douglas j. arent director, strategic energy analysis and applications center

Douglas J. Arent

Director, Strategic Energy Analysis and Applications Center

National Renewable Energy Laboratory

Thinking Differently:Developing a New Energy Economy

Presented at GRA 2007

Energy Solutions Are Enormously Challenging

Must address all three imperatives

Vulnerability or

Opportunity

Vulnerability or

Opportunity

Energy SecurityEnergy SecurityEnergy SecurityEnergy Security Economic Economic ProductivityProductivityEconomic Economic ProductivityProductivity

Environmental ImpactEnvironmental ImpactEnvironmental ImpactEnvironmental Impact

• SecureSecure supply supply• ReliabilityReliability• SecureSecure supply supply• ReliabilityReliability • Growth in Growth in

demanddemand• Price volatilityPrice volatility

• Growth in Growth in demanddemand

• Price volatilityPrice volatility

• Land and water useLand and water use• Carbon emissionsCarbon emissions• Land and water useLand and water use• Carbon emissionsCarbon emissions

How Big is the Challenge?

Source: Arvizu, NREL

Thinking Differently:Account for Externalities

Today’s energy marketplace does not appropriately “value” certain public objectives or social goods, instead we have:

– Price volatility– Serious environmental impacts– Underinvestment in energy

innovation

Source: Daniel Kammen, Gregory Nemet Reversing the Incredible, Shrinking Energy R&D Budget http://rael.berkeley.edu/files/2005/Kammen-Nemet-ShrinkingRD-2005.pdfTable 10.3, Edition 25, Transportation Energy Data Book http://cta.ornl.gov/data/chapter10.shtml

U.S

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Declining Energy R&D Investments…

Declining Energy R&D Investments… Reflect World Oil Price Movement

Source: Daniel Kammen, Gregory Nemet Reversing the Incredible, Shrinking Energy R&D Budget http://rael.berkeley.edu/files/2005/Kammen-Nemet-ShrinkingRD-2005.pdfTable 10.3, Edition 25, Transportation Energy Data Book http://cta.ornl.gov/data/chapter10.shtml

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llars per B

arrel – 2002$

0

50

100

150

200

250

300

350

400

450

1980198020302030

NON-OECDNON-OECD

20122012

OECD

Developing World Will Out-consume Developed

Global Energy Consumption

QB

tu

Year

Source: EIA

Economic development is tightly correlated with energy consumption

GJ/capita

GDP($K)/capita

Effect of Geography

Global Markets are Growing Rapidly

Global PV Shipments

Global Growth of Wind Energy Capacity

Getting to “Significance” Involves…

Policies Markets

ReducingRisk

ReducingRisk

Mobilizing Capital

Mobilizing Capital

Technologies

Source: NREL

Setting the Bar Higher

• U.S. National goals– Biofuels: reduce gasoline usage by 20% in ten

years– Wind: 20% of total provided energy by 2030– Solar: Be market competitive by 2015 for PV and

2020 for CSP

• Challenge goals– 25% of nation’s energy supply from renewable

sources by 2025– Others…

NV: 20% by 2015

HI: 20% by 2020

TX: 5,880 MW (~5.5%) by 2015

CA: 20% by 2010

CO: 20% by 2020

NM: 20% by 2020

AZ: 15% by 2025

IA: 2% by 1999

MN: 25% by 2025+

WI: 10% by 2015NY: 24% by 2013

ME: 30%by 2000

MA: 4%by 2009

CT: 10% by 2010

RI: 16%by 2019

PA: 8% by 2020

NJ: 22.5% by 2020

MD: 7.5% by 2019

*As of June 2007+For Xcel Energy, the requirement is 30% by 2020.

Sources: Union of Concerned Scientists and NREL

DC: 11% by 2022

MT: 15% by 2015

DE: 10% by 2019

IL: 8%by 2013

WA: 15%by 2020

Renewable Portfolio StandardsRenewable Portfolio Standards**

OR: 25% by 2025

NH: 23.8%by 2025

VA: 12% by 2022

VT: 10% by 2012

RPS

RE GoalMO: 10% by 2020

Electric Sector DriversAnnual Electric Generating

Capacity Additions

0

2

4

6

8

10

12

14

16

18

201

95

0

19

60

19

70

19

80

19

90

20

00

GW

Coal Natural Gas Nuclear

Nuclear emergesTechnology Available

Too cheap to meter

Gas declines PIFUA prohibits

Nuclear decline3-Mile Island (1979)Chernobyl (1986)

Gas increasesPIFUA changedPURPACC efficiencyLow price through deregulation

Coal declinesCAAA

63 GW 2002

Money Is Flowing Into the Sector

Source: New Energy Finance 2007

2006 Investment and M&A – By Sector and Asset Class

Annual VC Investment Volume – 2001-2004 Compared With 2005-2006

Investment and M&ABy Region and Asset Class – 2006

Source: New Energy Finance 2007

Figures in brackets represent total number of deals. 2006 figure is annualized.

Total Estimated VC Investment by Region2001-2006

Source: New Energy Finance, January 2007

Figures in brackets represent deals (with disclosed value/total number of deals). 2006 figure is annualized.

Renewable Energy Cost TrendsLevelized cost of energy in constant 2005$1

Source: NREL Energy Analysis Office (www.nrel.gov/analysis/docs/cost_curves_2005.ppt)1These graphs are reflections of historical cost trends NOT precise annual historical data. DRAFT November 2005

Technology Innovation ChallengesThe Next Generation

• Wind Turbines– Improve energy capture by 30%– Decrease costs by 25%

• Solar Systems– Improved performance through, new

materials, lower cost manufacturing processes, concentration

– Nanostructures

• Biofuels– New feedstocks– Integrated biorefineries

Achieving the Right Balance:Technology Investment Pathways

Source: NREL 2007

Promise of renewable energy is profound and can be realized if we…

• Aggressively seek a global sustainable energy economy

• Accelerate investment in technology innovation• Commit to consistent and predictable incentives for

deployment• Acknowledge and mitigate the carbon challenge with

the necessary policies

It is a matter of national will and leadership

Wind and Marine Energy R&D

Source: NREL 2007

Geothermal R&D

Source: NREL 2007

Photovoltaics R&D

Source: NREL 2007

Concentrating Solar Power R&D

Source: NREL 2007

Biofuels R&D

Source: NREL 2007