Project

Decreasing costs of renewables - Insights on energy sector planning and climate policy

We analyse how falling cost projections of key renewable energies can inform the energy sector planning and NDC revision in three country case studies - Argentina, Indonesia and Mexico. The results provide insights on the energy sector planning and climate policy processes in the three countries.

The cross-country synthesis report provides insights from all three country case studies and draws general conclusions. A more detailed analysis is provided by the country specific reports available below.

Decreasing costs of renewables – Insights on energy sector planning and climate policy from three country case studies

The study analyses the influence of falling cost projections of renewable energies on energy sector planning and the NDC revision of selected countries. A technical analysis sets the stage for a detailed assessment of the governance processes in the three countries.

Cross-country-synthesis

The cross-country synthesis report provides insights from all three country case studies and draws general conclusions.

Decreasing costs of renewables – Insights on energy sector planning and climate policy from three country case studies

Governance Report

Prepared by the technical analysis, the project team engaged with stakeholders of different backgrounds in the three countries to discuss the implications of falling costs of renewables. Building on a review of the technical analysis, these discussions and an analysis of the existing and available literature were the basis to analyse the governance processes underlying the NDC revision and long-term energy sector planning. In all three countries, this also put a spotlight on key challenges to the expansion of renewables currently discussed in the three countries. The analysis is summarized in a separate report for each country:

Argentina: Decreasing costs of renewables – Analysis of energy sector planning and climate policy in Argentina

Indonesia: Decreasing costs of renewables – Analysis of energy sector planning and climate policy in Indonesia

Mexico: Decreasing costs of renewables – Analysis of energy sector planning and climate policy in Mexico

Technical Analysis

The technical analysis is the basis of the work and served as the starter for the general discussion. Following the estimate of cost projections from literature and the strategic documents of the focus countries, we calculated possible quantitative increases in renewable energy uptake and subsequent emission savings, which could lead to an increase in the NDC ambition. The results show a possible increase in all three countries. A separate report provides details on each country analysis.

Argentina: Decreasing costs of renewables – Implications for Argentina’s climate targets

Indonesia: Decreasing costs of renewables – Implications for Indonesia’s climate targets

Mexico: Decreasing costs of renewables – Implications for Mexico's climate targets

The current commitments of the parties to the Paris Agreement in their nationally determined contributions (NDC) were defined in the run-up to the Paris Climate Summit 2015, COP21. The discussion paper "Bringing climate policy up to date – decreasing cost projections for renewable energy and batteries and their implications" (Wachsmuth et al. 2018, available here) commissioned by the German Environment Agency, has shown that certain key mitigation technologies, i.e. power generation from renewables (solar PV and wind energy) and lithium batteries, will become substantially cheaper by 2025/2030 than expected when NDCs were prepared. In this new situation, the same investments that were foreseen for the NDCs in 2015 can potentially lead to increased technology uptake and allow for higher targets.

Parties to the Paris Agreement are now in the position to review and strengthen their NDCs in 2020 and in future revisions, also based on the updated cost projections.  In this context, the project assesses the implications of the decrease of cost projections of wind energy and solar PV as key renewable energy technologies for energy sector planning and climate policy.

Countries of scope are Argentina, Indonesia and Mexico.

The project is carried out in collaboration with NewClimate Institute, based in Berlin and Cologne, Germany. In a different project, NewClimate has already applied the methodology to Chile and Canada. Publications are available online (download available for Chile, Canada)

The project has analysed the impact of the massive cost reductions that renewable energies in the power sector have experienced on Indonesia's energy sector planning and the NDC revision.

Results

We have published the results in two reports. The first provides a technical analysis of the potential to increase the uptake of renewable energies based on recent costs. The second presents a discussion of the NDC revision and energy sector planning processes in Indonesia.

Technical Analysis: Decreasing costs of renewables – Implications for Indonesia’s climate targets

Governance Report: Decreasing costs of renewables – Analysis of energy sector planning and climate policy in Indonesia

Country Visit

At the end of February 2020, the project team was in Indonesia for close to two weeks to discuss and review results with input from stakeholders and gather insights. In the first week, we met stakeholders of different institutions bilaterally. The second week started with a workshop on Monday afternoon, which was followed by more bilateral meetings. Discussions of all events and meetings revolved around the following questions:

  • Are energy planners aware of the cost progressions and is it being considered in the energy plans and the NDC update?
  • Is Indonesia locking itself into higher costs by disregarding the dynamic cost progression of key renewable technologies?
  • What are the perspective of different stakeholders towards energy planning and how do costs play a role for them?
  • In view of these cost reductions, is Indonesia planning to increase targets with more RE or EVs?
  • What processes determine these plans? What processes and assumptions determine the update of the NDC?

Workshop

On Monday of the second week we invited relevant stakeholders to a workshop on the project, in which we presented and discussed results and implications of our quantitative analysis. The workshop was held in the afternoon of March 2, at the Hotel Wyndham Casablanca in Jakarta, from 3 p.m. to 6 p.m., followed by a networking dinner. Many thanks to all who participated and made this event insightful!

The workshop started out with two presentations. The first presentation showed how costs have fallen globally and in Indonesia and what implications this could have on renewable energy targets of Indonesia. The second presentation highlighted how financing of renewable energy differs from that of conventional energy projects. In the session following the coffee break, we had prepared some insights from our bilateral meetings and discussed implications of falling costs of renewables on energy planning and the climate change mitigation strategies.

Many thanks again for your attendance, the lively discussion and the insights you provided! The slides are available for download here.

© Jose Ordonez
© Jose Ordonez

Follow-up

If you wish to get involved, provide feedback or additional thoughts, please reach out to the contacts provided to the right. We will be happy to continue the discussion!

The project has analysed the impact of the massive cost reductions that renewable energies in the power sector have experienced on Argentina's energy sector planning and the NDC revision.

Results

We have published the results in two reports. The first provides a technical analysis of the potential to increase the uptake of renewable energies based on recent costs. The second presents a discussion of the NDC revision and energy sector planning processes in Argentina.

Technical Analysis: Decreasing costs of renewables - Implications for Argentina's climate targets

Governance Report: Decreasing costs of renewables – Analysis of energy sector planning and climate policy in Argentina

Technical Analysis

Argentina is one of a few countries that have revised their NDC after COP21 in 2015. The current version was submitted in 2016 and is based on an updated methodological approach for the GHG inventory and a more comprehensive set of mitigation measures in key sectors. The current NDC presents unconditional and conditional absolute emissions targets of 483 MtCO2e and 369 MtCO2e in 2030, respectively, including the forestry sector. To reach the proposed targets, Argentina developed sector action plans for six key mitigation sectors: Energy, Transport, Forestry, Industry, Agriculture and Land-use, and Infrastructure and Territory. These sector action plans present strategies to implement Argentina’s NDC. We argue that a reduction in investment costs of key mitigation technologies should not lead to savings, i.e. implementation of the same sector action plans at a reduced cost, but ideally would be used as a stepping-stone towards increased ambition. [See project summary]

The analysis of renewable energy targets and investment cost reductions in Argentina shows that the absolute emissions level of Argentina's conditional NDC target could be reduced from 369 MtCO2e to 351-356 MtCO2e in 2030, based on technology cost progressions alone. [See preliminary analysis]

Stakeholder engagement

We have worked closely with country stakeholders throughout the project to verify the data, strengthen our results and inform discussions around the NDC revision process. Due to COVID-19, we were not able to host an in-country workshop, as planned. However, we have carried out virtual bilateral meetings and a joint webinar in the second quarter of 2020 to discuss our findings and their implications in more detail. The discussion revolved around the following topics:

  • Are there gaps in the data underlying our analysis? How realistic are the assumptions?
  • Are energy sector planners aware of cost progressions and are these being considered in energy sector planning and RE target setting?
  • Is Argentina planning to increase RE targets? If not, what are the main barriers?
  • At which stage is Argentina in the NDC revision process? Are cost progressions considered in the NDC revision process?

Get involved!

If you wish to get involved, provide feedback or additional thoughts, please reach out to the contacts provided to the right. We will be happy to continue the discussion!

Marie-Jeanne Kurdziel, m.kurdziel@newclimate.org

Leonardo Nascimento, l.nascimento@newclimate.org

For additional information, please also visit the NewClimate project website

The project has analysed the impact of the massive cost reductions that renewable energies in the power sector have experienced on Mexico's energy sector planning and the NDC revision.

Results

We have published the results in two reports. The first provides a technical analysis of the potential to increase the uptake of renewable energies based on recent costs. The second presents a discussion of the NDC revision and energy sector planning processes in Mexico.

Technical Analysis: Decreasing costs of renewables – Implications for Mexico's climate targets

Governance Report: Decreasing costs of renewables – Analysis of energy sector planning and climate policy in Mexico

Stakeholder Engagement

Due to the COVID-19 pandemic, a visit to Mexico in person was not possible. However, in a series of intense online interviews and a webinar, we were able to discuss the results of the technical analysis and the implications of falling costs of renewables with pertinent stakeholders in Mexico. The discussion revolved around topics summarized by the following questions:

  • Are stakeholders aware of the cost progressions and is it being considered in the energy plans and the NDC update?
  • Is Mexico locking itself into higher costs by disregarding the dynamic cost progression of key renewable technologies?
  • In view of these cost reductions, is Mexico planning to increase targets with more RE or EVs?
  • What processes determine these plans? What processes and assumptions determine the update of the NDC?
Many thanks again for the interesting discussions and the insights you shared!

Get involved!

If you wish to get involved, provide feedback or additional thoughts, please reach out to the contacts provided to the right. We will be happy to continue the discussion!

The project has been presented at several international conferences:

COP25 in Madrid, Spain

In a dedicated UNFCCC side-event organized in collaboration with NewClimate Institute and the Renewable Energy Institute based in Tokyo, Japan, the project was presented at COP25 in Madrid on December 13, 2019. Preliminary results from the studies on the three countries of scope (Argentina, Indonesia and Mexico) were shown in two presentations, complemented by a presentation of the state of renewable energies in Japan. More information on the side-event and the presentation can be obtained here, video stream is available here.

REEW 2019 2019

The project and results from the case studies on Chile and Canada were presented in the session 'NDC Implementation in the Energy Sector – A Reality Check' at the Renewable Energy and Efficiency Week (REEW) in Berlin on October 8, 2019.

Global NDC Conference 2019

The project was presented at a side event at the Global NDC Conference, which was held from June 12 to 16, 2019 in Berlin, Germany. The project team was again present to gather feedback from country stakeholders.

UNFCCC SB50 session 2019

The project was first presented at the UNFCCC SB50 session in Bonn in 2019. In the side-event 'Increasing NDCs in 2020 - analytical inputs', results of the underlying discussion paper by Wachsmuth et al. were presented, as well as results from the case studies on Chile and Canada. The slides shown at the side-event can be obtained here. The project team was present to gather feedback on the project idea from country stakeholders.

We also offer the slides for download directly for Argentina and Mexiko and Indonesia.

Duration

08/2019 - 09/2020

Client

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and

Federal Ministry for the Environment, Nature Conservation and Nuclear Safety