Didier Houssin Director, Energy Markets and Security International Energy Agency 27 March 2012

1. © OECD/IEA 2012
Renewables in the Changing
Energy Situation
Didier Houssin
Director, Energy Markets and Security
International Energy Agency
REWP-RIAB Workshop « Renewables – Policy and Market Design Challenges
Paris, OECD, 27 March 2012

2. Recent Trends in Renewables
300.00
 Strong growth Wind
continuing in 250.00
+22.6%
2011 despite 200.00 RoW
+22.5
uncertain India
GW
150.00 Spain
+31.7
economy +28.5
Germany
100.00 US
+26.7 China
+25.3
50.00
 Markets
rapidly moving 0.00
2005 2006 2007 2008 2009 2010 2011
to different 80
70
regions Solar PV
60 RoW
50 +70.4 China
US
 PV markets still
GW
40
Spain
30 +72.4%
concentrated +47.0%
Japan
20 Italy
in too few 10
+35.5%
+70.1%
Germany
+28.5%
countries 0
2005 2006 2007 2008 2009 2010 2011
© OECD/IEA 2012

3. Current context – Full of uncertainty
 Uncertain economic recovery
 Geo-political turmoil in North-Africa / Iran and
impacts on oil prices
 Unconventional gas in the US – and
elsewhere?
 Post-Fukushima concerns on nuclear
© OECD/IEA 2012

4. Sluggish Electricity Demand
OECD power generation, 2007=1.00
Conventional
generation is 370 Twh
below 2007
Total electricity demand in 2011 still below 2007 levels
2
© OECD/IEA 2012

5. Impacts on RE
 Very different impacts depending on
robustness of RE policy support framework
 In some countries very low energy demand
 no additional capacity of any kind needed
 Cost of capital and access to credit more
difficult
 higher costs of up-front capital intensive
renewables
© OECD/IEA 2012

6. Oil price trends and burden on GDP
World: Oil Burden & Price $/bbl
9% 115
Nominal Oil Expenditures as % 2nd oil C o ntributing to
105
8% the next sho ck?
shock
95
of Nominal GDP
7%
85
6%
1st oil Post- 75
5%
shock recession 3rd oil 65
4% recoveries shock 55
3%
45
2% 35
1% 25
0% 15
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Oil Burden Brent (real, 2008 base)
Source: IEA 2012
© OECD/IEA 2012

7. Impacts of high oil prices
 General:
 Strong driver for energy security and diversification
 Make gas more expensive via indexation
 BUT make unconventional production more profitable
(oil shale, oil sands, GTL)
 Electricity
 Around 1000 TWh produced worldwide  RES-E attractive
 Transport
 In principle make biofuels more competitive
(BUT also production of some biofuels more expensive via high
oil and fertilizers price )
 Render electro mobility more attractive
 Heat
 Make RES-H applications more competitive
(23% of fuels for heat in OECD oil)
© OECD/IEA 2012

8. Continuing deglobalisation of gas markets
18
16
14
12
Prices [USD/MBtu]
From US
10 to Japan
From US
8 to Europe
6
4
2
LNG freight cost
0
Henry Hub (Monthly Average) German Border Price (Monthly Average)
Japan LNG (Monthly Average) TTF
Source: IEA 2012
© OECD/IEA 2012

9. Unconventional gas in the world
The 2010 picture
North America ~ 420 bcm Europe FSU
CBM < 1 bcm Tight ~ 20 bcm
CBM < 1 bcm
Asia
Tight ~ 30 bcm
Middle East & Africa CBM ~ 6 bcm
Tight: NA
Latin America
Tight ~ 2 bcm
Australia
CBM ~ 5 bcm
 So far, it is essentially a North American gas story... from the
production point of view
 For how long?
© OECD/IEA 2012

10. US: gas beats coal in conventional power
generation, while renewables nicely grow
Cumulative change in power generation 2005-2011, Share of gas and non-hydro renewables in the US
Gwh 25.0% 10.0%
300000 24.0% 9.0%
23.0% 8.0%
200000
22.0% 7.0%
100000 21.0% 6.0%
20.0% 5.0%
0
coal gas non-hydro 19.0% 4.0%
renewable
-100000 18.0% 3.0%
17.0% gas 2.0%
-200000
non hydro
16.0% renewable 1.0%
-300000 15.0% 0.0%
2005 2006 2007 2008 2009 2010 2011
© OECD/IEA 2012

11. Towards a low-nuclear scenario?
Power generation by fuel in the New Policies Scenario and Low Nuclear Case
14 000
TWh
12 000 2009
10 000 2035:
New Policies
8 000 Scenario
6 000
2035:
4 000 Low Nuclear
2 000 Case
0
Nuclear Coal Gas Renewables Source: WEO 2011
 Overall, the biggest chunk of the lost nuclear generation is
replaced by power generation from coal, leading to a 6% increase
in CO2 emissions in the power sector
 Impacts on RE strongly depending on country-specific factors and
policies for renewables and climate change
© OECD/IEA 2012

12. Conclusions
 Current uncertain context produces both
opportunities and challenges for renewables
 Impacts strongly vary from country to country
 Economic crisis and sluggish energy demand
outlook has largest impact on RE
 What will be the most important factors
affecting RE outlook?
© OECD/IEA 2012