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Transitioning to Renewable Energy : A Developed Country Perspective

Transitioning to Renewable Energy : A Developed Country Perspective. Jonathan Pershing World Resources Institute Financing Sustainable Electricity: Policy and Governance Obstacles Washington, DC Wednesday, April 21, 2004. Overview. Energy trends and projections

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Transitioning to Renewable Energy : A Developed Country Perspective

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  1. Transitioning to Renewable Energy : A Developed Country Perspective Jonathan Pershing World Resources Institute Financing Sustainable Electricity: Policy and Governance Obstacles Washington, DCWednesday, April 21, 2004 J. Pershing, April 21, 2004

  2. Overview • Energy trends and projections • Drivers for and barriers to promoting RE – energy security, local pollution, costs, and climate • Policies and practices to promote RE • Looking forward J. Pershing, April 21, 2004

  3. Energy Trends – A Quick Overview J. Pershing, April 21, 2004

  4. World Primary Energy Demand Oil Natural gas Coal Hydro power Non-hydro renewables Nuclear power Source: IEA WEO 2002 J. Pershing, April 21, 2004

  5. Energy Production and Consumption Source: IEA WEO 2003 J. Pershing, April 21, 2004

  6. We are not running out of fossil fuels Source: IPCC, TAR, 2001 J. Pershing, April 21, 2004

  7. Prices come down as capacity rises Source, IEA, 2001 J. Pershing, April 21, 2004

  8. Energy Investment Projected Energy Investment Worldwide: $16 trillion from 2001-2030 E&D = Exploration and Development ; T&D = Transmission and Distribution Source, IEA WEO, 2003 J. Pershing, April 21, 2004

  9. Cumulative installed OECD solar PV capacity Source, BP Statistical database, 2004 J. Pershing, April 21, 2004

  10. Cumulative Installed Wind Turbine Capacity Source, BP Statistical database, 2004 J. Pershing, April 21, 2004

  11. Annual world incremental installed capacity (GW) Source: IAEA and BTM Consult ApS Source, BP Statistical database, 2004 J. Pershing, April 21, 2004

  12. Wind Power Installed in Europe (End 2003) J. Pershing, April 21, 2004

  13. Drivers for and Barriers to Promoting Renewable Energy • Energy Security • Local Pollution • Cost • Climate Change J. Pershing, April 21, 2004

  14. The Security Map: Gas/Oil/Coal Reserves Proved Reserves, End 2000 558/65/230 82/19/122 66/64/256 585/684/0 150/44/292 117/75/61 Gas: 100 bcm Oil: 1000 m bbls Coal: 1000 m ton 82/95/22 Sources: IEA and BP J. Pershing, April 21, 2004

  15. Local Pollution(Global energy-related emissions, 1995) Million metric tons Source: WRI Earth Trends J. Pershing, April 21, 2004

  16. Costs of New Technologies Lg Scale Central Stn Distributed Generation Renewable Source: CERA, 2003 J. Pershing, April 21, 2004

  17. Energy-Related CO2 Emissions Source: IEA WEO 2002 J. Pershing, April 21, 2004

  18. Emissions space for stabilising CO2 concentrations Source: IPCC-TAR Synthesis Report J. Pershing, April 21, 2004

  19. Policies and Practices to Promote Renewable Energy J. Pershing, April 21, 2004

  20. RE Policy Mechanisms • Regulations that govern: • capacity • access to the market/electric grid • production or purchase obligations • Financial incentives • Industry standards, permitting and building codes • Education and information dissemination • Stakeholder involvement J. Pershing, April 21, 2004

  21. Obstacles High up-front costs Lack of access to the transmission grid Lack of information Constraining or inconsistent government policies Solutions Production tax credits Feed-in tariffs Public awareness campaigns Consistent long-term government policies Obstacles – and Solutions to the Introduction of RE J. Pershing, April 21, 2004

  22. Renewable Energy Certificates J. Pershing, April 21, 2004

  23. Selected OECD REC Markets Source: Burzynski, R., et al. 2003, Anna Giovinetto, Evolution Markets, March 24, 2004. J. Pershing, April 21, 2004

  24. REC Markets J. Pershing, April 21, 2004

  25. Renewable Energy in the EU :Setting Regional Targets J. Pershing, April 21, 2004

  26. Key Policies: Germany • RE feed-in law: purchase obligation with agreed price for power generated from biomass sources (8,70 to 10.23 €-cent/kWh) of 20 MW or lower, and from wind (9.1 €-cent/kWh), solar (50.6 €-cent/kWh), or geothermal sources (7.2 €-cent/kWh), as well as from hydro, landfill, sewage or mine gas plants of 5MW or below • 100,000 Solar Roofs Program: supports the installation or extension of PV systems of at least 1kWp, offering special reduction up to -4.5% of market interest rates on loans, with a repayment period of 10 years and a 2 year repayment holiday. The possible share of financing is up to 100% to a maximum sum of 500 000 €. Overall program target of an additional 300 MW PV power J. Pershing, April 21, 2004

  27. Key Policies: UK • Renewable Obligation Plan: requires licensed electricity suppliers to buy specified portions of their purchases from renewable sources. Targets are a percentage of output of 3% between October 1, 2001 and March 31, 2003 (4.3% in 2004, 4.9% in 2005, 5.5% in 2006, 6.7% in 2007, 7.9% in 2008, 9.1% in 2009, 9.7% in 2010) and 10.4% by March 31, 2011. • Offshore Wind Capital Grants Scheme: totals GBP 74 million. Key programme objective is to stimulate early deployment of a significant capacity of offshore wind. the government will seek to ensure swift completion, making output from these projects available for electricity suppliers to respect their renewable obligation. J. Pershing, April 21, 2004

  28. Key Policies: Japan • New Energy Target : 3.1% (or 19.1m kl Oil Equivalent) of new energies in total primary energy supply in financial year 2010 (excluding hydro electric and geothermal energy). In 2000 the corresponding figure was about 1.2%. Targets : • PV: 4820 MW (from 330 MW in 2000) • Solar thermal utilization: 4,390,000 kl (from 890,000 kl in 2000) • Wind: 3000 MW (from 144 MW in 2000) • Waste power generation: 4170 MW (from 1030 MW in 2000) • Biomass generation: 330 MW (from 69 MW in 2000) • Regional Introduction of New Energy: NEDO incentive programme for local governments providing subsidy up to 50% of the installation cost to local public organizations, which introduce and promote PV, wind power, solar heat, differential temperature energy, natural gas-cogeneration, fuel cell, wastes generation, use of waste heat, production of wastes fuel, clean energy car, energy saving measures. Budget - 2000: 8.72 , 2001: 13.79 billion yen. J. Pershing, April 21, 2004

  29. Renewable Portfolio Standards (RPS) Source: CO2e.com, 2004 J. Pershing, April 21, 2004

  30. Wind in the USA With today's wind turbine technology, wind power could supply 20% of US electricity demand using only 0.6% of the land of the lower 48 states (and less than 5% of this land would be physically occupied by wind equipment) Source: Pacific Northwest Laboratory , 1993 J. Pershing, April 21, 2004

  31. State-wide net metering rules for all utilities Net metering offered by one or more individual utilities Net Metering Programs * 25 kW 100 kW 50 kW 100 kW * * 40 kW VT: 15/150 kW 25 kW NH: 25 kW 20 kW 10/400 kW MA: 60 kW 25/100 kW * CT: 100 kW 25 kW RI: 25 kW varies * * no limit varies 40 kW * NJ: 100 kW 30 kW 1,000 kWh/mo. DE: 25 kW * 25 kW MD: 80 kW varies 10/25 kW D.C. 100 kW 25 kW 1 MW varies 25/100 kW 10 kW 100 kW 10 kW * 10/100 kW 25/100 kW 50 kW * varies 10 kW State-wide net metering rules only for certain utility types (e.g., IOUs only) In these cases, other utilities (e.g., municipal utilities, cooperatives) may have different rules. * # kW indicates limit on system size; in some cases, limits vary by customer type. Source: Database of State Incentives for Renewable Energy (DSIRE) J. Pershing, April 21, 2004

  32. State GHG Summary Source: AEP J. Pershing, April 21, 2004

  33. Looking Forward J. Pershing, April 21, 2004

  34. World Non-Hydro Renewables-Based Power Generation Source: IEA WEO, 2002 J. Pershing, April 21, 2004

  35. Energy Supply: The Shell ScenarioSustained Growth Scenario RE Component Source: Shell International Limited. J. Pershing, April 21, 2004

  36. Enhanced RE Scenario(G-8 Report, 2001) J. Pershing, April 21, 2004

  37. Conclusions • Energy demand growth is continuing, and will require significant new investment • RE can fill part of this demand – but prices and regulatory barriers are keeping it from rapid market penetration • Policy mechanisms to overcome barriers are emerging in the developed world, with key players initiating major efforts; RE growth trends mirror these successes • Ultimately, the developed country RE future is bright only if policies can be sustained over a long period J. Pershing, April 21, 2004

  38. The Shape of the Future? J. Pershing, April 21, 2004

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