clean energy investment outlook - unescap 1-3 justin wu.pdf · clean energy investment outlook...
TRANSCRIPT
CLEAN ENERGY INVESTMENT OUTLOOK
Justin Wu
17 December 2015
The 3rd Northeast Asia Energy
Security Forum – Seoul, Korea
1
KEY DISCUSSION POINTS
1) Bloomberg New Energy Finance introduction
2) Clean energy investment snapshot
3) What drives clean energy investment?
4) Coal and gas in Asia
2
LEVERAGING THE POWER OF BLOOMBERG
Since 1981
Over 15,000 employees
in 192 locations
Generating 5,000 news stories per
day from 150 bureaus
320,000 global clients
Since 2004
200 employees in 15 locations
on six continents
Generating over 700 Insight
reports annually
2,500 global clients
3
200 EXPERTS ACROSS SIX CONTINENTS
San
Francisco Washington DC
Sao Paulo
Cape Town Sydney
Singapore
Zurich
Munich London
New Delhi Hong
Kong
Beijing New York
North America
40
South America
5
Europe 90
Africa 30
Asia Pacific
35
Tokyo
4
The right tools and analysis to fit your role
Strategy &
Business
Development
Executive
Trader &
Trading
Strategist
Policy
Analyst &
Regulatory
Professional
Sales &
Marketing
Executive
Investment &
Finance Professional
Researcher
Market &
investment
forecasts
Country profiles
& market data
Technology
analysis &
forecasts
Levelized cost of
electricity
analysis
Policy &
regulatory
analysis
Competitive
landscapes &
value chain
analysis
Asset & deal
databases &
valuation tools
Breaking news
& ‘First Takes’
Price indexes
& benchmarks
Economics, Finance & Markets
Policy & News Supply Chain & Technology
5
Europe, Middle East
& Africa
Asia Pacific Americas
PRODUCTS TO HELP YOU UNDERSTAND THE FUTURE OF ENERGY
Solar Wind Other
Renewables
Advanced
Transport
Energy Smart
Technologies Gas
Carbon &
RECs Markets
CLEAN ENERGY INVESTMENT SNAPSHOT
7
Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D, and spending for
digital energy and energy storage projects (not reported in quarterly statistics), as well as a BNEF estimate for large hydro
investment. Source: Bloomberg New Energy Finance
NEW INVESTMENT IN CLEAN ENERGY 2004–14 ($BN)
0
50
100
150
200
250
300
350
400
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
30%
50%
27%
12% -9%
35%
7% -7%
-8%12%
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20142015 Q1
Expected
Large hydro
Other
Solar
Wind
Fossil fuel generation
investment in 2014 =
$289bn
8
CLEAN ENERGY INVESTMENT BY REGION 2004 – 2014 ($BN)
Europe United States
China Asia ex-China
$28$38
$52
$72$87 $89
$119$129
$98
$66 $66
04 05 06 07 08 09 10 11 12 13 14
$10 $17$35 $41 $44
$35$48
$65$52 $48 $52
04 05 06 07 08 09 10 11 12 13 14
$3 $9 $11 $17$26
$40 $43$53
$67 $68
$89
04 05 06 07 08 09 10 11 12 13 14
$15 $17 $20 $24 $26 $25$36
$46 $46$59 $65
04 05 06 07 08 09 10 11 12 13 14
Source: Bloomberg New Energy Finance
9
CLEAN ENERGY INVESTMENT IN ASIA 2004 – 2014 ($BN)
China Japan
India
Source: Bloomberg New Energy Finance
$3 $9 $11 $17$26
$40 $43$53
$67 $68
$89
04 05 06 07 08 09 10 11 12 13 14
$426bn
South Korea
$190bn
$73bn $17bn
10
CLEAN ENERGY INVESTMENT BY SECTOR 2004 – 2014 ($BN)
Wind Solar
Energy Smart Technologies (EST) Biofuels
$18$29
$40
$62$75 $81
$99$84 $84 $89
$99
04 05 06 07 08 09 10 11 12 13 14
$12 $16 $22$38
$61 $64
$103
$156$144
$120
$150
04 05 06 07 08 09 10 11 12 13 14
$13 $13 $14 $18 $20 $27 $33 $35 $35 $34 $37
04 05 06 07 08 09 10 11 12 13 14
$4 $10
$28 $29$19
$10 $10 $10 $7 $5 $5
04 05 06 07 08 09 10 11 12 13 14
Source: Bloomberg New Energy Finance
11
CLEAN ENERGY INVESTMENT BY ASSET CLASS 2004 – 2014 ($BN)
Asset finance Public markets
Venture capital and private equity Small distributed capacity
$30
$53
$85
$110
$135$120
$155
$181
$163$155
$171
04 05 06 07 08 09 10 11 12 13 14
$1 $5 $10$24
$12 $15 $14 $11 $5$12 $19
04 05 06 07 08 09 10 11 12 13 14
$1 $2 $6 $8 $12 $7 $9 $8 $6 $4 $5
04 05 06 07 08 09 10 11 12 13 14
$9 $10 $9 $14$22
$33
$62$76 $79
$55
$74
04 05 06 07 08 09 10 11 12 13 14
Source: Bloomberg New Energy Finance
12
POWER GENERATION CAPACITY ADDITIONS BY REGION 2015 – 2040 (GW)
0.9
TW Europe
1.1
TW Rest of
World
Asia Pacific
4.8
TW
1.3
TW Americas
Source: Bloomberg New Energy Finance
15% 2% 53% 19% 10%
72% 3%4%2% 18%
8%3% 60% 27% 2%
28% 5% 39% 21% 7%
Fossil fuels Nuclear Solar Wind Other renewables
13
TOTAL INVESTMENTS PER TECHNOLOGY, 2015-40 (US$ REAL)
Source: Bloomberg New Energy Finance
RENEWABLES TAKE
65% OF THE $12.2
TRILLION POWER
INVESTMENT TO 2040
14
RENEWABLE ENERGY PROPORTION OF POWER GENERATION- INTERMITTENT ENERGY (WIND & SOLAR), 2014 (%)
Source: Bloomberg New Energy Finance
Brazil
3%
India
3%
China
5%
Australia
8%
France
3%
US
4%
Mexico
3%
ME +
Africa
0%
UK
9%
Japan
5%
Germany
16%
0
1-5%
6-10%
11-25%
26-50%
50+%
Note: This only shows the combination of wind and solar energy generation. All numbers come
from BNEF’s New Energy Outlook 2015
15
RENEWABLE ENERGY PROPORTION OF POWER GENERATION- INTERMITTENT ENERGY (WIND & SOLAR) , 2040 (%)
Source: Bloomberg New Energy Finance
Brazil
34%
India
32%
China
37%
France
30%
Australia
52%
ME +
Africa
26%
US
24%
Mexico
32%
Note: This only shows the combination of wind and solar energy generation. All numbers come
from BNEF’s New Energy Outlook 2015
UK
63%
Japan
20%
Germany
77%
0
1-5%
6-10%
11-25%
26-50%
50+%
16
WIND AND SOLAR CAPACITY FORECASTS SINCE 2010 BNEF, IEA
BNEF renewables forecasts have always outpaced IEA forecasts, and were closer to
actual installed wind and solar capacity.
Source: Bloomberg New Energy Finance, IEA
IEA - 2015
0
500
1,000
1,500
2,000
2,500
3,000
3,500
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
IEA - 2014
IEA - 2010
IEA - 2011IEA - 2012
IEA - 2013
BNEF - 2011
BNEF - 2013
BNEF - 2014BNEF - 2015
2015 wind and solar capacity = 673GW
WHAT DRIVES CLEAN ENERGY INVESTMENT?
18
$0 /MWh
$50 /MWh
$100 /MWh
$150 /MWh
2015 2020 2025 2030 2035 2040
$0 /MWh
$50 /MWh
$100 /MWh
$150 /MWh
2015 2020 2025 2030 2035 2040
WIND AND SOLAR LEVELISED COSTS 2015 – 2040 ($/MWH)
Onshore wind levelised cost of energy Solar PV levelised cost of energy
Source: Bloomberg New Energy Finance Source: Bloomberg New Energy Finance
Grid-competitive in
major electricity markets
19
THE SOLAR PV EXPERIENCE CURVE
Source: Bloomberg New Energy Finance, Battery University, MIIT, IIT
Solar PV modules increase in efficiency, decrease in cost
• Crystalline
silicon PV
module prices
decline 24% with
each doubling of
cumulative
production.
• In 2011-2012,
oversupply drove
solar module
prices below the
experience curve.
• c-Si modules will
decline to USD
0.28/W (2014
dollars) in 2030.
• Costs have
fallen 99% in 40
years.
$0.10
$1.00
$10.00
$100.00
1 10 100 1,000 10,000 100,000 1,000,000
Experience curve Historic c-Si prices (Maycock)
Chinese c-Si module prices (BNEF) Thin-film experience curve
First Solar thin-film module cost
1985
2003
2006
Cost per W (2013 $)
1976
Q4
2013
Cumulative
capacity
(MW)
2013
20
Note: Pricing data has been inflation corrected to 2014. We assume the debt ratio of 70%, cost of debt (bps to LIBOR) of 175, cost of equity of
8%. H1 2015 average LCOE data refers to H1 2015 Wind Levelised cost of electricity update. We convert US dollar to Euro based on the
exchange rate of 0.8979 (exchange rate on 30 July 2015). Learning curve is least square regression: R2 = 0.91 and learning rate=19% Source: Bloomberg New Energy Finance
LEVELISED COST, WIND ENERGY (2014 EUR/MWH)
y = 3,582.42x-0.30
R² = 0.91
16
32
64
128
256
512
1,024
100 1,000 10,000 100,000 1,000,000
1985
20252014
Learning rate =19%R² = 0.91
Thailand
Brazil
Germany
US
H1 2015
1999
2009
21 Source: Bloomberg New Energy Finance
H2 2015 LCOE – APAC UTILITY-SCALE PV (NO TRACKING) ($/MWH)
● The cost of fixed-axis solar PV projects in the APAC region has
fallen since H1, particularly in Southeast Asia where technology
risk has declined with ongoing deployment – the region now has
around 1.5GW of installed solar capacity.
● A combination of high capacity factors and low finance costs
(provided projects can secure a long term offtake contract) mean
Australia is the most competitive country to build solar projects
with an average LCOE of $88/MWh.
● India overtook China as the second-cheapest location to build
solar projects, with an average LCOE of $96/MWh. This was due
to a 10% decline in capex since the beginning of 2015 as a
result of competitive bidding policies, and a small reduction in
interest rates.
● A slight increase in capex and interest rates made the average
cost of new-build solar PV in China rise to $109/MWh. In this
analysis we do not assume any grid curtailments, but most
projects in China do face problems with grid availability.
● Reduced equity hurdle rates on solar projects in Malaysia,
Philippines and Indonesia drove their PV LCOEs down
15%,14% and 15% to $133/MWh, $153/MWh and $156/MWh
respectively.
● Thailand’s PV LCOE fell slightly, as its installed base exceeded
1GW and higher deployments brought down the project capex.
However project transaction costs are escalating due to further
delays in implementing the FiT policy and this may offset the
capex reduction.
● LCOE declined slightly in Japan to $218/MWh due to the
depreciation of the Japanese Yen.
0 100 200 300 400
Australia
India
China
Malaysia
Philippines
Thailand
Indonesia
Vietnam
Japan
LCOE range H2 2015 H1 2015
22 Source: Bloomberg New Energy Finance
Breakdown by component Capacity factors (%) LCOE ($/MWh)
CAPEX
Capex accounts for around 15-30% of total lifetime costs
for solar projects in the region. The exception is Japan,
where capex accounts for over 40% due to large upfront
investments and relatively low equity hurdle rates.
Financing
Developing countries have a higher contribution from
equity cashflows. Taxes are a substantial portion of
project costs in India, Philippines and Indonesia.
Finance costs dominate the LCOE of solar PV in India.
0% 20% 40% 60% 80% 100%
India
China
Malaysia
Philippines
Thailand
Indonesia
Vietnam
Japan
Capex F O&M Tax Interest Equity
0% 10% 20% 30%Capacity factor Global (17%)
0 100 200 300
H2 2015 LCOE – APAC UTILITY-SCALE SOLAR PV LCOE BREAKDOWN BY COMPONENT
THE FUTURE OF COAL AND GAS IN ASIA
24
Source: Bloomberg New Energy Finance, Coal
India, Ministry of Coal
INDIA THERMAL COAL PRODUCTION AND DEMAND 2010-25
0Mt
200Mt
400Mt
600Mt
800Mt
1,000Mt
1,200Mt
2010 2015 2020 2025
Coal India production Other domestic production Demand
• India will drive coal demand in Asia over the next few decades.
• However, growing domestic production, increased thermal efficiency and competition from renewables will mean the
country will stop needing to import thermal coal from 2023.
25
CHINA LNG CAPACITY AND DEMAND 2010-25
0MMtpa
25MMtpa
50MMtpa
75MMtpa
100MMtpa
2010 2015 2020 2025
Operational Under Construction Planned
Demand Long-term contracts
• There is already an overcapacity of LNG in China, which has already quadrupled LNG import capacity since 2010.
• Despite falling LNG prices, LNG that lands in China is still considerably more expensive than pipeline capacity or
domestic production.
• Demand for gas in China will be limited as the economy slows. China will unlikely swap coal for gas to power its
economy.
26
This publication is the copyright of Bloomberg New Energy Finance. No portion of this document may be photocopied,
reproduced, scanned into an electronic system or transmitted, forwarded or distributed in any way without prior consent of
Bloomberg New Energy Finance.
The information contained in this publication is derived from carefully selected sources we believe are reasonable. We do
not guarantee its accuracy or completeness and nothing in this document shall be construed to be a representation of such
a guarantee. Any opinions expressed reflect the current judgment of the author of the relevant article or features, and does
not necessarily reflect the opinion of Bloomberg New Energy Finance, Bloomberg Finance L.P., Bloomberg L.P. or any of
their affiliates ("Bloomberg"). The opinions presented are subject to change without notice. Bloomberg accepts no
responsibility for any liability arising from use of this document or its contents. Nothing herein shall constitute or be
construed as an offering of financial instruments, or as investment advice or recommendations by Bloomberg of an
investment strategy or whether or not to "buy," "sell" or "hold" an investment.
COPYRIGHT AND DISCLAIMER
Unique analysis, tools and data for decision-makers
driving change in the energy system
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
Justin Wu