MENA Renewable Energy Challenges of Meeting Future Regional Power Targets

Transcription

1 MENA Renewable Energy Challenges of Meeting Future Regional Power Targets Dr. Steve Griffiths Executive Director, Masdar Institute Professor of Practice 1

2 MENA Trends Electricity demands are reaching unsustainable levels Electricity production growth has outpaced economic growth (GDP) Electricity production growth has outpaced capacity growth Rising population Urbanization Economic growth and industrialization Source: APICORP Research, MENA Power Reassessed: Growth Potential, Investment and Challenges, April-May

3 MENA Electricity Demand If current trends continue Source: APICORP Research, MENA Power Reassessed: Growth Potential, Investment and Challenges, April-May 2012 Electricity production capacity growth will outpace GDP growth Production capacity grows at 7.8% while regional GDP grows at 4.5% By 2017: >120 GW new generation capacity needed at total cost of ~$250B 3

4 Evolution of MENA Energy Demand If current trends continue In 2010, ~60% of power generated using natural gas and ~37% using oil Limited renewables deployment, mostly hydro If new, fossil capacity is required to meet unchecked demand Significant budgetary strain on hydrocarbon importers Significant opportunity cost to hydrocarbon exporters Source: APICORP Research, MENA Power Reassessed: Growth Potential, Investment and Challenges, April-May

5 MENA Energy Demand How does the region achieve a sustainable energy mix? 5

6 Meeting the MENA Energy Demand Challenge The strategy requires both supply and demand considerations DEMAND-SIDE MANAGEMENT (DSM) SUSTAINABLE ENERGY SUPPLY Base Case Electricity Demand Reduced Demand with Demand- Side Management Aims at curbing electricity and water demand by using technical, regulatory, and information levers Aims at having a diversified portfolio optimized to the specific country context 6

7 Meeting the MENA Energy Demand Challenge DSM Options Energy Efficiency related to technological solutions, such as efficient cooling systems, heater control, etc. Energy Conservation - related to consumer behavior Conservation and Efficiency Demand Response -load management or shifting efforts, related to electricity market and price signals Load Shifting Peak Clipping 7

8 Meeting the MENA Energy Demand Challenge DSM opportunities Saudi Example Peak Demand (GW) USD $13.3B Net Savings Possible Energy Efficiency Programs Efficient cooling in existing homes and buildings New construction efficiency (building insulation and a/c) Demand Response Programs Direct load control Interruptible tariffs Curtailable load management Source: Saudi Electricity and Co-Generation Regulatory Authority, Demand Side Management Programs,

9 Meeting the MENA Energy Demand Challenge DSM opportunities Abu Dhabi Example DSM with focus on reducing A/C demand and consumption in residential, commercial and institutional buildings Lights, 7.4% Hot Water Boilers, 8.4% Other Common Equipment, 11.8% Fan-Coil Units, 8.1% External Consumption, 0.1% Exhaust Fans, 1.6% Other Internal, 5.1% Chillers, 57.5% > USD $4B Net Savings Possible Example of Electricity Consumption for Typical Building Source: Municipality of Abu Dhabi City. ADM Energy Consumption Management Program in Existing Buildings, October 31,

10 Meeting the MENA Energy Demand Challenge Demand management is the first step but not a silver bullet Base Case Electricity Demand Reduced Demand with Demand-Side Management Residual demand to be met with sustainable supply 10

11 Sustainable Energy Supply Clean energy will play an important role in sustainable supply Energy Mix Diversification Nat Gas (including CCS) Cost efficient Low emissions Nuclear Cost efficient for base load Clean Reliable source Renewables Decreasing costs Environmentally friendly Leverages abundant resources 11

12 Energy Mix Diversification with Renewables The Options and the Selection Criteria Utility PV Value chain opportunities Economics of Hydrocarbons Saved Wind (Onshore & Offshore) Rooftop PV CSP w/ Storage Human capital needs and availability Regulatory and physical infrastructure requirements Energy Mix Technology lifecycle costs Electricity and desalinated water demand patterns Waste-To-Energy Geothermal 12

13 Energy Mix Diversification with Renewables Significant Regional Opportunities 2,500 Solar Potential 24 GW PV deployed (~3% electricity generation) Wind Potential 50% electricity consumption supplied by wind power by Source: MEED, The outlook for the Middle East power and renewable sectors,

14 Energy Mix Diversification with Renewables Pursuing opportunities with targets renewable energy targets (selected MENA countries) Source: MEED, The outlook for the Middle East power and renewable sectors,

15 Achieving Regional Renewables Targets Holistic perspective is needed to catalyze action Comfort with technology costs and reliability Understanding of renewables value proposition avoided and opportunity costs Near and long-term renewables planning to achieve predictability, dispatchability, and availability where needed: Resource forecasting and operational planning Transmission and distribution Generation flexibility and energy storage Understanding of broader economic benefits of renewables deployment, including human capital development Identification and pursuit of local value chain opportunities Focusing of research and education on initiatives that create local value Robust supply-side and demand-side policies that stimulate renewables deployment 15

16 Achieving Regional Renewables Targets Implementing a holistic approach Robust Regulatory and Fiscal Policy Framework Deployment Perspective Holistic Value Chain Perspective Education R&D Education R&D Innovation Investment Innovation Investment Infrastructure Projects Infrastructure Projects Captures energy security, environmental and initial economic benefits Does not capture the complete set of possible direct and indirect economic opportunities Embraces renewable energy / sustainable technologies across all value chain Creates Green Economic Growth at home and raises the positioning of the region at a global level 16

17 Achieving Regional Renewables Targets Net benefits of a holistic approach $$ Aim is for costs to be outweighed by economic benefits Magnitude and distribution of benefits are context dependent Costs Fossil Fuel Displacement GHG Emission Reduction Benefits Direct and Indirect GDP Contribution Net Benefits 17

18 Achieving Renewables Targets in the UAE Engagement across the value chain Holistic Energy Strategy Working Together 18

19 Achieving Renewables Targets in the UAE Working together on all fronts renewables resource assessment Founding Members RE Atlas Data Layers RE Atlas Outputs RE Project Costs (LCOE) 19

20 Meeting the MENA Energy Demand Challenge Conclusions MENA electricity demand is growing rapidly ~$250B in new generation capacity required in the next 5 years ifdemand grows unchecked New fossil generation capacity based on natural gas and oil fuels Significant budgetary strain on hydrocarbon importers Significant opportunity cost to hydrocarbon exporters Focus needs to be placed on demand side management and diversification of energy supply Renewables and nuclear can serve as complimentary sources of supply diversification A holistic approach needs to be considered to capture the full economic benefits of renewables deployment 20

21 Meeting the MENA Energy Demand Challenge Conclusions Success factors to drive renewables deployment Development and implementation of regulatory and fiscal policy frameworks Transparent, stable, predictable and enforceable frameworks required Quantification of technical potentials Resource assessment site by site and grid availability to guide project development Understanding of technology costs and benefits Cost competitiveness from direct and opportunity perspectives Access to financing Financing conditions and structure are key to drive LCOE reductions and hence to reduce costs of renewables policies Development of quality projects Quality developers with good track records and sound power purchase agreements (PPAs) with transparent and stable terms Development of Value Chain Opportunities Economic diversification and renewable targets to drive development of local renewable industries, not only in manufacturing but also in services 21

22 THANK YOU 22