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Global Futures Report 2013 - Introduction

10 Introduction Renewable energy has been in a multi-decade process of becoming “mainstreamed” among businesses, governments, consumers, and utilities. In interviews, industry experts, CEOs, policymakers, and many others consistently pointed to this ongoing process, some proclaiming that “mainstreaming” was now achieved, especially considering that the majority of annual global investment in power generation was now flowing to renewable energy instead of fossil fuels and nuclear.1 The growth of renewable energy worldwide began in the 1990s and accelerated greatly in the 2000s. By 2011, the renewable energy industry was investing $260 billion annually. Many of those interviewed credited this growth to the proliferation of supportive government policies, to rising costs of conventional energy, and to dramatic reductions in renewable energy technology costs and economies of scale in manufacturing. These experts emphasized that policies at the national, state, provincial, and local levels have played a major role in driving renewable energy markets, invest- ments, and industry growth over the past two decades.2 Given the dynamic nature of this growth over the past decade, many past projections of renewable energy have already fallen short. For example, the International Energy Agency (IEA) in 2000 projected 34 gigawatts (GW) of wind power globally by 2010, while the actual level reached was 200 GW. The World Bank in 1996 projected 9 GW of wind power and 0.5 GW of solar PV in China by 2020, while the actual levels reached in 2011, nine years early, were 62 GW of wind power and 3 GW of solar PV. The history of energy scenarios is full of similar projections for renewable energy that proved too low by a factor of 10, or were achieved a decade earlier than expected.3 Many of those interviewed pointed to the increasingly diverse nature of motivations for renewables as part of the mainstream- ing process. Cited motivations that will continue to drive renew- able energy development in the future included security of energy supply, autonomy, resilience, jobs, industrial development, financial profit, portfolio risk mitigation, price risks of fossil fuels, rural energy access, climate change, environmental sustainability, and nuclear accidents and wastes.4 When thinking about the future of renewable energy, experts spoke of the broader context and debates about the future of energy systems overall. This meant thinking about cost comparisons, tech- nology choices, financial risks and returns, future fuel prices, total energy demand, levels of energy efficiency achievable, environmen- tal costs, social acceptance, and the overall shape and characteris- tics of future energy systems.5 Many experts argued that some forms of renewable energy are competitive today with conventional energy (fossil fuels and nuclear) in many places, even in the absence of policy support. Or, that renewables would already be competitive if “costs” were defined and counted properly, at both technology and system levels.6 (For more on these issues, see “Great Debate 1” on page 12, Box 2 on page 16, costs discussions in Chapter 6, and Annexes 3 and 4.) Experts also made clear that support policies and continued cost reductions remain central. Many of the “high-renewables” scenarios presented in this report model strong levels of policy support in the future together with continued cost reductions. Experts asserted that policymakers will confront a wide range of choices and consid- erations in the future, in terms of continuing, updating, and retiring existing renewable energy policies, and creating new ones.7 As renewables become more integrated with existing infrastructure and markets, policymakers will confront the need for new policies to achieve these various forms of integration, as noted throughout this report. Said one industry expert, “the long-term trajectory of renewables certainly depends on what happens with policies during the next ten years, and policy continuity beyond that.”8 (See also “Great Debate 2” on page 13.) Yet many experts also believed that technology and cost are no longer the fundamental issue. Many scenarios referenced in this report portray high-renewables futures using only currently existing technologies. Some scenarios also show total energy system cost to be roughly equal for renewables-centric and fossil fuel-centric cases. Thus, experts made clear that renewable energy futures also depend on finance, risk-return profiles, business models, invest- ment lifetimes, infrastructure integration, social and environmental factors, and a fundamental rethinking of how energy systems are designed, operated, and financed.9 In particular, the theme of “integration” was raised consistently during interviews. “Integration is in our face over the next five to ten years,” said one expert, referring to integration of renewables in utility power grids, buildings, transport, and industry. “Integration is not just about hardware, but also about how power markets function,” said another.10 (See Chapters 2 and 3.) Some experts emphasized the “paradigm-changing” nature of the energy systems transition ahead (actually a “transformation” in the words of some; see also the report’s Conclusion). “Technically speaking, we are moving from landlines to cell phones,” offered one expert as an analogy. And along with this transition, “We will see a lot of new players coming in, with unknown dynamics and unknown relationships.” Another said: “We can be almost sure that the future will not be a linear growth line from today.” One senior electric utility manager put it this way: “What’s happening is that society is changing the design criteria for energy systems.” This manager noted that, according to the old criteria, conventional technologies fit centralized, inflexible, and commodity-like systems. But according to new criteria, system designers will think in terms of flexibility, modularity, multiple levels of service and reliability, and a balance of centralized and decentralized, with energy becoming more service-like and less commodity-like.11 Experts also emphasized the long time frames associated with energy system infrastructure and investment. For example, a typical coal power plant might last for 40 years. So high shares of renew- ables in the longer term imply less fossil fuel construction even in the shorter term. Some developing country experts were concerned that the coming years will see large amounts of conventional generation such as coal power added to utility grids in developing countries. Such “lock-in” of conventional generation could pre-empt

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