Energy Transition The Role of Energy Statistics and Indicators · 5 Key statistics and indicators that drive Power Transition a. Demand & Supply b. Price Divergence c. Policy

Energy Transition – The Role of Energy Statistics and Indicators

Copyright © 2018 by S&P Global All rights reserved.

Amy GascaManager, Americas Power PricingIV Semana de la Energia – Lima, PeruNovember 11-14, 2019

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The energy transition has become an increasingly important driver of energy and commodity markets. The

power generation industry is clearly going through a profound transformation across the globe


5 Key statistics and indicators that drive Power Transition

a. Demand & Supply

b. Price Divergence

c. Policy

d. Technology & Energy Efficiencies

e. Consumers

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Demand: U.S. load grew up in 2018; YTD 2019 growth slower

-0.1%

0.7%

-0.3%

-3%

-2%

-1%

0%

1%

2%

3%

Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19

Y/Y Weather Adj. Monthly Load Growth 2017 Avg 2018 Avg 2019 Avg YTD

Source: Platts Analytics (Monthly Load Report)


Recent results have confirmed this slowdown in load growth; trade issues and strong dollar as macro causes


AEP: “..Industrial sales decreased by 2.7% for the

quarter, which brought the year-to-date comparison

down to 1.5% below last year. Sales to the

industrial class have been slowing in recent

quarters as the impact of a strong dollar and more

restrictive trade policy have challenged export

manufacturers within AEP's footprint…”

AEP: “…commercial sales decreased by 0.9% for

the quarter and were down 1.3% year-to-date. For

both comparisons, commercial sales were down

across all operating companies. The tightening

labor market and rising interest rates have limited

this sector's growth in recent quarters…”Ameren: “…Kilowatt-hour sales to low margin

Missouri industrial customers decreased 2.5% after

excluding the effects of our energy efficiency

plan…”

Southern Co.: “… weather-adjusted retail electric

sales were down just over 1% year-over-year due

to a combination of factors, including continued

energy efficiency and technology advances across

all customer segments and continued weakness in

industrial sales…”

“…Industrial sales, particularly primary metals,

chemicals and stone, clay and glass were down

due to global trade concerns and a strong dollar's

impact on trade as well as changes in production

levels…”


Source: IRENA, Platts Analytics, Market Intelligence World Electric Power Plant database. 2019 is a preliminary estimate, 2020 is forecast.

To

tal G

W a

dd

ed

glo

ba

lly

0

20

40

60

80

100

120

140

160

180

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Renewables

solar wind hydro

Supply Mix: Power transition: renewables additions slowing, but outpace fossil fuel new builds

0

20

40

60

80

100

120

140

160

180

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Fossil fuel and nuclear

nuclear coal gas oil


S&P Platts Analytics is forecasting that renewables generation growth will exceed load growth in US, but about half of global annual power demand growth

Source: Platts Analytics World Energy Demand, Platts Analytics North American Power Service. DG solar not included in US generation view.

ave

rag

e G

W/y

ea

r

Global average annual growthUS average annual growth

~90

GW/

year

0

10

20

30

40

50

60

70

Average 2020-2025

solar wind hydro Load growth

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Average 2020-2025

0.1% p.a.

2% p.a.


Price Divergence === Lower Consumer Prices === Clean Energy

• Plunging Prices means development of New Renewable Energy Is Cheaper Than Running Existing Coal and Fossil Fuels

• 42% of global coal capacity is currently unprofitable

• Across USA - Costs changes from 2009:

– Solar photovoltaic (PV) lower by 88%

– Wind costs lower by 69%

– Coal decreased just less than 9%

– Nuclear increased by 23%

Even without subsidies, renewable energy costs are now lower than the marginal cost of conventional energy technologies.


0

50

100

150

200

250

2010 2013 2016 2019 2022 2025 2028

US

Half of the

coal

dispatch

lost in

less than

10 years!

ave

rag

e G

W g

en

era

tio

n

Lower gas$

and/or policy


More Renewables; Coal and nuclear generation continue to retire

Source: Platts Analytics (September 2019 Short Term Forecast)

-6

-4

-2

0

2

4

6

8GW

Next 12 months

Wind

Storage

Solar

Other

Oil

Nuclear

Hydro

Gas

Coal

-6

-4

-2

0

2

4

6

8GW

Last 12 months

Wind

Storage

Solar

Other

Oil

Nuclear

Hydro

Gas

Coal


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Policy Across North America

Source: Platts Megawatt Daily Publication (October 2019)


Major transformation taking place in global power, with a number of key issues driven by Policy such as:

• Renewables growth impacted by policy uncertainties and step-down of incentives, but solid pipeline of projects in US

o Declining PV module prices continue to push solar PPAs to record low levels

o US will see strong onshore wind additions in the short-term. Growing interest in offshore wind, but uncertain timing. Limits to onshore developments emerging in more mature markets (e.g. Germany).

o Renewables output growth exceeds load growth in US, but below power demand growth globally

• Nuclear: new builds and restarts underpin nuclear generation in Asia, but retirements looming in US/Europe, absent further policy action

• Gas to benefit from large coal retirements, but with lingering questions:

o What will trigger further coal retirements? Policy (climate change/air quality concerns) or market drivers?

o Emerging cheap(er) alternatives

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Technology & Energy Efficiencies

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Shift of power generation sources

• Coal to natural gas (short term)

• Aggressive renewable growth

• Natural gas to sustainable hydrogen (long

term)

Efficient energy management

• Electricity storage for fluctuating

renewables- batteries

• Smart grid technology for demand

response

Improved energy efficiency

• Efficient use of energy

• Power-to-X to decarbonize other Sectors

such as transportation, Industry, etc.)


Consumers

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Economics/ Lower Prices

Votes/ Policies Consumer Drive

Shareholders Clean Energy

Corporations more than doubled commitment to renewable energy in 2018 and expected to increase in 2020-2025


Thank you!

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Amy GascaEditing Manager Power PricingHouston, [email protected]

mailto:[email protected]

Documents

Energy Transition The Role of Energy Statistics and Indicators · 5 Key statistics and indicators that drive Power Transition a. Demand & Supply b. Price Divergence c. Policy