Bringing climate policy up to date – decreasing cost projections for renewable energy and batteries and their implications (case study Chile)

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This case study presents the potential impact of lower battery and renewable energy costs projections in Chile’s NDC emissions target.

Main findings

The costs for renewable electricity generation and electric vehicles have dropped since the Nationally Determined Contributions (NDCs) were developed, and future cost projections also decreased as a result. Wachsmuth and Anatolitis (2018) suggest a simple method to estimate increased RE capacities and EV penetration resulting from these cost decreases. The method assumes that lower battery costs lead to a higher market uptake of EVs and that the savings from decreased RE capacity cost are reinvested in the same technology.

Our analysis applies the method to Chile, using country specific data sources for costs and expectations on technology development. It presents the potential impact of taking renewable generation and storage cost reductions into account to raise ambition of NDCs, as one element of various to consider for NDC revisions.

Our results suggest that by considering technology cost developments of wind, solar PV and batteries, Chile could increase the ambition of its NDC targets. The unconditional NDC target of 30% improvement of GHG intensity compared to 2007 moves downward by 1 to 2 pp, and the conditional targets of 35% to 45% by 3 to 5 pp. This reflects a reduction of 2 to 4 MtCO2e in 2030 of the unconditional target, and 7 to 10 MtCO2e in 2030 of the conditional target range.

Contact for further information: Hanna Fekete, Leonardo Nascimento