GREEN MARKETS, SUSTAINABLE BUSINESS · Michael Liebreich Centre for Enterprise, Markets and Ethics, 2 March 2017 @MLiebreich 3 $62bn $88bn $128bn $175bn $205bn $207bn $276bn $317bn

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


$62bn

$88bn

$128bn

$175bn

$205bn $207bn

$276bn

$317bn

$291bn

$269bn

$315bn

$349bn

$287bn

0

100

200

300

400

500

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


$62bn

$88bn

$128bn

$175bn

$205bn $207bn

$276bn

$317bn

$291bn

$269bn

$315bn

$349bn

$287bn

0

100

200

300

400

500

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

same,

get more”

0

20

40

60

80

100

120

140

160

180

0

100

200

300

400

500

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

20GW

88GW

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

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

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

0

50

100

150

200

250

300

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

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


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


16

32

64

128

256

512

1,024

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

1985

2016

19992009

Cumulative capacity (MW)

0.1

1

10

100

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

1976

1985

2003

2012

Cumulative capacity (MW)

2016

2008

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

24.3%

SOLAR COSTS

HAVE FALLEN

>99% SINCE 1976

90% since 2004

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

($/MWH)

LEARNING RATE

19%


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

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



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.

$/kWh

10

100

1,000

10,000

10 100 1,000 10,000 100,000

2011

2012

2013

2014

2015

2010

2016

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

PARIS


PARIS

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)

30

35

40

45

50

55

60

65

1990 1995 2000 2005 2010 2015 2020 2025 2030

Historical emissions

Pre-COP21 pledges



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


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


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

0

100

200

300

400

500

600

700

800

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

0

100

200

300

400

500

600

700

800

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

[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

Thanks!

Documents

GREEN MARKETS, SUSTAINABLE BUSINESS · Michael Liebreich Centre for Enterprise, Markets and Ethics, 2 March 2017 @MLiebreich 3 $62bn $88bn $128bn $175bn $205bn $207bn $276bn $317bn