ERC FORUM 2023 Global Outlook on Energy Markets and Transition August 28, 2023 ERC Forum 2023, Bangkok, Thailand Jie Tang, Practice Manager, Energy, World Bank Joonkyung Seong, Senior Energy Specialist, World Bank I. Context II. Challenges III. World Bank Engagement IV. Going Forward ERC FORUM 2023 I. Context ERC FORUM 2023 Global GHG emissions continue to grow I. Context ERC FORUM 2023 Energy and coal use contribute significantly I. Context ERC FORUM 2023 Coal use is led by Asia mainly for power generation Coal consumption by country in 2020 Coal consumption by sector in 2018 (selected countries) Indonesia 2.2% Rest of Non-OECD 8.2% China 54.3% India 11.6% Vietnam 1.4% Philippines 0.5% Thailand 0.5% Pakistan 0.4% 14% 27% 80% Asia 73.7% OECD 18.1% 100% 43% 32% Others 23% 25% Commercial/public 60% 70% 40% 73% 58% Residential 83% 61% Heat plants 69% Industry 56% 20% 24% Electricity (incl. CHP) 0% Rest of Asia 2.9% Source: BP Statistical Review of Global Energy 2021 I. Context Source: IEA World Energy Balances ERC FORUM 2023 Developing countries expect higher demand growth Electricity Consumption per capita (MWh per person) in 2019 Electricity demand growth forecast 2020-30 (%) ■ EAP countries ■ Advanced economies ■ EAP countries ■ Advanced economies OECD OECD I. Context ERC FORUM 2023 7 Electricity demand grows fast in developing countries Annual electricity generation growth for selected countries/economies 2010-2021 (2010 level = 1) 3.0 Vietnam 2.5 China 2.0 Indonesia Philippines 1.5 Thailand US / EU / OECD 1.0 0.5 2010 I. Context 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 ERC FORUM 2023 Many Asian countries are committed to net zero Number of developing Asian countries by net zero target year 2030 2040 2 1 2050 23 2060 4 2065 1 2070 1 n.a. 8 Source: ADB, Asia in the Global Transition to Net Zero (2023) I. Context ERC FORUM 2023 9 Governments take initiatives for energy transition I. Context ERC FORUM 10 2023 WBG’s Country Climate and Development Reports (CCDRs) provide diagnosis on intertwined challenges I. Context ERC FORUM 11 2023 Feasible pathways for transition in the power sector Projected annual carbon emissions from the power sector Source: World Bank I. Context ERC FORUM 12 2023 RE capacity will need to increase fivefold by 2040 Projected renewable energy installed capacity Source: World Bank I. Context ERC FORUM 13 2023 CCDRs shows that scaling up RE and phasing down coal are necessary across many countries Evolution of the share of renewable energy and coal capacity in selected countries Source: World Bank I. Context ERC FORUM 14 2023 Investment in clean energy continues to increase Annual clean energy investment, 2015-2023 (US$b) Increase in annual clean energy investment in selected countries/regions, 2019-2023 (US$b) Source: IEA, World Energy Investment 2023 I. Context ERC FORUM 15 2023 Solar PV energy auction prices continue to decline 9.00 Recent increase in 2022 reflecting polycrisis 8.00 PPA tariffs estimates based on auctions ($cents /kWh) 7.00 6.00 India – 6.5 $c/kWh 5.00 Peru – 4.9 $c/kWh Mexico – 3.6 $c/kWh 3.00 2.00 Philippines – 6.7 $c/kWh Zambia– 6 $c/kWh Argentina – 5.9 $c/kWh 4.00 Turkey– 7 $c/kWh Chile – 2.9 $c/kWh Israel– 5.5 $c/kWh El Salvador – 5.1 $c/kWh Philippines– 4.5 $c/kWh Armenia– 4.2 $c/kWh Argentina – 4.1 $c/kWh Brazil – 3.5 $c/kWh India – 3.7 $c/kWh Egypt– 2.8 $c/kWh Zambia and Senegal– 3.9 $c/kWh Uzbekistan– 2.7 $c/kWh Ethiopia– 2.56 $c/kWh Tunisia – 2.44 $c/kWh UAE – 2.4 $c/kWh 1.00 Dubai – 1.69 $c/kWh 0.00 Europe & Central Asia Latin America Poland– 5.73 $c/kWh Malaysia – 4.1 $c/kWh India – 3.7 $c/kWh Tunisia – 3.9 $c/kWh India – 2.7 $c/kWh Saudi Arabia – 1.61 $c/kWh Brazil – 3.5 $c/kWh India – 3.1 $c/kWh Saudi Arabia – 1.7 $c/kWh Qatar – 1.57 $c/kWh Sub- Saharan Africa Asia (South & East) MENA Source: PV magazine, GTM, IEA, Scaling Solar, EPE, WB own data, computed data from internet by the WB team I. Context ERC FORUM 16 2023 PV + battery storage PPA prices follow the trend 14.00 13.00 12.00 11.00 Hawaii: $c 13.9/kWh 13 MW PV + 52 MWh battery PPA tariffs estimates based on auctions ($cents /kWh) 10.00 Hawaii: $c 11/kWh 28 MW PV + 100 MWh battery 9.00 Australia: $c 6.8/kWh 170 MW PV + 100 MWh battery 8.00 7.00 6.00 5.00 Hawaii: $c 8.7/kWh 20 MW PV + 100 MWh battery *Hawaii: