Global Renewable Energy Perspectives:

1

• 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
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 worlds 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 RD of IEA country total energy RD
  was spent on RES RD 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 RD
• 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
• RD 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/argum
ent/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 Governors 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 Denmarks 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 MA 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 Mechanism Exposure
• 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
• RD 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_at_cmu.edu
• On CMU campus, stop by Hamburg A020