tracking clean energy progress 2015

8/15/2019 Tracking Clean Energy Progress 2015

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Tracking Clean

Energy Progress 2015Energy Technology Perspectives 2015 ExcerptIEA Input to the Clean Energy Ministerial


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Energy Progress 2015Energy Technology Perspectives 2015 ExcerptIEA Input to the Clean Energy Ministerial


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INTERNATIONAL ENERGY AGENCY

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IEA member countries: Australia

AustriaBelgium

CanadaCzech Republic

DenmarkEstonia

FinlandFrance

Germany Greece

Hungary Ireland

Italy JapanKoreaLuxembourgNetherlands

New ZealandNorway PolandPortugalSlovak RepublicSpainSwedenSwitzerland Turkey

United KingdomUnited States

The European Commissionalso participates in

the work of the IEA.

Please note that this publicationis subject to specic restrictionsthat limit its use and distribution.

The terms and conditions areavailable online at www.iea.org / t&c /

© OECD/IEA, 2015

Secure Sustainable Together


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© OECD/IEA, 2015.

Table of Contents 3

Table of Contents

Introduction 4

Foreword 4 Key Findings 6 Tracking Progress: How and Against What? 16

Chapter 1 Tracking Clean Energy Progress 19

Renewable power 20

Nuclear power 26 Natural gas-red power 28 Coal-red power 30 Carbon capture and storage 32 Industry 34 Iron and steel 36 Cement 38 Transport 40 Fuel economy 42 Electric vehicles 44 Buildings energy efficiency 46 Building envelopes 48

Appliances, lighting and equipment 50 Co-generation and DHC 52 Renewable heat 54 Smart grids 56 Energy storage 58 Hydrogen and uel cells 60

Chapter 2 Metrics for Energy Sector Decarbonisation 63

Choosing the right metrics or energy sector decarbonisation 65 Summing up the parts: Energy sector decarbonisation metrics 66 Role o electricity decarbonisation: A supply-side example 67 Benets and role o early action on energy efficiency 71 Better understanding the potential contribution o energy efficiency 74 Linking energy supply and demand – need or action on both sides 75 Conclusion 75

Annexes 77

Acronyms, Abbreviations and Units 78 Technology Overview Notes 82 Re erences 87 Acknowledgements 90


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4 Introduction Foreword

© OECD/IEA, 2015.

Foreword

As the IEA looks to what is being heralded as a historic year for international cooperationon climate change mitigation, I wonder: will we be able to rise to the challenge? Drawingon the analysis of Energy Technology Perspectives 2015 (ETP 2015 ) to survey today’s energylandscape, I am as convinced as ever that the opportunities are there. Never has the promiseof clean energy technology been so great. Yet, ETP 2015 also highlights that never have thechallenges surrounding deployment of the proper solutions been so daunting. We need tostart thinking differently about what we can do to change the current sluggish pace towards

sustainable change: we need to innovate!ETP 2015 demonstrates that strategic action on clean energy technologies at national,regional and international levels has the capacity to move the world closer to shared goalsfor climate change mitigation while delivering benets of enhanced energy security andsustainable economic development. Unfortunately, this report also shows that the currentpace of action is falling short of the aim of limiting climate change to a global temperaturerise of 2°C (in ETP modelling, the 2° Scenario or 2DS). Indeed, despite positive signs in manyareas, for the rst time since the IEA started monitoring clean energy progress, not one ofthe technology elds tracked is meeting its objectives. As a result, our ability to deliver afuture in which temperatures rise modestly is at risk of being jeopardised, and the future thatwe are heading towards will be far more difficult unless we can take action now to radicallychange the global energy system.

ETP analysis shows that innovation needs strong support to be able to deliver on its promises.Indeed, inventions do not become innovations until they are deployed at scales sufficientto have an impact, and there are many non-technical barriers that can prevent very cost-effective solutions from playing their role. We must therefore adopt a systems perspectiveand recognise that technology innovation will only occur if the right policy signals and marketand regulatory frameworks are in place to foster environments conducive to attracting therequired levels of investments. International collaboration can provide the means to speed upinnovation by sharing best practices and enabling a pooling of resources for solving commonissues.

The theme of ETP 2015, “Mobilising Innovation to Accelerate Climate Action”, not onlyreaffirms the need for government to stimulate energy technology innovation acrossproduction and consumption in all sectors, but also to recognise the impacts innovationcan have on providing cost-effective means to achieve ambitious goals. This year’s analysishighlights areas in which targeted action can deliver rapid impacts, for instance, bystimulating wider deployment of renewables such as wind and solar photovoltaics and byreducing emissions and improving efficiency in industry. It also demonstrates the importanceof early action to enable longer-term benets including the advancement of carbon captureand storage along the innovation pathway and boosting innovation capacity in emergingeconomies.

The timescale for this publication is 40 years. This also represents the IEA’s history ofsupporting international technology co-operation through its energy technology network,


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Introduction Foreword 5

© OECD/IEA, 2015.

which celebrates in 2015 four decades of progress in accelerating technology results throughinternational collaboration. Through its broad range of energy technology initiatives, theIEA enables countries, businesses, industries, and international as well as non-governmentalorganisations to share research on breakthrough technologies, to ll existing research gaps,to build pilot plants and to carry out deployment or demonstration programmes across the

energy sector. This quiet success story demonstrates that, through a common shared vision,stakeholders worldwide can take actions that will enable the transformation needed tosupport energy security, economic growth, and environmental protection.

We need more collaboration of this type if we are to transcend the shortcomings ofour current energy system, which is unsustainable and, therefore, insecure. The climatenegotiations set to take place in Paris later this year make it imperative that the messagesof ETP 2015 be heard by all stakeholders and turned into ambitious pledges for actions. Thisis the time to construct a clean energy future that works for everyone, and for our leaders tohave the wisdom to seize the power of innovation to benet from the best that technologyoffers.

This publication is produced under my authority as Executive Director of the IEA.

Maria van der HoevenExecutive Director

International Energy Agency


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6 Introduction Key Findings

© OECD/IEA, 2015.

Key Findings

Market viability o some clean energy technologiesis progressing, but the overall rate o deployment

alls short o achieving the ETP 2°C Scenario (2DS).

■ The cost gap between electricity generated rom renewables and that romossil uels is narrowing. Some renewables are already competitive with new-builtossil uel plants in various locations. In addition, long-term contracts with record

low prices were signed or both onshore wind and utility-scale solar photovoltaic (PV)

projects over the last year showing the signicant improvement on cost o energy orsome renewables.

■ Solar PV may even exceed 2DS targets with its strong growth in deploymentand increasing competitiveness. Improvement in the rate o onshore wind andhydropower deployment is needed to get back onto the 2DS trajectory. Meanwhile,progress has slowed in the development o bioenergy, offshore wind, geothermalpower, solar thermal electricity (STE) and ocean energy. In addition to current policy

rameworks urther support is needed to overcome technology-specic barriers in orderto meet 2DS targets.

■ Globally annual additions o renewable power capacity are expected to leveloff over the medium term. Policy uncertainty and retroactive policy signals are

the main barriers to deploying renewables in member countries o the Organisationor Economic Co-operation and Development (OECD). However, persistent economicand non-economic barriers remain challenging to deployment in OECD non-membereconomies. In particular, issues concerning nancing, grid connection and integrationare contributing to the slow-down in renewable power deployment and generation.

4%annual increase inGDP since 2002

2.6%annual increasein global energydemand between2002 and 2012 2.8%

in 201212%

in 2025

3.6% global annualincrease in electricitydemand between2002 and 2012Electricity

rom variablerenewables

billion global population in 2012,

grew at a rate o

1.2% per year between 2002 and 2012

2.3% annualincreaseexpectedto 2025

7 K e y N u m b e r s


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Introduction Key Findings 7

© OECD/IEA, 2015.

■ Support or low-carbon heat is very limited compared with low-carbonelectricity. Both co-generation and the use o modern renewable energy or heathave grown in absolute terms, but their rate o growth is too slow; co-generation hasplateaued as a share o global electricity generation. The strong potential o thesetechnologies, particularly when combined with district heating and cooling (DHC), to

support greater integration o locally available, renewable or surplus energy sources isnot being tapped.

■ Electricity markets and market mechanisms need to reect the trueenvironmental costs o generation while also adapting to the productiono variable and distributed clean energy generation. Clear and strong marketincentives that avour low-carbon technologies, either through the introductiono carbon prices or technology eed-in tariffs, are required to make clean energytechnologies competitive in an era o continuing low coal prices. To secure investmentand integration, market mechanisms need to be accompanied with clear policy goalsthat build certainty.

Limited data availability and poor data consistency onenergy use constrain capacity to undertake the targetedanalysis required to identi y underlying trendsand the most appropriate policy options.

■ High-quality, timely, comparable and detailed data and indicators are vitalto establishing, monitoring and maintaining (or adapting) sound policies.Promoting the development o metrics or evaluating the penetration o cleanenergy technologies, costs and benets, requires both national data collection and

international data co-ordination. Filling existing data gaps, many o which arehighlighted in this report, is vital to improving reporting o data and the quality oofficial statistics.

87 56%USD/MWh

or solar PV electr icity,a record low price

or contracts signedin 2014

increase in solar PVelectricity generation in 2012

Thermal demandaccounted or

44%o nal energyin 2012

29%o emissionsEUR/tCO 2 carbon price to

effect short-term coal-to-gasswitching in Europe 6.3

EUR/tCO 2 averagecarbon price in 2014 in Europe


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© OECD/IEA, 2015.

The deployment o clean ossil and nuclear technologiesis constrained by complacency in exploiting existingopportunities.

■ Low-priced coal was the astest-growing ossil uel in 2013, and coal-redgeneration increased in all regions. Newer coal plants can per orm to a relativelyhigh standard. But where coal-red capacity is expanding, in emerging economies

or example, less efficient, subcritical units dominate, primarily due to the absence ominimum efficiency policies.

■ Natural gas-red power, a cleaner and more exible generation uel than coal,slowed markedly on global markets in 2013-14, unable to compete againstlow coal prices. Weakened electricity demand and coal oversupply (leading to lowcoal prices) are undermining natural gas use or electricity generation. Technicaldevelopments to improve the exibility o gas red-power plants are continuing apace,establishing a long-term competitive advantage over the traditional base-load plants.

■ On the nuclear side, 2014 saw the highest number o reactors underconstruction in more than 25 years. But the increase in global capacity and therate o grid connections are still too low to meet 2DS targets in 2025. Overall, thereappears to be a plateauing o growth in OECD countries, though some newcomercountries (including Turkey and Poland) are preparing or new build. Much strongergrowth is expected in OECD non-member economies, with China having particularlyambitious plans.

New clean energy technologies can trans orm energy

markets providing new economic opportunities. ■ Smart grids can provide enhanced monitoring, control and directionality

to grid operators. Deployment o some sub-categories o smart-grid technologies

250USD billion invested in newrenewable capacity in 2014

11% 21% 40%only 50 countries havesupport measures

or renewable heat

more than

130 have policies supportingrenewable electricity

TOTAL ELECTRICITY GENERATION IN 2012

NUCLEAR RENEWABLE COAL FIRED


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© OECD/IEA, 2015.

has grown quickly in early adopter markets, although not entirely smoothly, withcost overruns and regulatory uncertainty the main barriers to greater deployment.Signicantly, in OECD non-member economies, the ability o smart grids to acilitategrid stabilisation and security o electricity supply is driving the technologydeployment, rather than integration o renewables. This signals progress in the

maturity o the concept and technology.■ Energy storage can provide valuable services to energy systems while also

acilitating exible electricity systems and reducing waste thermal energy.Development in battery technology is currently driven by transport demand or electricvehicles (EVs). But signicant numbers o large-scale batteries have been deployed oruse in requency regulation and to help integrate a rising share o variable renewables.

■ A signicant milestone or carbon capture and storage (CCS) was reachedwith the opening o the rst commercial-scale coal-red power plant (CFPP)with CO 2 capture in October 2014. Further projects are being built in the UnitedStates, Canada, Australia, Saudi Arabia and the United Arab Emirates. The numbero projects in development, however, is lower than required to meet the 2DS targets.

Given the importance o CCS in a low-carbon uture, there will need to be a substantialincrease in investment in research and development (R&D), storage resources, andprojects now to ensure it is widely available in the coming decades.

■ Increased use o hydrogen is seeing renewed interest, given its ability toprovide multiple energy services. Between 2008 and 2013, the global market o

uel cells (FCs) grew by almost 400%, with more than 80% o FCs used in stationaryapplications such as FC micro co-generation, backup and remote power systems. Interms o transport, some manu acturers have announced pre-commercial marketintroduction o uel cell electric vehicles (FCEVs) at prices o around USD 60 000.

■ EVs are continuing to grow in the passenger light-duty vehicle (PLDV) market,with more EV models released by vehicle manu acturers. Relative slowdowns

in deployment and in government spending make it unlikely, however, that ambitious2DS targets will be achieved. EVs also have signicant potential to contribute tocleaner and more uel-diverse vehicles in both light-duty reight and collectivetransport modes, but progress in these modes is negligible.

142 GW

current electricitystorage capacity

Primary energyconsumption

22 MWhper person in 2012

12 USD billionINVESTED IN LARGESCALE CCS PROJECTSSINCE 2005 15

USD billioninvested in smart grids

projects in 2013

USED FOR ELECTRICITYGENERATION

EMISSIONS PERPERSON IN 2012

4.5 tCO 2


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© OECD/IEA, 2015.

Strong actions linked to stated targets need to be pushedorward to achieve the clean energy potential.

■ Cleaner use o coal can be achieved by strengthening bilateral or multilateralco-operation. The recent agreement between China and the United States to addresstheir carbon emissions reects positive actions by both countries and sets a strongprecedent or other countries in the lead-up to COP 21. However, CFPP capacityis continuing to expand, and existing policies and best practices do not yet ensurestrategic siting o CFPPs, deployment o the most efficient technologies, or CCS-readiness or CCS.

■ In energy-intensive industries, deployment o best available technologies(BATs) and energy- saving measures, and demonstration o innovative low-carbon processes, have been relatively slow over the last decade and needto accelerate to match stated ambitions. This is partly due to inertia in capacitystock turnover, uctuation o raw material availability, and demands or return on

investment or re urbishment projects. Resource limitations also affect investmentsin research, development, demonstration and deployment (RDD&D), and processconstraints that make innovative technology developments rare and time rames orcommercialisation o such technologies long. Finding new pathways or public-privatecollaboration and co-operation, as well as more effective support mechanisms, will becritical to meeting short-term milestones and climate targets through 2025.

■ Buildings energy demand continues to grow rapidly; in act, the growth ratewould need to be halved to achieve 2DS targets, meaning that each year thegap grows larger. While ambitious targets have been set or the buildings sector,

ew examples exist o success ul large-scale measures. Given the relatively long li e o buildings, overcoming the large inertia in the building stock is critical. Both the rateand the depth o energy efficiency renovations need to scale up rom the current lowlevel o activity.

■ Fuel efficiency standards have proven to be an effective method o improvingvehicle eet efficiency; expanding the application o these standards beyondPLDVs is now necessary. As the PLDV market in OECD non-member economies isnow bigger than that in OECD member countries – and continuing to grow – policymeasures to improve uel economy o new PLDVs need to be introduced in OECD

82%80%

13% 29%GLOBAL ENERGY DEMAND IN 2012

REDUCTIONS TO MEET 2DS IN 2025relative to the current trajectory

FOSSIL FUELS

industry energy demand transport CO 2 emissions

REDUCTION OF THERMALLOADS IN NEW BUILDINGSPOSSIBLE WITH EFFICIENTBUILDING ENVELOPES

RENEWABLES COAL


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© OECD/IEA, 2015.

non-member regions. Even though over two-thirds o reight transport is by road, uelefficiency standards or medium- and heavy-duty vehicles remain quite limited andmust be expanded. An overarching strategy o Avoid, Shif and Improve is required tostabilise transport energy demand in the next decade, and or CO 2 emissions to startshowing a net decrease.

■ International transport, ofen excluded rom analysis o the transport sector,needs signicant co-operation to render policy measures effective. The energyefficiency targets o both the International Civil Aviation Organization (ICAO) and theInternational Maritime Organization (IMO) are broadly consistent with 2DS objectives,

but will need to be complemented with actions impacting activity levels and with uelswitching, especially towards bio uels. Market-based instruments such as emissionstrading have direct effects on transport activity in the aviation and shipping sectors;they can serve to internalise the social costs these transport sectors generate throughlocal pollutant and greenhouse gas (GHG) emissions.

Re raming climate goals through energy metrics canhelp highlight various drivers or low-carbon technologydeployment and support ambitious, yet realistic, targets.

■ The near-term ocus and monitoring o energy sector metrics can providea greater insight into emissions reduction measures than GHG emissionsinventories alone. International climate agreements have typically ocused on GHGemissions and measures. Alternative metrics, which can be ramed around energyefficiency, new investment in clean power generation, and even advances in RDD&D,can help to identi y opportunities or actions with both short- and long-term impacts.

■Energy sector decarbonisation needs to be tracked, with electricitydecarbonisation o particular importance and interest. Tracking both technology-and sector-specic indicators is use ul to get a clear picture o opportunities and

bottlenecks in advancing decarbonising the energy system as a whole. The transitionto low-carbon economies needs to be care ully managed, or the provision o secure,affordable energy is critical or economic growth and social development. A ullerunderstanding o the opportunities to promote synergies among energy, environmentaland climate policies is also needed .

52%OF EMISSIONS REDUCTIONS TO 2025

CAN BE DELIVERED BY END USEENERGY EFFICIENCY

15 13 7EMISSIONS REDUCTIONS POTENTIAL BY 2025

GtCO 2IN INDUSTRY

GtCO 2IN TRANSPORT

GtCO 2IN BUILDINGS


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© OECD/IEA, 2015.

Status against 2DS targets in 2025 Policy recommendations

Renewablepower

Renewable power is increasingly atrisk o alling short o ETP 2DS target,

despite the growing competitiveness o aport olio o renewable technologies.

Policies that enable a predictable and reliable long-term marketare imperative to mitigate the risks associated with capital-

intensive investment in renewables.Regulatory rameworks that support cost-effective remunerationare needed, to avoid high economic incentives and the possibilityo retroactive steps.

Developing markets should ollow well-established best practicesto avoid problems with integration.

Nuclear power Conservative estimates put installedcapacity at 24% below the 2DS target

or 2025, with policy and nancinguncertainties contributing to nuclearbeing off track.

Electricity market incentives that promote all types o low-carbon solutions are required to provide nancing certainty orinvestments in nuclear power.

Policy recognition o the security o supply, reliability andpredictability that nuclear power offers.

Gas-redpower

Despite improved exibility o gas-redpower plants, renewable energy and lowcoal prices make the situation or gaspower challenging.

Electricity market incentives such as carbon prices and otherregulatory mandates are necessary or natural gas to competewith low-cost coal in the power sector.Policy makers and manu acturers need to tailor solutions byapplication and location in order to maximise the advantageavailable rom natural gas-red power technologies.

Coal-redpower

The continuing trend of year-on-yeargrowth in coal-red power needs to bereversed to meet 2DS targets.

Policy incentives such as carbon pricing and regulation areimperative to control pollution and limit generation frominefficient units.

New coal power units should achieve best available efficiency and,if not initially installed, should be CCS-ready to have the potentialto reduce the impact of coal use

CCS While progress is being made, CCSdeployment is not on track to meet2DS targets.

Financial and policy commitment to CCS demonstration anddeployment are needed, to help mitigate the investment riskand long lead time required to discover and develop viablestorage sites.

Policy incentives such as carbon pricing and regulation arerequired as currently CO 2 or use in enhanced oil recovery (EOR)remains the only commercial driver or carbon capture projects.

Industry Despite progress in energy efficiencyenergy use must be cut 13% and directCO2 emissions 18% by 2025 compared

with current trends. Demonstrationactivities o innovative low-carbonindustrial technologies need to beaccelerated to meet 2DS targets.

Focus on improving energy efficiency, switching to lower-carbonand alternative uels, and deploying BATs to the greatest extentpossible in all sub-sectors. Instruments such as stable, long-term

CO2 pricing mechanisms and the removal o uel subsidies shouldbe implemented to properly incentivise energy efficiency.Support mechanisms to reduce investment risk and to acceleratedemonstration and deployment o innovative technologies, aswell as co-operative rameworks or international collaborationand technology trans er which manage intellectual propertyand competitive advantage concerns. Regional and sectorialdisparities illustrate the need or co-ordinated efforts.

On track?: ● Not on track ● Improvement, but more effort needed ● On track, but sustained deployment and policies requiredRecent trends: æ

Negative developments ~ Limited developments Positive developments

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Table I.1 Summary of progress


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Iron and steel Steady growth in crude steel production,particularly in emerging economies,puts more pressure on the need to limitannual growth in energy use to 1.1%through 2025 (hal o the increase in2012), along with direct CO 2 emissions.

Improve energy efficiency, phase out outdated technologies,switch to low-carbon uel based processes (e.g. gas-basedDRI) and recycle more steel to increase scrap availability, whileaddressing the challenges o slow capacity stock turnover, highabatement costs, uctuation in raw material availability, carbonleakage and industrial competitiveness.

Support research, development, demonstration and deployment(RDD&D) programmes that will bring new technologies tocommercial maturity and accelerate their diffusion to meetthe 2DS.

Cement Energy use must decline by 3% through2025, despite cement productiongrowth o 17%. Compared with currenttrajectory, direct CO

2 emissions need to

be reduced by 12%.

Incentivise improvements in thermal energy intensity,clinker substitution and switching to low-carbon uel mixesto capture potential improvements in energy use andemissions.

Demonstrate CCS in the short term to enable direct emissionsreduction rom cement manu acturing in the longer term,through globally co-ordinated efforts.

Transport Meeting the transport 2DS targetsrequires a reversal o current trends,

or both annual energy use and CO 2 emissions.

Policy instruments are required to rationalise travel choices,shifing part o the passenger transport activity to collectivetransport modes, particularly in areas o high urban density.Including economic instruments such as uel taxation, roadcharging (e.g. associated with the usage o reight transportvehicles on the road network), congestion charging andparking ees.

Remove uel subsidies to incentivise switching to uel-efficientvehicles.

Fuel economy OECD PLDV efficiency improvementrates o 3% per year have not beenmatched by the larger and growingnon-OECD market, leading to a globalannual average improvement o 1.8%,almost hal the rate required to meet2DS targets.

Replicate the success in improving the average uel economy othe PDLV eet in the light commercial and medium- and heavy-duty vehicle eets to drive efficiency improvements in the road

reight sector.Promote switching rom larger, more power ul PLDVs towardssmaller and/or less power ul vehicles.Introduce a global realistic test cycle and better monitoring othe real on-road uel economy.

Electric andhybrid-electric

vehicles

Annual average passenger electricvehicle sales growth rates o 50%are short o the 80% needed to meet2DS targets.

Continuing RD&D, in rastructure roll-out and governmentincentives are required to support the development o passengerelectric vehicles (EVs), particularly to increase vehicle range andreduce battery costs.

Promote EVs or transport modes other than passenger transportvehicles.

Explore the potential that electric mobility offers rom changesin traditional vehicle ownership patterns to multi-modal traveland behavioural changes rom enhanced use o in ormation andcommunication technologies (ICTs).



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Table I.1 Summary of progress (continued)


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Buildings Year-on-year growth o buildingsenergy demand is incompatible with2DS targets, which require constrainedgrowth between now and 2025, despitea predicted increase in population.

Governments need to promote deep energy renovation duringnormal re urbishment, only incentivising very high-per ormingbuildings and components.

To achieve near-zero-energy buildings (NZEBs), building codesor insulation and windows with lower U values, along with

mandatory air sealing, will be essential.All governments – especially in emerging economies – needto make more effort to develop, promote and en orce morestringent building codes.

Buildingenvelopes

The potential to save energy in buildingsby 75%-80% compared with existingbuildings through advanced buildingenvelope materials and constructiontechniques is not being realised.

Policies that promote awareness, education and nancialincentives or very high-per orming products and systems arenecessary to increase adoption o the most efficient buildingenvelope materials and construction.Labelling and minimum per ormance standards or buildingcomponents need to be en orced to accelerate the deployment obest available technologies.

International co-operation is needed to help establishcommodity-based advanced building materials and products inemerging markets.

Appliances andequipment

To meet 2DS targets the annual growtho electricity consumption in thebuildings sector needs to halve, relativeto growth in the last decade.

Appliance minimum energy per ormance standards (MEPS) needto be extended to more countries and appliances, particularly

or digital and network-connected appliances. Monitoring andevaluation o the standards and their impact are also needed.

Stringent standards and en orcement are required to eliminateinefficient appliances rom the market.

Co-generationand districtheating and

cooling

The benets of co-generation and districtheating and cooling (DHC) systems, boththrough their direct energy efficiency, andthrough the increased exibility that theyprovide to the electricity and thermal grids,have not been fully captured.

Strategic planning of local, regional and national heatingand cooling should be developed to identify cost-effectiveopportunities to efficiently develop co-generation and expandDHC networks.Policy measures are needed to facilitate investment inmodernising and improving existing DHC networks and makethem more energy efficient.Policies should be implemented to mitigate high up-front costsand inexible business structures, and address the lack oflong-term visibility on regulatory frameworks that also limitco-generation and DHC.

Renewableheat

Modern renewable heat deserves greaterattention by policy makers, and should beincluded in low-carbon energy strategiesthat are based on a detailed local appraisalof both potentials and barriers.

Policy measures to raise awareness and tackle non-economicbarriers can be a very cost-efficient way to tap into thepotential o renewable heat given the maturity o many modernrenewable heating technologies.Success o targets and support policies in a number o regionsneed to be replicated.



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Smart grids The transition o smart grids rom aperceived exclusive enabling unction orrenewable and distributed generationto the unction o grid stabilisation andsecurity o electricity supply signals thematurity o the concept and technology.

Regulation that enables cost-reective investment in advanceddistribution network technologies is required or sustainedmarket development.

Market mechanisms are necessary to ensure that customers andsuppliers share the smart-grid costs and benets.Support the development o international standards to accelerateRDD&D.

Energy storage Storage can contribute to meetingthe 2DS by providing exibility to theelectricity system and reducing wastedthermal energy.

Policies are required to support market development o energystorage and the regulatory environment needs to adapt torecognise and compensate storage or the variety o energysolutions it provides to both the electricity and thermal energysystems.

Hydrogen Hydrogen has the potential to contributeto meeting the 2DS as a exible near-zero-emissions energy carrier withpotential applications across all end-usesectors.

Targeted investment in RD&D or both stationary andtransportation applications, as well as energy system integration,is needed to establish the role o hydrogen technologies in abroader energy system.

Support the development o international standards or hydrogenstorage production and delivery.



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16 Introduction Tracking Progress: How and Against What?

© OECD/IEA, 2015.

Tracking Progress:

How and Against What?Tracking Clean Energy Progress 2015 (TCEP 2015) examines whether current policy is effectivelydriving efforts to achieve a more sustainable and secure global energy system. Published annually,TCEP highlights how the overall deployment picture is evolving. For each technology and sector,TCEP identies key policy and technology measures that energy ministers and their governmentscan take to scale up deployment, while also demonstrating the potential to save energy andreduce emissions.

TCEP 2015 uses interim 2025 benchmarks set out in the 2DS, as modelled in ETP 2015, to assesswhether technologies, energy savings and emissions reduction measures are on track to achieve

the 2DS by 2050. As in previous TCEP reports, there is an evaluation of whether a technology orsector is on track, needs improvement or is not on track to meet 2DS targets. Where possiblethis “traffic light” evaluation is quantitative.

The report is divided into 19 technology or sector sections, and uses graphical overviews 1 tosummarise the data behind the key ndings. This year’s edition contains a special feature onmetrics to support national action on energy sector decarbonisation, which is particularly relevantgiven that a new agreement will be negotiated in 2015 under the United Nations FrameworkConvention on Climate Change (UNFCCC).

TCEP focuses on whether the actions needed to decarbonise the energy sector over theten years to 2025 are progressing. It also uncovers areas that need additional stimulus. TCEP2015 introduces a second qualitative evaluation of progress, which reects whether the rate of

technology deployment, cost reductions, policy changes and other necessary measures have beenpositive, negative or limited. This evaluation is based on progress or activity in the last year orlast tracking period.

The 2DS relies on development and deployment of lower-carbon and energy efficient technologiesacross the power generation, industry, transport and buildings sectors (Figure I.1). For eachtechnology or sector, TCEP examines recent trends, tracks progress and recommends furtheraction.

Recent trends are assessed with reference to the three TCEP measures that are essential to thesuccess of individual technologies:

■ Technology penetration. What is the current rate of technology deployment? What share ofthe overall energy mix does the technology represent?

■ Market creation. What mechanisms are in place to enable and encourage technologydeployment, including government policies and regulations? What is the level of private-sectorinvestment? What efforts are being made to increase public understanding and acceptance ofthe technology? Are long-term deployment strategies in place?

■ Technology developments. Are technology reliability, efficiency and cost evolving, and if so,at what rate? What is the level of public investment for technology research, development anddemonstration (RD&D)?

1 Enhanced interactive data visualisations are available at: www.iea.org/etp/tracking.


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Introduction Tracking Progress: How and Against What? 17

© OECD/IEA, 2015.

Figure I.1 Sector contributions to emissions reductions

30

32

34

36

38

40

42

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

G t C O

2

Other 10%

Buildings 12%

Transport 23%

Industry 27%

Power 28%

Key point Reduction efforts are needed on both the supply and end-use sides; focusing on onlyone does not deliver the 2DS.

The 6°C Scenario (6DS) is largely an extension ocurrent trends. By 2050, primary energy use grows

by almost two-thirds (compared with 2012) andtotal GHG emissions rise even more. In the absenceo efforts to stabilise atmospheric concentration oGHGs, average global temperature rise above pre-industrial levels is projected to reach almost 5.5°Cin the long term (by 2500) and almost 4°C by theend o this century. Already, a 4°C increase withinthis century is likely to stimulate severe impacts,such as sea level rise, reduced crop yields, stressedwater resources or diseases outbreaks in new areas(World Bank, 2014). The 6DS is broadly consistentwith the World Energy Outlook (WEO ) CurrentPolicy Scenario through 2040.

The 4°C Scenario (4DS) takes into accountrecent pledges made by countries to limit emis-sions and step up efforts to improve energyefficiency, which helps limit long-term temperaturerise to 4°C (by 2500). The 4DS is, in many respects,already an ambitious scenario that requires signi-cant changes in policy and technologies comparedwith the 6DS. This long-term target also requiressignicant additional cuts in emissions in the

period afer 2050; yet with average temperaturelikely to rise by almost 3°C by 2100, it still carries

the signicant hazard o bringing orth drasticclimate impacts. The 4DS is broadly consistentwith the WEO New Policies Scenario.

The 2°C Scenario (2DS) is the main ocus oETP 2015 . It lays out the pathway to deploy anenergy system and emissions trajectory consis-tent with what recent climate science researchindicates would give at least a 50% chance olimiting average global temperature increase to2°C. The 2DS sets the target o cutting energy- andprocess-related CO 2 emissions by almost 60% by2050 (compared with 2012) and ensuring theycontinue to decline thereafer. It identies changesthat help ensure a secure and affordable energysystem in the long run, while also emphasisingthat trans orming the energy sector is vital butnot solely capable o meeting the ultimate goal.Substantial effort must also be made to reduce CO 2 and GHG emissions in non-energy sectors. The 2DSis broadly consistent with the WEO 450 Scenario(re erring to pollutant levels o 450 parts permillion in the atmosphere).

Box I.1 ETP 2015 scenarios

Tracking progress: For each technology or sector, the progress towards meeting the 2DS isevaluated.

Recommended actions: Policy measures, practical steps and other actions required to overcomebarriers to the 2DS are identied.


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20 Chapter 1Tracking Clean Energy Progress Renewable power

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● Improvement needed Positive developments

Renewable power

Renewable power generation continues to progress, but is not ully on trackto meet the 2DS. Renewable electricity generation is expected to grow

by 45% between 2013 and 2020, reaching 7 310 terawatt hours (TWh).With annual capacity additions expected to level off, however, renewablepower is increasingly at risk o alling short o the 2DS generation targeto 10 225 TWh by 2025, mainly because o slow economic growth, policyuncertainty in OECD member countries and persistent economic and non-economic barriers in OECD non-member economies.

Recent trends

In 2014, global renewable electricity generation rose byan estimated 7% (350 TWh) and accounted or morethan 22% o the overall generation. OECD non-membereconomies continued to dominate global renewablegeneration, with their share increasing to around 55%.China remained the largest market, accounting or anestimated 23% o overall renewable electricity generationin 2014.

In 2014, cumulative installed renewable capacityincreased urther. Onshore wind additions recoveredand are back on track; over 45 gigawatts (GW) o new

capacity was installed globally, as the market in theUnited States picked up. China remained the largestannual onshore wind market globally with a recordnumber o installations in 2014 o around 20 GW.Additions in China were signicantly higher than theannual deployment in 2013 as developers rushed to nishprojects be ore the eed-in tariff was cut by between 3%and 4%. The United States added close to 5 GW, ollowedby Germany (4.3 GW), Brazil (2.7 GW), and India (2.3 GW).

Solar photovoltaic (PV) capacity grew by an estimated40 GW in 2014, slightly more than the previous year.Strong expansions in Asia continued, particularly in China(10 GW) and Japan (9 GW). Asia installed close to 50%o new solar PV capacity. Growth in the United Stateswas higher than the previous year, with around 6.5 GWinstalled. Annual growth in OECD Europe was led byGermany and the United Kingdom (UK), each installingaround 2 GW.

Hydropower additions decreased slightly, as China hadcommissioned large capacity earlier than expected,in 2013. Offshore wind additions in Europe decreasedslightly to 1.5 GW due to grid connection delays. Asia’s

large offshore wind potential remained largely untapped.Two large solar thermal electricity (STE) plants werepartially operational in the United States (Ivanpah,333 MW; and Crescent Dunes, 100 MW), but severalother STE projects aced nancing challenges. In 2014,geothermal additions increased as large projects werecommissioned in Indonesia, Kenya, Turkey and the UnitedStates.

Early estimates indicate that total investment in newrenewable capacity reached around USD 250 billion in2014, with solar PV attracting the majority o investment,

ollowed by onshore wind. According to Bloomberg NewEnergy Finance (BNEF, 2015), the nancing o new

projects showed an upward trend over the last year orutility-scale solar PV and offshore wind projects, signallinga positive outlook.

Although renewables are still more expensive in generalthan conventional power generating technologies, thegap has narrowed signicantly over the last decade. Insome countries, some renewables are competitive withnew-built ossil uel generation.

Similarly, utility-scale solar PV installations are alreadycompetitive in some places. In Chile and Mexico, twoutility-scale solar PV plants are operational on thespot market. In Texas, a solar plant became partiallyoperational without a power purchase agreement (PPA)

or the rst time. More projects are under constructionand expected to be online in 2015.

In locations with good irradiation levels and highelectricity spot prices, PPAs with record low prices weresigned over the last year. In Brazil, developers signedPPA contracts or 1 GW o capacity averaging USD 87per megawatt hour (MWh) to deliver power by 2017. Inthe United Arab Emirates, projects submitted bids as


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Chapter 1Tracking Clean Energy Progress Renewable power 21

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1.2 Renewable capacity investment

1.1 Renewable power generation by region

1.3 Levelised cost of electricity

0

50

100

150

200

250

300

2002 2004 2006 2008 2010 2012 2014 2014Fossil fuels

USD billion

Fossil fuelsOtherSTESolar PVOffshore windOnshore windBioenergyHydropower

Other non-OECDBrazilIndiaChinaOECD EuropeOECD Asia OceaniaOECD Americas

0%

10%

20%

30%

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2000 2005 2012 2020 2025

Shareofenewableeneration

r

g

TWh

Forecast Targets

Share of renewable generation

0

100

200

300

400

500

Smallhydro

Solar PVresiden al

Solar PVcommerical

Bioenergy Bioenergyco-ring

Geo-thermal

Solar PVu lity

STE Largehydro

Onshorewind

Offshorewind

Newcoal

New gasCCGT

U S D / M W h

2013 2014 2025 targetETP

U lity scaleSmall scale Fossil fuels

For sources and notes see page 82

23%OF GLOBAL

RENEWABLE

GENERATION

CAME FROM

CHINA, THE

LARGEST MARKET

IN 2014

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low as USD 59/MWh. Developers in El Salvador, Panamaand Uruguay signed PPAs or offered bids ranging romUSD 90/MWh to USD 140/MWh.

Over the past year, growth in both residential andcommercial distributed solar PV sectors was robust in

countries where the levelised cost o energy (LCOE)o systems ell below the variable portion o retailelectricity prices. In the absence o remuneration oexcess electricity, the share o sel -use, the overall costo the project and nancing are important actors ora protable investment. In addition, i there is a goodmatch between demand and generation, higher shareso sel -consumption mean less stress on the grid. InAustralia, Germany, Italy and the Netherlands, whereretail electricity prices are high, some projects with goodnancing are already protable depending on the shareo sel -consumption. The increase o distributed solar PVgeneration has posed challenges to the air allocation oxed-grid costs, which need to be addressed.

In Japan, booming solar PV market deployment has beendriven by generous eed-in tariffs, which have raisedconcerns over the overall cost associated with thisdeployment. It has also posed integration challengesbecause developers have proposed PV projects inlocations where land is cheap but demand is low andgrid capacity is limited. In some provinces, utilities havere used to connect projects where the grid is alreadyhighly congested. Grid integration was also a challengein South A rica, where some solar PV and wind projectscould not get a timely grid connection. This contributedto delays in the third and ourth rounds o renewabletenders.

Over the past year, onshore wind continued to improve itscompetitive position. New turbine technology with largerrotor diameters has unlocked more low and mediumwind resource sites, increasing the number o bankableprojects, especially in Europe and the United States. Inthe interior region o the United States, PPAs were signedas low as USD 20/MWh (around USD 43/MWh including

production tax credit, or PTC). In Brazil, PPA prices urtherincreased rom USD 47/MWh to USD 54/MWh, mainlydue to the new grid connection rule where developersare responsible or all associated costs. In Uruguay, therst projects with PPAs – signed in 2011 – ranging romUSD 50/MWh to USD 65/MWh came online over thepast year.

Offshore wind costs remained high over the past year.This pushed some countries to lower their targets ordelay projects. Germany lowered its 2020 offshore wind

capacity target rom 10 GW to 6.5 GW, while Denmarkdelayed auctioning a 600 megawatt (MW) project. Bycontrast, some countries in Asia – China, Japan andKorea – increased their support to boost the offshoreindustry. However, more time is needed to see how this

affects actual deployment. Costs also remained high orocean energy, with only a ew demonstration projectsin operation globally. Two o the largest ocean energycompanies announced that they would not invest urtherin developing ocean technology.

Policy remains vital to the competitiveness anddeployment o renewable energy technologies. In2014, policy signals were mixed. Although ambitiousnew renewable energy targets were announced inChina and India, policy uncertainty and retroactivechanges elsewhere posed challenges or renewables. InOctober 2014, European Union (EU) leaders committedto reduce GHGs by at least 40% and increase energyefficiency and renewables by at least 27% by 2030. Botho these targets are binding, but only at the EU level.Furthermore, the governance around the new policy toachieve the targets remains unclear, creating uncertainty

or renewable energy investments.

In addition to policy uncertainty at the EU level, somecountries in Europe introduced retroactive measuresharming renewable deployment. Spain nalised the newretroactive remuneration scheme that ended eed-intariff payments and replaced them with annual paymentsbased on a calculation o a xed “reasonable annualreturn” o 7.4%. Bulgaria cut solar PV eed-in tariffsretroactively, assuming that the country had alreadymet its 2020 renewable energy target. In Romania, thegovernment decided to halve the number o certicatesprovided to both wind and solar PV. Retroactive policychanges were also introduced in Italy or solar PVinstallations larger than 200 kilowatts (kW).

In the United States (US), policy volatility persisted. InDecember 2014, the PTC or onshore wind projects wasextended or just a ew days through the end o 2014.

Meanwhile, the US Environmental Protection Agency(US EPA) announced its new Clean Energy Plan. Thedetails and implementation o the plan are expectedby June 2015, and its impact on renewable deploymentremains to be seen.

Mexico launched a major energy market re orm, whichincluded liberalising the electricity market. Neutral greencerticates were introduced to promote clean electricity.Rules and implementation o this policy remain uncertainwhile investors are currently in wait-and-see mode.


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1.4 Protability index of a residential PV system

1.5 Wind and solar PV tender results or offered bids

1.6 Renewable power policies

0 20 40 60 80 100 120 140 160

Jordan

Panama

Peru

El Salvador

South AfricaUruguay

Brazil

United States

UAE

USD/MWhOnshore wind Solar PV

:European Union Uncertainty over the governanceof the new 2030 targets persists

China : Continuous and increasingadditions of solar PV, onshore windand hydropower but still challengesconcerning the deployment of distributed generation and gridintegration remain

India : Announced a new ambitioussolar PV target of 100 GW by 2022

Japan : Grid integration of solarprojects needs to be addres ed sfor continuous deployment

South Africa : Gridandconnection delays

postponed renewableenergy tenders

Latin America : Lowest long-termPPAs were signed for both

onshore wind and solar PV

United States : Positivedevelopments concerning

EPA’s Clean PowerPlan but uncertaintyover sustainability of

the PTC and ITC remains

Renewablepower policies

201 new or4revised policies

Mexico: New energy reformlaunched. Uncertainty overthe implementation of new

green certificate and electricitymarkets’ rules remain

0.0

0.5

1.0

1.5

2.0

2.5

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

Protabilityindexat3.5% costof capital

Share of self consump on-

Korea France Mexico United Kingdom Italy Netherlands Australia Germany

Prot

Keydevelopments

Record-low long-termremuneration contractprices for onshorewind and solar PV wereachieved in 2014. In some

countries, renewableswere the preferredoption to new-builtfossil fuel generation.


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Tracking progressDespite the growing competitiveness o a port olio orenewable technologies, the growth o additional annualcapacity is slowing down due to sluggish economicgrowth, policy uncertainty in OECD member countries,and persistent economic and non-economic barriersin OECD non-member economies. Thus, or the rsttime the TCEP evaluation is that renewable powerimprovement is needed to meet the targets o theETP 2015 2DS scenario.

Renewable electricity generation is expected to growby 45% between 2013 and 2020, reaching 7 310 TWh,and is currently at risk o alling short o the 2DS targeto 7 537 TWh. I current trends continue, the short allwill increase even urther by 2025, when the 2DS targetis 10 225 TWh. This result is subject to strong regional

differences across technologies and regions.

Hydropower deployment needs improvement to reachits 2DS generation target. Over the medium term,new additions o hydropower capacity are expectedto all in OECD member countries, mainly due todecreasing resource availability. In OECD non-membereconomies, new additions are expected to be strong,but environmental concerns and lack o nancing posechallenges to large-scale projects. Deployment trendsin China and global precipitation levels may change thispicture by 2025.

For onshore wind, the second-largest renewabletechnology, improvement is needed in capacity growthrates to meet 2DS targets. Policy uncertainty in OECDmember countries is expected to affect deployment overthe medium term, including doubts over governance othe European Union’s 2030 climate change goals andthe extension o the production tax credit in the UnitedStates. In OECD non-member economies, onshore windis expected to grow, especially in China, Brazil and India.However, integrating large amounts o new onshore windpower remains a challenge, especially in China.

Solar PV is the only technology on track to meet its2DS power generation target by 2025. Its capacity is

orecast to grow by 18% annually between 2014 and2020. This growth should be stable in OECD membercountries, with decreasing annual additions in Europeand strong expansion in Chile, Japan and Mexico. InOECD non-member economies, growth o solar PVshould spread geographically. Deployment trends inChina are strong with improving economics and growingdistributed generation opportunities. I these medium-term trends continue, solar PV could even surpass its2025 target.

Offshore wind, geothermal, STE, bioenergy and oceanpower are not on track due to technology-specicchallenges. For offshore wind, OECD member countries,particularly in Europe, are expected to lead deploymentover the medium term. Some countries and companies

have announced ambitious targets to decrease costsby 2020, but grid delays and nancing challenges haveofen made it difficult to realise similar ambitions.OECD countries could reach their 2DS targets i thosechallenges are addressed. Deployment is alling behindin OECD non-member economies, however, especially inChina, as investment costs remain high and technologicalchallenges persist.

Total investment costs remain high or STE, slowingthe pace o deployment. The potential or electricitygeneration rom geothermal energy is largely untapped.Pre-development risks remain high and only a hand ul ocountries have introduced policies to address those risks.For bioenergy, sustainability challenges and long-termpolicy uncertainty have been decreasing the bankabilityo large projects, particularly in OECD member countries.Ocean power is still at the demonstration stage, with onlysmall projects deployed.

Recommended actionsDespite a port olio o renewables becoming morecompetitive in a wider set o circumstances, policies

remain vital to stimulating investment in renewables.Many renewables no longer need high economicincentives, but they do need long-term policies thatprovide a predictable and reliable market and regulatory

ramework compatible with societal goals.

Given their capital-intensive nature, renewables require amarket context that ensures a reasonable and predictablereturn. Financing costs play a large role in determininggeneration costs or capital-intensive renewables.Policy and regulatory uncertainties create higher riskpremiums, which directly undermine the competitivenesso renewables, so policy risk is an important barrier todeployment.

Policy makers should ocus on cost efficiency to preventover-remuneration o some technologies, but changesmust be predictable and retroactive changes must beavoided at all times. Countries beginning to deployvariable power plants should implement well-establishedbest practices to avoid integration challenges. Marketswith high variable renewable penetration should takeadvantage o their existing exibility assets, and considerother exibility mechanisms to optimise the balancing otheir overall energy system.


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1.7 Renewable power generation by technologyM o r e o n l i n e

2025

2013

0 2 000 4 000 6 000 8 000 10 000

Onshore wind Solar PV Bioenergy Geothermal Offshore wind STE OceanHydropower

Hydropower

0

200

400

600

800

1 002

T W h

Bioenergy

Geothermal

2000 2005 2010 2015 2020 2025

T W h

TWh

2000 2005 2010 2015 2020 2025

0

0

2000

2000

2005

2005

2010

2010

2015

2015

2020

2020

2025

2025

50

100

150

200

300

250

T W h

T W h

50

100

200

Solar thermal electricity Not on track

Not on track

Not on track

OECD ProjectionsNon-OECD World 2DS targets

0

1 000

2 000

3 000

4 000

5 000

6 000

Improvement needed

1 000

150

T W h

Solar PV

Offshore wind

On hore winds

On track

2000 2005 2010 2015 2020 2025

T W h

0

200

400

600

800

1 000

2000 2005 2010 2015 2020 2025

0

0

2000

2000

2005

2005

2010

2010

2015

2015

2020

2020

2025

2025

T W h

T W h

Not on track

Not on track

50

100

150

200

250

300

25

50

75

100

125

150

Ocean

Improvement needed

0

500

1 000

1 500

2 000

2 500

1 002


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26 Chapter 1Tracking Clean Energy Progress Nuclear power

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Nuclear power

Global nuclear generation increased slightly between 2012 and 2013, butremains about 10% lower than in 2010. At the beginning o 2014, 72 reactorswere under construction, the highest number or more than 25 years. But in2014 there were only three construction starts (down rom ten in 2013), andve grid connections (representing 5 GW, up rom 4 GW in 2013).

Recent trendsThe European Commission approved the UnitedKingdom’s Contracts or Difference scheme or theconstruction o the Hinkley Point C nuclear power plant,paving the way or urther new-build projects in the

United Kingdom and other European countries in thecoming decade. In Japan, all operable reactors haveremained idle pending sa ety reviews. The NuclearRegulation Authority has approved restarting the twounits o the Sendai plant, as well as Takahama units 3and 4. These restarts could be effective in the rst halo 2015. Construction o the Akkuyu nuclear power plantin Turkey, the country’s rst, is expected to start in 2015(under the build-own-operate model offered by Russia).In Poland, the rst nuclear power plant could be underconstruction be ore 2020 i a suitable nancing modelis ound. Hungary secured a loan rom Russia or twonew units, which also could be under construction be ore2020. A new energy plan developed by the governmento the Republic o Korea calls or the construction o ninenew reactors by 2023. In the United States, besides theve units under construction, there remains interest inlong-term operation o the existing eet. The NuclearRegulatory Commission has resumed licence renewals

or nuclear power plants afer a two-year hiatus; currently74 reactors are licensed to operate up to 60 years, andapplications are being reviewed or an additional 19 units.However, as many as six to ten merchant units could

be shut down due to un avourable economics despitereceiving licences. Vermont Yankee, or example, shutdown in December 2014 afer 42 years o operation.

Developments in other OECD countries in 2014 couldreduce nuclear generating capacity. France’s lower houseo parliament voted to reduce the share o nuclear powergeneration rom 75% to 50% by 2025. In Sweden, wherenuclear power accounts or more than 40% o generation,the short-lived coalition government proposed replacingthe country’s nuclear power plants with renewabletechnologies. Among OECD non-member economies,

South A rica signed several agreements with countriesthat possess nuclear technology, in preparation ortenders that aim at securing up to 9.6 GW by 2030. Chinamoved ahead with planning and construction o nuclearpower plants, and development o its own GenerationIII technologies, such as the Hualong-1 design. It is alsoconsidering investments in projects in Argentina, Romaniaand the United Kingdom. In the United Arab Emirates,construction started on the third unit o the our-unitBarakah plant, which will provide 5.6 GW by 2020. Belarusis constructing its rst two units with technical andnancial support rom Russia.

Tracking progressAccording to the recently published “Red Book” romthe Nuclear Energy Agency (NEA) and the InternationalAtomic Energy Agency (IAEA), gross installed capacitycurrently at 396 GW is projected to reach 438 GW to593 GW by 2025; in the 2DS, global nuclear capacitywould need to reach 585 GW by that time. The range oprojections is wide because policies concerning climatechange mitigation are still unclear, the existing eet willbe in operation or a long time, nancing is uncertain andChina’s new-build programme beyond 2020 has yet to beclaried, in particular with respect to inland power plants.

Recommended actions

Recent geopolitical events, and the realisation thatswif action is needed to reduce GHG emissions and airpollution rom ossil-based generation, have highlightedthe potential o nuclear power to increase energy security,diversi y uel supply and lower emissions. This awarenesshas yet to be translated into policy support or long-termoperation o the existing eet and construction o newplants, particularly in Europe. There is a need to introducemarket incentives to avour all low-carbon technologies,through carbon taxes or electricity market arrangements,or both, and to recognise the vital contribution thatnuclear energy can make.

● Not on track~ Limited developments


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Chapter 1Tracking Clean Energy Progress Nuclear power 27

© OECD/IEA, 2015.

1.8 Installed gross nuclear capacity

1.10 Reactors under construction

1.9 Operable reactors and electricity productionConstructiontrends

47% of all reactors

under construction

are third-generation

nuclear, 44% are

second-generation

and 9% other

5GW CAPACITYINCREASE IN 2014TO A TOTAL OF

438OPERATIONALREACTORS


Restof theworldRussiaChinaJapan and KoreaFrance,Germany and United KingdomUnitedStates

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100

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Reactors in opera on Elect rici ty produced

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UnitedStates

China India Russia UAE Othernon-OECD

OECD non-OECD

Gen II Gen III Other (SMR, FBR, HTR)

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28 Chapter 1Tracking Clean Energy Progress Natural gas-red power

© OECD/IEA, 2015.

Natural gas-red power

Natural gas-red power generation accounted or 22% o total global powergeneration in 2012 (5 104 TWh). While this share is projected to decrease,generation is likely to continue to grow over the next two decades, playinga major role in reducing the carbon intensity o power generation globally.

Recent trendsGlobal natural gas demand slowed markedly in 2013,increasing at an average o just 0.8%, comparedwith 1.8% in both 2011 and 2012. The power sectoraccounted or the bulk o the weakness in OECD membercountry demand. Gas-red generation dropped sharplyin 2013, as electricity consumption ell in the UnitedStates and Europe. In the United States, a rebound in gasprices allowed coal generation to regain market share. InEurope, under pressure rom renewable technologies andcoal, gas-red generation ell or a third consecutive yearin 2013, to stand some 30% below its 2010 level.

For 2014, gas demand in the OECD power sector ispoised to move less dramatically than during the previoustwo years. Gas use or electricity generation in the UnitedStates remained broadly at in 2014 until October,with the impact o urther moderate gas price gainsoffset by growing electricity demand. In some Europeancountries, including Spain and the United Kingdom, gasconsumption in the power sector was showing smaller

year-on-year reductions in 2014. In the United Kingdomin particular, the sharp all in gas prices made gas moreattractive than coal. In OECD non-member economies,growth in gas consumption was also considerably slowerthan usual in 2013 and, outside China, it barely increased.And many countries ace gas shortages, particularly inA rica and the Middle East, as the costs o developmento new elds are higher than subsidised domestic prices.

Lique action capacity stood at roughly 400 billion cubic

metres (bcm) globally at the end o 2013, with anadditional 150 bcm under construction. The next waveo liqueed natural gas (LNG) supplies will be dominatedby Australia and the United States. Governments remaindivided on shale gas exploration policy, and geologicaluncertainty is high. In China, the original 2020 shale gasproduction target o 60 bcm to 100 bcm has recentlybeen downgraded to 30 bcm. In India, the governmentinaugurated a shale gas policy in late 2013 and the rstwells have been drilled, but commercial production is

some time away. In Europe, a hand ul o countries havebanned hydraulic racturing ( racking) while others areissuing exploration licences. So ar, test drilling has shownless avourable conditions than in the United States,and local opposition remains strong in many places. Theplunge in oil prices during 2014 – and associated oil-linked gas prices – adds a urther obstacle.

High cycle efficiency that includes quick start-up time, lowturndown ratio, good ramping capabilities and part-loadbehaviour are now major gas turbine design parameters.Although reciprocating gas engines are unable to matchthe efficiencies o state-o -the-art combined-cyclegas turbines (CCGTs), they are becoming increasinglyattractive. They are robust, offer exible operation, accepta wide range o uels, are effective or co-generation 1 andcan be stacked to match the capacity required.

Tracking progress

Natural gas-red power is needed in the 2DS to providegrid exibility to support the integration o variablerenewables and as a lower-carbon alternative to coal-redgeneration. While natural gas-red electricity generationincreases in meeting 2DS projections over the nextdecade, its share would all by 1 to 2 percentage pointsby 2025. In act, growth in gas-red generation over theperiod alls to less than 2% annually rom the 5.2% annualaverage growth observed over the last decade.

Recommended actions

As regional differences in the energy mix and in gasprices widen, policy makers and manu acturers needto remain responsive to market demands, includingoperational exibility, high efficiency through theload range and uel exibility. In co-generation mode,improvements in thermal storage technology would allowa CCGT to operate more exibly. As designs are improved,the choice between CCGTs, open-cycle gas turbines(OCGTs) and stacked reciprocating engines will depend oneach project’s application and location.

● Improvement needed~ Limited developments

1 Co-generation re ers to the combined production o heat and power.


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Chapter 1Tracking Clean Energy Progress Natural gas-red power 29

© OECD/IEA, 2015.

1.11 Natural gas spot prices

1.12 Power generation mix and related CO 2 intensity

1.13 Natural gas-red power capacity factors

g C O / k W h

2

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U S D / M B t u

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Europe (NBP)Japan LNG United States (Henry Hub)

EU CO2 PRICE

42 €/tCO 2FOR SHORT TERMCOAL TO GASGENERATION SWITCH

20 €/tCO 2LONG TERM CAPACITYINVESTMENT SWITCH

Coal-to-gas orgas-to-coal?

Natural gas continues

to struggle against

cheap coal in the

power sector

Divergent trends incoal-to-gas switchingare continuing indifferent regionalmarkets

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tracking clean energy progress 2015

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