sustainable energy infrastructure: financing re - an economic development and infrastructure...
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visit: www.globalenergybasel.comTRANSCRIPT
Sustainable Energy Infrastructure: Financing RE - an economic development and
infrastructure approach
& smartgrids for sustainable development
Matt Kennedy
CoChair of IEA RETD
21 Feb 2012, Global Energy Basel
www.iea-retd.org 2
Agenda
To provide an overview of a recent IEA RETD Financing Study Strategies to finance large-scale deployment of renewable energy
projects - an economic development and infrastructure approach
To highlight the importance of smartgrids for energy infrastructure, utilising a smartgrid roadmap development project to 2050
www.iea-retd.org 3
Background to the study
Released in December 2011 Title: Strategies to finance large-scale deployment of renewable
energy projects - an economic development and infrastructure approach
Rational IEA-RETD: get more insight in what is needed now to attract substantial financial flows to the renewable energy sector? What to do now in order to make miles?
Available at: http://iea-retd.org/archives/publications/finance-re
Presentation of the FINANCE-RE report
www.iea-retd.org 4
Take-Away Themes from Report
Existing finance mechanisms alone will not attract huge quantities of needed new investment capital
Need to access new capital by reducing risk-to-reward ratio, showing potential profit to investors
New approaches needed to: 1. Combine support mechanisms with new financial products, possibly
under management of national infrastructure bank
2. Bring together job creation, finance, innovation, and policies for energy security, national economic recovery, and sustained competitiveness
Presentation of the FINANCE-RE report
www.iea-retd.org
Obstacles to Renewable Energy Investment
1. Perceived cost disadvantage to fossil fuel technologies
2. Intermittent resources require enabling technologies
3. Limitations of existing transmission grids
4. Matching funding sources to risk-to-reward profiles
5. Real world economic recessions and national deficits
6. Embedded institutional relationships support incumbent fossil fuel Market failures such as un-priced carbon emissions
7. Technological and Competitive Risks bring investment obstacles Uncertainty Large upfront asset costs Restricted lending by banks, High transaction costs Inflated costs to cover unknown or risk contingencies
5
Presentation of the FINANCE-RE report
www.iea-retd.org 6
Public Support and Finance Mechanisms
Price-Based Instruments Quantity-Based Instruments Investment Subsidies Financial Institution Partnership Programs Complementary Tax Measures
Pension funds: P8 Groups with USD $3.5 trillion Sovereign Funds: top 10 with USD $3.8 trillion Insurance Funds: could be tapped with tax credit incentives Profitable Corporations: making use of Tax Equity Incentives
Presentation of the FINANCE-RE report
www.iea-retd.org 7
Basis for Plausible Solutions
Incorporate and integrate four kinds of pubic and private approaches for renewable energy:
1. Economic Development, incentivizing renewable energy technological transition: replication of Asian models (RE as industrial policy)
2. Financial Innovation, institutionalize finance that buildings RE infrastructures, including EIB, Germany’s KfW,, proposed GIB
Proposed early launch (incubator) to give investor confidence Public funds as seed and leveraged (first loss position) Recycle investment funds and Explore green bonds
Presentation of the FINANCE-RE report
www.iea-retd.org 8
Basis for Plausible Solutions
3. Innovation Strategies, create enabling technologies that drive down costsencourage “open and distributed” innovation to tap dispersed global talent and to collaborate across institutions. Use “Distributed Innovation” to form public-private networks for accelerated and leveraged R&D, e.g., Marie Curie EU FP7, UK Carbon Trust Wind Accelerator, and US SEMATECH
4. Enabling Energy Policies, support investment in RE infrastructure with consistent enabling environment giving stable long-term investment signals.Scale-up of Existing TechnologiesSupport Emerging Technologies
Presentation of the FINANCE-RE report
www.iea-retd.org 9
RE Financing Infrastructure Conclusion
Need to consider it as national/regional, long-term, infra-structure building exercises vs. series of un-related individual large projects.
Need policies and institutions to increase public-funding leverage to target and unleash the large pools of private capital.
The suite of policies should align and integrate strategies for creating a new renewable energy infrastructure and a robust economy with long-term job generation, improved and lower cost technologies, better climate, energy security, and raised national competitiveness.
Presentation of the FINANCE-RE report
www.iea-retd.org
The importance ofSmartgrid : A Roadmap
Presentation of the Smartgrid Roadmap
www.iea-retd.org
The basic concept: maximizing throughput of the electricity delivery system while reducing the energy consumption monitoring, analysis, control, communication
Smart Grids?
Presentation of the Smartgrid Roadmap
www.iea-retd.org
The Smart Grid
www.iea-retd.org
The Smart Grid
www.iea-retd.org
Roadmap – Steering Group
Presentation of the Smartgrid Roadmap
www.iea-retd.org
Industry consultation
Presentation of the Smartgrid Roadmap
www.iea-retd.org
www.iea-retd.org
Projected Final Energy Demand by Sector
www.iea-retd.org
Projected Electricity Generation Mix
www.iea-retd.org
Key Findings
By 2050, this scenario shows:
• Increasing electrification of thermal loads in the residential, services and transport sectors
• Electrical final energy demand >48,000 GWh
• 88% renewable, 33,000 GWh on-shore wind
• Decarbonisation of electricity in the Irish system
• Reduction in energy imports in excess of 4.3 Mtoe
Monetary Savings (offset imports):
$/Barrel Oil $111 $179 $247
Savings (Billions) €2.35 €3.79 €5.23
Presentation of the Smartgrid Roadmap
www.iea-retd.org
Smart Grid Roadmap – next 10 years
• Establish a test-bed facility, strengthening smart grid technology research.
• Develop and deploy training courses in smart grid systems and technologies.
• Review of policies dealing with energy and CO2 ratings of buildings to encourage electrification.
• Develop interoperability standards and secure communications and data protocols
• National rollout of smart meters with DSM and variable ToU tariffs.
• Develop an overlay of secure, high speed communications onto the electricity system.
• Continue grid investment programmes, Grid-West, Grid 25.
Presentation of the Smartgrid Roadmap
Questions? Thank you
For additional information on RETD
Online: www.iea-retd.orgContact: [email protected][email protected]