Trends in renewable energy and storage Energy and Mines World Congress, 2017 Rachel Jiang November 27, 2017
Key trends Solar, wind may make up one-third of global electricity generation by 2040 and a growing share of generation capacity will be customer-sited Cost of wind, solar, and batteries are expected to fall further New renewables are becoming competitive against even existing fossil units in some countries 1 November 27, 2017
Key trends Solar, wind may make up one-third of global electricity generation by 2040 and a growing share of generation capacity will be customer-sited Cost of wind, solar, and batteries are expected to fall further New renewables are becoming competitive against even existing fossil units in some countries 2 November 27, 2017
Solar and wind may provide 34% of global electricity generation by 2040 TWh 40,000 100% 35,000 90% 80% 30,000 70% 25,000 60% 20,000 50% 15,000 40% 30% 10,000 20% 5,000 10% 0 0% 2012 2016 2020 2025 2030 2035 2040 Other Solar thermal Small-scale PV Utility-scale PV Offshore wind Onshore wind Biomass Geothermal Hydro Nuclear Oil Gas Coal Renewables share Source: Bloomberg New Energy Finance Note: Renewable share includes biomass, geothermal, and hydropower, in addition to solar and wind. 3 November 27, 2017
Solar and wind may provide half of installed capacity by 2040 GW 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2012 2016 2020 2025 2030 2035 2040 Other flexible capacity Demand response Utility-scale batteries Small-scale batteries Other Solar thermal Small-scale PV Utility-scale PV Offshore wind Onshore wind Biomass Geothermal Hydro Nuclear Oil Gas Coal Source: Bloomberg New Energy Finance 4 November 27, 2017
Wind, solar growth trend expected to hold across many large countries Wind, solar share of generation (%) 70% 60% 50% 40% 30% 20% 10% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Canada Chile USA Brazil Australia China India Germany Source: Bloomberg New Energy Finance 5 November 27, 2017
The future of electricity is decentralized, especially in Australia Decentralization ratio = distributed resources / total capacity installed Decentralization ratio (%) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Canada Chile USA Brazil Australia China India Germany Source: Bloomberg New Energy Finance. Note: Decentralization ratio is the sum of behind-the-meter solar, behind-the-meter batteries, and demand response capacity, divided by total installed capacity. 6 November 27, 2017
Key trends Solar, wind may make up one-third of global electricity generation by 2040 and a growing share of generation capacity will be customer-sited Cost of wind, solar, and batteries are expected to fall further New renewables are becoming competitive against even existing fossil units in some countries 7 November 27, 2017
Solar technology is getting cheaper, faster Solar PV module prices 2016 ($/W) 100 1976 10 1 0.1 1985 1 10 100 1,000 10,000 100,000 1,000,000 Cumulative capacity historic prices (Maycock) 2003 2008 NEO 2017 28% learning rate NEO 2016 26.5% learning rate Chinese c-si module prices (BNEF) 2015 2017 (est) Source: Maycock, Bloomberg New Energy Finance Note: Dollars are U.S. dollars. 8 November 27, 2017
Onshore wind is getting cheaper Wind turbine prices $million/mw (nominal) 2.50 2.25 2.00 1.75 Global 1.50 1.25 1.00 0.75 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0.99 Source: Bloomberg New Energy Finance. Note: Dollars are U.S. dollars. 9 November 27, 2017
World record unsubsidized clean energy prices, 2017 Solar PV Onshore wind Offshore wind Country: Bidder: Solar Signed: 2017 United Arab Emirates Marubeni and Jinko Construction: 2019 Price: US$ 2.42 cents/kwh Country: Morocco Bidder: Enel Green Power Signed: 2016 Construction: 2018 Price: US$ 3.0 cents/kwh Country: Germany Bidder: DONG/EnBW Signed: 2016 Construction: 2024 Price: US$ 4.9 cents/kwh Source: Bloomberg New Energy Finance; Images Siemens, Wikimedia Commons, Masdar. 10 November 27, 2017
Lithium-ion battery pack prices forecasted to shrink to to $73/kWh by 2030 Lithium-ion battery pack price forecast Dollars per kilowatt-hour (real 2017$) $1,000 $750 BNEF observed values: annual lithium-ion battery price index 2010-16. $500 $250 2025 average lithium-ion battery price: $109/kWh 2030 average lithium-ion battery price: $73/kWh BNEF observed values 19% learning rate $0 2010 15 20 25 30 Source: Bloomberg New Energy Finance, survey participants. Note: This represents pack prices (ie, cells plus packs). 11 November 27, 2017
Cheaper batteries will drive greater deployment and metals demand Cobalt market (metric ton/year) 450,000 400,000 350,000 300,000 Demand Other Demand Storage Demand CE 250,000 200,000 150,000 100,000 Demand E-Bus Demand EV Historic supply 50,000 Future supply 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Bloomberg New Energy Finance, press releases, Avicenne, USGS, IDTechEX, Wealthdaily Note: CE refers to consumer electronics, E-bus refers to electric buses 12 November 27, 2017
Key trends Solar, wind may make up one-third of global electricity generation by 2040 and a growing share of generation capacity will be customer-sited Cost of wind, solar, and batteries are expected to fall further New renewables are becoming competitive against even existing fossil units in some countries 13 November 27, 2017
For grid-connected mines, a fall in fuel prices boosts opportunity cost of using on- and off-grid renewables Power price; marginal cost, US$/MWh 140 120 100 80 60 40 140 120 100 80 60 40 20 0 PJM West Hub Onpeak Power price SRMC assuming Tetco M3 Gas price SRMC assuming Big Sandy (Central App) Coal price 1 20 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Bloomberg New Energy Finance 14 November 27, 2017 Note: SRMC stands for short-run marginal cost.
Wholesale markets: The merit order effect PJM, April 2016: Hypothetical merit order at US$6/MMBtu Henry Hub Marginal cost, US$/MWh $200 $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 $70/MWh - 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 Capacity, GW Sources: Bloomberg New Energy Finance, EIA Notes: Gas CC is combined cycle; gas OC is open cycle 15 November 27, 2017 Coal Gas CC Gas OC Coal Oil Gas OC Gas CC Biogas Biomass Large hydro Small hydro Nuclear Solar PV utility Solar PV rooftop Wind onshore
Wholesale markets: The merit order effect PJM, April 2016: Hypothetical merit order at US$1.9/MMBtu Henry Hub Marginal cost, US$/MWh $200 $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 $30/MWh Gas CC - 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 Capacity, GW Coal Gas OC Coal Oil Gas OC Gas CC Biogas Biomass Large hydro Small hydro Nuclear Solar PV utility Solar PV rooftop Wind onshore Sources: Bloomberg New Energy Finance, EIA Notes: Gas CC is combined cycle; gas OC is open cycle 16 November 27, 2017
Analogy: Off-grid telecom towers Cost of electricity ($/kwh) 0.90 0.80 0.70 0.60 0.50 0.40 0.30 Diesel Generator Battery+diesel hybrid Solar+battery+diesel hybrid 0.20 0.10 0.00 Nigeria Kenya India Source: Bloomberg New Energy Finance. Note: Dollars are U.S. dollars. Equipment size assumptions - diesel generator of 8kW, lithium-ion battery of 16.32kWh, PV of 5kW (DC). CAPEX assumptions - diesel generator of $500/kW, PV of $872/kW (India) and $932/kW (Nigeria and Kenya), lithium-ion battery of $313/kWh (India) and $413/kWh (Nigeria and Kenya), hybrid system $6,000. Battery hybrid is diesel generator with lithium-ion battery. Solar hybrid is PV, diesel generator, and lithium-ion battery. 17 November 27, 2017
Gas and coal price expectations Coal price outlook $/t (2016 real) 80 70 60 50 40 30 20 10 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Gas price outlook $/MMBtu (2016 real) 10 9 8 7 6 5 4 3 2 1 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 $/MMBtu 100 (2016 real) Europe China India Australia USA Canada 18 November 27, 2017
Cost of new renewable build v. cost of operating existing fossil plants Canada $/MWh (real 2016) 90 USA $/MWh (real 2016) 120 80 70 Utility-scale PV 100 Utility-scale PV New solar undercuts existing gas in 2027 60 50 40 Onshore wind Gas CCGT 80 60 Gas CCGT 30 40 20 10 Coal New wind, solar undercut existing coal, gas, by 2030 20 Coal Onshore wind 0 2017 2020 2025 2030 2035 2040 0 2017 2020 2025 2030 2035 2040 Source: Bloomberg New Energy Finance. Note: Dollars are U.S. dollars. 19 November 27, 2017
Cost of new renewable build v. cost of operating existing fossil plants Chile Australia $/MWh (real 2016) 80 70 60 50 40 Onshore wind Gas CCGT $/MWh (real 2016) 100 Utility-scale PV 90 80 70 60 50 Solar, wind LCOEs do not undercut operating costs for existing coal by 2040 Gas CCGT Onshore wind 30 20 10 0 Utility-scale PV Coal Solar LCOE falls 71% but only undercuts existing coal by 2040 2017 2020 2025 2030 2035 2040 40 30 20 10 0 Coal 2017 2020 2025 2030 2035 2040 Source: Bloomberg New Energy Finance. Note: Dollars are U.S. dollars. 20 November 27, 2017
Corporate clean energy procurement has taken off Global corporate PPA capacity (MW) by estimated signing year Wind Geothermal Small hydro Solar Biomass & waste Fuel cells Source: BNEF 21 November 27, 2017
Key trends Solar, wind may make up one-third of global electricity generation by 2040 and a growing share of generation capacity will be customer-sited Cost of wind, solar, and batteries are expected to fall further New renewables are becoming competitive against even existing fossil units in some countries Thank you 22 November 27, 2017
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