European Climate Change Programme

Renewable Energy, Progress and way forwardby

Oliver Schäfer, European Renewable Energy Council - EREC

Brussels, Monday, 24th October 2005

0

100

200

300

400

500

600

1950-1959 1960-1969 1970-1979 1980-1989 1990-1999

Growth and costs of major climate related natural disasters

billion €

source: Münchner Rück

Renewables Are the Key Solution to Climate Change

Why energy efficiency in combination with renewables development has to be the number 1

priority

- Climate change- Oil price/dependency- Air pollution- Nuclear risk- Electricity/gas prices- Competitiveness of EU businesses- Job creation potential

100 Millions of citizens from China, India, Brazil, Mexico,…

are

imitating those in the US, EU, Japan on consumption patterns

we have little time, because

Source: Malte Meinshausen, Swiss Technical University

Implications of delays in reductions of CO2

…and Harry Potter can not help

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Fusion

Generation IV

Carbon Capture and Storage

Energy Efficiency

On Shore Wind

Off Shore Wind

PV

Biomass

Wave/Tidal

Not Viable

Technical Viable

Economically Viable

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

The Reality Today Market Development in Wind and

PV

Cumulative Wind Energy Installed Capacity

0

5

10

15

20

25

30

35

40

45

50

GW

EUROPE 0.4 0.6 0.8 1.2 1.7 2.5 3.5 4.8 6.5 9.7 12.9 17.3 23.2 28.6 34.2

WORLD 1.7 2.0 2.3 2.8 3.5 4.8 6.1 7.6 10.2 13.6 17.4 23.9 31.1 39.3 47.3

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: Source: EWEA EWEAGrowth rates 1994-1999 : 31.2%

1999-2004 : 28.3%

The Top-10 Markets in the World

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

MW2002 2003 2004

Source: Source: EWEA EWEA

The Top 10 Suppliers in the World

REPOWER (Germany)

3%

NORDEX (Germany)

2%

GE WIND (USA)11%

SUZLON (India)4%

VESTAS (Denmark)

32%

SIEMENS (Denmark)

6%

GAMESA (Spain)

17%

ECOTECNIA (Spain)

3%

ENERCON (Germany)

15%

Others4%

MITSUBISHI (Japan)

3%

Source: Source: BTM Consult BTM Consult

Cumulative Photovoltaic Installed Capacity (MWp)Cumulative Photovoltaic Installed Capacity (MWp)

Source: Source: Eurec Agency, EPIA, Observ‘ER Eurec Agency, EPIA, Observ‘ER

0

1000

2000

3000

4000

5000MWp

World 314 371 432 502 580 669 795 948 1150 1428 1829 2387 3151 4345

EU-25 90 128 188 284 392 594 1004

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Growth rates 1994-1999 : 18.0%1999-2004 : 30.5%

The Top PV Markets in the World

0

200

400

600

800

1000

1200

Japa

nG

erm

any

US

A

Indi

aP

.R.C

hina

Aus

tral

iaN

eth

erla

nds

Spa

in

Italy

Luxe

mbu

rg

MWp 2001 2002 2003 2004

Source: Source: EPIA, Observ‘ER, IEA-PVPS EPIA, Observ‘ER, IEA-PVPS

Top PV producing countries in the world

0

50

100

150

200

250

300

350

400

Jap

an

US

A

Ger

man

y

Sp

ain

Aus

tral

ia

Indi

a

Fra

nce

P.R

.Chi

na

MWp 2001 2002 2003

Source: Source: EPIA, Observ‘ER, IEA-PVPS EPIA, Observ‘ER, IEA-PVPS

The Top PV Manufactures in the World

0

50

100

150

200

250

300

350

Sha

rp

Kyo

cera

BP

Sol

ar

Mits

ibis

hi

Q-c

ells

She

ll S

ola

r

San

yo

Isof

oton

RW

E S

olar

Deu

tsch

e C

ell

MWp 2001 2002 2003 2004

Source: Source: EPIA, Observ‘ER, IEA-PVPS EPIA, Observ‘ER, IEA-PVPS

Policy Works!

RES target for RES target for Europe Europe

20 % by 2020

The European Parliament key recommendations

- a 20% binding target for renewable energies in total energy consumption by 2020 (equivalent to 33% electricity in 2020, up from a level of 12.9% in 20024);

- tax cuts to encourage renewables;

- fair market conditions for electricity produced from renewable energies;

- end to distortions in the energy market (ownership unbundling, market concentration, environmental harmful subsidies to fossil fuels and nuclear energy);

- a clear increase of R&D budget for renewables in the upcoming FP7 to compensate the historical bias in EU energy research programmes;

20 % by 2020

• A contribution of RES to total inland consumption of 20 % by 2020 is possible

• The contribution of RES to electricity production will be more than 33 % in 2020

• The contribution of RES to heat production will be 25 % in 2020.

AGR needed to meet the White Paper Targets

Benefits of 20 % targetBenefits of 20 % target

Total RES investmentTotal RES investment of 443 billion € in the period of 443 billion € in the period 2001-20202001-2020

126,7 – 323,9 billion € of 126,7 – 323,9 billion € of cumulated avoided cumulated avoided externalexternal costscosts between 2001 and 2020 between 2001 and 2020

115,8 billion € of 115,8 billion € of cumulative avoided fuel cost cumulative avoided fuel cost reductionreduction in EU 15 (2001-2020) in EU 15 (2001-2020)

Creation ofCreation of more than 2 million full time more than 2 million full time jobsjobs until until 20202020

728 million tons/year of CO728 million tons/year of CO22 emission reduction emission reduction in 2020, representing a decrease of 17,3 % in 2020, representing a decrease of 17,3 % compared to 1990compared to 1990

Annual COAnnual CO22 Emission Reductions Emission Reductions due to RES Penetration due to RES Penetration

(2001 – 2020)(2001 – 2020)

 2010

Mt/year2020

Mt/year

Wind 99 236

PV 2.2 24

Biomass 176 326

Hydro 23 35

Geothermal 5.8 15

Solar thermal 14 92

TOTAL RES 320 728

% of total EU15 CO2 emissions in 2000 9.6% 21.9%

Conclusion

• RE has the technological potential to replace fossil fuels as mainstream energy source.

• RE is integral part of the energy supply in many countries today.

• RE has tangible economic, ecological and social benefit.

• BUT: RE market development depends on a coherent, predictable, supportive political & legal framework.

Think the `Unthinkable`

The EREC `Advanced Policies Scenario` (APS)

Why Scenarios?

• images of alternative futures• neither predictions nor forecasts• image of how the future could unfold• useful tools for investigating alternative future

developments and their implications

Scenarios can create a vision for the future and guide decision makers

`Scenarios help us understand the limitations of our ‘mental maps’ of the world – to think the

unthinkable, anticipate the unknowable and

utilise both to make better strategic decisions.`

The IEA AS is a welcomed move, but it has too many limitations – it does

not think the `unthinkable`:

A Substantial Policy Shift

Assumptions Based On:

• Ambitious growth rates• Additional support measures• Regions already active in the promotion of

renewables will increase their efforts• Higher prices for conventional energy supply• Growing support for electrification of the poor regions

by renewables.• Implementation of the Kyoto protocol and additional

measures• International cooperation• Total energy consumption are based on a scenario

from the IIASA

The Contribution of Renewable Energy Sources to the World Energy Supply in 2040 – Projections

in Mtoe – APS

Electricity Scenario

Exemplary detailed scenario for electricity – APS

Comparison between IEA-AP and EREC Scenarios (2030)

IEA-AS EREC-DCP EREC-AP

RES Total (Mtoe) 2345 3416 4289

RES- E (TWh) 6836 11770 17109

WIND (TWh) ~1000 4590 6307

PV (TWh) ~100 1280 2570

• diesel: 21 -23%• hydrogen from gas reforming: 30%• Hydrogen from electrolyses: 12 -15%• Hybrid: 30 - 35%

Efficiency of different engine solutions

What is not the Solution - Hydrogen

Overall efficiency of nuclear hydrogen 12%– 33% of efficiency to produce electricity from NP– 5 kWh to produce 1m3 H2 (electroloyses)– 1m3 H2 produces 1.8 kWh el

To fuel 40% of world transport demand in 2060

would require at least 4000 NPP of 1000 MW !

nuclear hydrogen for cars/lorries

A Streamlined Internal Electricity Market

Competition in the internal electricity market ?

“Much work still has to be done to deal with the dominant and even monopolistic positions of the incumbent operators and investments will be needed to guarantee the interoperability of grids and networks, interconnection and an adequate level of capabilities and infrastructure”

Loyola de Palacio, 13 October 2004

“The current level of competition is not encouraging. (…) In most national markets, customer switching rates are modest, substantial barriers remain for new entrants, market structures are highly concentrated and, last but not least a single European energy market has not been achieved.”

Mario Monti, 21 September 2004

Distortions in the internal electricity market

• 4 Commission benchmarking reports: Endless distortions

• National and regional monopolies / oligopolies

• No real consumer choice

• Lack of interconnectors

• Little separation of production and transmission

• Power companies acting on both demand and supply side in the wholesale market

• 75% of electricity subsidies goes to conventional power

• Euratom shields nuclear (33% of total EU production) from internal market rules (since 1958!)

• Complete absence of any meaningful internalisation of environmental costs

Liberalised Markets?Liberalised Markets?

• 95% of the EU power market is still affected by huge market distortions

• Electricity prices do not reflect full costs as long as polluter pays principle is missing

• Subsidies -direct and indirect- to conventional power production is still massive

• National and regional monopolies / oligopolies

Competition not effective

Ownership-Market Concentration

For more informationFor more information

www.erec-renewables.orgwww.erec-renewables.org

EREC - European Renewable Energy CouncilEREC - European Renewable Energy Council

Renewable Energy HouseRenewable Energy House

26, rue du Trône - B-1000 Brussels26, rue du Trône - B-1000 Brussels

T: +32 2 546 1933 - F: +32 2 546 1934T: +32 2 546 1933 - F: +32 2 546 1934

erec@erec-renewables.orgerec@erec-renewables.org