© OECD/IEA 2010

Renewable EnergyAn IEA Perspective

Amb. Richard H. JonesDeputy Executive DirectorInternational Energy Agency

VI Encuentro Internacional de Energías RenovablesSantiago, Chile, 10-11 May 2012

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Contents

Recent trends

Costs and Benefits

Outlook for renewables in IEA scenarios

Opportunities for Chile

Principles and examples for effective policies

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Strong Growth in Electricity …

Wind Bioenergy Solar PV Hydro other

Generation 2010 [TWh]

338 296 31 3503 74

CAGR 2005-2010 [%]

26.5% 8.8% 50.8% 3.1% 4.6%

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…and in Heat and Transport• 3% share of road

transport • Grew at 26% per

year in average• Growth focused in

Brazil, US, EU

• Rapid growth in solar water heating

• Focused mainly in China

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2000

2001

2002

2003

0

10000

20000

30000

40000

50000

60000

Brazil bioethanol US bioethanolEU-27 biodiesel RoW biofuels

Mto

e

2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

20406080

100120140160180200

Rest of world China

GW

th

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Costs are Reducing

Growing deployment has led to cost reductions in key technologies

Hydro and some geothermal already cost-competitive

New technologies such as wind onshore and biomass are competitive in a broader set of circumstances

Data from Breyer and Gerlach, 2010

1 10 100 1 000 10 000 100 0001

10

100

< 1976

< 1980

< 1990

< 2000

< 2010

Cumulative capacity (MW)

PV

Mo

du

le P

ric

e (

US

D 2

01

0/W

p)

Learning Rate: 19.3%

PV still expensive but 19% cost reduction for each capacity doubling; parity with retail prices in the next fiveyears in countries with high insolation and electricity prices

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Renewable Electricity Generating Costs

Bioenerg

y

Bioenerg

y cofirin

g

Geotherm

al

Solar

PVCSP

Hydro

Wind onsh

ore

Wind offsh

ore

Wav

e and tidal

New co

al

New ga

s CCGT

0

50

100

150

200

250

300

350

400

LCO

E

($/M

Wh)

Large ranges depending on technology and resource Competitiveness with new fossil power plants depending on local

conditions, but getting competitive in more circumstances

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Why Renewables?Climate Protection

Economic Development

Energy Access and Security

• Improved diversity• Reduced exposure to

volatile world energy prices

• Using natural resource

• Import savings

• Green jobs• Impact on

rural employment

• Stimulus for innovation and development

• CO2 savings• Air quality

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Market Expansion Opportunities

Leading countries

New opportunities

New opportunities

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Policy Trends

Many more countries putting policies in place, particularly outside OECD than in 2005

45 of the 56 focus countries in Deploying Renewables 2011 now have RE Electricity targets, including 20 non-OECD members

53 of the 56 focus countries have electricity support policies in place, compared to 35 in 2005

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Low-carbon power technologies come of age

Global installed power generation capacityin the New Policies Scenario

Renewables account for about half of all the new capacity added worldwide through to 2035

Nuclear additions

Renewable additions

Fossil-fuel additions

Existing 2010 capacity

0

2 000

4 000

6 000

8 000

10 000

2010 2015 2020 2025 2030 2035

GW

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Growing shares of renewables

All scenarios point out a large growth of renewables

2008 CPS scenario 2035 NPS scenario 2035 450 scenario 20350.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

Electricity Heat Transport

3900 TWh

11100 TWh

2009

15000 TWh

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Continuing Policy Support: Necessary and Justified

Policies need to continue to deliver energy security, environmental and economic benefits

Need for economic incentivesRE technologies not yet generally cost competitive under

current pricing mechanisms (e.g. lack of global carbon pricing)Transitional support needed to stimulate learning and cost

reduction and bring a larger portfolio of RET to competitiveness

Address non-economic barriers that hamper deploymentAccess to market and administrative hurdlesAccess to finance Infrastructure barriersLack of awareness and skilled personnelPublic acceptance and environmental barriers

Policies need to have highest impact at lowest costs

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Many opportunities for Chile

• Hydro• Geothermal• Wind• Biomass• And even Marine

energy

Source; NREL

A large and well diversified RE potential!

Not only the best solar resource in the continent but also:

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Overarching Best-PracticePolicy Principles

1. Predictable RE policy framework, integrated into overall energy strategy

2. Portfolio of incentives based on technology and market maturity

3. Dynamic policy approach based on monitoring of national and global market trends

4. Tackle non-economic barriers5. Address system integration issues

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Many Good Market Based Policy Examples…

US States – quotas and fiscal incentives Brazil – tendering scheme Europe – emerging flexible and market-

oriented premium systems

• Opportunity to benefit from many years of policy experience and emerging best practice

• Policy portfolio needs to be tailored to national priorities and conditions

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Conclusions

RE is an important component of any secure and sustainable energy economy

Renewables are cost competitive in an increasingly wider set of circumstances

Chile has a large and diverse resource base Policy experience is available to help develop

portfolio of policies suited to Chile’s priorities and conditions