© OECD/IEA Opportunities and Challenges in Deploying Renewables into the Mainstream demosEUROPA and Danish Embassy Joint Seminar Warsaw, 19 November 2008 Pieter Boot Director, Sustainable Energy Policy and Technology International Energy Agency

© OECD/IEA Global Power Generation Mix Scenarios 46.5% Renewables [Source: ETP 2008] Renewables would have to play a particularly significant role in the power sector, increasing from 18% today to nearly 50% by Non-hydro renewables show the highest growth rate.

© OECD/IEA Average Annual Power Generation Capacity Additions, 2010 – 2050 An Energy Revolution [Source: ETP 2008]

© OECD/IEA Deploying Renewables: Principles for Effective Policies Launched on 29 September in Berlin Contact Download Executive Summary at um/DeployRenew2008SUM.pdf

© OECD/IEA Achieved (by 2005) and Additional realisable mid-term potential (by 2020) for RES-E Achieved (2005) and additional realisable mid-term (up to 2020) potential for RES-Electricity by country (OECD+BRICS) – in absolute terms (TWh)

© OECD/IEA Effectiveness & Efficiency Wind On-shore 2005 (OECD & BRICS) Source: IEA & Fh-ISI, 2008 Long-term predictable incentives (FIT or FIP) + Appropriate framework Higher risk (TGC) + Non-economic barriers

© OECD/IEA Effectiveness & Efficiency Solid biomass elec (OECD+BRICS) Source: IEA & Fh-ISI, 2008 TGC FIT/FIP

© OECD/IEA Main Lessons Learnt and Conclusions

© OECD/IEA Effective policies only in a limited set of countries  Sometimes depending on specific technology Perceived risk, more than profit, is key to policy effectiveness & efficiency Price support can not be adequately addressed in isolation; non-economic barriers must be addressed concurrently  Grid barriers  Administrative barriers  Social acceptance issues  Other barriers (e.g. training, information, financial, etc.) Effective systems have, in practice, frequently been the most cost efficient  Technology-specific support is key for both effectiveness and cost-efficiency Main Lessons Learnt (1)

© OECD/IEA Main Lessons Learnt (2) ‘Feed-In Tariff vs. Quota Obligation System/ Tradable Green Certificate’ debate misleading  Both systems show success and failures depending on specific country and technology Precise design criteria and fine-tuning are key Signs of convergence:  Feed-In Tariff: Premium tariff option, time digression  Quota System/Tradable Green Certificate: Technology banding

© OECD/IEA Remove non-economic barriers to improve market functioning 2. Establish predictable support framework - to attract investments 3. Set up transitional incentives decreasing over time – to foster and monitor technological innovation and move towards market competitiveness 4. Ensure specific support in function of technology maturity to exploit potential of large RET range 5. With increasing mass-scale RET penetration impact on overall energy system must be taken into account Continuity Certainty Key Principles for Effective Renewable Energy Policies

© OECD/IEA Fostering RE’s transition towards mass market integration Niche marketsMass market Low cost-gap (e.g. wind onshore) High cost-gap (e.g. PV) Mature tech (e.g. hydro) Prototype & demo stage (e.g. 2 nd gen biofuels) Time Market Deployment Development 1. Development RD&D financing, capital cost support, investment tax credits, rebates, loan guarantees 2. Stable, low-risk, sheltered FIT, FIP, Tenders 3. Shared/imposed market risk, guaranteed minimum but declining support FIP, TGC (technology banding) 4. Technology-neutral competition TGC, Carbon trading (e.g. EU ETS)

© OECD/IEA Realise urgency to implement effective policies to exploit major potential of RETs in terms of energy security and climate change mitigation 2. Remove and overcome non-economic barriers first 3. Exploit substantial potential for improvement of policy effectiveness and efficiency: learn from good practice 4. Focus on rigorous and coherent implementation of key policy design principles with regard to long-term cost efficiency and national circumstances 5. Create level playing field by pricing in GHG emissions and other externalities & removing subsidies for conventional energy 6. Allow a combination framework of incentive schemes in function of technology maturity level Urgent action for Energy Technology Revolution Recommendations