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Renewables: Steam Engine of the Third Industrial Revolution Dr. Tao Wang Sussex Energy Group and Tyn


Sussex Energy Group. SPRU - Science and Technology Policy Research ... oil prices and their volatility stifle economic activity and cause risk of recession ... – PowerPoint PPT presentation

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Title: Renewables: Steam Engine of the Third Industrial Revolution Dr. Tao Wang Sussex Energy Group and Tyn

Renewables Steam Engine of the Third
Industrial Revolution? Dr. Tao WangSussex
Energy Group andTyndall Centre for Climate
Change Athens,
25th July 2008
Evolution of Renewables Energy Biomass
photo by Stephen Codrington
Evolution of Renewables Energy Wind
Evolution of Renewables Energy Solar
Renewable Energy Sources
Source Greenpeace Energy Revolution (2008)
Benefits of Renewables - oil-GDP relationship
  • Higher oil prices and their volatility stifle
    economic activity and cause risk of recession
  • The 1973 oil price increases estimated to cost
    the US economy 350 billion
  • Doubling in oil prices may reduces GDP by around
    5 - however very different for individual
  • RE help reduce exposure to oil-GDP losses
  • Provide a form of national insurance (Lind and
    Arrow, 1982) in that prices move against the
    value of other financial assets

Avoided GDP losses for 10 RES-E addition
Avoided GDP losses would offset 32 - 38 of
investment in renewable energy in the EU
Source Awerbuch and Sauter (2006), Energy Policy
Benefits of Renewables - energy security
  • Well structured energy portfolio diversity with
    renewables helps foster energy security
  • helping to reduce energy dependency
  • helping to ease the geopolitical tension and
  • European Commission estimated that every 20 oil
    price rise increase Europes gas costs by 15bn
  • low operational cost, 1/10th in Greenpeace
  • contributing to an optimised generation portfolio
    and mitigating risk of electricity price exposure
    to fossil fuel price volatility
  • in the long term correcting distorting energy

Benefits of Renewables - mitigating climate
  • The World need to halve emission from 1990s level
    by 2050 to stay reasonably safe below 2ºC global
    temperature rise
  • Greenpeace Energy Revolution report estimates
    70 electricity and 65 heat will be provided by
    renewables including large hydro, 7 folds
    increase of todays capacity
  • IEA ETP (2008) 46 power come from renewables
    and another 25 from nuclear, reducing 13Gt CO2
    emission every year, more than twice of US total
  • Global benefits are invaluable

Benefits of Renewables - industrial development
in low carbon economy
  • export of technology/equipment
  • There are more than140 renewable energy companies
    worldwide have larger than 40m market
    capitalisation in 2007, nearly doubled from 2005
  • World leader Germany 22bn turnover and 8bn
    export in 2006, with more than 210 thousand jobs
  • Big IPOs in 2005-2006 (including three with
    market capitalization greater than 5 billion)
    Suntech (China), Suzlon (India), REC (Norway),
    and Q-cells (Germany).
  • Industries in developing countries are catching
    up quickly (Suzlon, Goldwind, Suntech), but still
    lag behind market demand
  • Benefits to agriculture sector and rural

Benefits of Renewables - export of energy
  • The energy received each year by 1 km² of desert
    1.5 Million barrel oil,
  • we do have the technologies to convert (at
    least) 11 of it into electricity
  • (TREC 2006)

Source TREC-UK
Benefits of Renewables - export of energy via
EU-MENA grid
  • Power production costs of 4-6 c/kWh, power
    transmission costs of 1-2 c/kWh if constructed
    in large numbers
  • Investment per MW less than new nuclear built and
    IGCC in Europe
  • Grid cost about 50bn for 100 GW
  • Could be implemented together with wind and
    seawater desalination, solar assistant cooling
    also demonstrated
  • Export nearly 20 of electricity demand of EU by
  • Possibility of hydrogen to store energy in the
    future, so cover more sectors and regions

Renewable Power Capacities in 2006
World Leaders in Renewables Energy
Source REN21 Renewables 2007 Global Status Report
EU Renewables Targets by 2020
Renewable Share of Global Final Energy
Consumption in 2006
A Global Boom of RE
  • Investment in renewables are growing at an
    unprecedented rate since 2004, reach the
    milestone of 100bn in 2007
  • Germany (gt 14 billion), China (12 billion), and
    the United States (10 billion) were the
    investment leaders in 2007
  • Emerging market are capturing increasing share
    particularly in Brazil, China and India
  • Over 70 countries have wind power and more than
    50million households use solar water heater, gt90
    Israeli households
  • Renewables related jobs are more than 2.4m, 1.1m
    in biofuels

Data from REN21 Renewables 2007 Global Status
Renewable Electricity
  • Renewable electricity generation capacity
    increases more than 50 since 2004, now accounts
    for 6 global capacity and 3.4 of world total
    power generation
  • Wind represents the largest source of increase,
    nearly 30 increase in 2007 and more than
    100,000MW now, 1.5 UK
  • Wind power now dominates new capacity investment
    (47 share), with solar PV second (30) and
    solar hot water (9).

Data from REN21 Renewables 2007 Global Status
Global Wind Power in 2007
The Middle East/North Africa region increased its
wind power installations by 42, reaching 538 MW
at the end of 2007. New capacity was added in
Egypt, Morocco and Iran.
Source GWEC 2008
Average Annual Growth Rates of Renewable Energy
Capacity, 20022006
more cautions needed
Barriers to Renewables - technological
  • Status of renewable technology
  • different stages and different strategies needed
  • public and private support in RDDD
  • Risk of intermittency
  • smarter grid and energy storage technologies
  • backup by fossil or other sources
  • Premium cost
  • some already competitive with fossil fuels
  • government support according to different
    development stages
  • learning by doing

Cost and learning curves of RE
Barriers to Renewables - capital barriers
  • High upfront investment
  • Lack of large scale private investment
  • National fiscal support
  • International fund/loan
  • Clean technology fund WB
  • CDM
  • Public Private Partnership (PPP)

Barriers to Renewables - technology access
  • Technology transfer, acquisition and cooperation
  • Lack of absorptive capacity
  • Transfer of only second best, out-dated
  • IPR issue and competitiveness concern
  • Different strategy of technology acquisition in
  • Case of Suzlon (India) and Goldwind (China)

Suzlon and Goldwind
(Lewis, 2007)
Barriers to Renewables - institutional
  • Energy market distortion
  • internalise externality (carbon price)
  • gradually remove fossil fuels subsidy
  • Unfair and discriminated grid access and
  • compulsory and priority of grid access (very
  • fair and transparent network pricing
  • Uncertainty of investment
  • supporting mechanism (fix price system and quota
  • Germany and UK the huge contrast
  • User routine
  • Government regulation to promote renewables e.g.
    Israel national mandate on solar hot water and
    Spain national ordinance

Conclusion and Recommendations
  • Prospects of Renewables
  • Renewable energy sources are growing at
    unprecedented rate
  • Share of RE in current energy system is still low
    Investment grows quickly but still cannot match
    the demand
  • Widely existing barriers still prevent RE from
    larger and quicker growth
  • Large potential of benefits in energy security,
    climate change and low carbon economy, but need
    significant policy support
  • Different development stages so different support
  • A race to embrace new technology revolution

Conclusion and Recommendations
  • What to be done?
  • Clear and concrete renewables targets
  • More investment and support to facilitate RDDD
  • Removing energy market distortion and create the
    market for renewables, internalise externality
  • Removing institutional barriers (fair grid
    access, infrastructure development, enable
    informed choices)
  • Mitigating investment risk through support
    mechanisms for renewables (fixed price system and
    quota system)

No Perfect One-Off Solution
Barriers (technological, economic, institutional,
infrastructure, etc)
Solutions (Feed-in Tariff, CDM, PPP, carbon
price, renewables regulation..)
Adequacy Evaluation (How far does it removal the
  • Thank You !