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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. 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

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  1. 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

  2. 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

  3. The scale of the climate challenge IEA, 2010 “Energy Technology Perspectives: Scenarios & Strategies to 2050”

  4. Increasing demand from developing countries Source: IEA WEO 2012 Presentation to Press

  5. 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

  6. A growing fraction of investment

  7. Proportion of investment in developing countries Source: Frankfurt School-UNEP Centre/BNEF (2013). Global Trends in Renewable Energy Investment 2013.

  8. 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

  9. Diverse targets and policies Source: REN21 (2013) Global Status Report

  10. 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?)

  11. 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

  12. 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

  13. 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.

  14. Looking ahead – what’s policy trying to achieve?

  15. 1. Buy down costs Mott Macdonald and the CCC 2011 IEA 2000, Learning curves report

  16. 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.

  17. 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)

  18. Policies like the UK CfDFiTs transfer risk

  19. 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….

  20. 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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