1 New Energy Outlook 2017 - Bloomberg … New Energy Outlook 2017 Since 2004 200+ employees in 15...

1 New Energy Outlook 2017


Since 2004

200+ employees in 15 locations on six continents

Generating over 800 Insight reports annually

2,500+ global clients

Leveraging the power of Bloomberg

Since 1981

Over 15,000 employees in 192 locations

Generating 5,000 news stories a day from 150 bureaus

320,000 global clients


Analysis to help you understand the future of energy

Solar Wind Power and

Utilities

Electric

Vehicles

Energy Smart

Technologies

Gas Carbon

Markets &

Climate

Frontier

Power

Mobility and

Autonomous

Driving

Emerging

Technologies

Storage

Europe, Middle East

& AfricaAsia PacificAmericas


200 experts across six continents

San

FranciscoWashington DC

Sao Paulo

Cape Town Sydney

Singapore

Zurich

Munich

New Delhi Hong

Kong

BeijingNew York

NorthAmerica

40

SouthAmerica

5

Europe90

Africa30

AsiaPacific

35

TokyoMilan

Shanghai

London


Global Key Messages

NEO 2017

Seb Henbest, Lead Author

@SebHenbest


● Global coverage, with detailed, bottom-up modelling for 20 countries.

● Total demand, peak demand and load profiles.

● Active project pipeline and near-term BNEF country and industry forecasts.

● Model the supply mix by deploying least-cost technology options to meet demand.

● Subsidies and policy targets are excluded.

Our approach


● Refreshed inputs – technology cost curves, fuel prices, macroeconomics, consumer adoption

● Dynamic EV charging

● Batteries for peak demand

● Offshore wind costs

● New geographies – Italy, Iberia, Turkey, MENA, Indonesia, Malaysia, The Philippines, Thailand, South

Korea, 6 Chinese grids, 7 U.S. ISOs

What’s new?


● Solar and wind dominate the future of electricity

● Solar’s challenge gets more serious

● Onshore wind costs fall fast, and offshore falls faster

● China and India are a $4 trillion opportunity for the energy sector

● Batteries and new sources of flexibility bolster reach of renewables

● Homeowners’ love of solar grows

● Electric vehicles bolster electricity use and help balance the grid

● Coal-fired power collapses in Europe and the U.S., peaks globally by 2026

● Gas is a transition fuel, but not in the way most people think

● Global power sector emissions peak in just over ten years, then decline

Key messages












Key messages


Source: Bloomberg New Energy Finance



Investment, by technology, 2017-2040 Investment, by technology, 2017-2040

Solar and wind attract 73% of new investment in power generating capacity

Fossil fuels14%

Zero-carbon86%

$10.2 trillion

$3.3

$2.8

$1.4

$1.1

$0.8

$0.7

Wind

Solar

Nuclear

Hydro

Gas

Coal

($ trillion - 2016 real)






Global cumulative installed capacity: 2016 Global cumulative installed capacity: 2040

Solar and wind dominate the future of electricity

Coal30%

Gas24%

Oil6%

Nuclear5%

Hydro17%

Onshore wind7%

Utility-scale PV3%

Small-scale PV2%

6,719GW

Coal13%

Gas14%

Nuclear3%

Hydro12%Onshore

wind14%

Utility-scale PV

22%

Small-scale PV

10%

13,919GW

Flexible capacity












Key messages


Source: Maycock, Bloomberg New Energy Finance

Solar technology is getting cheaper, faster

0.1

1

10

100

1 10 100 1,000 10,000 100,000 1,000,000

historic prices (Maycock) Chinese c-Si module prices (BNEF)

1976

2003

1985

2008

Cumulative capacity (MW)

2015

2017 (est)

2016 ($/W)


Source: Maycock, Bloomberg New Energy Finance

Solar technology is getting cheaper, faster

0.1

1

10

100

1 10 100 1,000 10,000 100,000 1,000,000

historic prices (Maycock) Chinese c-Si module prices (BNEF)

1976

2003

1985

2008

Cumulative capacity (MW)

2015

2017 (est)

2016 ($/W)

NEO 2016

26.5% learning

rate

NEO 2017

28% learning

rate


Source: Bloomberg New Energy FinanceSource: Bloomberg New Energy Finance

China U.S.

Tipping point 1: new vs new

Utility-scale PV

Coal

Onshore wind

CCGT

0

20

40

60

80

100

120

140

160

180

2017 2020 2025 2030 2035 2040

$/MWh (real 2016)

Utility-scale PV

Coal

Onshore wind

CCGT

0

20

40

60

80

100

120

2017 2020 2025 2030 2035 2040

$/MWh (real 2016)



Japan India

Tipping point 1: new vs new

Utility-scale PV

Coal

Onshore wind

CCGT

0

50

100

150

200

250

2017 2020 2025 2030 2035 2040

$/MWh (real 2016)



Germany China

Tipping point 2: new vs existing

Utility-scale PV

Coal

Onshore wind

CCGT

0

20

40

60

80

100

120

2017 2020 2025 2030 2035 2040

$/MWh (real 2016)

Utility-scale PV

Coal

Onshore wind

CCGT

0

10

20

30

40

50

60

70

80

90

100

2017 2020 2025 2030 2035 2040

$/MWh (real 2016)



U.S. India

Tipping point 2: new vs existing

Utility-scale PV

Coal

Onshore wind

CCGT

0

10

20

30

40

50

60

70

80

90

2017 2020 2025 2030 2035 2040

$/MWh (real 2016)

Utility-scale PV

Coal

Onshore wind

CCGT

0

20

40

60

80

100

120

2017 2020 2025 2030 2035 2040

$/MWh (real 2016)












Key messages


Source: Bloomberg New Energy Finance Note: Data by contract signing date

Turbine price by delivery date

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020

Global (ex. China) Germany (ExTool) Denmark (Extool) US (LBL) China (BNEF) Vestas global

million Euro/MW


Source: Bloomberg New Energy Finance Notes: Line shows central case, error

bars reflect the range between low speed and high speed sites

Source: Bloomberg New Energy Finance Note: Note: Averages are capacity-

weighted. We calculate the capacity factor with our proprietary Wind Farm Capacity

Factor Tool using real project data and wind resource data provided by 3TIER by

Vaisala. We assume P90 value in the capacity factor tool.

Onshore wind capacity factor Capacity factor forecast for the U.S

Onshore wind is getting cheaper as capacity factors rise

0%

10%

20%

30%

40%

50%

60%

19801984198819921996200020042008201220162020

Germany Denmark UK Spain US Canada

299MW

0%

10%

20%

30%

40%

50%

60%

70%

2017 2020 2025 2030 2035 2040

https://www.bnef.com/Insight/12052https:/www.bnef.com/Insight/12052


Source: Bloomberg New Energy Finance Note: Projects by commissioning date. Full dots show the project level LCOEs have been estimated using winning tariffs, tariff

duration, indexation (if applicable) and a power price assumption for the merchant tail.

Offshore wind has surprised us

Completed auction

Anholt

Horns Rev III

Danish near-shore

Krieger's Flak

Borssele I & II

Borssele III & IV

Zuid I & II

Zuid III & IV

Noord

CfD-R1-East Anglia 1

CfD-R1-Neart na Goithe

CfD-Round 2

CfD-Round 3

Gode Wind 3

BRW II, OWP West

He Dreiht

0

50

100

150

200

250

2012 2014 2016 2018 2020 2022 2024 2026 2028

Netherlands

Denmark

U.K.

Planned auction

BNEF central view

Germany

Historical BNEF central LCOE BNEF LCOE range (H2 2016)

$/MWh (2016 $)


Turbine size Generation profiles: Germany LCOE - Germany

Offshore wind has surprised us

Utility-scale PV

Coal

Onshore wind

CCGT

Offshore wind

0

20

40

60

80

100

120

140

160

180

200

2017

2020

2025

2030

2035

2040

$/MWh (real 2016)

Offshore

Onshore

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0:0

0

3:0

0

6:0

0

9:0

0

12

:00

15

:00

18:0

0

21

:00

normalized

120MW

400MW

496MW

0

3

6

9

12

15

1990 2000 2010 2020

12-month weighted

Projec

MW

15MW turbines estimated

Source: Bloomberg New Energy Finance Source: Bloomberg New Energy Finance Source: Bloomberg New Energy Finance












Key messages



Cumulative capacity additions Cumulative investment

APAC: 47% of investmentChina & India: 83% of investment in APAC

$2,823

$1,157

$431

$195

$142

$79

China

India

SE Asia

Japan

SouthKorea

Australia

($ billion - 2016 real)

Coal Gas Nuclear Hydro Wind Solar Other

$4,828

$1,485

$1,454

$1,264

$1,185

APAC

AMER

META

RoW

Europe

($ billion - 2016 real)

Coal Gas Nuclear Hydro Wind Solar Other



Electricity intensity vs. GDP/capita in different countries, 2000-2015

0.01

0.1

1

10

100 1,000 10,000 100,000

$-2009/kWh

$-2009/capita


Electricity intensity vs. GDP/capita in different countries, 2000

0.01

0.1

1

10

100 1,000 10,000 100,000

$-2009/kWh

$-2009/capita




0.01

0.1

1

10

100 1,000 10,000 100,000

$-2009/kWh

$-2009/capita



Electricity intensity vs. GDP/capita in different countries, 2000-2015

0.01

0.1

1

10

100 1,000 10,000 100,000

$-2009/kWh

$-2009/capita













Key messages


Top 5 markets in 2040

China 343GW

U.S. 200GW

India 127GW

Japan 62GW

Germany 30GW

Demand response and batteries help meet peak demand and help balance the grid

0

200

400

600

800

1,000

1,200

2012 2016 2020 2025 2030 2035 2040

GW

Other flexiblecapacity

Demandresponse

Utility-scalebatteries

Small-scalebatteries



Batteries can help meet peak, but its limited

MW

Hour

Peak

duration

Battery

capacity

$/MW

Year

Marginal

Capex

Battery capacity

starts being used

for peaking


($/marginal MW)

BATT

OCGT

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2015 2020 2025 2030 2035 2040













Key messages



2015 2025

CA

TexasUSA

Mexico

Brazil

Chile

China

Japan

India

Indonesia

AustraliaSpain

Germany

Italy

Denmark

France

Netherlands

UK

Portugal

Romania

Greece

Czech Republic

Slovakia

Bulgaria

South Africa

0

50

100

150

200

250

300

350

400

450

750 1250 1750 2250

Va

ria

ble

co

mp

on

en

t o

f re

tail

ele

ctr

icity p

rice

s

($/M

Wh

)

Irradiation (kWh/kW/year)

50GW

100GW

LCOE

2015

More and more households and business will go solar

CA

Texas

USA MexicoBrazil

Chile

China

Japan

India

Indonesia

AustraliaSpain

Germany

Italy

Denmark

FranceNetherlands

UK

Portugal

Romania

Greece

Czech Republic

Slovakia

South Africa

0

50

100

150

200

250

300

350

400

450

750 1,250 1,750 2,250

Va

ria

ble

co

mp

on

en

t o

f re

tail

ele

ctr

icity p

rice

s

($/M

Wh

)

Irradiation (kWh/kW/year)

50GW

100GW

LCOE

2025



Mexico Brazil

Impact of behind the meter generation to total demand

Small-scale PV

Net demand

0

100

200

300

400

500

600

2012 2016 2020 2025 2030 2035 2040

TWh

Small-scale PV

Net demand

0

100

200

300

400

500

600

700

800

900

1,000

2012 2016 2020 2025 2030 2035 2040

TWh


Germany

Italy

United States

Mexico

China

Japan

India

Thailand

Australia

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2012 2016 2020 2025 2030 2035 2040

Brazil

Australia, Germany, Japan, Brazil – most decentralized

Source: Bloomberg New Energy Finance Note: decentralization ratio is the ratio

of non-grid-scale capacity to total installed capacity.

Decentralization ratio












Key messages


Li-ion battery prices to fall another 73% to 2040

-

100

200

300

400

500

600

700

800

900

1,000

1,100

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

$/kWh


$73/kWh

$273/kWh



Germany Germany

EVs arrest slide in grid demand


Small-scale PV

Gross demand

Net demand

0

100

200

300

400

500

600

700

2012 2016 2020 2025 2030 2035 2040

TWh

Small-scale PVNet demand

Gross demand

0

100

200

300

400

500

600

700

2012 2016 2020 2025 2030 2035 2040

TWh

EVs


Fixed and dynamic charging


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

0:0

0

1:0

0

2:0

0

3:0

0

4:0

0

5:0

0

6:0

0

7:0

0

8:0

0

9:0

0

10

:00

11

:00

12

:00

13

:00

14

:00

15

:00

16

:00

17

:00

18

:00

19

:00

20

:00

21

:00

22

:00

23

:00

General load

EV dynamic

EV fixed

U.K.: daily load profile, 2040

MWh












Key messages


0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2016 2020 2025 2030 2035 2040

TWh


Coal generation Coal generation

Poor outlook in U.S, EuropeMixed in Asia

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2012 2016 2020 2025 2030 2035 2040

TWh

U.S.

Europe

China

India

SE Asia


0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2016 2020 2025 2030 2035 2040

TWh




0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2016 2020 2025 2030 2035 2040

TWh

U.S.

Europe

China

India

SE Asia

+50%

+132%NEO 2016


0

2,000

4,000

6,000

8,000

10,000

12,000

2012 2016 2020 2025 2030 2035 2040

TWh




0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2016 2020 2025 2030 2035 2040

TWh

U.S.

Europe

China

India

SE Asia

U.S.

Europe

Global












Key messages



Incremental change in gas consumption Incremental change in gas vs. coal generation

Gas plays an important role, but its not bulk energy

-120

-80

-40

0

40

80

120

2017-20 2021-25 2026-30 2031-35 2036-40

China India Rest of APAC

Americas Europe ME & Africa

ROW

Bcm/yr

-1,200

-800

-400

0

400

800

1,200

2021-2025 2026-2030 2031-2035 2036-2040

Δ generation (TWh)

Coal Gas


Source: Bloomberg New Energy FinanceSource: Bloomberg New Energy Forecast

2017 2030

Germany hourly dispatch

Coal

Gas

Oil

Nuclear

Hydro

Geothermal

Biomass/WtE

Onshore wind

Offshore wind

Utility-scale PV

Small-scale PV

Solar thermal

Flexible capacity

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0:00 4:00 8:00 12:00 16:00 20:00

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0:00 4:00 8:00 12:00 16:00 20:00

Peaker gas

Peaker gas

Baseload gas

Baseload gas












Key messages



Global power sector CO2 emissions Global power sector CO2 emissions

Emissions peak in 2026…

NEO2016

NEO2017

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2012 2016 2020 2025 2030 2035 2040

(MtCO2)

NEO2017

NDC trajectory

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2012 2016 2020 2025 2030 2035 2040

(MtCO2)



Global power sector CO2 emissions Total investment in zero-carbon capacity

…but 2 degree is an additional $5.3 trillion

NEO2017

NEO2017 - 2deg trajectory

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2012 2016 2020 2025 2030 2035 2040

(MtCO2)

$1.3

$1.7 $1.7

$2.0 $2.1 $2.3

$3.0 $3.0 $3.2

$2.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2017-20 2021-25 2026-30 2031-35 2036-40

($ trillion - 2016 real)

NEO2017

2 degrees


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