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Global Renewable Energy Perspectives: A report from the Ninth World Renewable Energy Congress

Costa Samaras Dept. of Engineering & Public Policy Carnegie Mellon University October 23, 2006. Global Renewable Energy Perspectives: A report from the Ninth World Renewable Energy Congress. Climate Decision Making Center NSF SES-034578. Photo Sources: GE Energy, NREL. Agenda.

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Global Renewable Energy Perspectives: A report from the Ninth World Renewable Energy Congress

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  1. Costa Samaras Dept. of Engineering & Public Policy Carnegie Mellon University October 23, 2006 Global Renewable Energy Perspectives: A report from the Ninth World Renewable Energy Congress Climate Decision Making Center NSF SES-034578 Photo Sources: GE Energy, NREL

  2. Agenda • Introduction and motivation • Supply and demand challenges • Renewables policy landscape • Data resources • Research needs

  3. Introduction and Motivation • World Renewable Energy Congress • Held every two years in different locations • Organized by the World Renewable Energy Network and UNESCO • Publishers of Elsevier journal, Renewable Energy • 2008 conference in Glasgow • http://www.wrenuk.co.uk/ Photo Sources: UNEP, Elsevier

  4. Introduction and Motivation • 2006 World Renewable Energy Congress • Held in Florence Italy, 19-25 August • More than 700 papers from 107 countries • Proceedings published by Elsevier; hard copy and CD of papers available to those interested • Paper I presented, Learning from wind: A framework for low-carbon energy diffusion

  5. Conference Topics • Fuel cells and hydrogen • Biomass and biofuels • Energy, poverty and gender • Wind energy • Solar PV and thermal • Sustainable transport • Policy issues • Marine energy • Low energy architecture

  6. Major challenges - Demand • 1.6-2 billion of world’s population currently do not have access to electricity • Energy consumption to rise by factor of 2 or 3; long-lived fossil infrastructure • 600 million people in China to migrate from rural to urban areas by 2050 • More than 70% of energy use is in cities • 2.4 billion people using biomass for cooking and heating

  7. Major challenges - Supply • Too late to have an impact on the energy system for 2020, we might be able to have an impact for 2050 • Fusion and hydrogen will not play a role in the next 50 years, may play in following 50 • Nukes are 16% of world capacity; getting to 80% would require 5x number of reactors • Renewables need to be harnessed on a large scale, but…

  8. Renewables – major challenges • Renewables are: • “Intermittent, seasonal, distributed, expensive, and have an environmental impact of their own” – EU Renewable Energy Director • RE is 2.5% of world energy use, 0.5% with biomass excluded • Only 8% of R&D of IEA country total energy R&D was spent on RES R&D from 1975-2004 • Need to balance energy access, growth, security, GHGs and investment in the face of considerable constraints

  9. By the numbers • Renewables are: • 4% of EU energy supply, on course to exceed 10% by 2010 • 1.8% of US supply • EU has 90% of world renewables equipment market, EU RES industry employs 500,000 • Renewables government R&D • EU 2002-2006 – RES had 100 million euro/year • 2007 EU energy budget is €2.3 B – 40% for RES • In U.S., 2007 EERE requested $1.2 billion, which is 5.1% of total energy budget, no geothermal, no hydro Source: http://www.energy.gov/news/3150.htm

  10. By the numbers – reported current costs Sources: V. Radlow, EU Energy, Stan Bull, NREL

  11. Policy actions for renewables promotion Price Quantity Production Demand Sources: V. Radlow, EU Energy, Stan Bull, NREL

  12. Policy evaluation and end goals • Criteria to judge RES policy • supply effectiveness (kW, kWh) • cost effectiveness (kW/$) • economic efficiency ($/ton CO2) • equity (fair distribution of costs and benefits) • Policy actions depend on end goals • FIT supports industry development • R&D promotes new applications • RECs support lowest cost technologies • Certified emissions reductions internalize environmental externalities

  13. Feed-in Tariffs • Germany has 6-7 cents/kWh FIT for wind • Germany has 18 GW of global 59 GW of wind • Germany has 60-78 cents/kWh FIT for solar! • Germany has 800 MW of global 2600 MW of solar PV Photo Source: http://www.bized.co.uk/current/argument/arg5-3.htm; treehugger

  14. Wind highlights • Wind and intermittency • Some papers argued it is a power balancing issue and not a big concern, need 30% penetration before you notice 10% increase in system variability • For 1 minute of silence observed for Tsunami, demand in UK dropped 1500 MW almost instantly, then came back after 1 minute was over; no problem • High oil prices drive up price of offshore wind construction; high demand for construction equipment and crews that are more valuable for extraction

  15. Solar highlights • According to U.S. Western Governor’s Assoc., 10 GW of solar possible in SW U.S. by 2015 • 4 GW central station • 4 GW distributed generation • 2 GW solar thermal • Technical potential for flat area in Soutwest is 6800 GW, realistic assessment yields 200 GW Photo Sources: The Energy Blog

  16. Interesting and surprising • Solar thermal responsible for 65 and 90% of Greece, Cyprus residential hot water needs • CO2 capture and sequestration • EOR may drive 16 of the next 20 planned CCS • Weyburn field gets 6.5 barrels of oil out for every ton of CO2 purchased, currently trucking in CO2 at $110/ton • Wind is 25% of Denmark’s capacity, but 80% is exported

  17. Interesting and surprising • Consolidation in EU utility industry • 8 companies control 2/3 of market, high buy premiums in M&A reflect expectation of high future profits • Building of coal plants in China is understated • Small munis and villages building 50-150 MW coal plants and are not tracked by the government; coal is usually shipped by truck • Marine energy getting serious analysis • 25 MW wave energy planned for Portugal, thanks to 27 UScents/kWh FIT! • UK has more extractable tidal energy than all of Europe, 19 TWh • 1 MW wave power to be installed in Ireland

  18. Capital in wind project finance Contingency – 5% Equity – 10-20% Finance – 8% Debt – 80-90% Construction – 22% Equipment – 65% Sources Uses

  19. Allocating risk in energy projects • Capital is loaned up front and revenues depend on the future commodity price; risk must be allocated RE MechanismExposure FIT Customer Fixed premium Suppliers & customers X Variable premium Suppliers (Indexed to fossil market)

  20. Allocating risk in energy projects • Financiers hedge at lowest possible price, so if renewable premium is variable, financier assumes lowest price • Margin on power purchase agreement is implicit risk management fee charged by electricity company • Successful policy would have a FIT for first 1000 MW of new technology

  21. Data and Resources • www.reegle.info • Renewables and energy efficiency gateway • www.renewables.iea.org • Country specific RE policy database • www.dsireusa.org • U.S. state specific RE policy database • www.worldenergyoutlook.org • By IEA, out in November 2006 • www.iea.org/Textbase/stats/index.asp • R&D and energy stats and data

  22. Potential research questions • Learning curve analysis for future energy technologies • How much of an impact could production with CCS from biomass/biorefineries make on CO2 ppm? What about bio syngas, methanol, or F-T fluid for transport? • An evaluation of RE policies – i.e. $/ton CO2 for subsidies in Germany • Price of coal-to-liquids (CTL) with CCS for transport fuels? • Also have conference materials from Windpower 2006

  23. Conclusions • Large investment in RE necessary, predictable policy regime required • IEA/IPCC – Can not possibly substitute RES for coal/oil/gas in time • Must get CCS online, including CCS for biofuels/biorefineries • Biggest concern is CTL without CCS • There is a race to find an economically compelling example of low-carbon power production, which will be the only way to persuade the developing world

  24. Perspectives • On GHGs, Europe is “clinging to comforting delusions of grandeur in a post imperial mindset, ‘doing their bit’ and nothing more” “Markets will respond to RE subsidies by investing in the least capital intensive qualifying ticket for the RE gravy train” – J. Constable, UK RE Foundation • “EU actions and GHG contributions are ridiculously minute and amounts to a lot of posturing by bit players. Failure to address CO2 intensity by U.S., China, India, Brazil, a scathing failure” – M. Jefferson, IPCC, UNDP

  25. Questions and comments • For more information and resources: • Email: csamaras@cmu.edu • On CMU campus, stop by Hamburg A020

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