossils in America, and more than total demand in Europe © OECD/IEA 2013

9. Over the longer term, the power generation mix is set to change Global electricity generation by source, 2010-2035 TWh 14 000 12 000 Coal Renewables 10 000 8 000 Gas 6 000 4 000 Nuclear 2 000 Oil 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Source: IEA World Energy Outlook 2012 New Policies Scenario Renewables electricity generation overtakes natural gas by 2016 & almost coal by 2035; growth in coal generation in emerging economies outweighs a fall in the OECD © OECD/IEA 2013

10. Global climate-friendly electricity mix by 2050 Variables 32% 22% Renewables 57% 71% Renewables to provide 57 to 71% of World’s electricity by 2050 in 2 degree scenarios - VRE 22 to 32% © OECD/IEA 2013

11. The IEA Technology Roadmaps: Hydropower IEA roadmaps look at technologies required to limit climate change at 2°C HP roadmpa co-authored with Brazil’s Ministry of Mines and Energy Reviewers from agencies, academia, governments, industry, NGOs Support from CEPEL, ADEME, Iberdrola © OECD/IEA 2012 © OECD/IEA 2013

12. Vision for Hydropower IEA Roadmap TWh Share on total electricity generation 19% 17% 16% Asia Pacific China India Asean Other Asia Pacific Middle East Africa Africa M. East OECD Europe Europe & Eurasia Russia Transition eco. Central & South America North America Brazil Other LAM+Mex Canada USA Hydropower generation will double by 2050 and reach 2 000 GW and 7 000 TWh, mostly from large plants in emerging/developing economies © OECD/IEA© OECD/IEA 2013 2012

13. Technical improvements Strengthened environmental requirements may reduce hydropower output and potential Technical improvements allow to increase or maintain performance and output, and reduce environmental impacts © OECD/IEA© OECD/IEA 2013 2012

14. IEA Wind Power Roadmap 2013 Update considers recent trends and revised long-term targets: By 2050, 15% to 18% of global electricity, vs. 12% targeted in the former roadmap Technology and cost evolution 2050 “Vision” based on global energy context and system optimization Barriers and policy recommendations © OECD/IEA 2013

15. Wind power deployment to 2050 in the Roadmap Vision Wind power to provide 15% to 18% of global electricity China, Europe and the USA together account for two thirds © OECD/IEA 2013

16. Land-based and offshore deployment and costs By 2050, 25% of total global wind capacity to be located at sea, up from 6% in 2020 Investment costs for wind power to decrease by 25% on land and 45% off shore by 2050 © OECD/IEA 2013

17. Technology Evolution Growth in size, height and capacity Greater capacity factors Easier access to sites with lower-speed winds Easing grid integration with more regular output © OECD/IEA 2013

18. Wind costs decreasing Land-based LCOE Land-based wind getting cheaper Offshore not yet But significant cost decrease expected Evolution of LCOE to 2050 USD/MWh 2050 60 48 44 High 130 104 136 136 65 High 218 174 Land-based turbines 96 Low Offshore 2020 Low Land-based 2013 105 © OECD/IEA 2013

19. Solar PV growing out of Europe PV Annual Capacity Additions (GW) 20 15 10 5 0 2012 2015 2018 3 2 1 0 2012 5 2015 2018 2 4 3 1 2 1 0 2012 2015 2018 0 2012 2015 2018 Strong growth seen in China, Africa, Middle East, and Latin America © OECD/IEA 2013

20. Medium Term RE Market Report 2013 PV generation to 2018 by regions © OECD/IEA 2013

21. PV Module Prices Technology improvements and economies of scale drive sharp cost reduction Overcapacity leads to price setting below costs © OECD/IEA 2013

22. Rapid system cost cuts Solar PV system costs in Italy by size, EUR/W 8 7 6 5 €/W 4 3 2 1 1-3 kW 3-20 kW 20-200 kW PV system Price (€/W) 200 – 1000 kW 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008 0 > 1 MW Median Source: GSE, 2013. Note: includes VAT. © OECD/IEA 2013

23. PV LCOE depends on Solar Resource and Cost of Capital Best ‘sustainable’price ground-mounted PV systems: USD 1.7/W Murcia, Spain South Germany South France Sicily, Italy Costs soon to reach competitive levels when and where all favourable circumstances are met © OECD/IEA 2013

24. Various IEA scenarios for PV Time GW TWh 2018 308 368 2020 Scenario Medium Term RE Market Report 2013 (370-390) 210 298 602 846 IEA Technology Roadmap (2010) NPS 2035 World Energy Outlook 2012 966 1 371 3 155 2050 Source 4 572 2 017 2 655 450 IEA Technology Roadmap (2010) 2DS Energy Technology Perspectives 2012 3 289 >2060 4 822 hiRen 12 000 18 000 « Testing limits » Solar Energy Perspectives (2011) © OECD/IEA 2013

25. Distributed PV reaching “grid parity” in some markets Economics of distributed PV for self-consumption improving rapidly Difficult to quantify deployment – further monitoring needed Residential solar PV LCOE vs. average retail power prices (variable tariff) USD/MW USD/MWh 450 400 350 300 250 200 150 100 50 Average residential electricity price (variable tarif f ) 0 2010 Residential solar PV, LCOE estimates: 2011 Germany 2012 Italy 2013 California Examples correspond to Southern Germany, Southern California and Southern Italy. LCOEs use average residential system costs (include VAT and sales tax in California and Italy where they are applicable) and do not include financial incentives; ranges represent differences in financing costs and full load hours. The variable component of residential electricity prices calculated from average annual household electricity prices and estimation of fixed and variable components as reflected on a household electricity bill. In Germany and Italy, variable component is estimated at 91% while in California variable tariffs account for 99% of the bill. 2012 electricity prices are taken as proxy for 2013 in Germany and Italy where data not yet available. 2013 prices in California based onOECD/IEA 2013 1Q2013. ©

26. Variability limits self-consumption Daily self-consumption example – a household with 5-kW PV system in Germany June - cloudy June - sunny June – partly cloudy March – partly sunny December – cloudy December – very cloudy In grey, electricity drawn from the grid. In blue, electricity injected into the grid. In green, selfconsumption. Numbers indicate the percentage of self-consumed electricity. Horizontal axes: hours. Vertical axes: watts. Source: Génin, 2013. Self-consumption higher for: Some office and commerce buildings with high daily consumption, and relatively small systems on multi-storey dwellings Self-consumption potentially increased with: Load management Decentralised electricity storage (if/when affordable) © OECD/IEA 2013

27. Paying for grid injected excess power Payment System FIT/FIP Where Germany Observations •FIT below LCOE •Reduces FIT costs Net Metering Denmark, US States, Australia (Italy since July) •Netting period critical •Can over-reward generation •Overall level often capped Market based California or avoided cost •Likely to be more sustainable in long-term © OECD/IEA 2013

28. Electricity System Implications Fixed Grid Cost Recovery Integration Costs •Depend on match of PV output and peak demand •Who pays as commercial power demand reduced? More time-based pricing and different user profile-adjusted tariffs Foregone Tax Need for better assessment System Concerns RE Surcharge © OECD/IEA 2013

29. Solar thermal electricity (CSP plants) Absorber Tube Curved mirror Absorber tube and reconcentrator Linear Concentration C: 100 T: ~ 500 °C Curved mirror Pipe with thermal fluid Parabolic Trough Receiver / Engine Reflector Linear Fresnel Solar Receiver Point Concentration C: 1000+ T: ~ 1000+ °C Heliostats Dish/Engine Central Receiver © OECD/IEA 2013

30. Why STE/CSP might survive the competition of PV Higher costs but built-in thermal storage When demand peaks after sunset! If PV (plus minimum load of back-up, if any) already saturates demand at noon Only competing option (for now): pump-hydro storage Saudi Arabia plans for 2032: PV 16 GW and 25 GW STE/CSP; China’s plans for 2030 STE very flexible, helps accommodating more PV (when replacing coal) © OECD/IEA 2013

31. Various IEA scenarios for STE/CSP Time GW TWh 2018 12.4 (14) 34 2020 147 414 72 278 Scenario Medium Term RE Market Report 2013 IEA Technology Roadmap (2010) NPS 2035 World Energy Outlook 2012 219 815 1 089 2050 Source 4 770 859 3 333 450 IEA Technology Roadmap (2010) 2DS Energy Technology Perspectives 2012 1 108 >2060 4 125 hiRen 6 000 25 000 « Testing limits » Solar Energy Perspectives (2011) © OECD/IEA 2013

32. Ocean power to have a small absolute contribution to RE generation Small to medium size demonstration projects are expected to come online Two tidal barrages (France, Korea) represent the majority of generation Forecast is more optimistic than in MTRMR 2012 mainly due to Korea’s plans to deploy large scale tidal barrages Ocean generation and projection by region TWh 2.3 2.0 1.8 1.5 1.3 1.0 0.8 0.5 0.3 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 OECD Americas Africa Non-OECD Europe MTRMR 2012 OECD Asia Oceania Asia Non-OECD Americas OECD Europe China Middle East © OECD/IEA 2013

33. Geothermal advances but with slower growth rates Investment risks associated with drilling and exploration remains as a major challenge to deployment 60% of growth to come from OECD countries and the rest from Southeast Asia , Africa and Latin America Geothermal generation and projection by region TWh 100 90 80 70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 OECD Americas Africa Non-OECD Europe MTRMR 2012 OECD Asia Oceania Asia Non-OECD Americas OECD Europe China Middle East © OECD/IEA 2013

34. Bioenergy scales up with increased use of agricultural, municipal waste and co-firing China is largest grower, with ambitious targets and increasing renewable waste-to-energy plants Other non-OECD countries – Brazil, India and Thailand – also expected to add significant new generation OECD growth dominated by Europe, driven by 2020 targets Bioenergy generation and projection by region TWh 600 500 400 300 200 100 0 2010 2011 2012 OECD Americas Africa Non-OECD Europe MTRMR 2012 2013 2014 2015 OECD Asia Oceania Asia Non-OECD Americas 2016 2017 2018 OECD Europe China Middle East © OECD/IEA 2013

35. Variable RE will need more Flexibility Grid infrastructure Dispatchable generation Storage Demand side integration Value of flexibility has to be reflected in the market Need for a suite of different flexibility options GIVAR III study to be published in January 2014 © OECD/IEA 2013

36. © OECD/IEA, 2011 PSP: 99% of current on-grid storage Pumped-hydro plants the reference solution 140 GW in service, 50 GW in development PSP developed from existing hydro plants “off-stream” or “pumped-back” schemes Small energy volumes but large power capacities Daily/weekly storage does not require large areas Source: Inage 2009. © OECD/IEA 2012 © OECD/IEA 2013

37. Vision for PSP deployment by 2050 China Japan 21% 24% 43% 18% Hydro/total energy 14% 6% 13% 12% PSP/total capacity 4% 4% 6% 11% 2% GW 119 58 91 35 109 vRE/total energy High Europe vRE/total energy Low USA 34% 37% 48% 33% Hydro/total energy 15% 6% 11% 13% PSP/total capacity 5% 8% 10% 12% 3% 179 139 188 39 164 GW RoW Total 412 700 © OECD/IEA 2013

38. The way forward: testing the limits Under severe climate constraints… What if other low-carbon energy options are not easily available? Where are the technical limits to solar energy? Assuming efficiency improvements and further electrification of buildings, industry and transport Not always least cost, but affordable options Footprint, variability and convenience issues Three broad categories of situations: Sunny and dry climates, where CSP dominates Sunny and wet climates, with PV backed by hydro Temperate climates, with wind power and PV backed by hydro, pumped-hydro and H2-NG plants © OECD/IEA 2010

39. cp1 Testing limits: key role of electricity Electricity share keeps growing as efficient enduse technologies continue to penetrate markets Source: Heide et al. 2011 Source: Heide et al. 2011 Solar energy dominated by power (STE and PV) © OECD/IEA 2010 © OECD/IEA, 2011 Space heating needs reduced and satisfied with ambient heat through heat pumps Many options converging towards USD 100/MWh Solar PV (and wind) electricity storage where STE is not feasible: pumped-hydro plants

40. Diapositive 39 cp1 Paolo: add illustrations in these four slides ieauser; 26/08/2011

42. Testing limits: key results Solar energy could provide a third of final energy after 2060 If energy efficiency is greatly improved Footprint and variability solvable issues Solar energy, wind power, hydro power and biomass provide most of the world’s final energy demand Other renewables important in places Some uses of fossil fuels still required, but CO2 emissions reduced to 3 Gt or less if CCS is available © OECD/IEA 2010