Isabelle Kocher: “Affordable solar for all is our best option to tackle emission issues”
Speech of Isabelle Kocher, CEO of ENGIE and Chairperson of the Terrawatt Initiative during the COP22 Side Event “Solar@COP” in Marrakech, the 15th of November.
The Paris Agreement on Climate is now our law, a universal law to keep “a global temperature rise this century well below 2 degrees Celsius and to drive efforts to limit the temperature increase even further to 1.5 degrees Celsius above pre-industrial levels”.
Global temperature rise is a function of the quantity of greenhouse gases (GHG) in particular CO2 in the atmosphere.
Experts say that if we want to have a reasonable chance to remain at 2°C – which is above the Paris Agreement objectives - the concentration of CO2 must not cross the 450 ppm line at the end of the century, knowing that we have crossed this year 400 ppm, starting from 280 ppm during the preindustrial era.
At Terrawatt Initiative, we believe that solar power is an unparalleled instrument to make these changes happen. Solar power is as an unlimited, affordable and widely available source of energy. It is more universal to all countries. Applications from 500 MW utility-scale power plants to 50 watt solar home systems and 5 watt lanterns can boost growth and human development as soon as we unleash its true potential.
By its simplicity, scalability and universality, solar power is the only decarbonized power generation solution able to be deployed fast enough to put humanity on the 450 ppm track, leaving to other technologies to do what is necessary to be “well below 2° C”.
What does that mean in concrete terms?
In concrete terms, if solar is to replace fossil generation to put us on the 450 ppm pathway, solar should amount 2.5 TW of installed capacity by 2025. This represents 10 times the current installed capacity. This means to quintuple the yearly installation rate solar immediately. This means installing on average 700 MW, i.e. $m 700, per day starting from January 2017. This is huge.
How will we do that?
Obviously not with massive public subsidies. We can only rely on market forces, which means that solar power must be cheaper than any fossil power. Recent experiences demonstrated that around or below 30 USD/MWh (LCOE) can be achieved in very specific contexts. Around this cost of electricity, we believe that the market forces will drive a radical change in the power generation pattern.
First, because no fossil fuel will be able to compete especially if there is a carbon pricing and suppression of subsidies to fossil fuel. Secondly, because it makes solar power affordable for a much broader population. Thirdly, because these levels of costs open a large economic field, between the solar LCOE and the fossil LCOE, making economic power storage, demand-response, energy efficiency, mini-grids … in other words new energy management technologies, which in turn will accelerate the penetration of solar (and other renewable) power generation technologies, and accelerate decarbonization of our economies. There is a credible virtuous circle that can be initiate now.
Considering that the technology is a commodity which price is, before duties and tax, almost the same everywhere in the world, and that solar irradiation is a given, variations in solar LCOE are mainly driven by development costs and capital costs.
On the one hand, systemic constraints arising from inefficient regulations and cumbersome market practices negatively affect the development costs. On the other hand, the lack of adapted mitigation tools on macro-economic risks prevent most of the countries from accessing the deep pockets of affordable private capital.
If affordable solar power is the key to decarbonization, COP22 should clearly set as its number 1 priority the goal to reach a ‘new equilibrium around US$30/MWh’ everywhere. To that end, all necessary steps should be taken to streamline development and reduce the cost of capital through:
- simple and efficient local regulations driven by lower solar LCOE;
- simplification and adaptation of market contractual practices; and,
- universal de-risking guarantees.
Affordable solar power generation is no longer a technology issue but a financial and legal one, which makes it inherently solvable – should everyone join forces to tackle it.
A group of energy, industry and finance global leaders decided last year to launch the Terrawatt Initiative, the first private non-profit open organization who believes that it is now economically possible to start the fast decarbonization of the power generation sector and its deep modernization starting with solar PV technologies as a pathfinder for all existing and new sustainable power generation and management technologies.
We are advocating for a strong and fast dialogue between public and private sector, North and South, to implement as soon as possible a modern market framework. This is why we strongly support the initiatives of the International Solar Alliance (ISA), the International Renewable Energies Agency (IRENA) and others in that direction.
This is why we are bringing this message at the heart of the Climate Negotiation here in Marrakesh and beyond. This is why we will address citizens and communities from all over the world to incite people to take actions daily, engage with their leaders, forge bonds of trust between generations and ensure that the next generation will be born, as “solar native” in a safer world.
Affordable solar power everywhere is the best option we have now to start the decarbonization of our energy system at scale as well as to help people to adapt to the consequences of climate change and because it is also the best option we have to bring reliable, sustainable and modern energy for all.