Why a share of 80% electricity from renewable energy
sources is no utopia and
why a share of 80% fossil fuels will soon be history.
International Forum on Low-Carbon Industry and Green Economy
November 20th 2013, Beijing
Dr. Sven-Uwe Mueller
Head of Energy Sector, Director of the Sino-German Renewable Energy Programme
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Page 1
Because…
•
Levelized Cost of Electricity (LCOE) of RES are rapidly catching up with
fossil fuels – as proven by:
•
World Energy Council (WEC) World Energy Perspective: Cost of Energy
Technologies
•
Fraunhofer ISE Levelized Cost of Electricity: Renewable Energy
•
IRENA Renewable Power Generation Costs
•
Grid integration of variable RES is technically feasible provided that …
•
Grid integration of variable RES is economically feasible provided that …
Page 2
WEC: Most RE technologies close to reaching parity
LCOE analysis shows that the cost range across RE technologies is wider than those of
conventional energies.
But the most mature and widely deployed clean technologies (i.e. hydro and onshore
wind) are close to reaching parity with traditional sources.
LCOE of onshore wind electricity
by region (USD/MWh)
China USD 49-93/MWh
India USD 47-113/MWh
LCOE of coal electricity by region
(USD/MWh)
China USD 35-39/MWh
Source: World Energy Council. World Energy Perspective: Cost of Energy Technologies. 2013.
http://about.bnef.com/white-papers/world-energy-perspective-cost-of-energy-technologies/
Page 3
Australian wind power: A success story
Source: RE New Economy: Tracking the next Industrial Revolution. By Giles Parkinson. July 25, 2013. http://reneweconomy.com.au/2013/bugger-theutilities-wind-and-solar-will-be-built-anyway-74216
Page 4
Levelized Cost of Electricity
Fraunhofer ISE:
LCOE in Germany: Renewables are catching up rapidly
Lignite
Source: Fraunhofer ISE. ““Stromgestehungskosten Erneuerbare Energien.“ November 2013.
Coal
CCGT
Page 5
http://www.ise.fraunhofer.de/de/veroeffentlichungen/veroeffentlichungen-pdf-dateien/studien-und-konzeptpapiere/studie-stromgestehungskosten-erneuerbare-energien.pdf.
IRENA: LCOE for RE technologies are continuing to decline
(as of Nov 2012)
Chart shows costeffectiveness of today’s
RE technologies.
However, the cost
ranges are wide and very
site-specific.
A rapid deployment of
RE technologies has a
significant impact on
costs due to the high
learning rates for RE.
The LCOE for Renewable Power Generation Technologies
Note: Assumes the cost of capital is 10%. The bands reflect ranges of typical investment costs (excluding
transmission and distribution) and capacity factors. PT = parabolic through, ST = solar tower, BFB/CFB = bubbling
fluidized bed, AD = anaerobic digester, CHP = combined heat and power.
Source: IRENA. Summary for Policy Makers: Renewable Power Generation Costs. November 2012;
http://www.irena.org/menu/index.aspx?mnu=Subcat&PriMenuID=36&CatID=141&SubcatID=261
Page 6
Because…
•
Levelized Cost of Electricity (LCOE) of RES are rapidly catching up with fossil
fuels – as proven by:
•
World Energy Council (WEC) World Energy Perspective: Cost of Energy
Technologies
•
Fraunhofer ISE Levelized Cost of Electricity: Renewable Energy
•
IRENA Renewable Power Generation Costs
•
Grid integration of variable RES is technically feasible provided that …
•
Grid integration of variable RES is economically feasible provided that …
Page 7
… wind and solar fluctuation patterns are compensated for
by a more flexible electric system
Fossil Fuels
Solar
Wind Offshore
Wind Onshore
Hydro
Biomass
Electricity Demand
Fluctuation is the main technical challenge for an
electric system with high levels of RE penetration.
Source: AGORA. “12 Insights on Germany’s Energiwende.” Feburary 2013. http://www.agoraenergiewende.org/fileadmin/downloads/publikationen/Impulse/12_Thesen/Agora_12_Insights_on_Germanys_Energiewende_web.pdf
Page 8
Technical requirements for the successful integration of variable RES
Ways of thinking must change, a new approach is needed!
Conventional plants as
baseload providers
Conventional plants as
residual load providers
Zero flexibility of
dispatchable generation
Maximum flexibility of
dispatchable generation
Hierarchical grids as
distribution mechanism
Grids as an aggregation
and balancing instrument
Electricity as an isolated
system
Electricity as part of the
overall energy, heat and
transportation system
Source: AGORA. “12 Insights on Germany’s Energiwende.” Feburary 2013. http://www.agoraenergiewende.org/fileadmin/downloads/publikationen/Impulse/12_Thesen/Agora_12_Insights_on_Germanys_Energiewende_web.pdf
Page 9
The NREL Renewable Electricity Futures Study comes to similar
conclusions…
Conventional plants as baseload
providers
Conventional plants as residual load
providers
Conventional plants as
energy-providers
Conventional plants as
reserve-providers
Zero flexibility of dispatchable
generation
Maximum flexibility of dispatchable
generation
Electric Sector not flexibile
enough to accommodate
higher levels of RE generation
Increased flexibility of the
electric system
Hierarchical grids as distribution
mechanism
Grids as an aggregation and
balancing instrument
Today’s grid infrastructure
poses a constraint
Expansion of transmission
infrastructure to share and
balance reserves
Source: National Renewable Energy Laboratory (NREL). “Renewable Electricity Futures Study.” 2012. http://www.nrel.gov/analysis/re_futures/
Page 10
Because…
•
Levelized Cost of Electricity (LCOE) of RES are rapidly catching up with fossil
fuels – as proven by:
•
World Energy Council (WEC) World Energy Perspective: Cost of Energy
Technologies
•
Fraunhofer ISE Levelized Cost of Electricity: Renewable Energy
•
IRENA Renewable Power Generation Costs
•
Grid integration of variable RES is technically feasible provided that …
•
Grid integration of variable RES is economically feasible provided that …
Page 11
… new market rules and regulations are designed
•
Today's electricity market is about trading kilowatt hours
– it does not guarantee system reliability;
•
Wind and PV cannot be principally refinanced via marginal-cost-based
markets
– with good weather conditions they create excess electricity and
thereby destroy there own market value
•
The new market design must actively engage the demand-side;
Source: AGORA. “12 Insights on Germany’s Energiwende.” Feburary 2013. http://www.agoraenergiewende.org/fileadmin/downloads/publikationen/Impulse/12_Thesen/Agora_12_Insights_on_Germanys_Energiewende_web.pdf
Page 12
Mechanism of an energy only market works against RES
Source: AGORA. “12 Insights on Germany’s Energiwende.” Feburary 2013. http://www.agoraenergiewende.org/fileadmin/downloads/publikationen/Impulse/12_Thesen/Agora_12_Insights_on_Germanys_Energiewende_web.pdf
Page 13
Mechanism of an energy only market works against RES
Source: AGORA. “12 Insights on Germany’s Energiwende.” Feburary 2013. http://www.agoraenergiewende.org/fileadmin/downloads/publikationen/Impulse/12_Thesen/Agora_12_Insights_on_Germanys_Energiewende_web.pdf
Page 14
A transformed energy system needs a new market design and
regulations
Source: AGORA. “12 Insights on Germany’s Energiwende.” Feburary 2013. http://www.agoraenergiewende.org/fileadmin/downloads/publikationen/Impulse/12_Thesen/Agora_12_Insights_on_Germanys_Energiewende_web.pdf
Page 15
Thank You for Your Attention！
For more information please go to:
1.
BMU: http://www.erneuerbare-energien.de/en/
2.
Think Tanks: http://www.agora-energiewende.org/
Agora Paper online: http://climatepolicy.cn/en/capacity-building-for-climate-changemitigation-and-adaptation/40
Fed. government
3.
GIZ Projects： Climate Change: www.climatepolicy.cn
Biogas: www.biogas-china.org
Wind Energy Programme: www.cwpc.cn/cwpc (temporarily not available)
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