Energy Technology Perspectives 2014 Harnessing Electricity’s Potential Please note that this PDF is subject to specific restrictions that limit its use and distribution. The terms and conditions are available online at http://www.iea.org/termsandconditionsuseandcopyright/ Energy Technology Perspectives 2014 Harnessing Electricity’s Potential Explore the data behind ETP The IEA is expanding the availability of data used to create the Energy Technology Perspectives publication. Please visit the restricted area of the ETP website, www.iea.org/etp2014. There you will find many of the figures, graphs and tables in this book available for download, along with much more material. The website is evolving and will be continuously updated. Your username is “etp2014” and password “harnessingelectricity54”. INTERNATIONAL ENERGY AGENCY The International Energy Agency (IEA), an autonomous agency, was established in November 1974. Its primary mandate was – and is – two-fold: to promote energy security amongst its member countries through collective response to physical disruptions in oil supply, and provide authoritative research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports. The Agency’s aims include the following objectives: n Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular, through maintaining effective emergency response capabilities in case of oil supply disruptions. n Promote sustainable energy policies that spur economic growth and environmental protection in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute to climate change. n Improve transparency of international markets through collection and analysis of energy data. n Support global collaboration on energy technology to secure future energy supplies and mitigate their environmental impact, including through improved energy efficiency and development and deployment of low-carbon technologies. n Find solutions to global energy challenges through engagement and dialogue with non-member countries, industry, international organisations and other stakeholders. IEA member countries: Australia Austria Belgium Canada Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Secure Sustainable Together Japan Korea (Republic of) Luxembourg Netherlands New Zealand Norway Poland Portugal Slovak Republic © OECD/IEA, 2014 Spain International Energy Agency Sweden 9 rue de la Fédération Switzerland 75739 Paris Cedex 15, France Turkey www.iea.org United Kingdom United States Please note that this publication is subject to specific restrictions The European Commission that limit its use and distribution. The terms and conditions are available online at also participates in http://www.iea.org/termsandconditionsuseandcopyright/ the work of the IEA. 3 TableofContents Table of Contents Introduction 6 Foreword 6 ExecutiveSummary 8 Acknowledgements 17 Part1 SettingtheScene 22 Chapter1 TheGlobalOutlook 25 Globalmodellingresults 29 Changesthatalterpreviousenergyprojections 31 Sectordevelopmentinthefutureenergysystem 35 Investmentneedsandfuelsavingsfromtransformingtheenergysystem 51 Policyactiontoleadthetransition 53 Chapter2 TrackingCleanEnergyProgress 59 TrackingProgress:HowandAgainstWhat? 60 RenewablePower 64 NuclearPower 70 NaturalGas-FiredPower 72 Coal-FiredPower 74 CarbonCaptureandStorage 76 Industry 78 ChemicalsandPetrochemicals 80 IronandSteel 82 Transport 84 ElectricandHybridElectricVehicles 86 Biofuels 88 BuildingsEnergyEfficiency 90 BuildingEnvelope 92 AppliancesandEquipment 94 Co-generationandDistrictHeatingandCooling 96 SmartGrids 98 Getting“Smart”aboutStayingonLine 100 TechnologyOverviewNotes 109 ©OECD/IEA,2014. 4 TableofContents Part2 HarnessingElectricity’sPotential 116 Chapter3 ElectrificationoftheEnergySystem 119 Theincreasinglyessentialandevolvingroleofelectricity 122 Implicationsforenvironment,securityandeconomy 124 Recommendedactionsforthenearterm 133 Chapter4 SolarPower:PossiblytheDominantSourceby2050 137 Solartechnologiesintheelectricitysystem:Recenttrends 139 Futureroleofsolarintheglobalelectricitysystem 147 Recommendedactionsforthenearterm 162 Chapter5 NaturalGasinLow-CarbonElectricitySystems 167 NaturalgasintheETP2014scenarios:Asummary 168 Enablinggas-firedgenerationtechnologiestodisplacecoal 179 Flexiblegas-firedgenerationtosupportVREgeneration 189 Recommendedactionsforthenearterm 200 Chapter6 ElectrifyingTransport:HowCanE-MobilityReplaceOil? 207 Electrifyingtransportmodes:Technologies,timeframesandopportunities 210 TheLETMIX 224 TheETP20142DSand2DS-ETvariant 229 Recommendedactionsforthenearterm 233 Chapter7 ElectricityStorage:Costs,ValueandCompetitiveness 239 Appealofstoringelectricity 240 Applicationsforelectricitystorage 246 Performanceandcostsofelectricitystoragetechnology 252 Energystorageforsystemintegration 267 Gridstoragerequirementsinthe2DS 270 Recommendedactionsforthenearterm 272 Chapter8 AttractingFinanceforLow-CarbonGeneration 277 Attractingfinancingresources 279 Thetwoextremes:Regulatedutilitiesandcompetitivemarkets 288 Intermediatesolutionstopromotelow-carboninvestments 295 Recommendedactionsforthenearterm 301 Chapter9 PowerGenerationinIndia 305 India’slow-carbongrowthstrategy 306 TheIndianpowersectortoday 307 Mid-termgoalsforthepowersector 317 Coal 318 Gas 324 Nuclear 326 Hydropower 329 Otherrenewableenergytechnologies 330 Recommendedactionsforthenearterm 336 ©OECD/IEA,2014. 5 TableofContents Annexes 340 AnnexA AnalyticalApproach 341 AnnexB AbbreviationsandAcronyms 352 AnnexC Definitions,RegionalandCountryGroupingsandUnits 357 AnnexD ListsofFigures,TablesandBoxes 368 ©OECD/IEA,2014. 6 Introduction Foreword Foreword TheInternationalEnergyAgency(IEA)EnergyTechnologyPerspectives(ETP)analysisoffersa comprehensive,long-termviewofenergysystemtrendsandtechnologiesessentialtomeet goalsforaffordable,secureandlow-carbonenergy.Thislong-termviewisregularlychallenged bydevelopmentsthathavelastingandtransformativeimpacts,suchastheshalegasboomin NorthAmerica,costreductionsinseveralrenewabletechnologiesandtheuncertaintyin nuclearpowerprogress.Theseexamplesclearlyshowthattechnology,marketdevelopments andexternaleventsinfluencetheevolutionofenergysystems. Theseinteractionsdrawattentiontoatroublingfact.Inthefaceofrapidlygrowingdemand andtheincreasinglyurgentthreatofclimatechange,wearecontinuingtorespondtothe energysystemasitevolvesratherthanactivelymanagingitstransformationtowardstheaim ofachievingaclean,secureandeconomicenergysupply.Aradicalchangeofcourseislong overdue,andETPshowsthenecessityoftechnologytoobtainthesegoals. Consideringthelinksbetweeneffectiveshort-andlong-termdevelopmentofenergysystems,the IEAhastakenastrategicdecisiontotransitionETPtoanannualpublicationinwhicheachedition sharpensitsfocustoallowa“deepdive”intoanalysisoftimelytopicsandtrends.TheETPonline presencehasbeenexpandedtodeliverdownloadableanalysisupdates,datavisualisationsand sectorspecificcommentary,maintainingitscomprehensiveanalysis,whileincreasingusability. Wealsocontinuetomonitorthestatusofglobaltechnologyeffortstomeetlongtermtargets through“TrackingCleanEnergyProgress”,akeychapterinETPandistheIEAfourth submissiontotheCleanEnergyMinisterialonglobalcleanenergytechnologydevelopment anddeployment.Wefindgrowingevidencethatapartialenergytransitionisunderway–and thatemergingeconomieshavesteppedintothelead,achievingthegreatestgainsinthepast year.Butitisclearthatsomeoftheencouragingtrendsobservedin2013areindireneedof renewedsupport. ThethemeofETP2014,HarnessingElectricity’sPotential,reflectsanopportunityarisingfrom theconvergenceoftwotrends:rapidlyrisingglobalelectricitydemandandtheevidentneed forincreasedsystemintegration.Electricityproductionuses40%ofglobalprimaryenergyand producesanequalshareofenergy-basedcarbondioxideemissionstoday.However, cost-effectiveandpracticalsolutionsexistthatcanincreaseefficiencyandreduceelectricity demandaswellascarbonemissionsbetweennowand2050.Fourkeypointsemergeinthis year’sanalysis: ■ Theunrelentingriseincoalusewithoutdeploymentofcarboncaptureandstorageis fundamentallyincompatiblewithclimatechangeobjectives. ■ Naturalgascan,intheshortterm,playadualroleofreplacingcoalandsupportingintegration ofvariablerenewableenergy(VRE),inthemediumtolongerterm,gasmustbeseenforwhatit is–atransitionalfuel,notalow-carbonsolution. ■ DeploymentofVREtechnologyisgrowing,andinsomecasesbecomingcompetitive; experiencenowshowsthatbalancingVREsupplyandpatternsofenergydemandmust–and can–beactivelymanaged. ■ Electricitystoragecanplaymultiplerolesinanintegratedsystem,ascanothertechnologies withwhichitmustcompete.Contrarytomanyothervoices,ETPanalysisfindsthatelectricity storagealoneisnotanecessarygame-changerforthefutureenergysystem. ©OECD/IEA,2014. 7 Introduction Foreword Anewfeatureofeacheditionwillbeacountrycasestudyofparticularrelevancetothetheme, withtheinauguralexamplebeingIndia’stremendouschallengeofexpandingbothcapacity andgenerationofelectricitytomeetadoublingofdemandinthenextdecade.Alow-carbon, moreintegratedfuturewillrequirestrongpolicyactiontomanagetheuseofitssubstantial coalresourcesandtoaddresstheadministrativehurdlesthatimpedebothinnovationand investment. Thetimescaleforthispublicationis40years.AstheIEAentersits40thyear,energy challengesareasdauntingastheywerein1974.Whileenergysecurityisstillaconcern, shiftingtheworldtoasustainableenergypathhasbecomeanadditionalurgentpriority.Our effortsduringthelastfourdecadeshavenotaddressedthischallenge.Thegreaterfocusof ETPandtheassociatedseriesofpublicationsfurthertheIEA’sunderlyingaimofprovidingtruly transformative“callstoaction”sothatgovernmentscantakethestepsnecessarytomoveto acleanerpath.Butwemuststartnow;wecannotaffordtowaitanother40years. ThispublicationisproducedundermyauthorityasExecutiveDirectoroftheIEA. MariavanderHoeven ExecutiveDirector InternationalEnergyAgency ©OECD/IEA,2014. 8 Introduction ExecutiveSummary Executive Summary EnergyTechnologyPerspectives2014(ETP2014)chartsacoursebywhich policyandtechnologytogetherbecomedrivingforces–ratherthan reactionarytools–intransformingtheenergysectoroverthenext40 years. Recenttechnologydevelopments,marketsandenergy-relatedeventshave assertedtheircapacitytoinfluenceglobalenergysystems.Theyhavealso reinforcedthecentralroleofpolicyintheincreasinglyurgentneedtomeet growingenergydemandwhileaddressingrelatedconcernsforenergy security,costsandenergy-relatedenvironmentalimpacts.Radicalactionis neededtoactivelytransformenergysupplyandenduse. Inadditiontoanalysingtheglobaloutlookto2050underdifferentscenarios,acrosstheentire energysystemformorethan500technologyoptions,ETP2014explorespathwaystoa sustainableenergyfutureinwhichpolicysupportandtechnologychoicesaredrivenby economics,energysecurityandenvironmentalfactors.Startingfromthepremisethat electricitywillbeanincreasinglyimportantvectorinenergysystemsofthefuture,ETP2014 takesadeepdiveintoactionsneededtosupportdeploymentofsustainableoptionsforpower generation,distributionandend-useconsumption. ETP2014analysesthreepossibleenergyfuturesto2050: ■ 6oCScenario(6DS),wheretheworldisnowheadingwithpotentiallydevastatingresults ■ 4oCScenario(4DS)reflectsstatedintentionsbycountriestocutemissionsandboostenergy efficiency ■ 2oCScenario(2DS)offersavisionofasustainableenergysystemofreducedgreenhousegas andcarbondioxide(CO )emissions. 2 StatusandrecenttrendsarehighlightedinTrackingCleanEnergyProgress,providinga snapshotofadvancesorlackofprogressinmajorlow-carbonenergytechnologies. Collectively,ETP2014laysoutthewiderangeofnecessaryandachievablestepsthatcanbe takeninthenearandmediumtermstosetthestageforlong-termenergypolicyobjectives, clearlyidentifyingtherolesofenergysectorplayers,policymakersandindustry. ©OECD/IEA,2014. 9 Introduction ExecutiveSummary Global energy trends show advances in decoupling demand from economic growth, but also reveal bottlenecks and uncertainties ETP2014’s2DSconfirmsthatglobalpopulationandeconomicgrowthcanbe decoupledfromenergydemand,evenforoil.Extendingrecenttrendsto2050inthe6DS, globalenergydemandgrowsby70%andemissionsgrowbymorethan60%against2011 levels.Underthesameprojectionsforpopulationandgrossdomesticproduct,radicalactionin the2DSdramaticallyimprovesenergyefficiencytolimitincreasesindemandbyjustover25% whileemissionsarecutbymorethan50%.Oneofthemostnotabledifferencesbetweenthe twoscenariosisthis:inthe6DS,oilremainsthemostimportantprimaryenergycarrierwith demandincreasingby45%,whilethepolicyandtechnologychoicesmadeunderthe2DS delivera30%reductioninoildemand. Solar,hydropowerandonshorewindarepresentlyforgingahead,whiledevelopment ismixedforothercleanenergysupply.Policycertaintyremainsvitaltoapositive investmentoutlookforcleanenergytechnologies.Costperunitofenergygeneratedby onshorewindandsolarphotovoltaic(PV)continuedtofallin2013,albeitataslowerratethan inpreviousyears.Theircost-competitivenessisimproving,insomecountries,partlydueto innovativemarketdesign.Despitetheirflexibility,concentratingsolarpowerplantsarebeing deployedmuchmoreslowly,withaslowerdeclineincosts.Globalnuclearcapacityis stagnatingatthistimeasamodestcapacityincreasefromnewreactorscomingonlinehas beenoffsetbytheretirementofageingornon-profitableplantsinmembercountriesofthe OrganisationforEconomicCo-operationandDevelopment(OECD).Lookingatamidpointto 20502DStargets,installedglobalnuclearcapacityin2025willlikelybe5%to24%below neededlevels,demonstratingsignificantuncertainty. Emergingeconomieshavesteppeduptheirambitionsandbecomeleadersin deployinglow-carbonenergytechnologies.Emergingmarketsmorethancompensated forslowingormorevolatilerenewablepowergrowthinEuropeandtheUnitedStates,with AsiadeployingmorethanhalfofglobalsolarPVadditionsin2013.China’sboldmeasuresto supportcleantransportasameansofimprovingurbanairqualityhasledtosome150million electric2-wheelersontheroadandgreaterdeploymentofelectricbuses.Globally,salesof hybridelectricvehiclesandelectricvehicles(EVs)setnewrecordsin2013,butstillfallshortof the2DStrajectory. Continuedincreaseincoalusecounteractsemissionsreductionfromrecentprogress inthedeploymentofrenewables,underliningtheneedtoimprovecoalplantefficiency andscaleupcarboncaptureandstorage(CCS).Growthincoal-firedgenerationsince 2010hasbeengreaterthanthatofallnon-fossilsourcescombined,continuinga20-year trend;60%ofnewcoalcapacitybuiltinthepastdecadewassubcritical,theleastefficient classofcommerciallyavailablecoal-firedgenerationtechnologies.ThefutureofCCSis uncertain;atpresent,thetechnologyisadvancingslowly,duetohighcostsandlackofpolitical andfinancialcommitment.Near-termprogressinCCSresearch,developmentand demonstrationisneededtoensurelong-termandcost-competitivedeploymenttowards meetingclimategoals. Fossilfuelusedecreasesby2050inthe2DS,butitsshareofprimaryenergysupply remainsabove40%,reflectingitsparticularlyimportantroleforuseinindustry, transportandelectricitygeneration.Theabilityofthedifferentindustrialsub-sectorsto incorporaterenewableenergysourcesintotheirprocessesvariesgreatlydependingonthe natureofthefinalproductanddiverseoperationallimitations.CCSisneededtocaptureboth ©OECD/IEA,2014.