World Bank Power Projects:
Crossroads on Renewable Energy
David Wheeler
Kevin Ummel
Center for Global Development
What Has Changed
Since Kyoto?
• Carbon Emissions
Kyoto, 1997
• Climate Impact
• The South’s Role
• Clean Technology Fund
• Carbon Pricing
• New Technologies
Copenhagen, 2009
CO2 Emissions: Greater Than Predicted
120,000
100,000
80,000
IPCC Worst-Case Scenario
60,000
40,000
20,000
1990
2010
2030
2050
2070
1990 - 2100
40,000
Actual
35,000
Projected
30,000
25,000
1990
1995
2000
2005
2010
2015
2090
Climate Impacts:
Faster Than Predicted
"The situation is so desperately serious
that any delay could push us past
the tipping point”
Ban Ki-Moon – Bali, 2007
2005
• Ice Cap Melting
• Greenland
•
Texas +
California
West Antarctica
• Extreme Weather Events
• Droughts
• Floods
• Cyclones
2007
Developing Countries’ Role Has Changed
Kyoto Protocol (1997)
• The North Caused Global Warming
• The North Should Fix It
Current Situation
CO2 Emissions, 1900 - 2100
(History + IPCC)
• The South Should Focus on Poverty
South
North
Developing-Country View
“We don’t accept the idea that the
emerging nations are the ones who
have to make sacrifices, because
poverty itself is already a sacrifice.”
Brazil’ President da Silva,
G8 Meeting, June, 2007
1900
2000
2100
A Carbon-Intensive South Faces Environmental Disaster,
No Matter What the North Does
Atmospheric CO2
Concentration (ppm)
600
550
South
500
450
400
Global
350
300
1980
2000
*IPCC Scenario A1F1
2020
2040
2060
2080
Year
Real
Critical
Threshold?
2100
IPCC
Critical
Threshold
Implications for the 2009 Copenhagen Conference
• North – South: All Countries at the Table
• Efficient Mitigation
Clean
Technology
• Rapid Clean Technology Diffusion
Fund
• Support for Adaptation
Carbon Pricing (1)
Cap-and-Trade Systems
Operating:
European Union Emissions Trading System
(EU Allowance Units)
Price Per Ton of CO2
Current: $35.33
Expected (New Climate Action Plan): $50.00
Proposed
Australia
US (Warner – Lieberman, others)
Expected Price Per Ton of CO2: $20 - $40
(Citigroup, JP Morgan Chase
Morgan Stanley, Bank of America)
Carbon Pricing (2)
IMF Fossil Fuel
Price Indices, 2004 - 2008
400
Coal (Australia)
350
Coal (South Afr.)
300
250
Gas (Indonesia)
200
Oil (Combined)
150
100
50
0
2004M1
2004M7
2005M1
2005M7
2006M1
2006M7
2007M1
2007M7
2008M1
Carbon Charges: Prices and Consequences
CO2
Charge Concentration
William Nordhaus, Yale
Current CDM
US Warner-Lieberman Bill
EU cap-and-trade (now)
EU (after new reform)
Martin Weitzman, Harvard
Thomas Schelling, Maryland
Sir Nick Stern, LSE
James Hansen, NASA
$8
700
$15
$20-40
$35
$50
$50
$50
$80
550
$200+ 350
Coal Price Increase Since 2007 Q1:
Equivalent Charge for CO2 Emissions ($/Ton)
30
25
20
15
10
5
0
2007M3
2007M5
2007M7
2007M9
2007M11
2008M1
New Technologies
(Example: Solar Thermal)
Annual Solar Radiation:
80,000 Terawatts
Total Energy
Need in 2050:
50 Terawatts
We Have No
Shortage of
Energy
Solar Thermal Technology
(Compact Linear Fresnel Reflector)
Source: Ausra, Inc.
(www.ausra.com)
(1)
Reflectors
Move With
the Sun
(2)
Water Boils
In Fixed-Pipe
Receivers
(3)
Heat Storage
For 24-Hour
Operation
(4)-(5)
Steam Turbine
Generation
(6)
Water
Condensation
And Re-Use
Solar Thermal Technology
Area ( ) Required to Power the Entire US*
* Khosla and O’Donnell (2007)
Solar Thermal Power: Status in the US
(Similar in Europe)
500 MW Operating
2 Gigawatts Under Agreement
Example:
PG & E, California
with Ausra, Inc.
San Luis Obispo
County
175 MW Capacity
Startup in 2010
Worldwide Solar Energy Supply
Direct Normal Radiation: Average daily KWh per square meter
0-1
1-2
2-3
3-4
4-5
5-6
6-7
7-8
8-9
Data from NASA’s Surface Meteorology and Solar Energy Database
Necessary for
solar techs…
Static
Project Analysis
Dynamic
Program Analysis
Possible Learning Curves for Solar Thermal Power
Cost (cents/kWh)
14
12
10
10%
8
15%
6
20%
4
0
Supercritical
Coal Cost
7.65 ¢/kWh
5000
10000
15000
Cumulative Capacity (MW)
20000
Static
Project Analysis
Dynamic
Program Analysis
CLFR Solar Thermal
Supercritical Coal
vs.
• Private Investors Look at Present Value
(Capital, Operations & Maintenance, Fuel)
• CDM Credits Are Available for Emissions Averted
• Clean Technology Fund Covers the Remaining Difference
Static
Project Analysis
Costs Reach Parity
in Year 6
Dynamic
Program Analysis
With CDM Credit of $15/Ton CO2,
Subsidy No Longer Needed by Year 5
Cost
Solar Learning Curve
14
13
12
11
10
9
8
7
6
5
4
Program Costs ($Million)
2,000
1,500
Present
Discounted
Cost
1,000
500
0
0
5
10
15
20
5
10
15
Program Year
Program Year
Solar Thermal
0
Coal
20
Program Benefit
Expansion Field: 650,000 MW
70,000
60
50
40
30
20
10
0
60,000
Total MW
500 MW Units
Solar Generators Operating
0
5
10
50,000
40,000
30,000
20,000
10,000
0
15
0
Program Ends
Year
Cost Parity
5
10
15
20
25
30
Year
Program Ends
CO2 Emissions Averted
250,000,000
5,000,000,000
Tons
200,000,000
4,000,000,000
150,000,000
3,000,000,000
Discounted
Discounted
2,000,000,000
100,000,000
1,000,000,000
50,000,000
0
0
0
Program Ends
5
10
Year
15
0
5
10
Program Ends Year
15
20
25
30
Dynamic Program Assessment:
Some Results
Learning Rate (% Cost decline when
cumulative output doubles)
15%
15%
13.42
7.65
16.31
7.65
16.31
5.82
Switching Charge ($/Ton CO2)
Static Switching Charge
Dynamic Charge - Program Only
Dynamic Charge - Full Impact
$31.47 $63.05
$7.85 $15.31
$0.42
$1.28
$94.64
$24.96
$3.21
$114.64
$28.50
$9.45
Results
Program Years
Years to Cost Parity
Total Payment Required ($Million)
Total Tons CO2 Averted (Million)
Social Rate of Return (%)
1
4
3
6
547
3,048
12,823 22,379
6,960
2,241
7
12
8,945
23,857
835
14
24
21,712
15,727
217
Levelized Costs (cents/kWh)
CLFR Solar Thermal (cents/kWh)
Supercritical Coal (cents/kWh)
15%
10.53
7.65
15%
Conclusions
• Critical Problem: Rapid Carbon Abatement
• Critical Sector: Baseload Power
• Ultimate Objective: Renewable Cost<Coal Cost
•
Solar Thermal Power is a Viable Candidate
•
•
Excellent Solar Potential in LDC’s (esp. Africa)
Static Cost Differential Has Narrowed
• Dynamic Program Analysis Conclusions:
•
Cost Parity with Coal in 5-10 Years
•
•
Very High CO2 Abatement Potential
Very Low CO2 Switching Charges