Supplier Opportunities Amidst the Global Energy Transformation Brandon Owens, GE Energy Consulting May 1, 2018 RENEWABLE ENERGY AND SMART GRID SUPPLIERS FORUM Emerging Market Opportunities for U.S. Firms Embassy Suites Downtown Denver 1420 Stout Street Denver, CO 80202
Energy Use and Human Development Global electricity use is expected to rise by 26% over the next decade. That s a positive development for the world because increases in per capita energy use are positively correlated with increases in human development. 2
TRENDS DISRUPTING THE POWER SECTOR FROM GENERATION TO T&D DECARBONIZATION DIGITIZATION DECENTRALIZATION ELECTRIFICATION in energy ecosystem By 2040, RENEWABLES will represent 30% of global net electricity or more? GROWING THE NUMBER of connected devices & smart sensors GROWING PENETRATION of distributed resources (renewable, storage, efficient devices) ELECTRIFICATION OF ENERGY USES, transport (EVs) and heating IMPACT IMPACT IMPACT IMPACT Generation is becoming difficult to forecast & variable Grid stability, Congestion Volatility on electricity markets Allowing decision making based on dynamic and nodal prices More efficient assets, greater revenue, environmental savings. End user becomes an active actor of the power system ( pro-sumer ) Growing complexity of distribution grids Growth of Electricity demand, and an acceleration of decentralization of the power sector May 17, 2018 3 Copyright General Electric Company.
GE IS REIMAGINING THE FUTURE OF ELECTRICITY The global power system is in the midst of a grand transformation The world is transitioning from an electricity system based primarily upon large, centralized generation, transmission and distribution (T&D) technologies, to one that also embraces distributed, digitally-enhanced, and low-carbon technologies. We are honored and humbled to be part of the emerging twenty-first century global power system. We believe that the future has just begun and the best is yet to come. May 17, 2018 4
Here Comes the Sun Global electric capacity orders over the next decade will be roughly equivalent orders over the last decade but the orders mix shifts dramatically. Solar PV captures the greatest share of orders Natural gas, wind, and hydropower continue to play a key role. Coal s role will be focused on providing baseload power in emerging economies. Energy storage will emerge as a key technology in the decade ahead. All technologies will continue to have a role to play in the decade ahead. May 17, 2018 5
Change in Electricity Generation by Source (2016-2026) China (3.1%) India (6.2%) USA (0.7%) Brazil (3.0%) Indonesia (5.7%) Vietnam (7.0%) Saudi Arabia (3.4%) Mexico (3.5%) Iran (3.5%) Turkey (3.7%) Between 2016 and 2026, Global electricity demand is expected to grow by 2.3 % per year Fuel Biomass Coal Natural Gas Geothermal Hydro Nuclear Oil Solar Wind ~31,000 TWh global generation by 2026 All sources increase except oil Growth shifts globally to the east and south away from traditional centers in North America and Europe Bangladesh & Neighbors (3.7%) Egypt (4.9%) -250 0 250 500 750 1000 1250 1500 1750 2000 6
Serving Global Customers with Local Expertise Difficult to supply equipment as a global company need to localize Commit to developing markets individually investment, time, local presence if possible May need to meet localization requirements employment, training Consider local partners distribution, JVs, technology Leverage favorable financing opportunities expert credit agencies if available Be part of the local solution...infrastructure provider, jobs growth, environmental solutions Creativity, patience, persistence Need to be present and committed to developing markets play the long game, not the quick score Copyright General Electric Company.
Power System Transformation Distributed power technologies creating the need for two-way power flows. New technologies such as batteries are providing opportunities throughout the T&D network. Transformative applications such as electric transportation platforms are creating new synergies. Baseload power options coal, gas and nuclear power continue to expand. A two-way, intelligent, hybrid electric power network is emerging. May 17, 2018 8
The Global Energy System Comes Full Circle 1893: Rudolf Diesel develops the Diesel engine. 1900-1950: GE. By 1922, 175 MW power plants were being constructed. 1994-2012: Jenbacher begins focusing on ultra-high efficiency engines. 2010-2020: Acceleration of Internet of Things (IoT) and the digitization of energy. Distributed Power Age Central Power Period Electricity Transformation 1880 1900 1920 1950 1970 1990 2010 2020 1882: Thomas Edison s Pearl Street Station distributed power plant began supplying power in New York City. 1900: Distributed power plants account for 100% of global electric capacity additions. 1950: Distributed power technologies account for less than 10% of global electric capacity additions. 2010: GE s aero-derivative portfolio includes turbines with power output from 13 to 100 MW 1950-1960s: In 1957, Jenbacher began producing gas engines. 2010: Distributed power technologies account for 1/3 of global electric capacity additions. 2010-2020: The emergence of distributed hybrid systems with digital controllers. 2020: Increasingly economic energy storage systems emerge.
1995 1997 1999 2001 2004 2006 2007 2010 2012 2014 2017 Technology improvements Fueling Distributed Energy Gains Cost Declines (2010-2017) $1,200 Lithium-Ion Battery Pack Price Global Average ($/kwh) 100% $10 Solar PV System Prices ($/W-DC) Intel Transistor Manufacturing Costs (2004=100) 2,000 100% $1,000 $800 $600 $400 $200 80% 60% 40% 20% $8 $6 $4 $2 1,500 1,000 500 80% 60% 40% 20% $0 2010 2011 2012 2013 2014 2015 2016 2017 0% $0-0% Price ($/kwh) % Reduction from 2010 U.S. Germany Chinese multi-module Transistor Cost Index, 90nm = 100 % Decline in Cost Since 2010 Source: United National Environment Programme and Bloomberg New Energy Finance. 2018. Global Trends in Renewable Energy Investment 2018. Frankfurt, Germany: Frankfurt School of Finance & Management. www.fs-unep-centre.org. May 17, 2018 10
Distributed Energy Poised to Rise Capacity Installations (GW) 200 180 160 140 120 100 80 60 40 20 0 Distributed Energy Installed Capacity 2017-2026 (GW) 20172019202120232025 Small & Medium Wind Microturbines Fuel Cells Distributed Energy Storage Natural Gas Gensets Microgrids Distributed Solar PV 39 Distributed Energy Additions 2018-2026 (GW) 17 12 12 Source: Rodriguez Labastida, Roberto, and Brett Feldman. 2017 Q4. Global DER Deployment Forecast Database. Boulder, CO: Navigant Consulting, Inc. May 17, 2018 11
The Transformation Creates a World of Opportunities The global power system is transforming it s happening everywhere but at a different pace. This creates new opportunities for supplies with offerings that are focused on digitization, decarbonization, decentralization, and electrification. Standards, platforms, approaches not fully baked yet opportunities exist to influence the direction. All of the above environment exists, legacy technologies are not going away, they are just being improved upon. Digitization is a must huge value in integrating and controlling technologies, everything is smart now. Localize to take advantage of developing world opportunities Creativity and flexibility will be the keys to success in this new era. Equipment suppliers must have the right technologies, platforms, and people to successfully lead this transition. 12