1. Taking stock of clean energy policy and private sector investment Robert Gross and Becky Mawhood Centre for Energy Policy and Technology Imperial College London Imperial College Energy Futures Lab

2. Outline Context – the decarbonisation challenge and growth in green energy The policy map The investment challenges What’s policy been doing and what does policy need to do? Conclusions

3. The scale of the climate challenge IEA, 2010 “Energy Technology Perspectives: Scenarios & Strategies to 2050”

4. Increasing demand from developing countries Source: IEA WEO 2012 Presentation to Press

5. Investment flows Ren 21 Global Status Report 2012 Global new investment in renewable energy increased 17% in 2011, to a new record of USD 257 billion. This was more than six times the figure for 2004, and 94% more than the total in 2007, the last year before the acute phase of the recent global financial crisis.

6. A growing fraction of investment

7. Proportion of investment in developing countries Source: Frankfurt School-UNEP Centre/BNEF (2013). Global Trends in Renewable Energy Investment 2013.

8. Increasing policy interest 138 countries have targets 127 countries have support policies Two-thirds of these are emerging economies Source: REN21(2013) Global Status Report

9. Diverse targets and policies LocationTargetsPolicies & fiscal incentives Germany 18% of final energy consumption by 2020; 60% by 2050 35% of electricity production by 2020; 80% by 2050 14% renewables in total heat supply by 2020 FIT/premium payment Biofuels obligation/mandate Heat obligation/mandate Capital subsidy Tax credits/reduction Production payment India 10% of electricity production by 2012 3.5 GW new renewables over 2011-12 9 GW wind by 2012 20 GW grid-connected solar by 2022 2 GW off-grid solar by 2020 20 million solar lighting systems by 2022 14 GWth solar thermal by 2022 FIT/premium payment Utility quota obligation Net metering Biofuels obligation Heat obligation (State) Tradable certificates Capital subsidy Tax credits/reduction Production payment Guatemala 80% of final energy consumption by 2026 60% of electricity production by 2022 Net metering Biofuels obligation Tax credits/reduction Senegal15% of primary energy by 2025 60% rural electrification by 2017 (not exclusively renewables) FIT/premium payment Tax credits/reduction Source: REN21 (2013) Global Status Report

10. BUT all is not entirely well…. Swinging FiT cuts in some countries Dissatisfaction and reaction against price impacts amongst some publics The ‘solar bubble’ and trade war The ‘shale gas effect’ – cheaper coal, changed perception of scarcity, rewards to FF innovation Climate scepticism (or boredom?)

11. OECD issues – financing the transition e.g. Britain’s investment challenge - scale What do we need? – £75b required for new gen capacity * – £30b alone for offshore wind ? ** – Current big 6 spend around £5b/year – Dash for gas was about £11b total – Total market value of all existing UK generation plant is c. £50b *** – Huge plans for economic infrastructure at UK, EU and global level – UK policy/investment environment attractive vs peers? EMR WP, Chapter 2 ** DECC Roadmap (at current prices) *** SSE, An Energy White Paper

12. Africa’s is scale too – but also source Source data: AFD/WB (2010). Africa’s Infrastructure – A Time for Transformation Capital investment in Sub Saharan Africa’s electricity sector by source

13. Increasing private investment? Source: World Economic Forum (2013).The Green Investment Report.Source data: AFD/WB (2010). Africa’s Infrastructure – A Time for Transformation Capital investment in Sub Saharan Africa’s electricity sector by source

14. Looking ahead – what’s policy trying to achieve?

15. 1. Buy down costs IEA 2000, Learning curves report Mott Macdonald and the CCC 2011

16. Average module price reduction over time (left) versus annual PV cell/module production (right) O'Rourke et al., 2009 in FITT Research Report. Deutsche Bank. May 2008. 2009. PV – policies and buy down…. EPIA and EU PV Technology Platform, Solar Europe Industry Initiative (SEII). Summary implementation plan 2010-1012, in EPIA Draft Report, April 2010. 2010.

17. 2. Create stability, meet investor needs Spread in levelised costs arising from different CO2 and fuel price scenarios (taken from UK Energy Review ) (Working Paper by Will Blyth 2006) Net present value representation of the spread of returns arising from different CO2 and fuel price scenarios (taken from UK Energy Review ) (Working Paper by Will Blyth for UKERC 2006)

18. Policies like the UK CfD FiTs transfer risk

19. But also 3. suit the context…. Institutional and political feasibility are key –E.g. Senegal ASER conceptually strong, popular with donors, good leverage but… slow progress, turbulent management, ‘blocking’ by Senelec, etc… Need to avoid tail wags dog – liberalised approach to suit donor beliefs not beneficiary needs Affordability and believability also essential Who does what, with what? Incumbents/new entrants, large scale/small scale, new tech/old tech, government/companies, community/profit….

20. Conclusions/thoughts Green growth is already a reality Policy more contested, trade offs now central Continuation is not a given, FF renaissance…? Policy essential, we know (broadly) what works What works is context specific – IF is key Decades of experience –opportunity to learn from what works –Avoid pointless policy ‘innovation’ = ground hog day? Interesting times…!