GREEN MARKETS, SUSTAINABLE BUSINESS · Michael Liebreich Centre for Enterprise, Markets and Ethics,...

GREEN MARKETS, SUSTAINABLE BUSINESS

Michael Liebreich

Chairman of the Advisory Board

Twitter: @mliebreich

Centre for Enterprise, Markets and

Ethics, 2 March 2017

1Michael Liebreich @MLiebreichCentre for Enterprise, Markets and Ethics, 2 March 2017

THE LEGACY ENERGY SYSTEM

THE EMERGING ENERGY SYSTEM

$128bn

$175bn

$205bn $207bn

$276bn

$317bn

$291bn

$269bn

$315bn

$349bn

$287bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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

GLOBAL CLEAN ENERGY INVESTMENT & CAPACITY ADDITIONS

Forecast

$128bn

$175bn

$205bn $207bn

$276bn

$317bn

$291bn

$269bn

$315bn

$349bn

$287bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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

“Spend the

get more”

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

160GW“Spend more,

get more”

Forecast

GLOBAL CLEAN ENERGY INVESTMENT & CAPACITY ADDITIONS

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

RENEWABLE ENERGY INVESTMENT BY REGION 2004-2015 ($BN)

5.611.9

29.133.2

49.140.6

35.337.0

'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

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

AMER (excl. US & Brazil)

24.833.3

81.882.7

113.4122.9

60.062.0

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

Europe

7.39.010.012.413.613.919.3

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

38.839.6

47.461.7

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

2.73.04.96.75.64.38.8

12.87.86.68.3

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

India0.60.81.11.82.31.6

4.13.0

10.29.37.912.5

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

Middle East & Africa

Source: UNEP, Bloomberg New Energy Finance

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

Renewables ex large hydro

Fossil fuel

Nuclear

Large hydro

2008 2009 2010 2011 2012 2013 2014 2015

Note: Includes hydro Source: BP Statistical Review of

Energy, Bloomberg New Energy Finance

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

Canada

Brazil

Australia

16%India

S. Africa

0% Lowest

50% Mid

100% Highest

61%67%

Canada

89%79%

Brazil

South Africa

17% 18%

10%17%

Australia

10%15%

16%25%

Germany16%

69%Denmark

12%17%

France

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

US$ 3.0 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Enel Green Power

February 2016

US$ 4.8 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Morocco

Enel Green Power

January 2016

US$ 3.0 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Coahuila, Mexico

Enel Green Power

March 2016

US$ 3.6 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Morocco

Enel Green Power

January 2016

US$ 3.0 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Masdar Consortium

May 2016

US$ 2.99 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Morocco

Enel Green Power

January 2016

US$ 3.0 c/kWh

Location:

Bidder:

Signed:

Construction:

Price:

Solarpack Corporation

August 2016

US$ 2.91 c/kWh

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

19992009

Cumulative capacity (MW)

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

Cumulative capacity (MW)

WIND COSTS

HAVE FALLEN

60% SINCE 2004

WIND AND SOLAR EXPERIENCE CURVES

Note: Prices are in real (2015) USD. ‘Current price’ is $0.4/W

Source: Bloomberg New Energy Finance, Maycock

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%. *Data is for Northern

Europe.

Source: Bloomberg New Energy Finance

LEARNING RATE

SOLAR COSTS

HAVE FALLEN

>99% SINCE 1976

90% since 2004

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

($/MWH)

LEARNING RATE

CAPACITY FACTOR IMPROVEMENTS

LONGER BLADESLOW-WIND TURBINES

AT HIGH-WIND SITES

SITE-OPTIMISED POWER CURVES HIGHER TOWERS

Source: Siemens, Nordex, GE, Vestas

RENEWABLE ENERGY - THE MARCH OF THE PRICE SIGNAL

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

portfolio standards

Feed-in tariff/premiums

Countries with auction or tender programmes

portfolio standards

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

portfolio standards

ELECTRIC VEHICLES

Source: Bloomberg New Energy Finance, International Organization of Motor Vehicle Manufacturers

CARS AND TRUCKS IN USE

WORLDWIDE, 2016

1.3 billion

ELECTRIC VEHICLES IN USE

WORLDWIDE, END 2016

1.8 million (to scale)

BNEF BATTERY PRICE LEARNING RATE2013-2016 ($ PER KWH)

Notes: This includes cells plus pack prices. For years where there were two surveys,

the data in this chart is an average for the year. Prices are nominal.

10,000

10 100 1,000 10,000 100,000

Cumulative production (MWh)

EV LITHIUM-ION

BATTERY PRICES

HAVE FALLEN

73% since 2010

LEARNING RATE 19%

Tesla Model 3

BMW i3

VW e-Golf

Chevy Bolt

Renault-Nissan

Images: Tesla, BMW, VW, GM, Nissan

EV MASS MARKET / SECOND CARS$30,000 + 200 MILES RANGE

Picture: UNFCCC

The Paris Agreement is a monumental

triumph for people and our planet.

Ban Ki Moon, former UN SG

This is a turning point. This gives us the best

possible shot to save the one planet we got.

Barack Obama, US President

Today's agreement signals nothing less

than a renaissance for humankind.

Mr. Mogens Lykketoft, President, UN General Assembly

Together we have opened the door to a

sustainable and climate-safe future for all.

Christiana Figueres, former head, UNFCCC

It is a sign of hope. It can have a

positive influence on the living

conditions of billions of people.

Angela Merkel, Chancellor of Germany

The Paris Agreement has been an

unprecedented historic success.

Miguel Arias Cañete, European Commissioner for

Climate Action and Energy

Source: UNFCCC, UNEP, Climate Action Tracker, Bloomberg New Energy Finance

GLOBAL GREENHOUSE GAS EMISSIONS(GTCO2)

1990 1995 2000 2005 2010 2015 2020 2025 2030

Historical emissions

Pre-COP21 pledges

1990 1995 2000 2005 2010 2015 2020 2025 2030

Historical emissions

INDC trajectory

Pre-COP21 pledges

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

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

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

BNEF 2040

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

BNEF 2040

IEA 450ppm

Source: Bloomberg New Energy Finance, IEA

10,000

Renewable energy

Natural gas

OilCoal

Nuclear

BNEF 2040

IEA 450ppm

Illustrative

Paris scenario

before 2100

includes bioenergy and hydro. Paris illustrative scenario assumes some carbon capture.

CLEAN ENERGY CAPITAL REQUIREMENT TO 2030($BN)

Note: Global Futures figures from 2008 restated to reflect current investment

calculation methodology

Source: New Energy Finance Global Futures 2008,

Bloomberg New Energy Finance

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

CLEAN ENERGY CAPITAL REQUIREMENT TO 2030($BN)

Note: Global Futures figures from 2008 restated to reflect current investment

calculation methodology

Source: New Energy Finance Global Futures 2008,

Bloomberg New Energy Finance

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Average

2010 - 2016

$300 billion

WHY IS ALL THIS SO HARD?

1. Challenge of information (technology, engineering, human behaviour, economics etc)

2. Challenge of strategy(decision-making in uncertainty, poverty reduction vs growth)

3. Challenge of leadership (political, business, civic society)

4. Challenge of implementation (unintended consequences, agenda creep)

5. Challenge of inertia (social, physical, financial, incumbency)

Unique analysis, tools and data for decision-makers

driving change in the energy system

sales.bnef@bloomberg.net

MARKETS Renewable Energy

Energy Smart Technologies

Advanced Transport

Carbon and RECs

SERVICESAmericas Service

Asia Pacific Service

EMEA Service

Applied Research

Events and Workshops

Michael Liebreich

Twitter: @MLiebreich

Thanks!

GREEN MARKETS, SUSTAINABLE BUSINESS · Michael Liebreich Centre for Enterprise, Markets and Ethics,...

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