INVESTMENT OUTLOOK AND NEEDS
Supply-side energy efficiency investments are embedded in power generation, transmission, and distribution, and are essentially impos-sible to separate out and track over time.
Those on the demand side are projected to rise strongly, relative to current levels, in the WEO New Policies Scenario. Over the period to 2030, average annual energy efficiency
investments are $919 billion, with 70% of this in the transport sector in response to increas-ingly pervasive and stringent fuel economy standards, especially for passenger vehicles (IEA 2016a). Investment in more efficient buildings and in their appliances, lighting, heating and cooling systems requires a fur-ther 25% of the total. In the IEA 450 Sce-nario, tighter minimum energy performance standards for a range of energy-using equip-ment, higher fuel efficiency standards, wide-spread implementation of net zero-energy
buildings, and other initiatives push up cumu-lative spending on efficiency improvements to $1,402 billion annually, more than 50%
higher than in the New Policies Scenario (IEA 2016a).
Renewable energy investment averaged
$283 billion in 2010–15 (IEA 2016a), close to the level of around $300 billion in aver-age annual investment projected in the New Policies Scenario (although, as technology costs come down, this investment procures increased capacity). The investment needed to achieve the SEforALL renewable energy objective would have to be much higher, how-ever. Average global annual investments for renewables in the 450 Scenario amount to
$503 billion, but do not achieve the SEforALL renewable energy objective. The REmap Dou-bling Case, which is framed around SEforALL objectives, costs an average $770 billion a year just for renewables in the power sector, district heating, industry, buildings, and transport, with a further $650 billion needed for energy efficiency efforts. Table 6.4 summarizes the investment gap for relevant IEA and IRENA scenarios.
Comparable estimates of current financ-ing trends and future investment needs for achieving universal access to electricity and to clean cooking are sparser. The most recent IEA figures (IEA 2011) provided a high-level esti-mate of investment needs of $45 billion a year, against actual investment flows at that time estimated at $9 billion a year. For clean cook-ing, the IIASA Global Energy Assessment (2012), estimated investment needs of $71 billion annually, though it gives no figures for actual investments.
The World Bank’s Access Investment Model provides detailed bottom-up estimates of the cost of reaching universal access in each of 15 countries with large energy access deficits.
They reflect differences in population and geog-raphy as well as local unit costs, and can be extrapolated to give a global estimate of access investment needs (World Bank and IEA 2015).
The model, based on the Multi-Tier Framework (World Bank 2015), allows users to choose the tier of access used to meet the universal access objective, and illustrates how dramatically this choice affects the costs of electrification.
Reaching universal access at Tier 1 (enough to light a few light bulbs and charge a mobile tele-phone) would require investments of $1.5 bil-lion annually up to 2030. By contrast, reaching universal access at Tier 5 (full grid power all day, every day) would require investments of
$50 billion annually.
FIGURE 6.5
IRENA’s REmap: The renewable share in total final energy consumption, 2014–30
Renewable energy share in total final energy consumption (%)
0 Source: IRENA 2016.
TABLE 6.3 Penetration of renewables in end uses in REmap
Percent
2014 Reference Case REmap Options Doubling Case
Industry 11 15 26 35
Buildings 13 22 38 58
Transport 3 5 11 15
Source: IRENA 2016.
TABLE 6.4 Annual investment needs for clean energy based on IEA and IRENA analyses
$ billion
2015
investments IEA New Policies
Scenario IEA 450
Scenario IRENA Doubling Case
Energy efficiency 221 919 1,402 650
Renewable energy 283 299 503 770
Source: IEA 2016a; and IRENA 2015; 2016.
NOTES
1. The IEA uses concept of modern cooking and not clean cooking, one of the objectives of SEforALL. Modern cooking is defined as any cooking not done using traditional biomass uses, while clean cooking is a narrower category excluding certain polluting fuels (e.g., kerosene).
2. See the IEA’s most recent World Energy Outlook Energy Access Database at http://www.worldenergyoutlook.org/resources/energydevelopment /energyaccessdatabase/.
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