The OECD/IEA 2015 report highlights significant growth in renewable energy, forecasting renewables to become the dominant source of electricity globally while emphasizing the need for policy stability. It notes that non-hydro renewables now account for almost half of new global power capacity additions, with emerging markets driving growth. The report discusses challenges in reaching climate goals, particularly in the heat and transport sectors, while recognizing the importance of supportive regulations and competitive market structures.

1. © OECD/IEA 2015© OECD/IEA 2015
Medium-Term Renewable
Energy Market Report 2015:
Renewables poised to lead world
power market growth
Dr. Paolo Frankl
Renewable Energy Division
International Energy Agency

2. © OECD/IEA 2015
Profound changes underway in energy
markets
 Signs of decoupling of energy-related CO2 emissions and global
economic growth
 Fossil-fuel prices at multi-year lows; emerging market economic growth
slowing; uncertainty over monetary policy and interest rates in US
 But overarching policy drivers for renewable electricity – energy
diversification, local pollution and decarbonisation – remain robust
 Renewables are key to the unprecedented pledges ahead of COP 21
 Renewables to become first source for electricity in the longer term,
but addressing policy uncertainty in the next five years is crucial

3. © OECD/IEA 2015
IEA strategy to raise climate ambition
Peak in emissions (Bridge Scenario)
Global energy-related GHG emissions
20
25
30
35
40
2000 2014 2020 2025 2030
GtCO2-eq
Bridge Scenario
INDC Scenario
Energy
efficiency
49%
Reducing
inefficient coal
Renewables
investment
Upstream methane
reductions
Fossil-fuel
subsidy reform
17%
15%
10%
Savings by measure, 2030
9%
Five measures – shown in a “Bridge Scenario” – achieve a peak in emissions
around 2020, using only proven technologies & without harming economic growth

4. © OECD/IEA 2015
The share of renewables in net additions to power capacity continues to rise with non-hydro
sources reaching nearly half of the total
Renewables are becoming the largest
source of new power generation capacity
World net additions to power capacity
Analysis from the IEA Medium-Term
Renewable Energy Market Report
2015 and the New Policies Scenario
of the World Energy Outlook 2015.
0
200
400
600
800
1 000
1 200
1 400
1 600
2008-2014 2014-20
GW
Fossil fuels Nuclear Hydropower Non-hydro renewables

5. © OECD/IEA 2015
Share of non-hydropower in renewable electricity generation is expected to increase
significantly, but an acceleration is needed to meet climate change objectives
Strong momentum for renewable
generation growth
Renewable generation by technology, main case forecast and scenario analysis
0
2 000
4 000
6 000
8 000
10 000
12 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025
Generation(TWh)
Hydropower Bioenergy Onshore wind Offshore wind Solar PV Geothermal STE Ocean
Scenario
analysis 2DS
targets (IEA
ETP 2015)
ForecastHistorical
34%
18%
22%
Share of renewables in total generation 26%

6. © OECD/IEA 2015
Renewables generation costs will decrease
further
High levels of incentives are no longer necessary for solar PV and onshore wind, but their
economic attractiveness still depends on the regulatory framework and market design
Historical and forecast global weighted average generation costs for new plants
0
50
100
150
200
250
300
350
400
2010 2015 2020 2010 2015 2020 2010 2015 2020
Onshore wind Solar PV - utility scale Offshore wind
USD2014/MWh

7. © OECD/IEA 2015
Evidence of lower costs on the horizon
A combination of price competition, long-term contracts, good resources and financial de-
risking measures is creating deployment opportunities in newer markets and at lower costs
Recent announced long-term contract prices for new renewable power
Utility-scale solar PVOnshore wind
Chile
USD 85-89/MWh
Brazil
USD 81/MWh
United States
USD 65-70/MWh
India
USD 88-116/MWh
United Arab Emirates
USD 58/MWh
South Africa
USD 65/MWh
United States
USD 47/MWh
Brazil
USD 49/MWh
South Africa
USD 51/MWh Australia
USD 69/MWh
Turkey
USD 73/MWh
China
USD 80–91/MWh
Germany
USD 67-100/MWh
Egypt
USD 41-50/MWh
Jordan
USD 61-77/MWh
Uruguay
USD 90/MWh
Germany
USD 96 /MWh
Canada
USD 66/MWh
This map is without prejudice to the status or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area

8. © OECD/IEA 2015
As the OECD slows, non-OECD countries account for two-thirds of renewable growth, driven by
fast-growing power demand, diversification needs and local pollution concerns
Growth shifting to emerging markets and
developing countries
Shares of net additional renewable power capacity, 2014-20
EU
13%
USA
9%
Japan
5%
Rest OECD
8%
China
38%
India
9%
Brazil
5%
Rest non-OECD
13%

9. © OECD/IEA 2015
Europe transitioning to slower renewable
growth profile
OECD Europe annual net additions to renewable capacity
 Weak power demand growth, overcapacity, incentive reductions in a number of markets
 Uncertainties over policy frameworks (e.g. EU, UK) and integration of high levels of VRE
 Still, offshore wind deployment triples by 2020 and decarbonisation drivers remain robust
0
5
10
15
20
25
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
AnnualAdditions(GW)
Bioenergy PV Onshore Wind Offshore wind

10. © OECD/IEA 2015
Forecast progress towards indicative 2020
targets varies by market
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Austria
Belgium
Bulgaria
CzechRep.
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
TheNetherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
UK
Forecast%of2020NREAP
Comparison of MTRMR total renewable electricity forecast with NREAPs in 2020

11. © OECD/IEA 2015
VRE share of total annual electricity output
Source: IEA estimates derived in part from IEA Medium-Term Renewable Energy Market Report 2015.
European countries to reach high shares
of variable renewables
Share of variable electricity generation in 2014 and 2020

12. © OECD/IEA 2015
Mixed policy signals in EU countries
France:
New law with ambitious
targets and improvement
in administrative
procedures
Germany:
RE policy in transition,
uncertainty over the new
auction structure for
onshore wind
Spain:
Retroactive policies for
renewables and new taxes
for distributed solar PV
UK:
Uncertainty over the
future policy framework
for renewables with
plans to cut support
Italy:
?

13. © OECD/IEA 2015
Federal tax incentive uncertainty drives
irregular US renewable growth
US annual net additions to renewable capacity
0
2
4
6
8
10
12
14
16
18
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Annualadditions(GW)
Hydropower Bioenergy Onshore wind Offshore wind Solar PV Geothermal STE Ocean
After China and Europe, the US is the third largest market for new renewable generation,
but federal and state-level policy uncertainties create volatile deployment pattern
Impact of federal tax
incentive policy
uncertainty
Forecast

14. © OECD/IEA 2015
Renewables can power Africa’s
economic growth
With huge resources, improving cost-effectiveness and policy momentum, renewables account
for almost two-thirds of demand growth in Sub-Saharan Africa
Sub-Saharan Africa power demand growth versus supply sources
0
20
40
60
80
100
120
2008-14 2014-20
TWh
Other renewables Hydropower Fossil fuels
0
20
40
60
80
100
120
2008-14 2014-20
TWh
Power demand growth

15. © OECD/IEA 2015
More renewables for less money
Wind and solar PV comprise two thirds, or USD 900 billion, of new investment needs to 2020
and capacity increases are being made at lower cost than in the past
Renewable power capacity – net additions versus new investment
USD 2014GW
0
200
400
600
800
1 000
1 200
1 400
1 600
Capacity growth Capacity growth New investment New investment
2008-14 2014-20 2008-14 2014-20
GW/USD2014billion
Ocean Geothermal STE Solar PV Offshore wind Onshore wind Bioenergy Hydropower

16. © OECD/IEA 2015
Can renewables get back on track to meet
climate change goals?
With policy enhancements renewables can be back on track to meet long-term climate
change goals
World renewable power capacity growth, main versus accelerated case
0
20
40
60
80
100
120
140
160
180
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GW
United States Japan EU-28 Other OECD India China Brazil Other non-OECD
Historical Forecast
0
20
40
60
80
100
120
140
160
180
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GW
United States Japan EU-28 Other OECD India China Brazil Other non-OECD Main case
Historical Accelerated case

17. © OECD/IEA 2015
Persistent challenges slow growth
in heat and transport
Historical and forecast share of renewables in electricity, heat and
transport sectors 2005-20
Growth of renewable electricity generation is increasing, while renewable heat and transport
are falling behind.
0%
5%
10%
15%
20%
25%
30%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Shareofrenewablesinsectordemand
Renewable
electricity
Renewable heat
Biofuels in road
transport
Forecast

18. © OECD/IEA 2015
Early signs of commercialisation in the
advanced biofuels sector
Commissioned commercial scale advanced biofuel plants
Advanced biofuels – needed for long-term decarbonisation of the transport sector – are
starting to scale up, but development requires further policy support.

19. © OECD/IEA 2015
A decisive moment for the future of renewables
 Increasingly affordable renewables are set to dominate the growing
power systems of the world
 The impact of the lower oil price environment on global deployment of
renewables is limited – in particular for the power sector
 While variability of renewables is a challenge energy systems can learn to
adapt to, variability of policies poses a far greater risk
 Accelerated growth of renewables to meet energy security, local pollution
and climate protection goals is feasible
 Developing countries can now leapfrog to development based on
affordable clean power by addressing persistent barriers; improving
financing conditions; clear and predictable policies and good governance

20. © OECD/IEA 2015
IEA work on renewables
 The MTRM 2015 can be purchased at: www.iea.org/bookshop/
 Renewables analysis a crucial part of IEA long-term scenario analysis: e.g. World Energy
Outlook, Energy Technology Perspectives, Tracking Clean Energy Progress
 IEA renewables website: http://www.iea.org/topics/renewables/
 Renewable Policies and Measures Database:
http://www.iea.org/topics/renewables/renewablesiea/policiesmeasuresdatabasepams/

21. © OECD/IEA 2015
Reserve Slides

22. © OECD/IEA 2015
Onshore wind leads growth as deployment
spreads
Onshore wind annual additions (GW) 2014-20
OECD Americas
Non-OECD Americas
OECD Europe
Non-OECD Europe
and Eurasia
Africa
Middle East
Asia
China
OECD Asia Oceania
0
7.5
15
2914
2017
2020
0
4
8
2014
2017
2020
0
0.75
1.5
2014
2017
2020
0
0.75
1.5
2014
2017
2020
0
0.15
0.3
2014
2017
2020
0
5
10
2014
2017
2020
16
18
20
2014
2017
2020
0
10
20
2014
2017
2020
0
0.75
1.5
2014
2017
2020

23. © OECD/IEA 2015
Generation cost profile of alternatives vary
with fossil fuel prices
Note: LCOE for CCGT is calculated using a ~65% capacity factor and 7% discount rate. No carbon pricing is included in LCOEs.
Historical natural gas prices by region vs price range for LCOE of new CCGT at USD 60-80/MWh
 More robust competitiveness assessments would account for:
 Value of electricity generated – when and where
 Flexibility needs from high shares of variable renewable generation
 Fossil fuel and carbon price volatility, hedging costs
 System
Transformation
and Market
Design Reform
0
2
4
6
8
10
12
14
16
18
20
gen-05
lug-05
gen-06
lug-06
gen-07
lug-07
gen-08
lug-08
gen-09
lug-09
gen-10
lug-10
gen-11
lug-11
gen-12
lug-12
gen-13
lug-13
gen-14
lug-14
gen-15
lug-15
gen-16
lug-16
gen-17
lug-17
gen-18
lug-18
gen-19
lug-19
gen-20
USD/MBtu
US Henry Hub Europe - UK NBP Asian LNG price (average contracted import price) Asian LNG (spot)
Gas prices at which
new CCGT today
has LCOE at USD
60-80/MWh
?
?

24. © OECD/IEA 2015
Market and regulatory risks can increase weighted average cost of capital and
undermine competitiveness of PV and wind power
Dubai
Central
AfricaX
2X
Impact of cost of capital (WACC) on the levelised generation cost of
solar PV (for equivalent resource and investment cost)
Reducing financing costs key to more cost-
effective deployment

25. © OECD/IEA 2015
China to be market leader in both
wind and solar PV by 2020
0
50
100
150
200
250
2014 2020 2020 accelerated
GW
Cumulative grid-connected wind capacity
Onshoe wind Offshore wind Solar PV
0
50
100
150
200
250
2014 2020 2020 accelerated
Cumulative grid-connected solar capacity
China’s cumulative wind capacity to more than double while solar PV to quadruple in
2020 but further growth is possible if higher targets are set

26. © OECD/IEA 2015
Grid and system integration main
constraint to Japan PV deployment
Japan annual solar PV capacity additions, historical and forecast
0
2
4
6
8
10
12
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GW
Power diversification needs and generous incentives support Japan’s PV growth, but greater
progress is needed in variable renewable integration and power sector reform

27. © OECD/IEA 2015
Improving cost effectiveness supports
stronger renewable growth in India
India weighted average PPA bid prices in PV auctions, state and JNNSM
 Ambitious target of 100 GW solar PV by 2022, but MTRMR sees < 30 GW by 2020
 Auctions for utility-scale PV reducing costs, though they remain higher than coal
 Clear and credible implementation of supporting regulations needed to reduce offtaker
risks, promote net metering and reduce administrative barriers
 Significant grid expansion, strengthening and management needed
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
07-2010 03-2011 11-2011 07-2012 03-2013 12-2013 08-2014 04-2015 12-2015
USD/kWh
Telangana
Punjab
Karnatka
Madhya Pradesh
Uttar Pradesh
Andhra Pradesh
Rajasthan
Tamil Nadu
JNNSM
JNNSM
500 MW

28. © OECD/IEA 2015
Renewables are powering Latin America’s
economic growth
Excellent resources have underpinned hydropower’s strong role. Now, with policy momentum,
attractive economics and diversification needs, other renewable sources grow more rapidly
Latin America power demand growth versus new renewable generation
0
50
100
150
200
250
300
350
2002-08 2008-14 2014-20
TWh
Hydropower Other renewables Fossil fuels and nuclear

29. © OECD/IEA 2015
More widespread policy support
required in the renewable heat sector
Consumption of modern renewable energy for heat 2008-20
Challenges persist to increasing the contribution of renewables and decarbonising the heat
sector, however established renewable heat policies have proved successful.
0
2
4
6
8
10
12
14
16
18
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EJ
Geothermal Solar thermal Modern bioenergy

30. © OECD/IEA 2014
3) Increase flexibility of
other power system
components
Grids Generation
Storage Demand Side
1) Foster
System-friendly
RE
Three pillars of system transformation
2) Better
market design
& operation

31. © OECD/IEA 2014
Importance of grids
4 000 km4 000 km 4 000 km
Continental Dimension
BRAZIL EUROPE
 Interconnected continental-scale balancing areas smoothen out
variability and allow to exploit seasonal complementarities

32. © OECD/IEA 2014
* Compound annual average growth rate 2012-20 , slow <2%, dynamic ≥2%; region average used where country data unavailable
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.
Transformation depends on context
© OECD/IEA 2014 32
Stable Power
Systems
• Little general
investment need
short term
Dynamic
Power Systems
• Large general
investment need
short term
Slow demand growth*
Dynamic demand growth*
Maximise the contribution
from existing flexible assets
Decommission or mothball
inflexible polluting surplus
capacity to foster system
transformation
Implement holistic, long-term
transformation from onset
Use proper long-term planning
instruments to capture VRE’s
contribution at system level

33. © OECD/IEA 2015
For further insights and analysis
 The Medium-Term Renewable
Energy Market Report 2015
can be purchased at:
www.iea.org/bookshop/
 Thank you for your attention!