GLOBAL TRENDS IN CLEAN ENERGY INVESTMENT Michael Liebreich Chairman of the Advisory Board Bloomberg

GLOBAL TRENDS IN CLEAN ENERGY INVESTMENT Bloomberg EMEA Summit London, 12 October 2015

Michael Liebreich Chairman of the Advisory Board Twitter: @mliebreich

NEW INVESTMENT IN CLEAN ENERGY 2004–14 ($BN)

400

600

7%

350

35%

-7%

-8%

12%

500 300

12%

400 250

-9%

Expected 27%

Large hydro

200 300

Other

50%

Solar

150

200

30%

Wind

100

100 50

0

0

2004 2005 2006 2007 2008 2009 2010 2011 20122012 20132013 20142015 Q1 2004 2005 2006 2007 2008 2009 2010 2011 2014

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), as well as a BNEF estimate for large hydro investment.

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

1

NEW INVESTMENT IN CLEAN ENERGY Q1 2004-Q3 2015 ($BN)

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).

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

2

AMER NEW INVESTMENT IN CLEAN ENERGY BY SECTOR Q1 2004-Q3 2015 ($BN)

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).

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

3

APAC NEW INVESTMENT IN CLEAN ENERGY BY SECTOR Q1 2004-Q3 2015 ($BN)

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).

Liebreich â—?Michael 13 October 2015

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

4

EMEA NEW INVESTMENT IN CLEAN ENERGY BY SECTOR Q1 2004-Q3 2015 ($BN)

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).

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

5

SPAIN NEW INVESTMENT IN CLEAN ENERGY Q1 2004-Q2 2015 ($BN)

12.6

8.6

5.8

4.1

4.44.2

5.7

5.4

4.1

3.9 3.1

2.9 2.0

1.9

1.8

1.8

1.9 0.80.91.0

0.60.4 0.1 0.10.20.1

0.9 0.3

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

1.0

1.7 1.2 1.2 1.0 1.0 0.7 0.6

2.5 2.0 1.8 1.41.2 0.9

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

'15

Four quarter running average Note: Total values include estimates for undisclosed deals

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

6

ITALY NEW INVESTMENT IN CLEAN ENERGY Q1 2004-Q2 2015 ($BN)

9.3 8.4 7.7 7.1 6.8 5.7

5.4 4.8 4.0 3.7 3.63.6

2.8 0.9

0.9 0.8 0.8 0.4 0.2 0.30.40.4 0.2

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

1.6 1.6 1.3 0.9 0.81.0 0.60.50.40.6 0.20.2 0.20.30.20.20.20.2

2.3 1.9 1.8 1.6 1.2

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

'15

Four quarter running average Note: Total values include estimates for undisclosed deals

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

7

GERMANY NEW INVESTMENT IN CLEAN ENERGY Q1 2004-Q2 2015 ($BN) 15.0

13.0

11.6 10.7

11.0

8.9

9.0

7.5 7.0

5.5

5.5

5.1

5.0

4.0 3.0

1.8

4.1

4.0

2.6 2.1 1.5

3.1 2.7 2.4

2.8

3.1

4.1 3.7 3.4

8.9 7.67.7

7.1 6.9

6.6 6.4 5.8 5.55.4 4.8

5.1

4.54.64.4

5.0 4.2

4.3

4.3

2.7 2.1

1.92.0 1.5

-1.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

1.0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

'15

Four quarter running average Note: Total values include estimates for undisclosed deals

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

8

FRANCE NEW INVESTMENT IN CLEAN ENERGY Q1 2004-Q2 2015 ($BN)

1.9

2.1

1.41.6 1.31.2 1.2 0.8 1.0 1.0 0.9 0.9 0.9 0.7 0.70.60.7 0.7

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

1.01.2 0.80.80.6 0.5 0.20.10.10.10.3

2.1 1.9 1.9 1.8 1.6 1.5 1.1 1.0 1.4 1.41.1 0.5 0.9 0.9 0.8 0.6 0.5

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

'15

Four quarter running average Note: Total values include estimates for undisclosed deals

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

9

UK NEW INVESTMENT IN CLEAN ENERGY Q1 2004-Q2 2015 ($BN)

7.9

5.3 5.3 4.4 4.0 3.4 2.3 1.6 1.2 0.91.11.0 0.9

1.8 1.3 1.2

1.9 1.5 1.0 0.8 0.3

4.0 3.9 3.6

3.1

2.0

2.2

2.5

3.0 2.7

3.0 2.9

1.8

1.2 0.8 0.5

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

0.8 0.4 0.40.3 0.1

2.1

1.9

4.13.9

4.0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

'15

Four quarter running average Note: Total values include estimates for undisclosed deals

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

10

SUPPORT SCHEMES FOR LARGE-SCALE RENEWABLES PROJECTS IN THE EU

PAYMENT MECHANISM Feed-in tariff (FiT) Premium Green certificates

Source: Bloomberg New Energy Finance.

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

11

SUPPORT SCHEMES FOR LARGE-SCALE RENEWABLE ENERGY PROJECTS IN THE EU

PAYMENT MECHANISM Feed-in tariff (FiT) Premium Green certificates ALLOCATION Competitive auctions .

Auctions legislated but yet to be held or pilot auctions only

Source: Bloomberg New Energy Finance.

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

12

SUPPORT SCHEMES FOR LARGE-SCALE RENEWABLE ENERGY PROJECTS IN THE EU

PAYMENT MECHANISM Feed-in tariff (FiT)

Premium Green certificates ALLOCATION

Competitive auctions .

Auctions legislated but yet to be held or pilot auctions only SUBSIDY BUDGET



Capped



Frozen / no new support



 



Source: Bloomberg New Energy Finance.

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

13

PRINCIPAL STATE- AND NATIONAL-LEVEL POLICY MECHANISMS FOR RENEWABLES PROJECTS (IN FORCE OR PROPOSED)

Market-based mechanisms – eg, auctions, renewable energy certificate schemes, renewable portfolio standards Feed-in tariff/premiums Country switched to auction or tender programme since 2010

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

14

LEVELISED COST OF ELECTRICITY 2014 ($/MWH) Marine - wave Marine - tidal STEG - LFR STEG - parabolic trough STEG - tower & heliostat Wind - offshore PV - thin film PV - c-Si PV - c-Si tracking Biomass - anaerobic digestion Biomass - gasification Biomass - incineration Municipal solid waste Geothermal - binary plant Wind - onshore Small hydro Large hydro Landfill gas Geothermal - flash plant Natural gas CCGT Coal fired CHP Nuclear

1037 844

PV projects as low as $58/MWh Onshore wind as low as $37/MWh

0

100

200

300

Q2 2013 central Fossil technologies:

US

400 H1 2014 central

China

Europe

Australia

Note: LCOEs for coal and CCGTs in Europe and Australia assume a carbon price of $20/t. No carbon prices are assumed for China and the US.

Michael Liebreich

500

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance

@MLiebreich

15

THE ROAD TO PARIS

Image: UNFCCC

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

16

G7 JUNE 2015 – SCHLOSS ELMAU

Emissions must be cut 40-70% by mid-century and phased out entirely by 2100

Picture: Wikimedia

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

17

LAUDATO SI – DEMAND SIDE

There is an urgent need to develop sources of renewable energy.

Pope Francis Picture: Wikimedia

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

18

THE ECONOMIST COVER, “SHEIKHS VERSUS SHALE” DECEMBER 2014

Source: The Economist

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

19

WTI CRUDE OIL PRICES, 2000–2015 ($2015 / BARREL) 180 160 140 120 100

or

80 60 40

?

20 0 2000

2002

2004

2006

2008

2010

2012

Note: The Green line represents the WTI Spot price, and has been adjusted for inflation and is represented here in real 2015 US$

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

2014

Source: Bloomberg New Energy Finance, EIA, World Bank

@MLiebreich

20

OIL AND GAS PRICES: HENRY HUB, NBP, BAFA, AND NE LNG, 2004–15 (US$/MMBTU) 20 18

20

16

18 16

14

NBP (UK)

14

12

12

10

Henry Hub (US)

10

8 BAFA (Germany border price for Russian gas)

8 6 6

4

North East Asia LNG 4

2 2

0 2004

2005

2006 0 2007

2008

2009

2010

2011

2012

2013

2014

Note: Japan-Korea Marker is based on broker assessments of the spot price of un-contracted LNG cargoes delivered into the Northeast Asia market.

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

2015

Source: Bloomberg New Energy Finance, ICAP, Platts

@MLiebreich

21

AN AGE OF ENERGY PLENTY…

… AGE OF COMPETITION Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

22

US SHALE GAS PRODUCTION BY FIELD, 2000–2015 BCFD 50

45 40

40

Marcellus

35

Marcellus

Haynesville

Haynesville

30

Eagle Ford

25

Fayetteville Barnett

Eagle Ford Fayetteville

30

Barnett Woodford 20

Bakken Woodford

20

AntrimBakken

15

Utica Antrim Rest of US 'shale'

Utica

10

10

Gas rigs online

Other Shale

Oil rigs online

5

0 2000

0 2000

2002 2005

2004

2006

2008 2010

2010

2012

2014 2015

Source: Bloomberg New Energy Finance, EIA

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

23

AVERAGE LATERAL LENGTH (FEET)

7,000 6,000

+114% 5,000 4,000 3,000 2,000 1,000 0 2011

2012

2013

2014

http://www.slideshare.net/MarcellusDN/range-resources-company-presentation-july-28-2015

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

2015

Range Resources, 28 July 2015 , Bloomberg New Energy Finance

@MLiebreich

24

DRILLING COST/LATERAL LENGTH (INCLUDES VERTICAL) ($/FOOT)

1,400 1,200

-71% 1,000 800 600 400 200 0 2011

2012

2013

2014

http://www.slideshare.net/MarcellusDN/range-resources-company-presentation-july-28-2015

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

2015

Range Resources, 28 July 2015 , Bloomberg New Energy Finance

@MLiebreich

25

COMPLETION COST/LATERAL LENGTH ($/FOOT)

1,400

-42%

1,200 1,000 800 600 400 200 0 2011

2012

2013

2014

http://www.slideshare.net/MarcellusDN/range-resources-company-presentation-july-28-2015

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

2015 Range Resources, 28 July 2015 , Bloomberg New Energy Finance

@MLiebreich

26

WELL COST/LATERAL LENGTH ($/FOOT)

2,500

-57% 2,000

1,500

1,000

500

0 2011

2012

2013

2014

http://www.slideshare.net/MarcellusDN/range-resources-company-presentation-july-28-2015

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

2015 Range Resources, 28 July 2015 , Bloomberg New Energy Finance

@MLiebreich

27

NORTHEAST GAS PRODUCTION PER RIG (MCFD) 10,000

9,000 8,000

7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2007 Michael Liebreich

2008

2009

2010

2011

2012

2013

BNEF EMEA Summit, London, 12 October 2015

2014

2015

@MLiebreich

28

MAJOR GLOBAL SHALE FIELDS

Canada

Norway

Poland

UK China Algeria Libya

USA

Mexico

Brazil Australia

200 trillion cubic feet

South Africa Argentina

Note: Technically recoverable shale gas resources shown

Michael Liebreich

Source: EIA Assessment of World Shale Gas Resources, April 2011

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

29

LNG EXPORT CAPACITY BY COUNTRY/REGION

700 600 500 400 300 200 100

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

0

Note: For the underlying data to this chart, go to BI LNGGG<GO>

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Other North America Russia East Africa West Africa Australia Other North America Russia West Africa North Africa Indonesia Malaysia Australia Qatar Demand

Operational, under construction or post-FID

800

Pre-FID

(MMTPA)

Source: Bloomberg New Energy Finance

@MLiebreich

30

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

240

1.6

220

1.4

GDP 200

1.2

Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

31

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010 240

1.6

220

1.4

GDP 200

1.2

Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

32

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010

2011

240

1.6

220

1.4

GDP 200

1.2

Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

33

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010

2011

240

1.6

220

1.4

GDP 200

1.2

Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

34

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010

2011

240

1.6

220

1.4

GDP 200

1.2

Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

35

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010

2011

240

1.6

2012 220

1.4

GDP 200

1.2

Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

36

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010

2011

240

1.6

2012 220

1.4

GDP 200

1.2

Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

37

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010

2011

240

1.6

2012 220

2013

1.4

GDP 200

1.2

Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

38

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010

2011

240

1.6

2012 220

2013

1.4

GDP 200

1.2

2014 Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

39

AUSTRALIA NATIONAL ELECTRICITY MARKET ACTUAL VS FORECAST ELECTRICITY DEMAND FY2004–FY2025 TWh

AUD trillion

260

1.8

2010

2011

240

1.6

2012 220

2013

1.4

GDP 200

1.2

2014 Historical 180

1.0

160

0.8 FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24

Source: Australian Energy Market Operator, Reserve Bank of Australia, Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

40

GLOBAL POWER DEMAND GROWTH, 2012-40

DEMAND UNDER NEO WILL BE 15% LOWER IN 2040 THAN IEA NEW POLICIES SCENARIO Negative

Low

Medium

High

Source: Bloomberg New Energy Finance

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

41

ARA AND NEWCASTLE COAL PRICE 2007â&#x20AC;&#x201C;2015 (2014 US$/TONNE) 300 300

250 250

200 200

150

ARA

150

Newcastle 100 100

50 50

0 2007

0 2007 2008

2008 2009

2009 2010

2010 2011

2011 2012

2012 2013

2013 2014

Note: Prices have been adjusted for inflation according to YoY CPI Index from UK Office of National Statistics

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

2014 2015

Source: Bloomberg New Energy Finance, ONS

@MLiebreich

42

NEX CLEAN ENERGY INDEX 2013 â&#x20AC;&#x201C; 2015 YTD

200

150

S&P 500 Oil & Gas NEX

Stowe Global Coal

100

50

0 Jan 13

Apr 13

Jul 13

Oct 13

Jan 14

Apr 14

Jul 14

Oct 14

Jan 15

Apr 15

Jul 15

Note: Values as of 08 September 2015; Stowe and S&P 500 rebased to 100 on 01 Jan 2013

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Oct 15

Source: Bloomberg New Energy Finance

@MLiebreich

43

COAL BANKRUPTCIES

Investment Pte Image: various company sources

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

44

COAL

The coal business in the United States has kind of died, so weâ&#x20AC;&#x2122;re out of the coal business now.

Bill Koch Picture: Forbes

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

45

DEVELOPING WORLD ENERGY

The greatest crisis society confronts is not a future environmental crisis predicted by computer models but a human crisis today that is fully within our power to solve... with coal.

‘Energy Access For All With Green Coal’ campaign Picture: Peabody Energy

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

46

AFRICAN PROVERB

“The gazelle does not have to outrun the cheetah It has to outrun the slowest gazelle”

Clean energy

Coal

Oil Sands

Oil

Gas Image: Denis Donohue / Shutterstock

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

47

US LCOE ($/MWH NOMINAL)

200

Onshore wind 150 Utility-scale PV

100 Natural gas Coal

50

0 2015

2020

2025

2030

2035

2040

Note: Capacity factors â&#x20AC;&#x201C; onshore wind: 25-35%; solar PV: 10-15%

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance:

@MLiebreich

48

EUROPE LCOE ($/MWH NOMINAL)

200

Onshore wind 150 Utility-scale PV

100 Natural gas Coal

50

0 2015

2020

2025

2030

2035

2040

Note: Capacity factors â&#x20AC;&#x201C; onshore wind: 25-35%; solar PV: 10-15%

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance:

@MLiebreich

49

CHINA LCOE ($/MWH NOMINAL)

150

Onshore wind 100

Utility-scale PV

Natural gas 50

Coal

0 2015

2020

2025

2030

2035

2040

Note: Capacity factors â&#x20AC;&#x201C; onshore wind: 25-35%; solar PV: 10-15%

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance:

@MLiebreich

50

INDIA LCOE ($/MWH NOMINAL)

150

Onshore wind 100

Utility-scale PV

Natural gas 50

Coal

0 2015

2020

2025

2030

2035

2040

Note: Capacity factors â&#x20AC;&#x201C; onshore wind: 25-35%; solar PV: 10-15%

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Source: Bloomberg New Energy Finance:

@MLiebreich

51

TOTAL INVESTMENTS PER TECHNOLOGY, 2015-40 (US$ REAL) RENEWABLES TAKE 65% OF THE $12.2 TRILLION POWER INVESTMENT TO 2040

Source: Bloomberg New Energy Finance

Liebreich ●Michael 10/13/2015

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

52

RENEWABLES TO DOMINATE POWER SUPPLY GROWTH

Renewables are poised to seize the crucial top spot in global power supply growthâ&#x20AC;Ś Affordable renewables are set to dominate the emerging power systems of the world Fatih Birol Chief Economist, IEA Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Picture: Mikhail Evstafiev, Wikimedia

@MLiebreich

53

RENEWABLE ENERGY PROPORTION OF POWER GENERATION- INTERMITTENT ENERGY (WIND & SOLAR) , 2014 (%) France 3%

UK 9%

Germany 16%

US 4%

Japan 5%

Mexico 3%

China 5%

0 1-5% 6-10%

11-25% 26-50% 50+%

Brazil 3%

ME + Africa 0%

India 3%

Note: This only shows the combination of wind and solar energy generation. All numbers come from BNEFâ&#x20AC;&#x2122;s New Energy Outlook 2015

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Australia 8% Source: Bloomberg New Energy Finance

@MLiebreich

54

RENEWABLE ENERGY PROPORTION OF POWER GENERATION- INTERMITTENT ENERGY (WIND & SOLAR) , 2040 (%) France 30%

UK 63%

Germany 77%

US 24%

Japan 20%

Mexico 32%

China 37%

0 1-5% 6-10%

11-25% 26-50% 50+%

Brazil 34%

ME + Africa 26%

India 32%

Note: This only shows the combination of wind and solar energy generation. All numbers come from BNEFâ&#x20AC;&#x2122;s New Energy Outlook 2015

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Australia 52% Source: Bloomberg New Energy Finance

@MLiebreich

55

ENERGY SERVICE BATTLEFIELD

Residential tools BundledHEM telecoms, Smart energy and DRhome energy. Residential Integrated smart HIVE home hubs storage energy storage. homes heating Heating controls controls Solar PV and Home Load Energy supply energy monitoring automation disaggregation Bundled telecoms Smart and services and energy Home automation thermostats Registered Smart home energy supplier partnerships/investment

Nest acquisition Smart thermostats, electricity, ??? homeBundled automation entertainment and home automation IHD and smart thermostat HomeKit program Load disaggregation

Behavioural Home engagement Smart automation thermostats and â&#x20AC;&#x2DC;behaviouralâ&#x20AC;&#x2122; DR

HEM tools 1m connected Digital Life home connected customers homeSmart service Smart thermostats thermostats to and load BEMS for DR reduce churn disaggregation and energy

Smart lighting / Smart home Connected home platform home / IoT automation (AT&T)

Bundled telecoms, electricity supply beginning in 2016 DR and retail services

Bundled telecoms, Virtual mobile Smart electricityâ&#x20AC;&#x201C;and operator 80k gas thermostats customers

HEMS platform

Bundled insurance, telecoms and energy

efficiency Bundled electricity telecoms services Home energy management

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

56

E.ON SPLIT

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

57

ELECTRIC VEHICLE UPTAKE CARS AND TRUCKS IN USE WORLDWIDE, 2013 1.2 billion

ELECTRIC VEHICLES IN USE WORLDWIDE, 2014 0.75 million (to scale) Source: Bloomberg New Energy Finance, International Organization of Motor Vehicle Manufacturers

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

58

EV LITHIUM-ION BATTERY PACKS & CRYSTYALLINE SI PV MODULES: HISTORICAL COST REDUCTIONS

Crystalline Si PV Module price (USD/W)

100

10

m=26.3%

1

0 1

10

100 1,000 10,000 Cumulative crystalline PV module production (MW)

100,000

Note: Values from 2010-2014 are based on BNEFâ&#x20AC;&#x2122;s annual battery price index, *2015 based on H1 data. For more see here: https://www.bnef.com/Insight/10299. Cumulative production is based on total EVs sold and their respective battery pack size.

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

1,000,000

Bloomberg New Energy Finance

@MLiebreich

59

EV LITHIUM-ION BATTERY PACKS & CRYSTYALLINE SI PV MODULES: HISTORICAL COST REDUCTIONS Cumulative lithium-ion EV battery pack production (MWh) 1

10

100

1,000

10,000

100,000 100

10 10

m=26.3%

1

EV LI-ION BATTERYPACK PRICES HAVE FALLEN 60% SINCE 2010

m=15.5%

0 1

10

100 1,000 10,000 Cumulative crystalline PV module production (MW)

100,000

Note: Values from 2010-2014 are based on BNEFâ&#x20AC;&#x2122;s annual battery price index, *2015 based on H1 data. For more see here: https://www.bnef.com/Insight/10299. Cumulative production is based on total EVs sold and their respective battery pack size.

Michael Liebreich

1

Lithium-ion battery pack price (USD/Wh)

Crystalline Si PV Module price (USD/W)

100

BNEF EMEA Summit, London, 12 October 2015

0 1,000,000

Bloomberg New Energy Finance

@MLiebreich

60

BEIJING, CHINA

Photo: Reuters/NASA

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

61

DELHI, INDIA

Photo: JE Poirrier, Creative Commons

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

62

LOS ANGELES, USA

Photo: UCLA

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

63

PARIS, FRANCE

Photo: Dâ&#x201A;ŹNNI$/Creative Commons

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

64

LONDON, UK

Photo: HHRCA

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

65

VW DIESELGATE

Source: Flickriver

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

66

GAP BETWEEN EUROPEAN TEST AND REAL WORLD EMISSIONS, VARIOUS VEHICLES, 2001-2014 (%)

Source: International Council on Clean Transportation

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

67

URBAN TRANSPORT REVOLUTION

Images: Transport for London, Zipcar, Uber, Proterra

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

68

CHANGING UK ELECTRICITY MIX

POWER GENERATED BY SOURCE, 1998-2014 (TWH)

SHARE OF GENERATION, 2015 YTD (%)

450 400

1.9%

350 300

Other Renewables

250

23.8%

Nuclear 200

26.2%

Gas Oil

150

Coal

0.5% 20.1%

27.5%

100 50 0 1998 2000 2002 2004 2006 2008 2010 2012 2014 Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

69

UK HOUSEHOLD ELECTRICITY BILL 2014 (ÂŁ)

700 586

600

29 59

500

Minus ÂŁ30 rebates + >>> Other, 45

124

400

29 59

300

124

139

VAT @ 5%

200

139 235

100

Renewables Obligation, 36

Energy and climate change policies VAT @ 5% Supplier costs and margins

Small-scale Feed-inTariffs, 9

Energy and climate Network costs change policies

Supplier costs and margins Wholesale energy costs

0

235

Note: Real 2014 Sterling.

2014 Michael Liebreich

2014

Network costs Wholesale energy costs

Source: UK DECC Annual domestic energy bills 2013, Bloomberg New Energy Finance,

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

70

UK LCOE BY TECHNOLOTY H2 2015 ($/MWH)

5% PV - c-Si (U)

17% 13% Coal

Natural gas CCGT

36% 44%

19%

Wind - onshore

27% 0

50

100

150

Note: Natural gas CCGT and coal includes a carbon cost of $26/tonne Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

200

250

Source: Bloomberg New Energy Finance

@MLiebreich

71

UK ENERGY POLICY

Image: Wikimedia Commons

Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

@MLiebreich

72

IN SUMMARYâ&#x20AC;Ś

The old is dying and the new struggles to be born; in this interregnum a great variety of morbid symptoms appear.

Antonio Gramsci Co-Founder & Leader, Italian Communist Party Michael Liebreich

BNEF EMEA Summit, London, 12 October 2015

Picture: Wikimedia Commons

@MLiebreich

73

Thanks!

MARKETS Renewable Energy Energy Smart Technologies Advanced Transport Gas Carbon and RECs

SERVICES Americas Service Asia Pacific Service EMEA Service Applied Research Events and Workshops

Unique analysis, tools and data for decision-makers driving change in the energy system sales.bnef@bloomberg.net

Michael Liebreich Twitter: @mliebreich