hugh bromley, bloomberg new energy finance

SOLAR 3.0: A DISTRIBUTED ENERGY FUTURE?

Disruption & the Energy Industry

Hugh Bromley

9 September 2015

1

Europe, Middle East

& Africa

Asia PacificAmericas

PRODUCTS TO HELP YOU UNDERSTAND THE FUTURE OF ENERGY

Solar WindOther

Renewables

Advanced

Transport

Energy Smart

TechnologiesGas

Carbon &

RECs Markets

SOLAR 3.0: A DISTRIBUTED ENERGY FUTURE | Disruption & the Energy Industry | Sydney | 9 September 2015

2

200 EXPERTS ACROSS SIX CONTINENTS

San

Francisco

Washington DC

Sao Paulo

Cape Town Sydney

Singapore

Zurich

Munich

London

New DelhiHong

Kong

Tokyo

Beijing

Seoul

New York

North America

40

SouthAmerica

5

Europe90

Africa30

AsiaPacific

35


4SOLAR 3.0: A DISTRIBUTED ENERGY FUTURE | Disruption & the Energy Industry | Sydney | 9 September 2015

EVOLUTION OF THE WEB

Web 2.0 (1999)

● The ‘interactive’ web

● Social media and ‘folksonomies’ emerges

● Near universal adoption

Web 3.0(2006)

● The ‘intelligent’ web

● Machine learning and artificial intelligence

● Ubiquitous connectivity

Web 1.0(1990)

● The ‘read only’ web

● Standardisation, commoditisation and commercialisation

● Mass market availability and appeal

PC Era(1980’s)

● Little to no connectivity

● Bespoke configurations

● Enthusiasts and niche applications

5

Source: Bloomberg New Energy Finance, Clean Energy Regulator


EVOLUTION OF THE SOLAR ‘WEB’

Solar 2.0 (2012/13)

● Value sales proposition

● Increasing use of data analytics

● Financial engineering

Solar 3.0(?)

● Automated control & analytics

● Fully integrated into power system

● Ubiquitous coverage

Solar 1.0(2007)

● Fragmented cottage industry

● Commoditisation of products

● Network effect drive uptake

Grid

● Solar is high cost, low efficiency

● Enthusiasts and offgrid customers

● Bespoke configurations

5 6 7 8 10 10 12 2087

390

854

1,028

768819

200

1

20

02

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

Utility-scale PV Industrial PV

Commercial PV Residential PV

6

Source: Bloomberg, Bloomberg New Energy Finance

SOLAR 3.0: A DISTRIBUTED ENERGY FUTURE | Disruption & the Energy Industry | Sydney | 9 September

2015

DISRUPTIVE FORCE OF THE WEB

7

Source: Bloomberg New Energy Finance - Fight, flight or adapt: Australian utility strategy


AUSTRALIAN ELECTRICITY SUPPLY BY SOURCE, FY2007-14

TWh Percent of total supply from fossil-fuel

19 18 19 22 27 26 28 30

199 203 202 201 193 191 185 182

1 13 4 6

91% 92% 91% 90%87% 87% 85% 84%

0%

20%

40%

60%

80%

100%

0

60

120

180

240

300

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

Small-scale PV

Fossil fuel

Large-scale RE

Percent of supplyfrom fossil fuels

9.5% decline over four years

8

Note: Dotted column and label indicate the combined revenue of fossil-fuel generators in

the NEM. Market value is calculated as product of volume weighted spot price and

regional energy demand. ‘Carbon’ column displays estimated pass-through of AUD

23.0/t carbon price in FY2013 and AUD 24.2/t carbon price in FY2014.

Source: Australian Energy Regulator, Australian Energy Market Operator, Bloomberg

New Energy Finance - Fight, flight or adapt: Australian utility strategy.


ESTIMATED MARKET VALUE OF ELECTRICITY TRADED IN THE NEM, FY2007-14 (AUD BN)

5.8

7.3

5.1

6.4

8.37.9

9.5

11.9

0

2

4

6

8

10

12

FY2014FY2013FY2012FY2011FY2010FY2009FY2008FY2007

Renewables

Carbon

VIC

TAS

SA

QLD

NSW

9

AUSTRALIA CUMULATIVE INSTALLED CAPACITY BY TECHNOLOGY, 2012-40

Source: Bloomberg New Energy Finance – New Energy Outlook 2015


0 0 0 39

21

41

Flexible capacity

0 0 4 5 7 815

2015 2020 2025 2030 2035 2040

Utility-scale PV

0 0 0 0 1 49

Industrial PV

0 0 2 3 4 4 5Commercial PV

2 48

1317 20 23

Residential PV

0

20

40

60

80

100

120

140

2015 2020 2025 2030 2035 2040

Coal Gas Oil

Hydro Geothermal Biomass

Wind Solar Flexible capacity

10

BY 2040, OVER 50% OF CAPACITY WILL BE LOCATED BEHIND THE METER

PENETRATION ROOFTOP CAPACITY

ENERGY MARKETS UTILITY PORTFOLIOS

Source: Bloomberg Source: Bloomberg

Source: BloombergSource: Bloomberg


11

Source: Bloomberg New Energy Finance


ECONOMICS OF DISTRIBUTED VS CENTRALISEDGENERATION, 2015-40 (AUD/MWh nominal)

Reserved for BNEF clients

12

Note: Renewables costs include the renewable energy target, feed-in tariffs and state

energy efficiency schemes Source: Australian Energy Regulator, Bloomberg New Energy Finance

COMPOSITION OF RESIDENTIAL ELECTRICITY TARIFF IN NEW SOUTH WALES, FY2010-13 (AUD c/kWh)

9.3 10.7 12.314.0

18.3

21.0

23.6

27.5

2010 2011 2012 2013

Other + profit

Carbon

Renewables

Network

Wholesale


13





14

Source: Bloomberg New Energy Finance - Fight, flight or adapt: Australian utility strategy


UTILITY STRATEGY DECISION TREE

FIGHT FLIGHTADAPT

SEEK TO SLOW AND HALT RE

DEPLOYMENT

BUSINESS-AS-USUAL

POSITION COMPANY

TO BENEFIT FROM RE

INTRA-REGIONAL

DEVELOPMENT

(cannibalistic)

EXTRA-REGIONAL

DEVELOPMENT

(non-cannibalistic)

PASSIVE

INVESTMENT

(projects)

ACTIVE

INVESTMENT

(platforms)

ENABLING

TECHNOLOGY

SERVICE

PROVISION

LOBBY FOR WEAKER

RE SUPPORT

PUSH ANTI-RE

REGULATORY REFORMEXIT THE MARKET

TAKE NO ACTION TO ADDRESS

OR BENEFIT FROM RE

15

Brand PV sales Loan Lease PPA

ActewAGL Retail

AGL Energy

EnergyAustralia

ERM Power

GoEnergy

Momentum Energy

Origin Energy

Note: considers only utilities and customers within the National Electricity Market Source: Bloomberg New Energy Finance, Company websites


DISRUPTION OF THE SOLAR INDUSTRY

AGL2.3

EA1.8

Origin2.9

0.3

2.2

Retail customers (million)

Other retailer

offering PV

Other retailer

not offering PV

Four in five customers can source a PV system from their current energy retailer

16



DISRUPTION OF THE SOLAR INDUSTRY


17





18SOLAR 3.0: A DISTRIBUTED ENERGY FUTURE | Disruption & the Energy Industry | Sydney | 9 September 2015

GRID REFORM?

19

Source: Michael Felton, The New York Times, Harvard Business Review,

Bloomberg New Energy Finance

UBIQUITOUS ADOPTION?


20

Note: Residential PV and storage show forecast Australian penetration

Source: Michael Felton, The New York Times, Harvard Business Review,

Bloomberg New Energy Finance

UBIQUITOUS ADOPTION?

2008

Residential PV

2040

2015

Residential storage

2040


21

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