RENEWABLE ENERGY INSTITUTE · 9/9/2016 · Michael Liebreich REI Tokyo, 9 September 2016 @MLiebreich 5 0.1 1 10 100 1 10 100 1,000 10,000 100,000 1,000,000 2003 1976 1985 2008 Cumulative

RENEWABLE ENERGY INSTITUTE

Michael Liebreich

Chairman of the Advisory

Board

Twitter: @mliebreich

Tokyo

9 September 2016

1Michael Liebreich @MLiebreichREI Tokyo, 9 September 2016

0

5

10

15

20

25

30

35

40

187

0

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188

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199

5

200

0

200

5

201

0

201

5

Note: Includes NGL and processing gain, but excludes biofuels

Source: IEA; CDIAC; BP; Bloomberg New

Energy Finance

GLOBAL CARBON EMISSIONS FROM FOSSIL FUELS(GIGATONNES CO2/YEAR)

0.00%2.00%4.00%6.00%8.00%10.00%

30

32

34

36

5.5% 5.7% 3.1% 5.4% 4.2% 3.4% 3.4% 3.4% 3.5%

0%

2%

4%

6%

20

06

20

07

20

08

20

09

20

10

20

11

2012

20

13

20

14

2015

5.5% 5.7% 3.1% 0% 5.4% 4.2% 3.4% 3.4% 3.4% 3.5%

Global GDP growth (real)


$62bn

$88bn

$128bn

$175bn

$206bn $207bn

$274bn

$318bn$297bn

$272bn

$316bn$329bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$146/bbl

Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D, and spending for digital energy and energy

storage projects (not reported in quarterly statistics). Excludes large hydro.

Source: Bloomberg Intelligence, Bloomberg New Energy

Finance

CLEAN ENERGY INVESTMENT ROSE WHILE OIL PLUMMETEDGLOBAL CLEAN ENERGY INVESTMENT VS WTI CRUDE SPOT 2004-15

$48/bbl

Record

investment


Source: UNEP, Bloomberg New Energy Finance

INVESTMENT IN POWER CAPACITY, 2008–15 ($BN)

Renewables ex large hydro

Fossil fuel

Nuclear

Large hydro

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 2013 2014 2015


Note: New investment volume adjusts for re-invested equity. Total values include estimates for undisclosed deals. Source: Bloomberg New Energy FInance

RENEWABLE ENERGY INVESTMENT, 2004–15 BY REGION ($BN NOMINAL)

5.611.9

29.133.2

35.5

23.9

34.7

49.140.6

35.337.0

44.1

'04'05'06'07'08'09'10'11'12'13'14'15

United States

0.83.15.2

11.411.8

7.97.210.2

7.74.4

8.07.1

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Brazil

1.73.33.75.06.15.5

12.09.3

10.112.0

13.3

12.8

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

AMER (excl. US & Brazil)

24.833.3

46.9

66.8

81.882.7

113.4122.9

89.0

60.062.0

48.8

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Europe

7.39.010.012.413.613.919.3

23.8

30.2

44.4

48.847.6

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

ASOC (excl. China & India)

3.08.3

11.216.7

25.6

38.839.6

47.461.7

62.0

87.8

102.9

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

China

2.73.04.96.75.64.38.8

12.87.86.68.3

10.2

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

India

0.60.81.11.82.31.64.13.0

10.29.37.912.5

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Middle East & Africa


0.1

1

10

100

1 10 100 1,000 10,000 100,000 1,000,000

2003

1976

1985

2008

Cumulative capacity (MW)

Current 2015 price

WIND AND SOLAR EXPERIENCE CURVES

Note: Pricing data has been inflation corrected to 2014. We assume the debt ratio

of 70%, cost of debt (bps to LIBOR) of 175, cost of equity of 8%

Source: Bloomberg New Energy Finance

Note: Prices are in real (2015) USD. ‘Current price’ is $0.61/W

Source: Bloomberg New Energy Finance, Maycock

ONSHORE WIND LEVELISED COST ($/MWh) SOLAR PV MODULE COST ($/W)

Learning rate

24.3%

MODULE COSTS

HAVE FALLEN

99% SINCE 1976

80% SINCE 2008

y = 3,582.42x-0.30

R² = 0.91

16

32

64

128

256

512

1,024

100 1,000 10,000 100,000 1,000,000

1985

20252014

Learning rate =19%R² = 0.91

Thailand

Brazil

Germany

US

H1 2015

1999

2009

1,024

512

256

128

64

32

100 1,000 10,000

16

100,000 1,000,000

Learning rate 19%

1985

1999

2009

2014

2025

H2 2015

Learning rate

19%

WIND COSTS

HAVE FALLEN

50% SINCE 2009


2011 UNSUBSIDISED CLEAN ENERGYWORLD RECORDS

Source: Bloomberg New Energy Finance; ImagesSiemens; Wikimedia Commons

ONSHORE WIND SOLAR PV

US$ 6.2 cents/kWh US$ 17 cents/kWh





Location:

Bidder:

Signed:

Construction:

Price:

Morocco

Enel Green Power

January 2016

2018

US$ 3.0 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Peru

Enel Green Power

February 2016

2017

US$ 4.8 c/kWh





Location:

Bidder:

Signed:

Construction:

Price:

Morocco

Enel Green Power

January 2016

2018

US$ 3.0 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Coahuila, Mexico

Enel Green Power

March 2016

2018

US$ 3.6 c/kWh





Location:

Bidder:

Signed:

Construction:

Price:

Morocco

Enel Green Power

January 2016

2018

US$ 3.0 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Dubai

Masdar Consortium

May 2016

2019

US$ 2.99 c/kWh





Location:

Bidder:

Signed:

Construction:

Price:

Morocco

Enel Green Power

January 2016

2018

US$ 3.0 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Chile

Solarpack Corporation

August 2016

2019

US$ 2.91 c/kWh



PRICE IMPACT OF SWITCH FROM FIT TO AUCTIONS, SELECTED COUNTRIES (NORMALISED)

0

20

40

60

80

100

120

140

160

+3+2+10-1-2-30

20

40

60

80

100

120

140

160

+3+2+10-1-2-3

Solar PV

(unit price normalised to 100 at date of first auction)

Onshore Wind

(unit price normalised to 100 at date of first auction)

: non-tariff price signals

: tariffs

: auctions

KEY

EMEA

Other LatAm

Brazil

India

South Africa

- 30% - 50% - 35% - 60%


RENEWABLE ENERGY - THE MARCH OF THE PRICE SIGNAL

Market-based mechanisms – eg renewable energy auctions, certificate schemes, renewable

portfolio standards

Feed-in tariff/premiums

Mixed

Countries with auction or tender programmes

2000




portfolio standards


Mixed


2001


portfolio standards


Mixed





portfolio standards


Mixed


2002


portfolio standards


Mixed





portfolio standards


Mixed


2003


portfolio standards


Mixed





portfolio standards


Mixed


2004


portfolio standards


Mixed





portfolio standards


Mixed


2005


portfolio standards


Mixed




Market-based mechanisms – eg, renewable energy auctions, certificate schemes, renewable

portfolio standards


Mixed


2006


portfolio standards


Mixed





portfolio standards


Mixed


2007


portfolio standards


Mixed





portfolio standards


Mixed


2008


portfolio standards


Mixed





portfolio standards


Mixed


2009


portfolio standards


Mixed





portfolio standards


Mixed


2010


portfolio standards


Mixed





portfolio standards


Mixed


2011


portfolio standards


Mixed





portfolio standards


Mixed


2012


portfolio standards


Mixed





portfolio standards


Mixed


2013


portfolio standards


Mixed





portfolio standards


Mixed


2014


portfolio standards


Mixed





portfolio standards


Mixed


2015


portfolio standards


Mixed





portfolio standards


Mixed


2016


portfolio standards


Mixed



0.1%

0.2%

0.4%

0.8%

1.6%

3.1%

6.3%

12.5%

25.0%

2000 2002 2004 2006 2008 2010 2012 2014

RENEWABLES SHARE OF GENERATION, 2000–15 (% OF SYSTEM TOTAL)

Note: Y-axes are logarithmic with base 2 Source: Bloomberg New Energy Finance, BP, UNEP

WIND

Four

doublings

SOLAR

0.0%

0.0%

0.0%

0.0%

0.1%

0.2%

0.4%

0.8%

1.6%

3.1%

6.3%

12.5%

25.0%

2000 2002 2004 2006 2008 2010 2012 2014

Seven

doublings

0.05%

0.03%

0.01%15 years 15 years


Note: Includes hydro Source: BP Statistical Review of Energy,

Bloomberg New Energy Finance

RENEWABLE ENERGY PROPORTION OF POWER GENERATION, 10 YEARS TO 2015 (%)

Canada

76%

US

13%

Brazil

71%

China

22%

Japan

11%

Australia

16%India

6%

S. Africa

2%

0% Lowest

50% Mid

100% Highest

9%14%

US

61%67%

Canada

89%79%

Brazil

1% 3%

South Africa

17% 18%

India

10%17%

Australia

10%15%

Japan

16%25%

China

5%

26%UK

12%

36%

Germany16%

69%Denmark

21%

37%

Spain

20%

40%

Italy

12%17%

France


0%

10%

20%

30%

40%

50%

60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil

Historical Forecast 1

0%

20%

40%

60%

80%

100%

120%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Historical

EUROPE POWER GENERATION BY FUEL TYPE (TWH/YR)

1

0%

20%

40%

60%

80%

100%

120%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil

Historical Forecast

Intermittent renewables accounted for

16% of generation in Europe in 2015

Note: Includes EU 28, Norway, Iceland and Switzerland Source: Bloomberg New Energy Finance


0%

10%

20%

30%

40%

50%

60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil


0%

20%

40%

60%

80%

100%

120%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Historical Forecast


1

0%

20%

40%

60%

80%

100%

120%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil

Historical Forecast

● Assumes power demand from EVs grows to 80TWh/yr by 2040, or 21% of total demand

● GDP growth assumed to be around 2% per year, in line with forecasts from the IMF






0%

10%

20%

30%

40%

50%

60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil


0%

20%

40%

60%

80%

100%

120%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil

Historical Forecast








0%

10%

20%

30%

40%

50%

60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil


0%

20%

40%

60%

80%

100%

120%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil

Historical Forecast

0%

10%

20%

30%

40%

50%

60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990 2000 2010 2020 2030 2040

Other RE

Solar

Wind

Hydro

Nuclear

Fossil

Historical Forecast

Intermittent renewables

will account for 53% of

European power

generation in 2040



% share of generation

from intermittent (RHS)





MANAGING INTERMITTENCYTHE BIG CHALLENGE – THE BIG OPPORTUNITY

II. CONTINUOUS

BALANCING

III. CONTROLLING

FREQUENCY

I. PLANNING FOR

EXTREMES

Demand

Variable supply

Years to Months Days to minutes Seconds to minutes



BALANCING THE GRID

Coal-fired generation

Inc

um

be

nt

tec

hn

olo

gie

s Gas-fired generation

Nuclear

Reservoir hydro

Pumped hydro

Interconnectors

Renewable generation

Demand response

New

tec

hn

olo

gie

s Electrochemical storage

Thermal storage

Mechanical storage

Chemical

Months to years

ahead

Minutes to days

ahead

2016 Seconds to

minutes after



Coal-fired generation

Inc

um

be

nt

tec

hn

olo

gie

s Gas-fired generation

Nuclear

Reservoir hydro

Pumped hydro

Interconnection

Renewable generation

Software solutions

New

tec

hn

olo

gie

s Electrochemical storage

Thermal storage

Mechanical storage

Chemical storage

Seconds to

minutes after

BALANCING THE GRID

Months to years

ahead

Hours to days

ahead

2016

Future


Power to gas

Interconnectors

New heating/cooling

solutionsAmonium H2

Flywheels

Compressed airBiomass

/biogas

Electric vehiclesElectric vehicles

Demand responseDemand response

Smart Grid and “Gridchain”

Gravity systemsBiofuel

BatteriesBatteriesFlow

batteriesSolar CSP

UHV Supergrid(GEIDCO) Interconnectors


POTENTIAL GRIDCHAIN APPLICATIONS

TRANSMISSION

MICROGRID/

MINIGRID

SMART DISTRIBUTION

& COMMUNITY STORAGE

SMART HOMES

AND

BUILDINGS

SMART DISTRIBUTION

NETWORK EDGE

Carbon market with fraud-proof

distributed registry

Community minigrid buys &

sells power, settles payments,

no central controller

EV charging

payments

settlement

Home energy

management with

no central controller

Transmission

network settles all

payments peer-to-

peer

Carbon tax

collected directly

from appliances

Distribution grid balances

supply and demand with no

central controller

Shared and

autonomous vehicle

payments

Secure distributed

asset registries


Tesla Model 3

BMW i3

VW e-Golf

Chevy Bolt

Nissan Leaf

Images: Tesla, BMW, VW, GM, Nissan

EV MASS MARKET$30,000 + 200 MILES RANGE


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

20

40

60

80

100

120

140

2015 2020 2025 2030 2035 2040

m vehicles sold per year % of new car sales

Note: forecast uses Gasoline and electricity prices from EIA’s 2015 Annual Energy Outlook ‘Low Oil Price’

scenario (ranging from $50 to $65 per barrel between 2015 and 2025). High scenario assumes greater vehicle

utilisation. Low scenario assumes $20 per barrel oil price Source: Bloomberg New Energy Finance

GLOBAL LIGHT DUTY VEHICLE AND EV ANNUAL SALES, 2015–40 (M VEHICLES SOLD PER YEAR, %)

By 2040

Up to 50%

of new cars

will be EVs

Shared vehicle

scenario

$20 oil

scenario

0%10%20%30%40%50%60%70%80%90%100%

020406080100120140

2015 2020 2025 2030 2035 2040

ICE + HEV BEV PHEV EV % of new sales

m vehicles sold per year % of new car sales


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2015 2020 2025 2030 2035 2040

ELECTRICITY DEMAND FROM EVS

(TWH/YR)

TRANSFORMATION OF TRANSPORTATIONIMPACT OF ELECTRIC VEHICLES

EV SALES BY REGION IN 2040

(MILLION VEHICLES)

Europe15%

USA21%

China35%

Japan3%

Rest of the world26%

Total 41m

Total global electricity demand

excluding EVs

Electricity demand from EVs

2. Chinese

car industry

leadership

1. Around 10%

additional

power demand

OIL DEMAND DISPLACED BY EVS

(MILLION BARRELS / DAY)

0

2

4

6

8

10

12

14

2015 2020 2025 2030 2035 2040

Rest ofthe world

Japan

Europe

USA

China

3. Destruction

of 13m bbl/day

oil demand



THE PARIS OPPORTUNITY

Image: UNFCCC


Source: UNFCCC, UNEP, Climate Action Tracker


GLOBAL GREENHOUSE GAS EMISSIONS(GTCO2)

30

35

40

45

50

55

60

65

1990 1995 2000 2005 2010 2015 2020 2025 2030

Historical emissions

INDC trajectory

Pre-COP21 pledges

30

35

40

45

50

55

60

65

1990 1995 2000 2005 2010 2015 2020 2025 2030

Historical emissions 2 C trajectory

INDC trajectory

Pre-COP21 pledges



GLOBAL PRIMARY ENERGY SUPPLY (MTOE)

10,000

5,000

1,000

0

Renewable energy

Natural gas

OilCoal

Nuclear


Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total

includes bioenergy and hydro. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 1975 (MTOE)

10,000

5,000

1,000

1975

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

1980

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

1985

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

1990

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

1995

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

2000

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

2005

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

2010

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

2015

Renewable energy

Natural gas

OilCoal

Nuclear





10,000

5,000

1,000

2015

Renewable energy

Natural gas

OilCoal

Nuclear

BNEF 2040





10,000

5,000

1,000

2015

Renewable energy

Natural gas

OilCoal

Nuclear

BNEF 2040

IEA 450ppm

2040



includes bioenergy and hydro. Paris illustrative scenario assumes some carbon capture. Source: Bloomberg New Energy Finance, IEA


10,000

5,000

1,000

2015

Renewable energy

Natural gas

OilCoal

Nuclear

BNEF 2040

IEA 450ppm

2040

Illustrative

Paris scenario

before 2100


Note: Total values include estimates for undisclosed deals. Excludes corporate and government R&D, and spending

for digital energy and energy storage projects (reported in annual statistics only). Source: Bloomberg New Energy Finance

NEW INVESTMENT IN CLEAN ENERGYQ1 2004-Q2 2016 ($BN)

● Quarterly new investment in clean energy. This includes

investment into all asset classes except EST asset finance

and R&D, which are compiled on an annual basis only.




NEW INVESTMENT IN CLEAN ENERGY IN EUROPEQ1 2004-Q2 2016 ($BN)




NEW INVESTMENT IN CLEAN ENERGY IN THE USQ1 2004-Q2 2016 ($BN)




NEW INVESTMENT IN CLEAN ENERGY IN CHINAQ1 2004-Q2 2016 ($BN)




NEW INVESTMENT IN CLEAN ENERGY, JAPANQ1 2004-Q2 2016 ($BN)

Quarterly new investment in clean energy. This includes

investment into all asset classes except EST asset finance and

R&D, which are compiled on an annual basis only.


0

100

200

300

400

500

600

700

800

1860 1880 1900 1920 1940 1960 1980 2000 2020 2040

Source: EIA

US COAL CONSUMPTION VS GAS AND RENEWABLES, PRIMARY ENERGY (MTOE/YR)

Renewables

inc. hyrdo

Gas

US: Coal

overtaken by

gas in the US

energy mix

Thermal coal


Source: BEIS, Prof. David Rutledge,


UK COAL CONSUMPTION 1850-2030 (MT/YR)

0

50

100

150

200

250

1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

BNEF NEO

2016 forecast

UK: Government

committed to

shutting coal by

2025


TOTAL COAL CAPACITY INCLUDING PLANS BY NON-UTILITY(PPS) ENTITIES

Note: Figures includes plants that were announced officially as well as reported in

media. Source: Bloomberg New Energy Finance

CUMULATIVE COAL CAPACITY BY

SUPPLY AREA (GW)

ADDITIONAL COAL CAPACITY PLANNED

BY EACH ENTITY (GW)

0

10

20

30

40

50

60

70

200

9

201

0

201

1

201

2

201

3

201

4

201

5

2016

201

7

201

8

201

9

202

0

2021

202

2

202

3

202

4

202

5

202

6

202

7

Okinawa

Hokuriku

Hokkaido

Shikoku

Chubu

Tohoku

Kyushu

Kansai

Chugoku

TEPCO

0123456789

10

Ho

kkaid

o

To

ho

ku

TE

PC

O

Ch

ub

u

Ho

kuri

ku

Kan

sa

i

Ch

ug

oku

Shik

oku

Kyush

u

PP

S

J-P

ow

er

UnderConstruction

Mediareports

In planning

In EIA


Source: Japan Ministry of Finance

JAPAN THERMAL COAL IMPORT VOLUME(MILLION TONNES)

0

25

50

75

100

125

1988 1993 1998 2003 2008 2013



0

50

100

150

200

250

300

350

400

450

2012 2015 2020 2025 2030 2035 20400

200

400

600

800

1,000

1,200

2012 2015 2020 2025 2030 2035 2040

Cumulative installed capacity (GW) Electricity generation (TWh)

JAPAN GENERATION MIX



We need an

energy miracle

Picture: Bloomberg

ENERGY MIRACLE

Bill Gates

February 2016

Unique analysis, tools and data for decision-makers

driving change in the energy system

[email protected]

MARKETS Renewable Energy

Energy Smart Technologies

Advanced Transport

Gas

Carbon and RECs

SERVICESAmericas Service

Asia Pacific Service

EMEA Service

Applied Research

Events and Workshops

Michael Liebreich

Twitter: @MLiebreich

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RENEWABLE ENERGY INSTITUTE · 9/9/2016 · Michael Liebreich REI Tokyo, 9 September 2016 @MLiebreich 5 0.1 1 10 100 1 10 100 1,000 10,000 100,000 1,000,000 2003 1976 1985 2008 Cumulative