Environmental Engineering Reference
In-Depth Information
generation by 6 % for wind power and 3 % for solar photovoltaic. This rapid growth
is expected to be localized mainly in the emerging economies, India and China,
although the EU, the USA, and Japan should continue to play an important role in
RES' markets. In the face of significant developments identified by this scenario,
significant implications are highlighted in terms of adaptation, new design and in-
vestment in energy grids for the exploitation of intermittent sources and in terms of
the need for capacity of traditional reserves, that are flexible plants for dispatching
energy to cope with the demand for energy that might not be covered by RES.
The 450 scenario is even more challenging since it requires practically a revo-
lution that would involve a radical afterthought, even institutional, of the power
systems since the share of the RES electricity generation in 2040 that could reach
51 % of the total, with solar and wind power installed capacity equal to 50 % of
peak demand global. This is difficult to implement in light of the impact of RES on
liberalized electricity markets, in which the projected future low marginal costs of
production of energy from RES, due to the effect of the merit order, tend to reduce
the price of electricity and displace the traditional plants shrinking profit's margins,
with the risk of not covering investment cost.
In summary, we provide estimates of investment needed to get the objectives out-
lined in both the new policies scenario and 450 scenario (IEA
2014b
). Estimates in
the new policies scenario provide for the need for cumulative investment in energy
of US$ 48 trillion between 2014 and 2035, of which US$ 40 trillion in energy supply
and US$ 8 trillion in energy efficiency. The US$ 40 trillion in energy supply is split
into US$ 23 trillion in fossil fuel extraction, US$ 6 trillion in RES, US$ 1 in nuclear,
and US$ 7 trillion in transmission and distribution. Most of the investments, i.e.,
63 % of energy supply investment, has to be made in non-OECD and the remain-
ing US$ 14.5 trillion in OECD countries. Instead, with regard to energy efficiency,
investments are higher for OECD countries, at around US$ 4.63 trillion, than non-
OECD countries (US$ 3.14 trillion), reflecting the size of OECD energy markets.
By focusing on the power sector, global investment forecasted amounts to
US$ 16.4 trillion between 2014 and 2035, of which US$ 9.6 trillion for power plants
and US$ 6.8 trillion for transmission and distribution infrastructures. Investments in
power plants are mainly aimed at non-hydro RES, mostly wind and solar photovol-
taic, because their capacity is projected to increase over time, in spite of fossil fuels.
The achievement of the objectives outlined in the 450 scenario implies cumula-
tive investments to 2035 of US$ 53 trillion of which US$ 13.5 trillion in energy ef-
ficiency and $ 39.4 trillion in energy supply. Compared to the new policies scenario,
the 450 scenario requires heavier efforts on energy efficiency to reduce pollution, so
that the cumulative investment in the 450 scenario is greater than $ 5 trillion with
respect to the new policies scenario. The energy supply requires investments mainly
by non-OECD countries (US$ 24.1 trillion) and the remaining US$ 14.9 trillion by
OECD countries.
A key point to achieve the 450 scenario's goals is the deployment of less mature
low carbon technologies, as RES and carbon capture and storage. Power sector in-
vestments amount to US$ 19.3 trillion from 2014 to 2035, of which RES represents
70 % of total investments in 2035. RES investments in the 450 scenario are almost
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