RENEWABLES AND FOSSIL FUELS COST TRENDS

Transcription

1 10 June 2015 RENEWABLES AND FOSSIL FUELS COST TRENDS APERC Annual Conference, 9-10 June 2015, Hotel New Otani, Tokyo Ali Izadi

2 NEW INVESTMENT IN CLEAN ENERGY ($BN) 32% 17% $318bn -7% $294bn -9% 16% $310bn 0.5% $272bn $268bn 17% 36% $175bn $205bn $206bn 46% 46% $128bn $60bn $88bn Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D, and spending for digital energy and energy storage projects. Source: Bloomberg New Energy Finance 1

3 CLEAN ENERGY INVESTMENT BY REGION ($BN) Europe United States $119 $129 $98 $28 $38 $52 $72 $87 $89 $66 $66 $10 $17 $35 $41 $44 $35 $48 $65 $52 $48 $ China Asia ex-china $89 $3 $9 $11 $17 $26 $40 $43 $53 $67 $68 $15 $17 $20 $24 $26 $25 $36 $46 $46 $59 $ Source: Bloomberg New Energy Finance 2

4 CLEAN ENERGY INVESTMENT BY SECTOR ($BN) Wind Solar $156 $144 $150 $18 $29 $40 $62 $75 $81 $99 $84 $84 $89 $99 $12 $16 $22 $38 $61 $64 $103 $ Energy Smart Technologies (EST) Biofuels $13 $13 $14 $18 $20 $27 $33 $35 $35 $34 $ $4 $10 $28 $29 $19 $10 $10 $10 $7 $5 $ Source: Bloomberg New Energy Finance 3

5 WIND TURBINE PRICE INDEX MEAN PRICE BY DATE OF DELIVERY H H ( M/MW) H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H WTPI <95m rotor diameter >95m rotor diameter Source: Bloomberg New Energy Finance Note: Contract prices include turbine plus towers and transport to site, and they exclude VAT. Turbine contracts signed for delivery in China are excluded from this Index. 4

6 Historical price (USD/W) SOLAR PV EXPERIENCE CURVE Solar PV module experience curve: 24% cost reduction for every doubling of capacity Crystalline Si PV module m=24.3% ,000 10, ,000 1,000,000 10,000,000 Cumulative production (MW) Note: Prices are in real (2014) USD. Source: Bloomberg New Energy Finance, Maycock, Battery University, MIIT 5

7 Historical price (USD/W, USD/Wh) LITHIUM-ION EV BATTERY EXPERIENCE CURVE COMPARED WITH SOLAR PV EXPERIENCE CURVE Crystalline Si PV module H Li-ion EV battery pack m=24.3% m=21.6% ,000 10, ,000 1,000,000 10,000,000 Cumulative production (MW, MWh) Note: Prices are in real (2014) USD. Source: Bloomberg New Energy Finance, Maycock, Battery University, MIIT 6

8 AVERAGE RESIDENTIAL ELECTRICITY PRICE (USD/MWH) AGAINST AVERAGE ANNUAL OUTPUT PER WATT INSTALLED (KWH/KW/YEAR) 450 Germany 400 Denmark Hawaii 50GW Netherlands UK Slovakia Czech Republic Switzerland Romania Italy Slovenia Japan France Canada Southern China: Hainan New Jersey USA China Spain Portugal Greece South Korea Australia California Northern China: Qinghai Texas South Africa Brazil Mexico Chile 100GW Saudi Arabia LCOE 2014 LCOE 2020 Note: Bubble size represents approximate total residential rooftop PV market potential Source: Bloomberg New Energy Finance 7

9 AVERAGE COMMERCIAL ELECTRICITY PRICE (USD/MWH) AGAINST AVERAGE ANNUAL OUTPUT PER WATT INSTALLED (KWH/KW/YEAR) 350 Denmark Hawaii 50GW 300 Germany Italy Australia UK Czech Republic Switzerland Romania Spain Portugal Greece Mexico 100GW Southern China: Hainan Japan USA France China South Korea California South Africa Brazil Chile Saudi Arabia LCOE Canada Northern China: Qinghai LCOE Note: Bubble size represents approximate total commercial rooftop PV market potential Source: Bloomberg New Energy Finance 8

10 H LEVELISED COST OF ELECTRICITY ($/MWH) GLOBAL AND APAC PV - c-si Biomass - incineration Geothermal - flash plant Wind - onshore Small hydro Natural gas CCGT Coal fired APAC H Global H APAC H The cost of electricity generated from renewable energy sources in APAC remains noticeably higher than the global average. However, the gap between renewable and fossil-fuel LCOEs in Asia continues to decrease. Onshore wind power is more competitive than gas power in China and India due to deteriorating gas power economics. The cost of PV continues to fall. In China, the average PV LCOE is now in parity with gas LCOE at $100/MWh. Other countries will follow suit, with Japan having the biggest medium-term potential in PV LCOE reduction given lower financing costs. Coal-fired electricity remains the cheapest among all energy sources under review due to the increasing use of more efficient supercritical technologies mandated by policy and slumping coal prices. Indonesia, China and India manage the lowest coal LCOEs at below $40/MWh The average cost of gas power has increased across Asia as gas prices are rising under many countries gas pricing reforms. In China, gas LCOEs are pushed up to $100/MWh by lower capacity factors in addition to rising gas prices In contrast, the cost of PV continues to fall thanks to further reductions on equipment cost and improved capacity factors. The region s average PV LCOE currently stands at $150/MWh. As lower cost Chinese solar modules gain larger market shares in current high cost regions such as Japan and Southeast Asia, APAC s average PV LCOE could fall to as low as $120/MWh in the medium term 9

11 PUBLIC BENCHMARKS OF RESIDENTIAL PV SYSTEM CAPEX, $/W(DC) Q Q Q Q Q Q Q Q Germany California Japan Chinese multi module Australia (3kW) Source: Bloomberg New Energy Finance, Solarchoice, METI, BSW-Solar, California Solar Initiative 10

12 LEVELISED SUPPORT MECHANISMS FOR ONSHORE WIND BY MARKET VS NEW BUILD 2014 LEVELISED SUPPORT MECHANISMS (EUR/MWH) 2014 NEW BUILD (MW) Japan Philippines UK (ROC) UK (CfD) Canada - Ontario Italy India - Maharashtra Z1 Romania China - Shandong France Germany (EEG 2012) Germany (EEG 2014) Finland Turkey Ireland US - California China - Inner Mongolia West India - Maharashtra Z4 South Africa Spain (incentive freeze) Brazil US - Texas Feed-in tariff Electricity 57 REC ROC Production tax credit Premium Japan Philippines UK (ROC) UK (CfD) Canada - Ontario Italy India - Maharashtra Z1 Romania China - Shandong France Germany (EEG 2012) Germany (EEG 2014) Finland Turkey Ireland US - California China - Inner Mongolia India - Maharashtra Z4 South Africa Spain (incentive freeze) Brazil US - Texas , ,277 1,871 2,315 2,315 2,877 3,655 4,438 4,438 9,936 10,764 Source: Bloomberg New Energy Finance 11

13 WTI CRUDE OIL PRICES, ($2014 / BARREL) or? Note: WTI crude oil prices adjusted to inflation Source: Bloomberg New Energy Finance, World Bank 12

14 OIL PRICE CRASH V OR L? Abdalla El-Badri, Secretary General, OPEC If you don t invest in oil and gas, you will see more than $200 Bob Dudley CEO, BP You won t see $100 oil again for a long time Images: Bloomberg 13

15 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 ANY IMPACT FROM LOW CRUDE PRICES? PRIMARILY INDIRECTLY VIA LOWER GAS PRICES BRENT CRUDE, HISTORICAL AND THREE SCENARIOS (US$/BBL) FUEL COSTS FOR ELECTRICITY GENERATION IN JAPAN (JPY/kWh) Scenario 3 Scenario 2 Scenario Q Q4 Scenario Q4 Scenario Q4 Scenario 3 Coal LNG Oil Source: Bloomberg New Energy Finance. Note: Petroleum and coal tax is included in the calculation for the three fuels. Thermal efficiency is assumed at oil 38.4%, coal 40.5%, LNG 44.1%, which are the 10 utilities average in FY2013. Forex assumed at US$1=JPY118 in Q

16 GAS PRICES: HENRY HUB, NBP, BAFA, AND NE LNG, (US$/MM BTU) ~ $5 spread to Henry Hub > $8 spread to Henry hub ~ $5 spread to Henry Hub? NBP (UK) Henry Hub (US) BAFA (Germany border price for Russian gas) North East Asia LNG Note: Japan-Korea Marker is based on broker assessments of the spot price of un-contracted LNG cargoes delivered into the Northeast Asia market. Source: Bloomberg New Energy Finance, ICAP, Platts 15

17 Operational, under construction or post-fid Pre-FID LNG EXPORT CAPACITY BY COUNTRY/REGION (MMTPA) Other North America Russia East Africa West Africa Australia Other North America Russia West Africa North Africa Indonesia Malaysia Australia Qatar Demand Source: Bloomberg New Energy Finance 16

18 IMPACT OF LOWER OIL AND GAS PRICES ($BN/YR) Canada - $40 billion Norway - $53 billion Europe billion Russia & C. Asia - $218 billion??? Asia billion USA billion Latin America - $60 billion North Africa - $62 billion Sub-Saharan Africa - $89 billion Middle East - $357 billion Note: Calculation based on $5 drop in natural gas price and $50 drop in oil price; based on import/export volumes , excluding impact of changes in volumes since then Source: Bloomberg New Energy Finance; CIA Fact Book; IEA; EIA; World Bank; IMF 17

19 US CAPACITY BUILD, (GW) 50 Up to 23GW of US coal capacity coming offline in Coal Gas Oil Nuclear Hydro Renewables Other Notes: Bloomberg New Energy Finance base case build forecasts; historical build from EIA Form 860 Source: Bloomberg New Energy Finance 18

20 CHINA COAL CONSUMPTION, (MILLION TONS) 3,000 2,500 2,000 1,500 1, Source: Bloomberg New Energy Finance, Chinese Government 19

21 CLEAN VS FOSSIL ENERGY INVESTMENT ($BN) Capex of top 20 quoted oil and gas companies plus top 20 quoted coal companies 30% 50% 27% 12% -9% 35% 7% -7% -8% 12% -15% Q1 Q1 Expected Large hydro Other Solar Wind Expected Large hydro Other Solar Wind 100 Note: Nominal values. Renewable energy includes large hydro, investment made at financial close. Fossil fuel is gross investment on coal, gas and oil capacity. We assume capacity retirement of 3.3%/yr for coal, 4%/yr for gas and 2.5%/yr for coal in all countries where fossil capacity is net positive. We assume retiring capacity is replaced in countries where fossil fuel capacity additions are net positive and not where additions are zero or negative. We count fossil fuel investment in the year when capacity was commissioned (owing to a lower visibility of data). Q figures do not include corporate & governmnet R&D, or EST asset finance estimates which are compiled on an annual basis only Q1 Source: Bloomberg New Energy Finance 20

22 ASIA PACIFIC LEVELISED COST OF ELECTRICITY ($/MWh NOMINAL) Coal Gas Onshore wind Utility-scale PV Source: Bloomberg New Energy Finance 21

23 POWER GENERATION MIX BY REGION 2013 AND 2030 Asia Americas 20% 18% 4% 12% 2% 17% 5% Other renewables Wind Solar 24% 23% 5% 10% 8% 15% 6% Other renewables Wind Solar 72% 48% Nuclear Fossil fuels 63% 47% Nuclear Fossil fuels Europe Rest of world 22% 16% 11% 24% 7% 12% 24% Other renewables Wind Solar 20% 18% 3% 8% 6% 19% 6% Other renewables Wind Solar 48% 8% 28% Nuclear Fossil fuels 69% 49% Nuclear Fossil fuels Source: Bloomberg New Energy Finance 22

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25 MARKETS Renewable Energy Energy Smart Technologies Advanced Transport Gas Carbon and RECs SERVICES Americas Service Asia Pacific Service EMEA Service Applied Research Events and Workshops Unique analysis, tools and data for decision-makers driving change in the energy system Ali Izadi-Najafabadi