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Taking stock of clean energy policy and private sector investment. Robert Gross and Becky Mawhood Centre for Energy Policy and Technology Imperial College London Imperial College Energy Futures Lab. Outline. Context – the decarbonisation challenge and growth in green energy The policy map

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taking stock of clean energy policy and private sector investment

Taking stock of clean energy policy and private sector investment

Robert Gross and Becky Mawhood

Centre for Energy Policy and Technology

Imperial College London

Imperial College Energy Futures Lab

outline
Outline
  • Context – the decarbonisation challenge and growth in green energy
  • The policy map
  • The investment challenges
  • What’s policy been doing and what does policy need to do?
  • Conclusions
the scale of the climate challenge
The scale of the climate challenge

IEA, 2010 “Energy Technology Perspectives: Scenarios & Strategies to 2050”

increasing demand from developing countries
Increasing demand from developing countries

Source: IEA WEO 2012 Presentation to Press

investment flows
Investment flows

Global new investment in

renewable energy increased

17% in 2011, to a new record

of USD 257 billion.

This was more than six times

the figure for 2004, and 94%

more than the total in 2007,

the last year before the acute

phase of the recent global

financial crisis.

Ren 21 Global Status Report 2012

proportion of investment in developing countries
Proportion of investment in developing countries

Source: Frankfurt School-UNEP Centre/BNEF (2013). Global Trends in Renewable Energy Investment 2013.

increasing policy interest
Increasing policy interest
  • 138 countries have targets
  • 127 countries have support policies
  • Two-thirds of these are emerging economies

Source: REN21(2013) Global Status Report

diverse targets and policies
Diverse targets and policies

Source: REN21 (2013) Global Status Report

but all is not entirely well
BUT all is not entirely well….
  • Swinging FiT cuts in some countries
  • Dissatisfaction and reaction against price impacts amongst some publics
  • The ‘solar bubble’ and trade war
  • The ‘shale gas effect’ – cheaper coal, changed perception of scarcity, rewards to FF innovation
  • Climate scepticism (or boredom?)
oecd issues financing the transition e g britain s investment challenge scale
OECD issues – financing the transitione.g. Britain’s investment challenge - scale

What do we need?

  • £75b required for new gen capacity *
  • £30b alone for offshore wind ?**
  • Current big 6 spend around £5b/year
  • Dash for gas was about £11b total
  • Total market value of all existing UK generation plant is c. £50b***
  • Huge plans for economic infrastructure at UK, EU and global level
  • UK policy/investment environment attractive vs peers?
  • EMR WP, Chapter 2 ** DECC Roadmap (at current prices) *** SSE, An Energy White Paper
africa s is scale too but also source
Africa’s is scale too – but also source

Capital investment in Sub Saharan Africa’s electricity sector by source

Source data: AFD/WB (2010). Africa’s Infrastructure – A Time for Transformation

increasing private investment
Increasing private investment?

Capital investment in Sub Saharan Africa’s electricity sector by source

Source data: AFD/WB (2010). Africa’s Infrastructure – A Time for Transformation

Source: World Economic Forum (2013) .The Green Investment Report.

1 buy down costs
1. Buy down costs

Mott Macdonald and the CCC 2011

IEA 2000, Learning curves report

slide16

PV – policies and buy down….

Average module price reduction over time (left) versus annual PV cell/module production (right)

O\'Rourke et al., 2009 in FITT Research Report. Deutsche Bank. May 2008. 2009.

EPIA and EU PV Technology Platform, Solar Europe Industry Initiative (SEII). Summary implementation plan 2010-1012, in EPIA Draft Report, April 2010. 2010.

2 create stability meet investor needs
2. Create stability, meet investor needs

Net present value representation of the spread of returns arising from different CO2 and fuel price scenarios (taken from UK Energy Review ) (Working Paper by Will Blyth for UKERC 2006)

Spread in levelised costs arising from different CO2 and fuel price scenarios (taken from UK Energy Review ) (Working Paper by Will Blyth 2006)

but also 3 suit the context
But also 3. suit the context….
  • Institutional and political feasibility are key
    • E.g. Senegal ASER
      • conceptually strong, popular with donors, good leverage but… slow progress, turbulent management, ‘blocking’ by Senelec, etc…
      • Need to avoid tail wags dog – liberalised approach to suit donor beliefs not beneficiary needs
  • Affordability and believability also essential
  • Who does what, with what?
      • Incumbents/new entrants, large scale/small scale, new tech/old tech, government/companies, community/profit….
conclusions thoughts
Conclusions/thoughts
  • Green growth is already a reality
  • Policy more contested, trade offs now central
  • Continuation is not a given, FF renaissance…?
  • Policy essential, we know (broadly) what works
  • What works is context specific – IF is key
  • Decades of experience
    • opportunity to learn from what works
    • Avoid pointless policy ‘innovation’ = ground hog day?
  • Interesting times…!
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