External costs of future technologies

1. External costs of future technologies Wolfram Krewitt DLR Institute of Technical Thermodynamics Systems Analysis and Technology Assessment Stuttgart presented by Andrea Ricci ISIS Roma NEEDS Forum January 28, 2008 Cairo

2. external cost assessment as an input to strategic energy planning • needs to reflect long term innovation dynamics of relevant technologies • energy policy decisions based on current technology characteristics might hinder the exploitation of future technology development potentials

3. NEEDS Research Stream ‘life cycle approaches for the assessment of emerging technologies’ provide data on • technical characteristics, • costs • life cycle emissions • external costs • for emerging electricity generation technologies • with a strong focus on long term technical developments (time horizon 2050)

4. NEEDS approach to characterise future technologies • Basic understanding in foresight studies: there is not just one possible future, but many. Dependent on how actors choose to act, different futures are possible, though of course not all of them will become reality. • To cover a reasonable range of alternative future development options, three different technology development scenarios for each individual technology: • ‘pessimistic scenario’: Socio-economic framing conditions do not stimulate market uptake and technical innovations. • ‘realistic-optimistic scenario’: Strong socio-economic drivers support dynamic market uptake and continuous technology development. It is very likely that the respective technology gains relevance on the global electricity market. • ‘very optimistic scenario’: A technological breakthrough makes the respective technology on the long term a leading global electricity supply technology.

5. technology foresight approaches • The individual technology scenarios are developed by combining a bottom-up technology oriented perspective with a top-down energy system perspective in an iterative way. • The key driving forces which can help to activate diffusion factors and to overcome market barriers are identified. • The assessment of future costs is based on experience curves. A complementary bottom-up approach is used, describing different sources of cost reduction, leading to cost estimates in a mid-term time perspective. Interviews with experts from both academia and industry are used to envision long-term alternative cost development paths.

6. examples • two different solar technologies • photovoltaic • concentrating solar thermal power plants (CSP) • coal combustion with carbon capture and sequestration (CCS)

7. Resource direct and diffuse irradiation Capacity Watt to MW Installation: everywhere (roofs, etc.) Full load hours: 700 – 2000 h/a Reserve capacity: external Proven tech. lifetime > 20 years Annual generation in 2004 2500 GWh Cost of electricity (today) 0,25 – 0,50 €/kWh PV CSP Characteristics direct irradiation 10 MW to several 100 MW flat unused terrain 2000 – 7000 h/a internal (fossil hybrid operation) > 20 years 800 GWh 0,13 – 0,22 €/kWh Source: R. Pitz-Paal, DLR

8. PV technology development scenarios • ‘Pessimistic’: current incentives for PV will not be supported long enough for the technology to ever become competitive with bulk electricity. Growth of world PV market resulting from current PV funding schemes, severely stunted by 2025. • ‘Optimistic-realistic’: three different PV ‘families’ (crystalline Si, thin film, novel devices) are likely to co-exist, each expanding in its own most suitable sector. Growth according to industry (EPIA) predictions, after 2025 reduced growth rates (GP/EREC scenario). • ‘Very optimistic’: • Market still growing until 2050 (yearly growth rate down to 4%) • By mid 2030’s large scale energy storage infrastructure • Very rapid expansion of PV based on novel technologies after 2025 (technological breakthrough)  50% of total PV market in 2050

9. PV market development pathways ‘optimistic realistic’ scenario ‘pessimistic’ scenario Source: P. Frankl, NEEDS, 2007

10. Innovation and environmental learning: life cycle CO2 emissions of future PV configurations Source: P. Frankl, NEEDS, 2007

11. Concentrating solar thermal power plants • Large scale grid connected electricity generation • electricity generation today 800 GWh/y • Several power plants under construction (Spain, US) • thermal storage: dispatchable solar power

12. solar resources in the Middle East/North Africa region a solar thermal power plant of the size of Lake Nasser (Aswan) could harvest energy equivalent to the annual oil production of the Middle East

13. CSP – future development options

14. CSP – life cycle greenhouse gas emissions for various future configurations

15. fossil fuels – carbon capture and sequestration source: Dones et al., NEEDS, 2007 (adapted from BP)

16. pulverised coal combustion – current and with CCS source: Dones et al., NEEDS, 2007 (preliminary data)

17. pulverised coal combustion (current/CCS) – valuation of impacts based on Ecoindicator ‘99 source: Dones et al., NEEDS, 2007 (preliminary data)

18. external costs of future technologies(low estimate - no equity weighting. 2025  7 €/tCO2; 2050  5 €/tCO2)

19. external costs of future technologies(high estimate – equity weighting; normalised to Western Europe 2025  86 €/tCO2; 2050  52 €/tCO2)

20. conclusions • there is a large potential for improving environmental performance of current ‘emerging technologies’ • quantifiable external costs strongly depend on assumptions related to the valuation of climate change impacts • depending on climate change valuation, external costs from fossil electricity generation might be significantly higher than private costs • Carbon Capture and Sequestration can significantly reduce quantifiable external costs from fossil fuels, but CCS ranks bad on other evaluation scheme (EcoIndicator ’99) • future renewable energy technologies show very low quantifiable external costs