Now, my first slide is exactly around the CO2 emissions. From 2014 to 2016, we had hope that the CO2 emissions, at least the energy-related CO2 emissions we're stabilizing in the world. Then something happened in 2017 and again in 2018, and we had record growth of CO2 emissions again because we had record growth of energy demand. Unfortunately, when these happen nowadays, it is still mostly fossil fuel-based, in particular, coal, and this is why we had the record CO2 emissions in 2017 and 2018. Twenty nineteen could be different because of slower economic growth, but it is still a high level. Now, you may know that the World Energy Outlook 2019 has been released just today. I will not go into those details because I know that you will have another lecture on the coming week, so I will only answer questions if you have any. But one of the main messages is that there is a big discrepancy between where we should be going and where the scientists tell us we should be doing in today's reality. All these happens in a day where Venice has the highest flooding ever in history and half of the town is completely flooded. If you look at news, in particular in the Italian news, they're very worrying right today. So this is unfortunately where we start. Now, second question and which is related to one of my questions to you. Where are we using energy? Which one of these is the electricity part? You should know. The blue one. The blue one. Precisely. So one of the reason why indeed everybody is a little bit perplexed about the role of renewables is because we always tend to speak more on renewable electricity. To some extent rightly so, because there is a lot of movement and momentum in the electricity part in particular of solar and wind, but actually the big consumption in final energy is somewhere else. It's in heat for both building and industry, it's in transport, and then electricity. The shares of renewables are the other way around. They are highest in the electricity parts. This is 2017 numbers. So in 2018, it was already 25 percent and something, and today, renewables have 26 percent of electricity share on the total. But in heat and transport, the shares are much lower. Today you will see in a minute, it's 10 percent for heat and less than four percent for transport. Yes, please. [inaudible] electricity used for residential building or industrial? It's heat here. This is the share of electricity production but the part of electricity which is in the heat is also included here. We do an allocation of what goes from the electricity generation to the others. You're right that there we are mixing a little bit of apples with pears because we're looking at generation on one end and that the end-use at the other part. But this is still important today to see where renewables are going. These makes still the fact that the overall shares of renewables in the total final consumption is only 10 percent. So it is still quite marginal. Now, my question to you. Which is bigger? Solar and hydro and bioenergy? Nobody answered the right answer, which is that actually the one which is dominating, these are 2017 numbers but the situation will not change in 2024, is the green part, it's the bioenergy parts. At the end of 2017, if you compared bioenergy with the rest, bioenergy was five times bigger than solar and winds combined. Once again, it's because wind and solar are in the electricity parts and bioenergy is in electricity, heat, and transport. Usually, the most neglected part is this one, is the heat parts. The biggest chunk of these in bioenergy is, comes from industry but there is also buildings parts. Now, the fact that we speak and we tend to speak and we tend to concentrate more on electricity, this is where the biggest momentum and the biggest changes are coming from, is strictly related with the number of policies that are around the world, which are now there are policies and targets for renewable electricity in some 120 countries in the world, roughly the half for biofuels in mandates and only a few dozens of countries have really dedicated renewable heat policies. So you're right in saying that renewables are not on track with the Paris Agreement, and the main reason and you're also right that they are not even on track on electricity but a few single technologies are like solar PV, the others are not, but the missing big giants are the heating parts and the transport parts. This is why, usually, I'm pretty sure that if you hear about renewables, everybody starts with solar and wind, and I want to start from the other angle. So I want to start precisely from renewable heat. Just to clarify again, we are only speaking about the modern renewable heat. So I'm excluding completely from this analysis, the traditional use of biomass mostly in developing countries for cooking, for heating, which is heavily non-sustainable, which is a major cause of air pollution and also premature deaths. These should be phased out as soon as we can, of course giving good substitutes. I'm only speaking about modern renewables, including modern bioenergy. So that [inaudible]? I'm sorry. [inaudible] examples of modern bioenergy? Sure. A boiler which is using pellets and which has good air pollution and their emission control is a modern use of bioenergy. A power plant that uses bioenergy both for co-firing or completely for bioenergy to produce electricity, is a modern use of bioenergy. Biofuels for transport that are coming from an industrial production is a modern use of bioenergy. What is not the modern use is the use of wood, in particular, in a closed environment which is polluting and which has severe health effects, in particular, in developing countries. Do not think about [inaudible] fire in our wealthy house in Bungonia. This is a different thing. But it's mainly for cooking. In developing countries, this is really negative. Now, today the shares are around 10 percent if you include also the renewable electricity part of heat and this is going to increase up to 12 percent in 2024. This is a small number unfortunately, and this is one of the biggest problems that we have because we don't have enough policy attention. It's growing by 25 percent, but by far not quick enough. On the right, you see the split between industrial, agriculture, and buildings. So it's roughly half and half. It should be increased massively in both cases, and I will give you a few examples in the coming minutes. Please. [inaudible]. No. I should have been more precise. It's a growth of 25 percent over the forecast period of five years. So by 2024, we'd compare to the end of 2018, which will be precisely six years not five, because it includes 2019. This is a growth of 25 percent which is definitely not negligible, but it's not very big. Now in terms of different technologies, here you can see that bio-energy remains number one even in terms of growth, but something which sometimes is called sector coupling. So the use of renewable electricity for heating and cooling, I should add that this is also cooling, purposes is growing now at the same level of bio-energy. In absolute numbers, bio-energy is dominating by far. But renewables electricity is becoming the second part of growth. Solar thermal which is something that is quite old and quite reliable but we tend to forget, we tend to now only associate solar to solar PV is the third largest growth and then geothermal and district heating are the other parts of growth of renewable heat which have some important implications, which is the following. This is district heating supply in different countries and the share of renewables in this. Welcome Carolina. Hello. My colleague Carolina [inaudible] who is a former colleague of yours. I'm sorry for being late. No, don't worry. Now in this graph, we see on a double axis, what is the share of renewable energy in district heating and what is the share of district heating in the total heat demand. So here you see the top countries which are not by chance all the Nordic countries where this is both the case, they have a high share of district heating and a high share of renewables in district heating. Now these are an interesting example because this was not always like this. These are countries that have developed their district heating infrastructures back in the '50s and in the '60s which were run on fossil fuels, and then they transitioned to renewables in particular to bio-energy. There are other countries in the world which have high shares of district heating, notably Russia, but also Poland and Ukraine. But they are absolutely fossil-fuel driven and nothing else. Then there is everything in between. Now the country which has barely not even started in renewable district heating but which has a potential which is much bigger than all these other countries altogether, is China. They're actually looking at this precisely to substitute coal with bio-energy and also solar thermal for district heating for applications in the North of China. Tell me. What is [inaudible] district heating? District heating is heating not through the direct use of a heat source, but through pipelines that transmit and transport hot water directly to the houses. We're all cold now, it's also district cooling with cold water. Paris is a city which has a good district heating infrastructure not everywhere, and there are other cities and countries in Europe which are also good examples. One may be the biggest capital with a large district heating in Western Europe is Berlin, where you go to a house or a hotel and you get directly hot water, you could even have the problem that this is too hot water. So you need to be a little bit attentive. But what is the advantage of district heating is the size, is the economy of scale. You can have large renewable plants that are not a single boiler, which is more efficient than other solutions, and then you can use the existing infrastructure of district heating and in the future of district cooling as a good means for developing more renewables on a faster scale. So these are the few slides that I wanted to show you on renewable heat. Please don't forget, this is the biggest giant that we are missing in the discussion of renewables. The second giant is renewable transport, and here look first at the left. Unfortunately, the renewables share in total energy transport demand is very low, is lower than four percent and even in 2024, it will not reach more than five. Second aspect, it is true that the electric vehicles are increasing exponentially. But when you look at the totality of transport demand, this is actually a very minor part and I'm pretty sure that Tim Gold, my colleague, who will present the wheel next week will show you one slide on this which basically shows that the faster expansion of SUVs is basically eating up all the gains that we have with more inefficient motors and electric vehicles. These electricity parts includes also rail, which so far is much more than electric vehicles. So while electrification of transport is highly desirable and the electric cars are wonderful, we are very far away of having high shares of renewables in transport energy demand consumption. Now, the good news is on the right part that which is a normalized graph of growth of renewable transport fuels in different countries and as you can see, Asian countries are growing much faster than in other region and this is good because in Asia of course, this is where the demand is growing the fastest. So that's the good news. Why is that? This has actually little to do with climate protection. In some cases it is air pollution fight, but the biggest driver is actually energy security. If you look at three examples, Indonesia, China, and India, which together do almost three billion of people if I'm not wrong, 1,413,250. So it's almost three billion people, not a minor amount, six times Europe. Their oil import dependency is very high, is the highest in India. Oil demand is growing at double digit scale because of the growth in particular of transport, and the domestic oil production is going down. So it's very obvious that for those countries, bio-fuels and there are also electric vehicles but mainly bio-fuels, don't forget the bio-fuel part, are a major way to decrease the import dependency and to increase the security of supply. That's driver number one. Driver number two, for any one of you who has been recently either in Beijing or more recently in Bali, air pollution is a big driver. I and some colleagues of mine, we were in daily just before and just after the peak of the weekend where they shut down the airport. But even before this was a brown carpet, it was quite impressive arriving there. Now for the first time, China leads the growth of biofuels. This is the first time ever. This is for one simple reason, they are mandating 10 percent of ethanol now nationwide, and they're getting serious about it. The other countries like Asian is the second largest growth, followed by Brazil and the United States. India is progressing fast, while Europe has a mixed situation where conventional biodiesel is going down, but this is substituted by HVO. HVO stands for hydrotreated vegetable oils. It is a substitute of biodiesel. It's a modern technology, pretty Nova Div, which has one crucial advantage, it can use feed-stock from waste and residues. So for instance, from the used oils of McDonald's is one of the best feedstocks for HVOs, but also other agricultural wastes. This is very important because as you may know, bioenergy has raises a lot of controversial discussion about sustainability, about the fact whether it is really carbon-neutral, whether it has not other unintended consequences, in particular, in the food versus fuel debate. I will happy to discuss this in the Q and A if you want. You can do bioenergy in a sustainable way and it will have to be sustainable to remain. But I insist bioenergy is actually we have called it last year the overlooked giant of renewables, because we tend not to think about it. It's by far the largest contribution of renewable energy today and also for many years to come. Now then we get to what is usually looked at more often, which is the renewable electricity. Here, indeed, the change is quite dramatic. This is the growth by between 2019 and 2024 measured in gigawatt. A couple of remarks here. Off-shore wind. You may have heard recently about big progress in offshore wind. These may seem little to you, but it started from zero just a few years ago. It is tripling their capacity in just five years. It is growing more than bioenergy itself for power, bioenergy for power, and it has a very strong long-term potential. For those who are interested, the IA published a special report on wind offshore just a few weeks ago. Hydro-power. We tend also to forget it, and some people tend to think that the potential hydro-power is finished, it's not true. Still the dominating renewable electricity technology in terms of generation, not capacity. Certainly very important. Onshore wind these please. [inaudible]. In the developing world, in the developing countries in Asia, in Africa, and Latin America. Less so in US, North America, and Europe. Although, North America, Europe, Japan and in Korea have very important still unexploited potential for pumped hydro. So not building new reservoirs but building new power station that can pump up the hydro and then use it as a storage mean, and we will see more and more of these devices in the future without making new reservoirs. But in terms of generation, it is mostly coming from Africa, Asia, and Latin America. Some of these big roads is related to huge, giant, a new installations in particular in Africa. Catalina, correct me if I'm wrong. That's correct. Very good. Thank you so much. Now then comes the big one in terms of capacity growth, which is solar PV, which grows enormously, which grows 60 percent of total growth. Almost half of this is distributed PV. I will spend some specific slides on this in a few minutes. Now overall, this is a total of 1,200 gigawatt in six years. So 200 gigabit per year. Last year, for the first time, we said renewables are going to install one terawatt, 1,000 gigawatts, this year we have 20 percent higher. Just to give you an idea, 1,200 gigawatt is the equivalent of the total installed capacity, total at Fall Seal Conventional Nuclear in the United States. So in a space of six years, renewables are installing the equivalent total capacity of the United States. It's an increased by 50 percent for renewables themselves in capacity terms, from 2,400 to 3,600. So while you are right in saying renewables are not on track, this is still a very very good progress. Renewable power is actually almost on track. The rest is not on track, but renewable power is closely on track. Now here I would like to mention that in these renewable market report, we also look at what we call an accelerated case. We identify country per country, some major policies that if implemented in the next 12 to 24 months, have measurable impact on the forecast over five years. This is the case in the case of power. Now, sorry, it's the other way around, this is what I want. That would lead the growth up 2,500 gigawatt, which would be a quite remarkable. Well, that one is really on track with the Paris Agreement. Now in terms of regions, China is by far the number one, the Asia Pacific region as a whole. This is where renewables are growing the most and this is good because this is where demand is growing the most, followed by Europe, North America, and then all the other regions. Two remarks. Yes please. Just two remarks. One, Europe has a big rebound, which is related to the better clarity of policies after the 2030 targets, and also a much better prospect also for distributed PV, plus offshore wind. North America remains a robust market. This byte, I would say the federal administration. The only negative thing here is the Sub-Saharan African, because this is the only region where we actually changed our forecast down. This is because of the permanent issues in terms of policy stability, in terms of risk of investment, in terms of greedy infrastructure which are all unsolved problems. Africa has a huge potential for renewables, but has the strongest problems in the world in terms of implementation. Sorry, you wanted to ask, yes. [inaudible]. Yes, a good, thank you for this. I'm laughing because I have asked in vain, my colleagues how do I get back? Page down? No, this is the other one, okay. It's here, it's in Asia Pacific. It's here, it's hidden here, how big? It's fairly big. Although, in terms of renewables growth also Japan is a big part and in terms of distributed PV, it's also Australia and Japan again. I'm laughing because I've asked you the same question to my distinguished colleagues many times. Why don't we have India, so protest with her? No, I'm kidding. Is not her, the responsible person is someone else. [inaudible] I'm sorry? [inaudible] But you are in Asia, right? We are. Yes. So this is called the Asia Pacific. You're all making good points, which I ask you, Carolina to report back to one person in particular that I know. You know who it is. [inaudible]. Please do. It's also recorded, so we can have the proofs. We will know to whom address this question. Now, these complicated graph shows two things. One, that the trends of cost reductions of both wind and solar PV are amazing. This is the mix of three things. First, historically good and strong support policies. Second, the important technology progress. Third, competition. Because the move from the feed-in tariffs to the competitive auctions. Have put in place much more technology competition, much more competition of the private sector in optimizing all the supply chain, which has led to a real success story. If you look at the cost comparison, even only five years ago of solar and where solar will be in 2024, it's an amazing story. I was glad to hear that our Executive Director for now, several years has been speaking about the shale gas revolution in the United States. Now he systematically also speaks about the solar revolution in the world. This is true because this is an amazing story. Now, what these slides also shows, however, is that there's still important differences among countries. In some countries there are funny stories happening in terms of cost reductions over time. In some cases, where is Japan? Japan is again hidden in Asia Pacific. The cost of renewables are still very high. Carolina, second remark here. Of course. To split India and Japan. Now, let me give you just a few examples because we said China is the number 1, United States, Europe, India. Now I will give you a few, one graph on India. The growth in China is incredible. It is true that China is the largest polluter in this moment in absolute terms in annual emissions, not in cumulative emissions. In cumulative emissions, the West is much worse, the US and Europe. But in terms of annual emission, but is also true that they have the strongest policy in place and the strongest industry development. They are the number one now in renewables for all technologies, with the exception of just a few, all of them. The growth in the case here of the accelerated case is 600 gigabytes. So it's again, half the United States, in six years. Now, if any one of you is more familiar with China, you will know that in China they have been severe curtailment issues. Curtailment is when you have too much production from wind and solar. In the moment there is no demand. If you don't have the grid, and in particular in China, there was the problem that the renewables rich regions are in the West and in the North. The big demand is in the coast, in the big cities and the big industries in the East. So they were not the lines and the curtailment was very high. It is being reduced dramatically. Look at wind between 2015 & 2016 & 2018, it is going much stronger. One of the reasons is grids, is the construction of grids. I remember I was in a conference in China a few years ago and the person off state grid told us, yes, we are building 20,000 kilometers of grids. I asked by when and in my head I had the Europeans scale of time. So I thought one decade, two decades. He answered, "Well, in two years they're done." So this is what is going on in China. This is, of course, helping curtailment, other things is that there is more market and more competition coming. So this is a very good news. Now, India has a big acceleration of renewables, which has been driven in recent years by the very ambitious targets of India, which is 175 gigawatt installed cumulatively by 2022. More recently, the Prime Minister expressed officially that the country will have a target of 450 gigawatt by 2030. Now, if I now ask you, will India meet the targets in 2022? Who knows the response? Nobody knows, but what do you guess? [inaudible] Please. [inaudible]. The truth is in-between, they are going at a much faster rate than in the past. In our projections, they will not reach the targets. They will be more precise. They will reach the wind target, they will reach the utility-scale PV targets, but where they are lagging behind is distributed PV because there are a number of barriers of distribution company levels. So they have an indicative target of 40 gigawatt of distributed PV by 2022, and as of now, so November 2019, they have only installed five. That's the issue. This is why it is unlikely, given the existing barriers, that in the next two years they will make it. Having said so, never say never. If they do the right policy action and the IEA will try to support the Indian government and we have planned a workshop precisely on this in next March, never say never. The scale of the country and the scale of possible growth is such that you can have very fast countries, but at this moment in time, our projections in the main case is they don't reach the targets. In the accelerated case, we go 90 percent, 95 percent of the targets are reached, but not 100 percent. Now the 450 gigawatt target by 2030 is a very high level of ambition but it is still problematic. Now, good and bad news in India. The good news is the cost reduction here on your right. These are the average prices of the auctions. So once again, more competition has driven the cost enormously down. Just two years ago, you go to India and you'll still hear, yes, but all what you are saying is very nice but I'm sorry, coal is less expensive and our country needs to expand. Today, the main narrative is we realized solar and wind partly are cheaper than coal. So we have to do something for economic reasons, not just for environmental reasons. The less good news is that India suffers still a lot at distribution company levels. The financial viability of these companies is very bad generally and this is for systemic reasons, because the prices of electricity is subsidized to protect the poor, which is understandable. But then, of course, this means, the tariffs are not cost-reflective and the distribution companies, most of them are very close to bankruptcy. Now, these are the same companies that need to buy the electricity from independent power producers and there, there is a big problem. So there are a number of problems in India. The other problem is also grid expansion and the capability to absorb variable renewables although now it has improved. So there are a number of challenges in India. We count on India to make the right policy decisions in the next 12-24 months to accelerate the growth much faster. India is, of course, the second giant after China that can change the world numbers in renewables. Europe. I was thinking yesterday about the project that I was involved in 1999, where we were looking at the target of 1,000 terawatt-hours of renewables by 2020, roughly one-third, and at that point, this target seemed to be a dream. We're beyond that. So Europe has done in an expensive way but remarkable way, a massive growth in particular for onshore wind. Also bio-energy, again, tends to be forgotten. Then more recently, solar. Of course, the potential of solar PV in Europe is less good because of climatic reasons. I mean, you're in Paris, you know very well. I'm from Rome. Rome is a little bit better than that but still, Southern Europe is not enough. This is why wind, of course, it gives a much higher contribution. Now, the growth of renewables in the next years is very good in Europe. It's going back to the first boom of PV and wind in the decade ago at much lower costs. So for Europe, we have a rebound of our forecast and this is just good news and the offshore wind will come on top of that. The real big growth of offshore wind will be after 2024. So you don't see it here because it's too soon. Now a few slides on distributed PV. Why this is important. First of all, because of the numbers. I mean, one decade ago, this was still a small part. It doubled growth in the last five years and it will double again in the next five years with big important total numbers. The total installed capacity by 2024 will be something between 500 gigawatts and 600 gigawatts. So again, half of the United States, or if you want to translate it in cumulative investment, is one trillion US dollars. Now that's a big number, because this is private capital coming from people that have nothing to do with energy. This is real good private money for the clean energy transition coming from private stakeholders. So in terms of growth, China again. Look at China 10 years ago and look at China in the next five years. China becomes the number one in distributed PV between next year and 2021. India accelerates by a factor of five, but it's still not enough to achieve the 2022 targets. They will get their '23, '24. Europe, as I said, is growing again at the pace of the PV boom but with costs which are 10 times lower. Then the good news is this, because these are all new markets from Asia, Vietnam, to Africa, to Latin America that are installing more distributed PV. Now, when I ask you distributed PV, you say is what? What is distributed PV for you? It's a rooftop on that roof or what is it? [inaudible]. Something like this is correct. [inaudible]. Now, without going at the level necessarily of the micro-grids, distributed is defined of all those which are directly connected to the distribution grid. So it's low, medium voltage but not the high voltage of the big utility scale power-plants. Now this does not mean that distributed cannot be big. A distributed PV on an industrial park or in a big commercial settlement can be very big. Indeed, in this graph, we will show you three categories. First, off-grid. It's not the mini-grid that you're speaking about but the off-grid. Now, this is, of course, tiny in terms of gigawatt but it will give first access to electricity and energy services to some 100 million people in the next five years. So it's still very, very important. These here in this color are rooftops. So these are residential system. These are going to double from roughly 50-100 million rooftop installation in the world, which again, it's a remarkable number. But in terms of big growth, the big growth in capacity, is in industrial and commercial. For two reasons, one is size. It's a really economies of scale, you have bigger installations at a lower cost. The second, it's because there is a better match between supply and demand. If you are in an industry or in a commercial installation, you will always have demand during the day. If you have a residential system and you are not at home, nobody is consuming electricity when you are producing, which means that your electricity needs to go somewhere else in the system, which has some implications. So commercial and industrial are actually the application number one for distributed PV. Once again, the economic driver is becoming much more important than in the past. Here you don't need to compare with the generation cost of other technologies or with the wholesale market prices but you compare with the retail prices. To be more precise, you should compare with the variable component of the retail electricity prices. So the component per kilowatt-hour. I'm saying this because in our bills we also usually pay a small fixed part. Who knows how much do we pay electricity in France? Do you know how much do you pay? Well, it depends on how you live here, but how do you pay for your bill in electricity? It's about 0.66 per kilowatt-hours provided. Point what? Six six cents per kilowatt-hour? Six six? Yeah. No. Is that too low? This would be enormously high. Okay. No, 0.66. This would be enormously cheap. Okay. 0.66. That's good. It comes as a subscription. Sure, but how much do you pay for your bill, assuming that you pay something, how much per kilowatt-hour do we pay here in Paris roughly? You remember you are very well-educated people. So you should know. No, not $0.15. Yeah, $0.15, sorry. You're right, $0.15 per kilowatt-hour, sorry. How's the German exactly? This is why, good? Now, German customers pay $0.30 per kilowatt-hour, and French, we pay roughly the half here, Italy somewhere in between. How much is Poland? [inaudible]. [inaudible] Okay, now, if you install your rooftop installation on your rooftop, you compare with that because if you self consume, you will not pay this to the grid. So if you compare these in 2018, you will see that in a country like Germany, this is a very good economic case, in Japan, this equation is mixed, in Australia is a very good case and there indeed you see what's happening in other places. No, for a variety of reasons, California is still more expensive, and in China and India, not surprisingly, because the electricity prices for residential are subsidized. The economic case for industrial PV is much better in both countries. Now, in 2024, these becomes the norm almost everywhere in the world, that the levelized cost of generation of solar PV distributed are comparable all lower to retail electricity prices, and this means the economic driver for someone who can afford to put the solar roof on solar rooftop system are enormous because if you can self consume, so if you can consume the electricity that you generate with your PV, you gain a lot of money. Please. [inaudible] It does not and you are raising a good question, which I think we should discuss at the end, which has to do with system integration and which has to do very much with the question whether you are really self consuming or not self consuming, remind me and I will ask you a question on this when we finish, so that we can discuss this more precisely. But in general terms, this is what customer see, because you're right in raising the question of system cost. But this is a utility problem, is the problem of the provider, is a problem of the regulator, but once the bill is set, once the tariff is set, this is what the customers do. So a German customer who can afford a solar PV system in his house, for each kilowatt-hour that he produces with each PV, and that he does not pay to the bill. He basically make a gain of three times. Is it attractive enough to invest? If you translate this in terms of internal rate of return and you compare it to an investment in putting your money in a German bank. The case is very compelling for you to invest in a solar PV system. By the way, this is also true in France, but even in Paris. Now, so costs are no longer a problem. Here, the curve of growth of distributed PV is exponential. It will be around as I said, more than 500 gigawatt in 2024, the one trillion dollar figure. But if you compare this with the real potential of rooftop available area, this is nothing, the potential in the world that we estimate is 20 times higher. So cost is no longer a problem. Rooftop availability is not another problem. That could be a huge boom. Now one of the main messages of the report is that this boom must be managed, because it can disrupt the electricity systems, it can lead to system integration issues, but it can also lead to something else. In our bills, the famous $0.15, we pay for energy, we pay for transmission and distribution and part of those are fixed costs. We pay for whatever levies and surcharges, this would be including the renewable surcharges and then we pay for taxes like VAT. Now in particular, the T&D, so the fixed asset for transmission, distribution are an issue, because if you have a lot of distributed PV, those companies have much less money and need still to fix for fixed asset. So these needs to be really managed. We estimate that there could be losses for companies up to $60 billion in this period and therefore, our policy messages that going forward, the policymakers and the regulators need to find the right balance between the opposing interests of the distributed PV owners. So those who can afford investment and who wants to do something for clean energy for their children, the distribution companies and the other consumers. Because the other consumers who cannot may be afforded this PV roofs, they are left in a system where there are less kilowatt-hours sold, there is still fixed costs, so they will end up to pay higher prices. That's obviously not socially fair and this needs to be fixed. So distributed PV has a double side here. It's a very positive news because it's remarkably fast expanding, reliable, clean technology, which is affordable to many, very soon to billions of people worldwide, but the growth needs to be managed. That's our main message, which leads me to the other front, which is system integration. Now, until five years ago, roughly. We would still hear around in the world sentences like you can only integrate 4-5 percent of wind and solar in the grid and after that our system electricity will go bust. Of course, I'm saying this because wind and solar are variable, they're not dispatchable, you cannot easily store them, and so you would hear some sentences like this. You would also hear sentences like, for each kilowatt, megawatt of wind, we will need one megawatt of backup. Now those are all false statement, but it is true that there is a system integration challenge that people needs to take into account. Now those challenge depend on two big variables, the penetration of wind and solar, and the rest of the system, how it is structure and how much it is flexible and that will mean in, I will say in one minute what flexibility means. But first, let's see at the variable share. So here are the many countries in the x-axis and the many markets, because this problem can be a smaller level than a country. Most of the countries in the world still have shares of variable renewables. When I say variable renewables is wind plus solar, shares on total electricity generation in one year, which is less than 10 percent. This share, which is again largely the vast majority of countries in the world, has basically no impact on the system. Can you tell me why there is no impact on the system? Yes. Because the variability of the consumption is much bigger than the variability of wind and solar supply. Demand varies during the day, during hours, and then during seasons massively. All the electricity system in the world are thought in order to cope with this variability. So at the shares, really nothing can be persist. In the second share, which is from, let's say five to 10. We are perfectly conscious that we are over-simplifying, but I think these are very important numbers to have a feeding, there is a moderate impact on system operation so from time to time you can see an impact. When I say an impact, you'll see the net demand, which is very different from the old demand before, wind and solar. Then of course, the system needs to intervene. It will intervene with more gas, for instance, if you need to ramp up production because suddenly you have a big cloud that is coming and there is no more solar or the wind is going down. What we have determined as a Phase 3 is above 10 percent, and then you change the operation of your system. This is where many European countries are today with share between 10 percent and 30 percent of wind and solar, still you can do that with very little storage, you can do it with the flexibility of the system itself. Then you enter in a fourth phase, which is well above the highest world record at the moment of shares is in Denmark, but the two most extreme cases is not Denmark, because Denmark is very interconnected. So when they have too much wind, they would just export it to either the north to Germany or to Holland. This is not the case of Southern Australia and not the case of Ireland, which are the two most extreme cases in the world. Also, California is very high, California is not indicated here. Yes, it's here, but it's a lower still at 20, it's still at the yellow level. So if someone asks you, what is the maximum share of wind and solar than I can integrate in a grid, the respond is, it depends. It depends on the flexibility of the system where you are integrating. Now, this flexibility has four components. It is the power plants, the other one, and if you have base load power like coal and nuclear, these are generally more rigid, they don't love to go up and down. They are designed to provide a base load 24-7 for, let's say 7,000 hours or so apart from maintenance. Gas is much more flexible and in the meantime, even coal power plants go up and down, and even nuclear goes up and down much more than in the past. Second is grids. If you have very well interconnected systems, this is the phenomenal source of flexibility because you can dispatch the electricity from one place to another. So you may have a lot of wind in the north and the bigger of demand in the south, if you have the lines, this is good. They are very good examples where this is a problem. Germany is probably the most famous one because it has very strong in renewables, a lot of wind in the north, the big demand is in the south and the lines do not exist, and this has been a discussion for a more than a decade now. Wherever you have east-west lines, that's fantastic for solar because you are in the dark here and you still have the sun in the west. So if you have something that can dispatch you the sun energy from the west to the east, you can do a lot, even in evenings. Storage: Storage is pumped hydro mainly, but also now batteries and this is the most expensive part of flexibility. You can do a lot without a single kilowatt-hour of storage, but it is also becoming more and more important, the more variable wind and solar increase. Then demand side, which we call here distributed energy resources, this is demand side response in a house. It is the batteries of electric cars, it is all the things that you can do in house. An example, you have a rooftop system, a cloud comes on your PV, your system automatically shuts down your refrigerator for five minutes, will you see the anything? You will never. Do you follow when your refrigerator is on or off? Hopefully not. So you have a lot of inertia in all thermal systems, this is true for heat maps, this is true for refrigerators, this is true for boilers that you can play with on these rapid scale, this is very important for all types with clouds. But then there are also batteries for electric vehicles, which can provide services to the grid, then so on and so on. So these can be very cheap to provide flexibility and this is why those sentences like you need the one megawatt backup for a one megawatt wind is absolutely false, and this is also why saying that low shares of variable renewables can be safely integrated is also false. Now, I don't want to go in detail here, but it's important in these policies that you don't touch the government, but also the regulators and the system operators. Actually in many cases, it's exactly the regulators and the system operators which are the biggest barrier to variable renewables. I don't want to get into that detail. My last part before we go to the Q and A and a conclusions is something which has barely started, it's renewables for industry. One of the reasons why we are completely off track of Paris is because we are not decarbonizing transport we spoke about, but the other thing which is missing is industry, and in particularly heavy industry. The reason why this is problematic for renewables is because indeed in those industries you need high temperature, high pressures, and this is what renewable heat cannot provide. Renewable heat is a good input for medium, low temperature applications like food, textiles, but not for heavy industries. Now, in recent years, something happens which is changing this picture fundamentally and probably forever. You can use renewables in all sectors, of course, directly through electricity, and of course, this is what we just discussed. The cheaper the electricity, the more the case. But the other part where you can use is through the production of hydrogen and then from hydrogen you can do other liquid fuels like ammonia or like methanol, or like dimethyl ester, and then you can put this as a feedstock and as a source of energy and high temperature heat in buildings, in industry, in transport, and actually also in the power plants. So renewables in the future will help both directly and indirectly to consumptions and feedstocks in industry and transport. One important graph that a colleague of us has invented a few years ago is this one. It shows the cost of the production of hydrogen, depending on the cost of renewable electricity and the number of full load hours. You need two things. You need cheap electricity and you need the number of full load hours that is high enough to repay for the fixed asset cost of an electrolyzer. The electrolyzers are built and designed to work for 7,000 hours, you put wind and solar and suddenly they work for less hours. But what is important in this curve is that the curve is very steep, up to 3,000 hours and then it becomes very, very flat and simplifying if you are at the level of $3 per kilowatt-hour and the number of full load hours of 3,000 hours, it starts to be very interesting and competitive to produce hydrogen compared to the alternative, which is natural gas plus steam reforming, which is 99 percent of the hydrogen production today. Now, this opens a new page in history of the energy system because suddenly it allows to produce from renewable sources, a clean energy vector hydrogen, which is difficult to transport and store, but which is complimentary to electricity. The second argument here is that these hydrogen can be converted to a liquid, in particular, ammonia. The ammonia industry today is responsible for 650 millions of tons of CO2 per year, so just greening the ammonia industry is a huge thing. But the other part is that the ammonia is the basis of fertilizers and the fertilizers are of course, crucially important to feed a growing population in the world. Prospects for green hydrogen, green ammonia, green fertilizers production in India, in China, in Africa is a fundamental shift. The second fundamental shift is to link this with the advanced in bioenergy and the use of bio-based carbon, because then suddenly, you have the combination of green hydrogen and green carbon. This is the green chemistry, but this will be our next lesson, not today. Please. [inaudible] I'm not sure I get your point. This is a curve which is good for a dedicated renewable installation which feeds a production site for hydrogen and ammonia. [inaudible] A huge number. That's a good question actually. There is a recent study of the German industry association which shows that the whole German chemistry industry could be carbon neutral-based on such a thing in 2050. But these basically would double and triple the production of renewable electricity of Germany. So your question is very good, and you can see it from both sides. One side is, how will I do it? Indeed for Germany, it's an issue because they don't have enough renewable energy sources to do that. But if you see it globally, this is an extra demand for renewable electricity that is worth thousands and thousands of terawatt-hours on top over the IAEA scenarios, I would say, because we are still have not figured that in our scenarios. Now, this map is a very good answer to this. This is in the longer-term, exactly all the places where high production of hydrogen would be the cheapest. I would like to drive your attention on a few places. The first will be this. How much population has Australia? Thirteen million, 15 million? Twenty million. Twenty million people in Australia, which is half of Europe, all this is in the middle of nowhere with a lot of sun and a lot of wind. You produce hydrogen here. You put it in a liquid and you export it to Japan, Korea, and then Asia. This is the first thing that will happen. Second thing is here, the Desert of Atacama, the place in the earth with the largest irradiation of sun, but very close to the sea, very close to the coast, very close to wind and water. Once again, this will be another place for production of ammonia, I'm speaking of liquids. Because transporting hydrogen in form of gas is tricky, either you liquefy it, but the temperature is much lower than natural gas, and so it's very costly and very expensive. But you can do liquids, then you go to Panama, and then you go to the whole world. India, China and the Middle East. The Middle East is actually one of the places where this production of hydrogen could be the cheapest in the world. So today, it sounds very dreamish vision that the Middle East goes from oil to something else, but it's absolutely not to be excluded because if you look at countries in the Middle East, they are as rich in sun as they are rich in oil. I would say they have more sun than oil. So this is what is coming. I just wanted to give you this hint because this in your INR market forecast, of course, you don't see it and you barely see it in our longer-term scenario. But this is coming, and it's coming big time. Hydrogen is not new. It's something that was heavily discussed in the very early of the '90s than back in 2005 and '6, but this time there is a big news. This is cheap wind and solar. This is what makes the difference. This is why this is an area for those who are interested. I would recommend to keep an eye to this area. This is a combination of renewables chemistry, and even fossil-fueled technologies that is very interesting and could be one of the game changer of the future in the years to come. I come to the conclusions. I come to the fact of my question, are we on track? Are we not on track? On one hand, there is enormous progress of renewable electricity, but it is true that we are not on track. Renewables are growing the shares in the system in total electricity by one percent per year. They'll be at 30 percent in 2024. Coal is going down in the meantime, so the crossing of the two is not so far away anymore. We're still not there. We need to be there in the power sector to be in track with Paris. It could happen, and you can ask Tim Gold next week if it can happen. It can actually, pretty soon in this decade if there are more coal phase out or coal refurbishment part in the power system generation. But so far, we're not totally in track. Solar PV is on track. Solar PV is expanding very, very strongly. Now, as I said in our main case, the 1,200 gigawatt are in the United States. It's still not on track. In our accelerated case, we are on track. This depends on the policies of a bunch of places. China, first of all, Asia-Pacific, sorry, India is again hidden here. I have another slide with India explicitly here. Well, in the slide that I will send you for diffusion, I will make sure there is India. I would like to show your attention on MENA, the Middle East and North Africa. We have accelerated case where the thing doubles. It depends on how serious these countries are in their policies. It will very much depend on what Saudi Arabia does, what the whole of North Africa does, what Iran does, it will see, but the potential is definitely there. This is on track, and this is my real last slide with a couple of messages. One is, we have seen phenomenal progress of renewables in the last years, technology-wise, deployment-wise, cost-wise. Still, we need policies not to provide anymore financial incentive, but to provide the right market design, the right incentives in order to attract investment. We need policy predictability. This is not the case in most of our country's policies go and are then changed suddenly. This is not good for an industry to develop. Solar and wind will be 70 percent of total capacity additions in the years to come. Total, I'm speaking of total, not of renewables, so of all power. This obviously calls for big attention to system integration. System integration is possible, is economically feasible, is secure, but needs attention. Distributed PV is a new way which disrupts the way how we consume and produce electricity. But once again, its growth needs to be managed because otherwise you make a good private case, but you disrupt the business models of the distribution companies and this is not useful for anyone. Last points, it is not just about electricity, the top priority is to give much more policy attention to all end-users. We didn't touch it in this lesson, but also looking at buildings and the much closer interaction between energy efficiency and renewable heat is amassed, which is usually neglected by policymakers, even by ourselves. We tend not to think about it even if in reality 50 percent of our consumption comes from this, from heat, it doesn't come from electricity. The last point is the industry part. This has not yet begun, but this is a new era because you asked the right question in terms of penetration. These are thousands and thousands of additional terawatt-hours from renewables that would dramatically change the environmental impacts of these, what we call harder to abate sector. We see now many more possibilities than in the past to abate emissions and the pollution from these industrial sectors. So I will stop it here. It took a long time, but thank you for your question in between and I welcome many more questions if you have, also, because I have Carolina here who will answer all the difficult question that I cannot answer. Okay. Thank you for your attention to start with.
