© OECD/IEA 2015© OECD/IEA 2015

Renewables after COP-21 A global perspective

Dr. Fatih Birol

Executive DirectorInternational Energy Agency

17th Symposium, Syndicat des Énergies Renouvelables, Unesco, Paris, 4 February 2016

© OECD/IEA 2015

The start of a new energy era?

Universal agreement from COP21 is an historic milestone

• Pledges of 180+ countries account for 95% of energy-related emissions

• Record renewables capacity additions in 2014 and 2015

In 2015, lowest-ever prices announced for wind and PV

• Sustained technology improvement and economies of scale

• Reduced cost of financing in countries with sound regulatory and market frameworks

But 2015 has also seen lower prices for all fossil fuels • Oil & gas could face second year of falling upstream investment in 2016

• Coal prices remain at rock-bottom as demand slows in China

© OECD/IEA 2015

Indexed generation costs

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2010 =

100

Onshore wind Solar PV - residential Solar PV - utility scale

Innovation and scale-up are driving costs down

High levels of incentives are no longer necessary for solar PV and onshore wind, but their economic attractiveness still depends on regulatory framework and market design

© OECD/IEA 2015

Recent announced long-term contract prices for new renewable power

Utility-scale solar PVOnshore wind

ChileUSD 65-68/MWh

BrazilUSD 81/MWh

United StatesUSD 65-70/MWh

IndiaUSD 66-116/MWh

United Arab EmiratesUSD 58/MWh

South AfricaUSD 65/MWh

United StatesUSD 47/MWh

BrazilUSD 49/MWh

South AfricaUSD 51/MWh Australia

USD 69/MWh

TurkeyUSD 73/MWh

ChinaUSD 80–91/MWh

GermanyUSD 67-100/MWh

EgyptUSD 41-50/MWh

JordanUSD 61-77/MWh

UruguayUSD 90/MWh

GermanyUSD 96 /MWh

CanadaUSD 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

Lower costs on the horizon

MoroccoUSD 35-40/MWh

Best results occur where price competition, long-term contracts and good resources are combined

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The share of renewables in net additions to power capacity continues to rise with non-hydro sources reaching nearly half of the total

Renewables set to dominate new power generation capacity additions

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

G W

Fossil fuels Nuclear Hydropower Non-hydro renewables

© 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

Deployment shifting to emerging markets and developing countries

Shares of net additional renewable capacity, 2014-20

EU-28

13%

United States

9%

Japan

5%

Rest of OECD

8%

China

38%

India

9%

Brazil

5%

Africa

4%

Rest of

non-OECD

9%

© OECD/IEA 2015

RE deployment prospects are improving around COP21

Policy enhancements can ensure continued renewables deployment growth and put the power sector back on track to meet long-term climate change goals

World renewable power capacity growth, historical

0

20

40

60

80

100

120

140

160

180

200620072008200920102011201220132014201520162017201820192020

GW

Historical Accelerate

d

0

20

40

60

80

100

120

140

160

180

200620072008200920102011201220132014201520162017201820192020

GW

Historical Accelerate

d

© OECD/IEA 2015

RE deployment prospects are improving around COP21

Policy enhancements can ensure continued renewables deployment growth and put the power sector back on track to meet long-term climate change goals

World renewable power capacity growth, accelerated vs post-COP21 case

0

20

40

60

80

100

120

140

160

180

200620072008200920102011201220132014201520162017201820192020

GW

Historical Accelerate

d

0

20

40

60

80

100

120

140

160

180

200620072008200920102011201220132014201520162017201820192020

GW

Historical Accelerate

d

© OECD/IEA 2015Source: IEA estimates derived in part from IEA Medium-Term Renewable Energy Market Report 2015.

Towards high shares of variable renewables

Share of variable electricity generation in 2014 and 2020

0% 10% 20% 30% 40% 50% 60%

Japan

USA

France

China

India

Brazil

Australia

Sweden

Italy

UK

ESP & PRT

Germany

Ireland

Denmark

Share wind 2014 Share PV 2014 Share Wind 2020 Share PV 2020

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A 2 °C pathway requires efforts well beyond INDCs and 2030

16

20

24

28

32

36

40

2010 2015 2020 2025 2030 2035 2040

Gt

Baseline (NPS including INDCs)

450 Scenario

17.9 Gt

A peak in emissions by around 2020 is possible using existing policies & technologies; technology innovation and RD&D will be key to achieving the longer-term goal.

Energy efficiency

Fuel & technology switching in end-uses

Renewables

Nuclear

CCS

Other

© OECD/IEA 2015

2. Make better use of what

you have

Op

eratio

ns

1. Let wind and solarplay their

part

3. Take a system wide-strategic approach

to investments!

System friendly

VRE

Technology spread

Geographic spread

Designof power

plants

Three pillars of system transformation

Investm

ents

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Subsidies to fossil fuels dominate over carbon pricing

Energy-related CO2 emissions, 2014, shares of coverage by CO2 prices or subsidies

© OECD/IEA 2015

A decisive moment for the future of renewables

Sharp cost reductions of RE change policy and market design needs

• From providing financial support to creating a framework for investment

• Long-term remuneration crucial to attract financing

• Innovation must extend from renewable technology to system integration

While variability of renewables is a challenge energy systems can learn to adapt to, variability of policies poses a far greater risk

Low fossil fuel prices are a good time window to introduce robust long-term carbon pricing and make progress in phasing out fossil fuel subsidies

Paris Agreement accelerates virtuous circle already started before COP

Increasingly affordable renewables are set to dominate the growing power systems of the world