1. Accelerating the energy transition
REthinking Energy 2017
Henning Wuester
Director – Knowledge, Policy and Finance
IRENA

2. The true value of renewables goes well beyond providing energy services
A definitive series that brings together IRENA’s analytical work on resources, costing, data and statistics, policy and investment analysis.
Indeed, the value of renewables goes well beyond providing energy services. This is best illustrated by the interlinkages between renewables development, as included in SDG 7, and other SDGs.

3. Key pillars for accelerating the global energy transformation
The third edition adopts the same analytical approach as edition 1 which is centered around key dimensions of renewable energy that will support their growing inclusion as the energy transformation gathers pace: policy, finance and investment, and technology.
Within each dimension, two topical and critical issues of the renewable energy landscape are discussed. These issues were selected precisely for the strategic role they will play in the transition.
The in-focus chapter will change annually with the current edition focusing on the central role that renewables play in meeting the UN Sustainable Development Goals, including the goal on universal energy access.
Policy, finance and investment, and technology remain central for accelerated growth.

4. Current status of renewable energy
Where are we today?
Today, one out of every five units of energy delivered to consumers comes from renewable energy sources.
In the power sector, global energy generation capacity increased by 161 GW (or 8.2%) in 2016.
Within the broader energy sector, the contribution of renewables in the energy mix grew by the largest increment yet in (2016 data yet to be published).
In 2015, the contribution of all renewable energy to the global energy mix grew by the largest increment yet, particularly in the electricity sector.

5. Accelerating the pace of the energy transition
If all existing national plans and policies are fully implemented, the share of renewables in the total energy mix is expected to rise only slightly over the next 15 years, from 18.3% in 2014 to 21% by 2030, compared to the target of 36%.
IRENA has a far more ambitious vision with the pursuit of all available renewable energy options and energy efficiency to reach 36%, as seen in the third pie of the Figure.
While the power sector is on track, more emphasis needs to be placed on the use of renewable energy for heating and cooling in buildings and industry and for transportation.
To complete the doubling by 2030, an enabling environment with the required frameworks is needed.
To meet sustainable development goals and decarbonise global energy use, renewables need to be scaled up significantly.

6. Policy frameworks: Focus on auctions
Renewable energy auctions in 2016:
At the end of 2016, at least 67 countries had held such auctions, up from only six in 2005.
As seen from the figure, renewable power auctions throughout 2016 resulted in record-low prices for both solar PV and wind. We have here solar prices that show spectacular fall together with convergence.
Solar PV achieved new price lows in several countries, with a record-breaking bid in the United Arab Emirates (USD 29.9 per megawatt-hour).
Source: IRENA

7. Policy frameworks: Focus on auctions
Evolution of solar prices
By 2016, solar PV bids in the most competitive countries came in below USD 60/MWh, as seen in the figure..
Renewable power auctions throughout 2016 resulted in record-low prices.

8. Policy frameworks: Focus on renewable integration and market design
As the share of variable and distributed renewables grows, structural adjustments to market design, regulations and operations will be needed to allow integration.
A portfolio of flexibility measures exist (as seen in the figure): supply and demand-side options, networks, storage, system operation and management, and market design.
Grid operators have integrated well above 30% variable renewables.
Denmark has seen RE electricity share rise to around 50% without compromising the reliability of electricity supply. Around 20% in Ireland, Germany and Spain.
A complete transformation of the energy system will not be possible without tapping into the synergies between renewables and EE, and among different end-use sectors (going beyond power) (US mini-grids for resilence. Denmark VRE integration. Changing roles & ownership).
Attracting sufficient financing remains key to increased renewable energy penetration.
Integrating large shares of renewables is not as challenging as often thought.

9. Scaling up investments – using public funds for risk mitigation to catalyse private investment
Early stage innovation fund
Sheikh Mohammed bin Rashid Al Maktoum Fund (UAE)
National Clean Energy Fund (India)
Guarantees to mitigate risks
Loan guarantees: Green Tech Financing Scheme (Malaysia)
Resource risk:
Geothermal Fund Facility (Indonesia)
Geothermal Financing and Risk Transfer Programme (IADB in Mexico)
Currency Risk Guarantee Fund (India)
Off-take risk: Regional Liquidity Support Facility (KfW in Sub-Saharan Africa)
For renewables to achieve their full potential, a significant scale-up in investments is required. Renewable investment falls far short of the estimated average of USD 770 billion that is needed annually during 2016—2030 in order to achieve a doubling of renewable energy’s share in the global energy mix.
Public financing itself will be insufficient, but will play an important role in catalysing private investments from a wider pool of sources.
Several national governments have begun to establish risk mitigation instruments, including loan guarantees, currency-risk guarantees and other tools to reduce the cost of capital.
New capital market instruments (e.g., yieldcos and green bonds) are enabling easier access to investment opportunities.

10. Leveraging new capital cost instruments
Growth in the Global Green Bond Market and Renewable Energy Share, /16
Renewable energy - the biggest sector in the green bond universe.
As the figure shows, global green bond issuances have increased tremendously over the past few years. Nearly half of the USD 41.8 billion green bond-labelled proceeds went to renewable energy, led by India and China.
Institutional investors are a crucial source of capital for large-scale renewable energy investment.

11. Innovations in Technology
Falling costs complemented by technology advances are driving renewables deployment around the world in all end-use sectors (in particular in solar thermal and geothermal in buildings which is illustrated in the table), BUT most rapidly in the power sector.
While the power sector is on track, more emphasis needs to be placed on the use of renewable energy for heating and cooling in buildings and industry and for transportation.
Renewable heating, cooling and renewables in the transport sector need to expand.

12. Technology innovation: Focus on storage
The rapidly evolving cost and technology landscape of electricity storage will be a game changer.
Storage offers greater flexibility in power system infrastructure. Batteries have experienced the most significant growth in recent years.
Costs of advanced battery storage systems are already in decline and expected to fall rapidly, driving up to 250 GW of capacity by 2030 and creating a multi-billion dollar market (as seen in the presentation).
IRENA estimates that total available battery storage for electricity will increase from just 0.8 GW to around 250 GW between 2014 and 2030.
Storage is also a key requirement for bridging the electricity gap in the off-grid context.
The rapidly evolving cost and technology landscape of electricity storage will be a game changer.

13. Bridging the electricity access gap through off-grid renewable energy solutions
The key challenge facing policy makers and other stakeholders to provide universal access to modern energy services is to extend electricity access to remote or rural areas, and at a scale that can meet not only basic needs, but also energy needs for productive uses.
A paradigm change is needed in the way off-grid solutions are deployed – away from kWs and kWhs towards livelihoods and services
Key conditions for promoting deployment combine policy and institutional aspects, financing solutions, and technology customization.
The development of off-grid solutions needs a new paradigm, putting the focus on energy services instead of supply to provide opportunities for improving livelihoods, increasing productivity and generating income, thereby, to contribute to multiple SDGs.
Off-grid systems build foundation for economic growth and improved livelihood.

14. Harnessing the cross-cutting impact of renewables
The true value of renewables goes well beyond providing energy services.
Renewable energy can trigger ripple effects through nearly every aspect of life, advancing progress on nearly all development goals either directly or indirectly.
Ensure a climate-safe future while fuelling economic growth, creating jobs and helping to alleviate poverty.
The in-focus chapter in this edition of rethinking illustrates the direct linkages between SDG 7 and other SDGs across three key dimensions of sustainable development:
Renewables and environmental sustainability (SDG 11 and SDG 15)
Renewables and human development (SDG 2, 3, 4, 5 and 6)
Renewables and sustainable economic growth (SDG 1 and 8)
Holistic policies can maximize the development benefits of renewables within and beyond the energy sector.

15. Five overarching sets of actions
Strengthening the policy commitment
Catalysing additional investments
Fostering technological innovation
Bridging the access gap through off-grid solutions
Harnessing renewable energy to meet multiple SDGs
Key pillars can help decision makers step up their efforts to maximise the social, economic and environmental benefits of an accelerated transition.
Realising the global energy transformation - and the central role of renewable energy in this process - presents a historic opportunity. The time to act is now, with new models and new approaches that empower everyone to engage as an open global community forging a sustainable energy future together.
The foundations for the transformation already exist. IRENA suggests 5 key action plans [see slide].
IRENA stands ready to assist in making that renewable energy transformation a continuous and sustainable reality. This edition of REthinking Energy brings a thought-provoking contribution to the ongoing debate.

16. Thank you!