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IEA country review: Sweden is a leader in the energy transition

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Sweden is a global leader in building a low-carbon economy, with the lowest share of fossil fuels in its primary energy supply among all IEA member countries, and the second-lowest carbon-intensive economy.

Sweden has been successful in its energy transformation through market-based policies that focus on energy efficiency and renewable energy, notably CO2 taxation, which has helped drive decarbonisation across several sectors.

Sweden’s energy policy is also well-integrated with its climate objectives, according to the latest review of the country’s energy policies conducted by the International Energy Agency. In the 2016 Energy Agreement and the Climate Framework from 2017, Sweden set ambitious targets, including the long-term goal of zero net emissions by 2045. But additional action is needed to achieve these results, as the country’s total carbon emissions have been flat since 2013.

“Sweden has shown that ambitious energy transition policies can accompany strong economic growth” said Paul Simons, the IEA’s Deputy Executive Director. “With the Energy Agreement now in place, the time has come to implement a clear roadmap towards the long term target of carbon neutrality.”

The report pays special attention to transport-related emissions. This sector accounts for less than a quarter of Sweden’s final energy consumption, but over half of its energy-related CO2 emissions. Sweden has set a target to reduce transport emissions by 70% between 2010 and 2030.

The government has also introduced several new policies including a bonus/penalty system to support new low‑emission vehicles and measures to increase the use of biofuels. However, Sweden is not yet on a trajectory towards its 2030 target, and the IEA recommends that the government closely monitors developments,  and strengthens policy measures as needed.

The electricity system is another important element in Sweden’s energy transition. Sweden has largely decarbonised its electricity generation through investments in  nuclear power, hydropower, and most recently, other renewables. This is an important achievement that needs to be sustained. Sweden has not taken a formal position against the construction of new nuclear plants and most existing nuclear power plants are expected to run for the next several decades before being phased out. That said, there is little interest to invest in new reactors in the current market.  Meanwhile, Sweden has set an ambitious target of achieving 100% renewable electricity generation by 2040. The IEA recommends the government carefully assess how to reach that target and what the implications will be for grid stability and security of supply.

One key factor for maintaining a secure electricity supply is the regional power market. Sweden is well‑connected with its Nordic and Baltic neighbours and has become a large net exporter of  electricity. As the share of wind power continues to increase, supported by green electricity certificates, regional trade becomes even more important.

“The Nordic power market is an excellent example of how countries can benefit from closer collaboration,” said Mr Simons. “We recommend further market integration to support the continued energy transition in the region.” 

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ADB, Gulf PD Sign Deal to Build 2,500 MW Power Plant in Thailand

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The Asian Development Bank (ADB) and Gulf PD Company Limited (Gulf PD) today signed a $180 million agreement to build and operate a 2,500-megawatt (MW) combined cycle gas turbine power plant in the Rojana Rayong 2 Industrial Park of Thailand’s Rayong Province, about 150 kilometers southeast of Bangkok.

Gulf PD is owned by Independent Power Development, a joint venture between Gulf Energy Development Public Company Limited (GED) and Mitsui & Co., Ltd. (Mitsui).

ADB’s support is composed of a regular loan of $50 million and a B loan of up to $85 million. ADB will also mobilize $45 million through the Leading Asia’s Private Infrastructure Fund (LEAP), established in 2016 and supported by the Japan International Cooperation Agency. ADB signed the loan agreement with its cofinanciers—the Japan Bank for International Cooperation and 12 other international and local commercial banks—playing an anchor lender role in the project by catalyzing up to $764 million in commercial cofinancing. The B loan will be funded by Singapore’s Oversea-Chinese Banking Corporation and Germany’s DZ Bank.

The agreement for the Eastern Economic Corridor Independent Power Project was signed by ADB Deputy Director General for Private Sector Operations Mr. Christopher Thieme and the CEO of GED Mr. Sarath Ratanavadi at a ceremony in Bangkok.

“The project will build the fourth-largest power plant and one of the largest combined cycle gas turbine power plants in Thailand, which will be key in the Eastern Economic Corridor (EEC) development plan, considered as the prime economic growth driver for the country until 2028,” said Mr. Thieme. “ADB is proud to play an essential role in this transaction, which will help provide reliable power to industry and households and boost Thailand’s economic growth and development prospects. We are particularly pleased to bring in additional cofinanciers to this transaction through our B loan program and LEAP, since the financing gap will be one of the major challenges for the success of the EEC development plan.”

The plant will be fully operational by 2024, delivering at least 16,000 gigawatt-hours of electricity to users. With the state-of-the-art combined-cycle gas turbine technology to be used at the plant, the project will mean 1 million fewer tons of carbon dioxide is emitted every year compared with current electricity grid emissions. The plant will be integral to sustaining Thailand’s energy security given that more than 8,500 MW of generating capacity—equivalent to about 20% of current national energy capacity—of aging power plants will be retired between 2020 and 2025.

Gulf PD was established in 2012 to develop, construct, own, and operate the 2,500 MW power plant. GED is a leading power generation company with the largest portfolio of contracted power purchase agreements in Thailand. Mitsui, established in 1947, is one of Japan’s largest trading companies involved in the development of more than 74 power projects globally.

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Latin America and Caribbean on the Brink of Massive Solar Power Growth

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Latin America and the Caribbean could grow their installed solar capacity by a factor of 40 by 2050, a new report by the International Renewable Energy Agency (IRENA) shows. Annual investmens exceeding seven billion would see the region’s solar PV capacity rise from 7 gigawatts (GW) today, to more than 280 GW by mid-century. While solar energy remains the highest in Asia, North America and Europe, market growth is set to shift to other regions in the world.

By that time, solar PV would represent the second-largest power source behind wind, generating a quarter of the world’s power, “Future of Solar Photovoltaic” launched today at “Sun World 2019” in Lima finds. In total, global solar power capacity would rise from 480 GW in 2018 to over 8000 GW by 2050, growing by nearly 9 per cent every year.

“Solar PV and other renewables sources represent the most effective and ready solution for addressing growing energy demand and limiting carbon emission at the same time,” said IRENA’s Director-General Francesco La Camera. “Renewables are practical, affordable and climate-safe. They are key to sustainable development, enabling energy access, spurring economic growth, creating employment and improving health. Particularly solar energy is set to become one of the most prominent power sources in 2050. Projected growth rates in markets like Latin America showcase that we can extend the energy transition to all countries. It’s possible.”

If accompanied by sound policies, the transformation driven by renewables such as solar can bring substantial socioeconomic benefits, IRENA’s new report finds. The global solar industry has the potential to employ over 18 million people by 2050, four times more than the 4.4 million jobs today.

Over the last decade, installed capacity of off-grid solar PV has grown more than tenfold, from roughly 0.25 GW in 2008 to almost 3 GW in 2018 around the world. With its modular and flexible nature, solar PV technology can be adapted to a wide range of off-grid applications and to local conditions. Indeed, off-grid solar PV is a key technology for achieving universal electricity access, in line with the UN Sustainable Development Goals.

Similarly, the deployment of rooftop solar PV systems has increased extensively, which today makes solar PV in some markets more attractive than buying electricity from the grid. The competitiveness of distributed solar power is clearly raising deployment in large markets, including Brazil, China, Germany and Mexico.

Statistical highlights:

Accelerating solar PV can cut energy-related CO2 emissions by 21 per cent in 2050.

With over 50 per cent of installed capacity in 2050, Asia (mostly China) would continue to dominate solar PV power, followed by North America (20%) and Europe (10%). The Latin American market would grow from 7 GW in 2018 to over 280 GW.

Annual solar PV investment would have to increase by 68 per cent on average globally, from USD 114 billion in 2018 to USD 192 billion in 2050.

Global levelised cost of electricity (LCOE) for solar PV will continue to fall from an average of USD 85 cents per kilowatt-hour (kWh) in 2018 to between USD 5-14 cents per kWh by 2050. A recent solar and wind power auction in Colombia was awarded for an average electricity price of USD 27 cents per kWh.

Due to innovations, solar PV remains a fast-evolving industry. Floating PV is one of the most prominent examples with global cumulative installed capacity exceeding 1 GW in 2018. Battery storage and electric vehicles are key solutions to support the grid and manage high shares of solar PV as well as to guarantee the flexibility of the power system.

The full report “Future of Solar Photovoltaic. Deployment, investment, technology, grid integration and socio-economic aspects” can be found here

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IRENA Facilitates Investment and Renewable Projects on Ground in Africa

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Boosting renewable energy projects on the ground requires scaling up investment. IRENA’s state-of-the-art analysis of enabling policy frameworks and finance mechanisms channel public and private investment in markets like Africa, Latin America, Asia, South-East Europe and the Small Island Developing States (SIDS). Now, IRENA is taking its work one step further by increasing the Agency’s on-ground impact with 15 regional and sub-regional platforms which aims at scaling up renewables deployment and investments.

One step in this new direction is the event that took place in Johannesburg as part of the Africa Investment Forum hosted by the African Development Bank. It facilitated renewable energy deal-making in Sub-Saharan Africa in partnership with Power Africa and the African Trade Insurance Agency. The event corresponds to IRENA’s new direction and way forward ensuring an acceleration of the renewable energy transformation globally.

Speaking at the Investment Forum in South Africa, IRENA’s Director-General Francesco La Camera underlined the importance of renewable energy to meet sustainable economic growth and Africa’s climate and development ambitions. “Now more than ever, renewables have become a compelling investment proposition”, said La Camera. “With renewable energy technology prices set to decline, the cost-competitiveness of renewables will strengthen further. IRENA’s analysis shows that nearly a quarter of Africa’s energy needs could be met from indigenous and clean renewable energy sources by 2030. This would result in a wide array of socio-economic benefits in terms of economic growth, welfare, employment and energy access. It’s Possible”.

IRENA has been committed to supporting African governments in their quest for a sustainable energy future. The Agency has supported countries in building attractive investment frameworks for renewables to strengthen institutional and technical capacity. It has also supported the development and financing of renewable energy projects through project facilitation tools. 
“A lot remains to be done to address the key risks and barriers that hinder the scale-up of renewable investment in the region”, La Camera continued. “There is no shortage of renewable energy project proposals which are competing for investor capital. But they are not always financially viable. Many proposals fail to materialize due to high cost of capital, limited access to risk mitigation solutions and long delays in projects”.

By building on its extensive project pipeline in Sub-Saharan Africa with over 90 renewable energy projects, the Agency has showcased 10 renewable energy projects at the Investment Forum. Projects from Cameroon, Cote D’Ivoire, Kenya, Mali, Senegal, Sierra Leone and Togo which have a total capacity ranging from 6 MW to 70 MW – covering technologies like wind, solar, bioenergy and hydropower – were presented.

IRENA’s project facilitation platform provides project owners and developers with increased visibility for their projects among financiers and other market players. Project owners have access to wide range of financial instruments provided by multiple investors from development finance institutions, private companies, utilities, private equity funds, donor and multi-donor facilities, commercial banks and more, as well as access to different services for example legal and financial advisory, environmental, project development and Engineering Procurement and Construction contracting.

More information about IRENA’s project facilitation.

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