The Role of Energy Efficiency and Renewable Energy

in a Fossil Fuel Based Electricity System

Middle East Electricity Leaders ForumDubai Exhibition Centre

8 February 2011

Dr. Marianne Moscoso-OsterkornREEEP Director General

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Agenda

International developments

MENA region’s key role

Opportunities and barriers

REEEP’s global activities

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World leaders see the need for a paradigm change in our energy systems

We have to make changes in our lifestyles… and learn to make do with less. In developing countries, poverty eradication will have to be linked to the availability of clean, renewable and affordable energy. I believe that charting these new pathways is not beyond our collective imagination.

Manmohan Singh

The earlier Europe moves, the greater our opportunity to use our skills andtechnology to boost innovation andgrowth. Renewable energy technologies already account for aturnover of 20 bn euros and havealready created 300,000 jobs.

José Manuel Durão Barroso

Today, the world is faced with serious challenges, including finding scalable sources of clean energy, providing a fresh water supply and battling climate change.His Highness Sheikh Mohammed Bin Rashid Al Maktoum

China has adopted and is implementing its national climate change program. This includes mandatory national targets for reducing energy intensity … and the share of renewable energy for the period of 2005 through 2010.

Hu Jintao

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For the next 25 it is estimated that primary energy demand will grow by around 36% - strongest growth increase will take place in China, India and Middle East

Source: IEA World Energy Outlook 2010, p. 85

In this period, China is expected to add generation capacity that is equivalent to the current total installed capacity of the US.

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Transition to low carbon economies is only possible if changes are made both in the demand and supply side of the current energy systems

Energy efficiency along the entire value chain

Efficiency for end consumers

Optimization of the energy mix

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Globally, a decoupling of energy demand from economic growth can be seen – energy intensity decreases globally

Source: IEA World Energy Outlook 2010, p. 85

In China, the ratio of energy demand to GDP is currently 1.5 times above the world average, but with a targeted energy efficiency increase of 3.3% per year, China will achieve the strongest improvements

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Today, 80% of primary energy is wasted – huge untapped savings potential in the power sector and end-use consumption

Source: ABB 2007

The greenest and cheapest energy is the energy not generated – every €1 spent on more efficient energy use avoids €2 spent in energy supply investment

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The energy efficiency potential in the MENA region has not been utilized as in other growing economies

Source: UNEP

Buildings, Appliances and Transport contain a energy saving potential of 40%

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By 2035, the share of renewables will triple and will account for one third of the primary energy supply

Source: IEA World Energy Outlook 2010, p. 85

In China, the share of renewables will grow from 17% to 27%. China will then have the largest hydropower and PV capacity in the world and is since 2010 first in wind power

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De-carbonizing of the power sector is expected in all regions of the world

Source: IEA World Energy Outlook 2010, New Policy Scenario, p. 231

Globally nearly USD 30 trillion of investments in new power plants and transmission and distribution grid will be necessary to meet the future demand by 2035

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China has become a global leader in renewable energy, in terms both of investment and manufacturing

11th five-year plan committed to reducing GDP energy intensity by 20% and increasing the share of non-hydro RES to 10% by 2010 and 30% by 2050

Strong incentives for renewables: Bidding system - Wind Concession Program, FTs and other provincial initiatives

Stringent Energy Conservation measures

USD 300 billion investment by 2020 –300GW hydropower, 30GW wind, 30GW biomass, 1.8GW solar power

Largest installed capacity of wind - largest turbine manufacturing industry and 2rd

largest global producer of solar PV

China is the global leader in solar water heating – 40 million systems covering 10 million households

Source: IEA WEO 2011

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India is strongly committed to deploying renewable energy throughout its states

Action Plan for Climate Change and Solar Mission aims to increase the nation’s installed capacity to 20GW by 2022

Energy Conservation Act 2001: Comprehensive legislation laying roadmap for improvement in energy efficiency

Preferential tariffs, RES purchase obligations for utilities (up to 10% of power), tax incentives

Market has been estimated to be worth around USD 1 billion with future investment of up to USD 3 billion

Huge estimated potential: 15000 MW small hydro, 45000 MW wind, 17000 MW biomass all grid connected

Source: Central Electricity Authority India

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The EU was an early driver of ambitious clean energy policies - achieving the 20-20-20 target

EU Energy and Climate Change Package

towards the 20-20-20 target with a number of

policy measures including:

the revised EU ETS;

a new directive on renewable energy;

a number of measures on energy

efficiency, including a new building

directive;

Directive on CCS and Environmental state

aid guidelines

Set plan for infrastructure

Source: IEA WEO 2011

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Shared responsibilities among European Member States reflect the differing RE potential in each country

Source: European Commission

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Feed-in tariffs are the main regulatory acceleration force for RE in EU –Prices range from 40ct to 15 ct

Certificate systems

Feed-In tariffs Quota obligation

Fiscal incentivesTenders

AT, BG, CY, CZ, DE, DK,

EE, ES, FR, GR, HU

IT, IE, LT, LU, PT

UK, SI, SKNL

UK

DK, FR, IE

BE, IT, SE,

RO, PL, UK

BG, FI, SI, MT

BG

Source: OPTRES

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Thanks to FIT, Germany overachieved its 2010 RES target (12.5%)

German Feed-in Law (EEG) is

Purchase price guarantee

Grid access guarantee

Purchase obligation, priority forfeed-in

Grid operator buys at predefined rates

National equalization fund

Every power customer pays

Law is reviewed every four years

Federal law

Annual decrease incentivizes early action

Guaranteed for 20 yearsDuring 2010, the current government has reduced the feed-in tariffs for solar by 16%

The FT has raised electricity end consumer prices by around 3%

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Future transmission and distribution grid are challenged and significant investment is needed to empower them for the future

Need for balancing highly fragmented, less predictable generation and loading from dislocated generation sources

New services for customers offer real time pricing, local energy storage and smart charging

Smart buildings optimize their internal energy flow and become power producers

Grid integration of renewables has to be a profitable business model also for grid operators

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Markets will be increasingly interconnected – generates advantages and challenges

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Untapped renewable resources: by 2008, just 3% of the MENA region’s electricity were produced from renewables

Source: PwC - 100% renewable electricity

Despite water scarcity in the region, hydroelectricity is the only well-developed, non fossil fuel form of electricity generation in North Africa and the Middle East

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Huge solar and wind potentials make MENA a prime region for harvesting these clean energy sources

Source: 3Tier

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Solar energy – MENA’s geographic advantage: each square kilometer of land receives the solar energy equivalence of 1.5 barrels of crude oil every year

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The region has incident solar irradiance and land sites allowing for large scale CSP – producing electricity and offering its synergies for water desalination

Source: weather2travel.com

Average daily sunlight hours

The average direct normal irradiance (DNI) of 2,334 kWh/m2/y, suits most parts of the region for CSP , PV systems and SWH. 1 km2 of CSP can generate 165,000 m3 of desalinated water

Some countries in the Middle East appear as the largest per capita CO2 emitters globally

Source: Al Masah Capital Limited

CO2 emissions per capita (tons CO2 per capita)

Qatar, Kuwait and the UAE emit more CO2 per capita than the US.

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With an average global growth rate of more than 20%, SWHs have proven to be another key technology to ease power systems in hot countries

Newly installed capacity in 2008

Growth rate 2006-2008Main driver:

Building codes and

incentive schemes

Eskom/SA have saved 6.4GWh through SWH since 2008 and expect a saving equivalent of 578MW from the 925 000 SWH they are aiming for 2013

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MENA governments have increasingly seized upon the recognized benefits of using renewables for power generation and its synergies for water desalination

UAE: 7% renewables by 2020, Masdar City in Abu Dhabi (USD 22 billion investment), where all stages of renewables and energy efficiency development are applied from research to commercialization; establishment of IRENA

Saudi Arabia: recently passed a decree establishing the King Abdullah bin Abdulaziz City for Atomic and Renewable Energy in Riyadh

Qatar: Green transport initiative and Lusail City, a green real estate development

Egypt: 20% non-hydro renewables; 3% electricity by 2020 (wind, CSP, PV); tender, FT, investment tax credits for SWH

Algeria: 6% renewables by 2015 (wind, CSP, PV); 10% by 2027: FT, investment tax credits for SWH

Tunisia: 10% renewables in 2011; 40 projects by 2016 (PV, CSP); tax exemptions, investment tax credits

Morocco: 10% renewables of primary energy by 2012 and 20% of electricity (wind, SWH, CSP); VAT exemption for equipment, FT, investment credits for SWH

Other initiatives: MSP, Desertec

Source: Al Masah Capital Limited

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The costs gap between renewables and conventional power is significantly decreasing, due to reduced manufacturing costs and economies of scale

Source: PricewaterhouseCoopers

The retail prices of PV panels fell to about USD 2/W in 2010, from nearly USD 30/W in the 1990s. The costs of wind energy decreased from USD 3,000/kW in the 1980s to USD 2,200/kW in 2010.

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Already in the near future, CSP can become profitable at different times of day and year, providing peak load electricity

Large-scale CSP development in the MENA region could entail exports to neighboring countries, as well as to Europe.

Source: www.dlr.de/tt/csp-finance

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The removal of distorted fossil fuel subsidies is critical to allowing renewables to fairly compete in a hydrocarbon-based power system

Source: IEA World Energy Outlook 2010, p. 581

Globally, fossil fuel consumption subsidies amounted to USD 312 billion in 2009, with oil products accounting for almost half of the total.

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Conclusion

Advantages to utilizing the potential for renewables in the MENA region:

Growing demand for electricity and water require more generation capacities

Depletion of fossil fuel reserves leads to higher fossil fuel prices, resulting in higher value to divert hydrocarbon to export

Attract high technology into the region and create new jobs

Strong utility structure

Barriers to develop the market:

High subsidies on fossil fuel – price transparency

Challenge for the existing power grid – positive business model for generator and grid operator required

Need for further research and capacity building

Enabling policies and regulations required

Importance the visionary support of the political leaders

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REEEP’s mission aims to accelerate market development for renewable energy and energy efficiency in developing and emerging economies

REEEP’s 350 partners comprise of key governments and private sector entities

REEEP supports one of the largest global networks of stakeholders in renewables and energy efficiency, interconnecting 3,000 “Friends of REEEP” and working with 150 top experts throughout the world

REEEP runs the world’s most effective, dedicated sustainable energy information platform, with 100,000 users per month: www.reegle.info

Over the last 7 years, REEEP supported governments, communities and the private sector in 130 projects to accelerate renewables and/or energy efficiency

The regional presence in major emerging markets, such as India, China, Brazil south Africa but also LDCs guarantees strong local ownership and delivery of best fits for local needs

REEEP is unique in combining the symbiotic benefits of renewables and energy efficiency

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REEEP is currently implementing 65 projects in 29 countries – 8 in the MENA

region

Projects covering more than one country are listed in all covered regions

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Its project activities have made REEEP a successful change agent for sustainable energy systems

Policy - China

Conducted research to underpin a possible 30%

renewable energy target in China by 2030

Energy Efficiency - Brazil

Integrated 40,000 solar water heating systems

into low-income housing loans

Standards & Labeling - Ghana

Funded public awareness campaign surrounding

introduction of appliance efficiency labeling

Business - India

Designed the mechanisms for tradable renewable

energy certificate system, enabling inter-state trade

Regulation - Mexico

Developing regulatory instruments to attract

investment in geothermal energy

Finance - Mozambique and Uganda

Coached clean energy entrepreneurs and facilitated

investor matchmaking

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Lead Time

Average time for planning and construction of power systems

Source: Wuppertal Institute

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شكرا / Thank you

REEEP International Secretariat

Vienna International CentreRoom D1738

Vienna, Austria

info@reeep.org+43 1 26026 3425

www.reeep.orgwww.reegle.info