Wind Energy Briefing

BNEF WIND ENERGY BRIEFING

Yiyi Zhou

28 April 2016

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COMMUNITY SCALE WIND TURBINE

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Source: Bloomberg New Energy Finance


TWO TYPES OF UTILITY SCALE WIND ENERGY

Offshore wind farmOnshore wind farm

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CLEAN ENERGY INVESTMENT ROSE WHILE OIL PLUMMETEDGLOBAL CLEAN ENERGY INVESTMENT VS WTI CRUDE SPOT 2004 - 2015

$62bn

$88bn

$128bn

$175bn

$206bn $207bn

$274bn

$318bn

$297bn

$272bn

$316bn$329bn

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

$37.04

$140.00

$35.76

Source: Bloomberg New Energy FinanceNote: nominal dollars

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CLEAN ENERGY INVESTMENT BY SECTOR2004 – 2015 ($BN)

Wind Solar

Energy Smart Technologies (EST) Biofuels


Clean energy investment through 2015

$18$28

$39

$60$74 $78

$97$82 $80

$89$104$108

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

$9 $13 $19$36

$58 $60

$99

$150$141

$113

$139$157

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

$13 $13 $14 $18 $20 $28 $33 $36 $37 $36 $41 $41

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

$3 $9$27 $27

$17$8 $8 $8 $5 $4 $3 $1

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

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CHINA IS THE FIRST SINGLE $100BN CLEAN ENERGY MARKETANNUAL CLEAN ENERGY INVESTMENT IN FIVE COUNTRIES, 2004 – 2015

$0bn

$50bn

$100bn

$150bn

$0bn

$50bn

$100bn

$150bn

$0bn

$50bn

$100bn

$150bn

$0bn

$50bn

$100bn

$150bn

$0bn

$50bn

$100bn

$150bnGermany US Japan Spain China

’04 ’15 ’04 ’15 ’04 ’15 ’04 ’15 ’04 ’15

Source: Bloomberg New Energy FinanceNote: nominal dollars

9

Source: Bloomberg New Energy Finance Note: North America includes the US and Canada. Some historical installation data has been revised. A table showing how this

forecast compares to our last Quarterly Outlook can be found in the appendix. Click here for underlying data.

SHORT-TERM NEW WIND BUILD FORECASTANNUAL WIND INSTALLATIONS BY REGIONS, INCLUDING OFFSHORE WIND, 2010–20E (GW)

17.0 18.013.9 15.0

20.728.7

21.3 22.6 21.7 21.0 21.0

8.9 9.611.7 10.9

10.6

10.7

10.0 9.0 8.1 8.3 8.15.3

8.0 14.8

2.2

6.9

10.4

11.6 8.9 12.37.1 6.2

4.2

3.5

3.93.2

5.1

3.5 3.7

3.2

3.9

4.1

2.7

5.5

4.810.5

12.1

14.0

15.1 14.5

4.14.6

5.7

6.5 10.2

36.3

40.5

46.7

33.6

48.8

62.159.1 60.4

66.8

61.563.8

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Offshore

RoW

LatinAmerica

NorthAmerica

Europe

China

12% 15% -28% 45% 27% -5% 2% 11% -8% 4%

http://www.bnef.com/Downloads/insightnote/13735/excelfile/

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Source: Bloomberg New Energy Finance. Note: Nameplate capacity represents the companies' announced production capacity. Discounted capacity represents our best

estimation of actual available capacity. For details see our Wind Turbine Manufacturing Supply Model

ESTIMATED GLOBAL WIND TURBINE SUPPLY2011-14 (%, GW)

43.1% 44.3% 44.1% 45.6%

9% 9% 12% 13%3% 3%3%

3%15% 14% 13%13%

9% 9% 10%8%

21% 20% 19% 17%

2011 2012 2013 2014

Rest of world

Germany

US

Other Asia

India

China

63.6 62.8 61.3 74.1

Asia = 62%

Asia = 55%

https://www.bnef.com/Insight/12563

11

Source: Bloomberg New Energy Finance,

Lawrence Berkeley National Laboratory

(LBNL), ExTool study (Neij et al.2003), Vestas

annual reports.

ONSHORE WIND TURBINE PRICE(INFLATION CORRECTED TO 2014),1984-2016E (EUR M/MW)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Global (ex. China) (BNEF) Germany (ExTool) Denmark (Extool)

Vestas global The US (LBL) China (BNEF)

Rapid reductionPlateau

periodResumed

decline

15GW 115GW 469GWCumulative

installed

capacity

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H2 2015 LEVELISED COST OF ELECTRICITYCENTRAL AND REGIONAL SCENARIOS ($/MWH)

Source: Bloomberg New Energy FinanceNote: STEG = solar thermal electric generation

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CHINA ADDED 150GW OF GENERATION WITH NO NEW DEMANDCHINA POWER CAPACITY ADDITIONS AND YOY DEMAND GROWTH, 1995 – 2015

Source: NEA

0GW

50GW

100GW

150GW

1995 2000 2005 2010 2015

Thermal Hydro Nuclear Wind Solar

10%

15.6%

0.5%

Power generation capacity additions Year-on-year demand growth

14

0%

20%

40%

60%

80%

100%

0

1,752

3,504

5,256

7,008

8,760

2008 2009 2010 2011 2012 2013 2014 2015

General Thermal Hydro Nuclear Wind Solar

Source: China Electricity Council

ANNUAL UTILISATION HOURS AND CAPACITY FACTOR BY TECHNOLOGY, 2008-15

Annual utilisation hours Capacity factor

15

CHALLENGES FACING RENEWABLES IN CHINA

WIND GENERATION AND CURTAILMENT 2011-15 (TWH)

RENEWABLE ENERGY FUND DEFICIT 2016-20 ($BN)

74 103 139 160 185

14

21

1714

34

16%17%

11%

8%

15%

0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

2011 2012 2013 2014 2015

Wind generation Wind curtailment Wind curtailment ratio

Wind generation and

curtailment (TWh)Curtailment ratio

13.8 13.9 14.2 14.6 15.0

4.76.9

9.813.3

17.6

18.520.8

24.0

27.9

32.7

2016E 2017E 2018E 2019E 2020E

Deficit

Renewable fund

To support its feed-in tariff, China levies a surcharge on

electricity end-users, which is then collected into a

renewable energy fund before being redistributed. The

fund is currently insufficient to cover the subsidies and

the deficit is expected to grow in the next five years,

which will lead to more payment delays.

After seeing some improvement, wind curtailment

worsened in 2015. It will worsen further in the next five

years as the pace of wind project development

continues unabated and China’s power demand

weakens. However, curtailment is much worse in some

regions (north and west) than in others (south).

16

Note: Hours represent full load hours of each province in 2015. Capacity factor can be calculated as full load hours divided

by 8,760 hours. Percentage numbers in the brackets represent average curtailment rate of each province calculated as

[estimated curtailed electricity generation / (actual electricity generation + estimated curtailed electricity generation)]

Source: Bloomberg New Energy Finance,

China Electric Council (CEC).


CHINA WIND CURTAILMENT BY PROVINCE, 2015, (FULL LOAD HOURS, %)

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● High capital investment

● Complicated development and construction

process

● Limited types of wind farm developers and

financing model



KEY BARRIERS FOR COMMUNITY LEVEL INVESTOR TO ENTER WIND MARKET

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CORPORATE RENEWABLE ENERGY PROCUREMENT

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