Global Techno-Economic Trends for Solar PV and Relevance for MENA

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1 Global Techno-Economic Trends for Solar PV and Relevance for MENA 22 January 2016: American University of Beirut Peter Durante: Division Head New & Emerging Technology + Market Intelligence Team Saudi Aramco s Power Systems Renewables Department

2 Photovoltaics (PV): Scalability and versatility From the smallest to largest plants, and to every corner of the world & beyond 2

3 Global Installation Trends GWp Net Additions by Tech 250, , Marine 150, Geothermal Biomass & Waste Solar 100, Wind Hydro Gas 50, Coal Oil Nuclear , Data source: BNEF 2015, subscriber database

4 Global Installation Trends RE now the majority NB: Nuclear and Oil excluded as they were negative from % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Coal Gas Hydro Wind Solar Biomass & Waste Geothermal Marine 4 Source: BNEF 2015, subscriber database

5 Global Installation Trends Solar s share growing % of Total Renewable Energy Capacity Additions by Technology Data Source: BNEF % 90% 80% 70% 60% 50% 40% 30% Marine Geothermal Biomass & Waste Solar Wind Hydro 20% 10% 0% Data source: BNEF 2015, subscriber database

6 Solar Cell Price Decline in Perspective Importance of up to date market intelligence. -85% since % Cost reduction since

7 Evolution of Wind and PV LCOE 7

8 LCOE (Levelized Cost of Energy) Comparison Unsubsidized cost of energy comparison ($/MWh) DEWA PV PPA = $0.0584/kWh Jordan PV PPAs = $ /kWh Egyptian Wind PPA ~ $0.04/kWh 2015 Moroccan Wind PPA ~$0.031/kWh Source : Lazard's Levelized Cost of Energy Analysis Version 9.0 (2015) 8

9 Costs (and capacity) What was previously seen as overly optimistic now seems prescient or even conservative Installed capacity at end-2014 = +180GW Utility PV cost: PPA awarded for $0.0584/ kwh by DEWA in early 2015 for 2016/7 first power Other utility PPAs from $ globally

10 Module Learning Curve! Industrial goods follow learning curve! Doubling of cumulative capacity " X % cost reduction! PV cost reduction X > 20%! Price often used as proxy for cost! PV module cost reduction since 1990 > 90% since 1976 > 99%! Excessive margin period (price distortion) 2015 prices 10 Source: Graph from IEA, current price from variety of market sources and discussions Saudi Aramco: Company General Use

11 Predictions not all estimates are equal 11 Source: MIT Future of Solar study. 2015

12 PV & Wind leading growth in the energy sector Fossil Fuel Nuclear Other Renewables Wind Solar PV Technology 2012 GW 2040 GW Growth Solar PV 101 3, X Wind 282 2, X Other Renewables 1,235 2, X Coal 1,800 2, X Nat Gas 1,472 2, X Oil X Nuclear X 12 Source: New energy outlook 2015, Bloomberg New Energy Finance Note: Other Renewables = hydro, geothermal, biomass, solar thermal, marine and flexible capacity (storage, demand response, etc.) Note: Solar Thermal (CSP) remains less than 1% of installed capacity by 2040 Note: Energy from solar + wind in this forecast = 30% of global total

13 Predictions within top clean-tech analysts also vary (2020 annual installs 135GW or 80GW?) Data source: GTM 2020 Outlook Data source: BNEF 2015 New Energy Outlook 13

14 Forecasts of Global Installed PV Capacity 8,000 7,000 6,000 GW cummulative installation 5,000 4,000 3,000 2,000 BNEF Agora low Agora high IEA (hi-ren Scenario) UBSe 1, Year 14

15 Cost Reduction Drivers Modules - Efficiency - Cheaper material - Less material - Optimized production - (Disruptive technology) Inverter - Power Electronics - Mass production - Dematerialization Installation - Automation - Pre-assembly - Optimization Energy - Higher specific yield Financing - Bankability - Relative WACC BOS - Standardization - Optimization - Functional integration O&M - Automation - Remote sensing 15

16 Efficiency is on the Rise - Examples! Top thin film manufacturer. Top 10 manufacturer.! CdTe Multi-crystalline Silicon 15.6%** %* % %* 2011 * Best module, ** best production line (average Q at 14.6%) 16

17 Efficiency Drives Cost Down Beyond Module Increased module efficiency : " Less Material (to build module) " Less land " Less civil works " Less racking " Shorter cabling " Less work Effect of cell efficiency increase 100% 7% -11% 90% 16% 6% 80% 13% 8% 70% 7% Ground 12% 60% Mounting 12% Wiring 50% Inverter Efficiency increase largely justifies a higher cell cost. 40% 32% 26% Module assembly Cell conversion Example: Cell cost +25% à System cost -11% 30% 20% 8% 10% Wafer 10% 18% 15% 0% current (15%) next (18%) Source data: ITRPV and BNEF 17

18 Efficiency is on the Rise: Expansions have higher efficiency 2011 market 30GW * 50% " 15 GW 2015 market 50GW * 30% " 15 GW # (Entire) 20GW growth from advanced concepts! Source: GTM Research 18

19 Efficiency far from Limit Thermodynamic limit 95% Source: Royal Society Practical limits - Single junction (Shockley-Queisser limit) 32% - Multi junction limited only by technical feasibility 46% achieved!! Myth: Efficiency is topping out!! Myth cherry-picks period and technology Reality! focus on scale! Since 2010 focus on cost " efficiency improvements.! Technology shift 19 Source: NREL Saudi Aramco: Company General Use

20 Efficiency to move beyond 30% Effect of 30% commercial efficiency - All else equal reduces cost by 1/3 But, all other aspects will improve in parallel! 100% 90% -36% 80% 70% 60% 50% Ground Mounting Wiring Inverter 40% Module assembly 30% Cell conversion 20% 10% 8% 12% Wafer 0% current (15%) 2050 (30%) 20 Source: Agora

21 Inverter Learning Curve Similar price decline as for PV modules Increased power density (dematerialization) Road free to further >2/3 cost reduction 25kg/kW 10.5kg/kW 2.4kg/kW Source: Agora 21

22 Balance of System Cost is Declining BOS cost can be improved considerably. - Rail-less, automation, functional integration, pre-assembly, standardization, etc. 22 Source: Agora Saudi Aramco: Company General Use

23 Expect disruption Forecasts assume: - No technology breakthrough - Incremental improvements only Disruptive events likely in next 35 years - 3 RD Generation PV (i.e. Perovskites) - Roll-to-roll coating - Default building material (no more racking cost) - Cheap storage " >4 time larger PV market potential (learning curve " 1/3 cost reduction) - Fully automated installation - Fully automated cleaning - Commercial efficiencies beyond 30% - 23

24 Thank you 24

25 Key Sources: Bloomberg New Energy Finance: - New Energy Outlook 2015 Agora Energiewende Current and Future Cost of Solar Photovoltaics (2015) Lazard s Levelized Cost of Energy 9.0 (2015) MIT Energy Institute: Future of Solar Energy (2015) GTM Research Global PV Demand Outlook (2015) US National Renewable Energy Lab National Center for Photovoltaics IHS UBS Research 25