DOCKETED Docket Number: 20-IEPR-02

Project Title: Transportation

TN #: 233700

Document Title: Presentation - Projections for global final energy consumption in

2050

Description: Presentation Dr. Xiaoting Wang, Bloomberg New Energy

Finance

Filer: Raquel Kravitz

Organization: Bloomberg New Energy Finance

Submitter Role: Public

Submission Date: 7/1/2020 10:18:12 AM

Docketed Date: 7/1/2020

1

Source: BloombergNEF, IEA, IPCC.

Projections for global final energy consumption in 2050

Zero carbon electricity

Clean molecules

Coal

Coal

Oil

OilGas

Gas

Bioenergy + other

Bioenergy + other

Heat

Heat

417

643

405

2018 2050 - IEA Current Policies Scenario(extrapolated)

2050 - IPPC 1.5°C Pathways (median)

EJ

Nuclear Hydro Wind Solar Other renewables Coal Oil Gas

Demand growth (+54%)

Energy efficiency

Massive electrification

Molecule fuels

Electricity

2018 2050 with current policies Changes needed to limit

warming to 1.5°C

2

Source: BloombergNEF

Hydrogen has potential as a zero-carbon fuel

Fuel for

H2

Buildings

Residential & Commercial

Feedstock forHeat for

Power

Electricity Power Plants

Transport Industry

Steel

AluminumCement

PaperFood

Steel

GlassMetallurgy

Food

Products

Fertilizers, plastics

Fuel refining

Chemicals

3

Source: BloombergNEF, International Energy Agency. Note: For deliberate production, the category terms indicate the source materials; for byproduct, the terms refer to the industries

Hydrogen production by source and application by sector, 2018

Natural gas28%

Oil18%

Coal11%

Electrolysis2%

Oil17%

Coke/Iron16%

Ethylene6%

Chlor-alkali2%

Deliberate production,

59%

Byproduct, 41%

Production:117 MMT

Oil refining33%

Ammonia27%

Others4%

Methanol10%

DRI3%

Others23%

Pure hydrogen, 63%

Hydrogen mixed with other gases,

37%

Consumption:117 MMT

4

Source: BloombergNEF.

Estimated shipment of water electrolyzers, 2018

Alkaline: Chinese suppliers

(domestic)55%

Alkaline: Chinese suppliers (export)

4%

Alkaline: Western suppliers

26%

PEM: Western suppliers

15%

Total135MW

5

Source: BloombergNEF. Note: The range for fossil fuel derive hydrogen reflects current costs.

Forecast levelized cost of renewable hydrogen production from large projects

LCOH of renewable H2 production from large projects

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2019 2030 2050

2019$/kg

Renewable H2

Fossil fuel derived H2

6

Source: BloombergNEF. Note: The project scale is assumed to be 2-3MW in 2019, 100MW in 2030, 400MW in 2050. The results in the conservative-scenario are based on electrolyzers powered by PV alone, while the optimistic results are based on a PV-plus-wind power source. In 2019, the conservative and optimistic cases for alkaline electrolyzers corresponds to projects adopting Western-made equipment and Chinese-made equipment, respectively.

Both equipment and electricity will be cheaper

2.48 2.32

1.23 1.160.72 0.72

2.09

1.40

1.68

0.30

0.33 0.21

4.57

3.72

2.90

1.46

1.05 0.92

PEM Alkaline PEM Alkaline PEM Alkaline

2019$/kg

2019 2030 2050

Equipment

Electricity

2.482.17

1.26 1.220.68 0.68

2.09

0.36

0.430.16

0.09 0.10

4.57

2.53

1.69

1.38

0.76 0.78

PEM Alkaline PEM Alkaline PEM Alkaline

2019$/kg

2019 2030 2050

Equipment

Electricity

Conservative

LCOH of renewable H2 production from large projects

Optimistic

7

Source: BloombergNEF

Benchmark system capex based on large-scale electrolyzers, 2014 and 2019

The price of electrolyzers has been falling

$2.0/W

$1.2/W

2014(Western-made)

2019(Western-made)

2019(Chinese-made)

Alkaline

-40%

$2.8/W

$1.4/W

2014(Western-made)

2019(Western-made)

2019(Chinese-made)

Proton Exchange Membrane

-50%

Not made (yet)

8

Source: BloombergNEF

Benchmark system capex based on large-scale electrolyzers, 2014 and 2019

Electrolysis systems cost 83% less in China

$2.0/W

$1.2/W

$0.2/W

2014(Western-made)

2019(Western-made)

2019(Chinese-made)

Alkaline

-40%

-83%

$2.8/W

$1.4/W

2014(Western-made)

2019(Western-made)

2019(Chinese-made)

Proton Exchange Membrane

-50%

Not made (yet)

9

Source: Japan METI, BloombergNEF. Note: The power ratings of the systems are in the range of 700-1,000W.

Installation volume and price of PEM fuel cell systems under Japan's Ene-Farm program

-

50

100

150

200

250

300

0

5,000

10,000

15,000

20,000

25,000

30,00020

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Thousands of systems

Cumulative installation System price ($/system)

$/system

1,000

10,000

100,000

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

Cumulative installation

$/system

LR=19.8%

10

Source: BloombergNEF. Note: The two dashed boxes indicate that PEM electrolysis system capex for large projects is derived from cost estimates for 4MW PEM systems, and should be considered as a hypothetical value

Great potential for further cost reduction of electrolyzers

157115

135184 322

440

738

1,008

4MW 100MW

2030 forecast

9561 80

125

139

217

98153

4MW 400MW

2050 forecast

200

1,200

1,400

2-3MW

2019

PEM

Alkaline

Forecast of electrolysis system capex (2019$/kW)

11

Source: BloombergNEF. Note: The gray range represents the global diversity of benchmark LCOEs. These figures exclude curtailment and subsidies.

Renewable electricity cost continues to fall

Utility-scale PV LCOE Onshore wind LCOE

Germany

U.S.

China

India

Japan

0

20

40

60

80

100

120

2019 2025 2030 2035 2040 2045 2050

$/MWh (2018 real)

U.K.

U.S.

China

India

0

20

40

60

80

100

120

2019 2025 2030 2035 2040 2045 2050

$/MWh (2018 real)

12

Source: BloombergNEF.

Learning rates of PV and wind LCOE

LR=22%

LR=15%

1

10

100

100 1,000 10,000

Global cumulative installation (GW)

Lowest LCOE in the U.S. for PV and wind (2018$/MWh)

PV with tracking

Onshore wind

13

Source: BloombergNEF. Note: PV capacity here in DC.

Increase in PV build and reduction in LCOE from demand for renewable hydrogen, 2050

7.6 7.89.5

100% 99%92%

0%

20%

40%

60%

80%

100%

0

3

6

9

12

15

Power sector only(NEO 2019)

Power + renewablehydrogen

(conservative)

Power + renewablehydrogen

(optimistic)

Cumulative installation (TW) PV LCOE (relative)

14

Source: BloombergNEF. Note: Wind capacity here refers to onshore installation.

Increase in wind build and reduction in LCOE from demand for renewable hydrogen, 2050

3.0 3.25.2

100% 98%

88%

0%

20%

40%

60%

80%

100%

0

3

6

9

12

15

Power sector only(NEO 2019)

Power + renewablehydrogen

(conservative)

Power + renewablehydrogen

(optimistic)

Cumulative installation (TW) Wind LCOE (relative)

15

Source: BloombergNEF.

A system with storage AC-coupled with PV

+

_

PV module array

Battery array

PV inverter

(mono-directional)

Battery inverter

(bi-directional)

Transformer

Transformer

Grid

DC AC AC

DC AC AC

16

Source: BloombergNEF.

A system with storage DC-coupled with PV

+

_

PV module array

Battery array

Transformer

Grid

DC AC

DC-DC converter

(directional)

DC

PV inverter

(mono-directional)

AC

17

Source: BloombergNEF. Note: The electricity cost is for captive renewable power plants designed for electrolyzers.

LCOE forecast for electrolyzers, 2030 and 2050 (2019$/MWh)

PV Wind PV+wind

2030 24.1-25.6 25.8-27.9 25.5-27.4

2050 14.8-15.9 14.9-16.9 15.0-17.0

18

Source: BloombergNEF. Note: The range for fossil fuel derive hydrogen reflects current costs.

Green hydrogen will be cheaper than grey hydrogen

LCOH of renewable H2 production from large projects

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2019 2030 2050

2019$/kg

Renewable H2

Fossil fuel derived H2

19

Source: BloombergNEF.

A variety of storage options exist

Hydrogen storage options and levelized cost of storage, 2019

1.90

0.23 0.711.41

4.50 4.57

0.19

2.83

0.97

3.89 3.79

7.336.65

1.19

0

2

4

6

8

Depleted gas fields Salt caverns Rock caverns Ammonia Liquid organic

hydrogen carriers

Liquid hydrogen Pressurized

containers

$/kg months

years

weeks

days

20

Source: Oxford Institute for Energy Studies, Bloomberg, International Energy Agency (IEA), Japan Ministry of Trade Economy, Trade and Industry

Hydrogen will need to be stored at similar scales to natural gas

0%

5%

10%

15%

20%

25%

30%

35%

France Europe IEA (oil) US Japan UK China

Natural gas storage as % of annual demand

21

Source: Solution Mining Research Institute, published in Blanco and Faaij 2018, A review at the role of storage in energy systems with a focus on Power to Gas and long-term storage, Renewable and Sustainable Energy Reviews Journal

Major world salt deposits

22

Source: BloombergNEF.

A variety of storage options exist

Hydrogen storage options and levelized cost of storage, 2019

1.90

0.23 0.711.41

4.50 4.57

0.19

2.83

0.97

3.89 3.79

7.336.65

1.19

0

2

4

6

8

Depleted gas fields Salt caverns Rock caverns Ammonia Liquid organic

hydrogen carriers

Liquid hydrogen Pressurized

containers

$/kg months

years

weeks

days

23

Source: BloombergNEF.

Prices across the board should fall in future

Hydrogen storage options and levelized cost of storage, future best case

1.07

0.11 0.23

0.87

1.86

0.95

0.17

1.71

0.38

1.11

2.392.69

1.81

0.86

0

1

2

3

Depleted gasfields

Salt caverns Rock caverns Ammonia Liquid organichydrogencarriers

Liquid hydrogen Pressurizedcontainers

$/kg months

years

weeksdays

24

Source: BloombergNEF. Note 1: Ammonia assumed unsuitable at small scale due to its toxicity. Note 2: While LOHC is cheaper than LH2 for long distance trucking, it is less likely to be used than the more commercially developed LH2. Note 3: assumes salt cavern storage for pipelines.

H2 transport costs based on distance and volume, $/kg, 2019

0.05 0.05 - 0.10 0.10 - 0.58 0.58 - 3.00

0.05 - 0.06 0.06 - 0.22 0.22 - 1.82 < 3.00

CGH2CGH2 / LOHCCGH2

0.65 - 0.76 0.68 - 1.73 0.96 - 3.87

CGH2CGH2 / LOHCCGH2

0.65 - 0.76 0.68 - 1.73 0.96 - 3.87

3+

NH3

3+

Ships

NH3

0

1

10

100

1,000

1 10 100 1,000 10,000

Distance (km)

Volume (tons/day)

Local Urban Inter-city Inter-

continental

Large

Mid

Small

Very

small

3.87 - 6.70

LOHC

3.87 - 6.70

LOHC

Unviable

Unviable

Transmission pipelines

Distribution pipelines

Trucks

25

Source: BloombergNEF. Note 1: Ammonia assumed unsuitable at small scale due to its toxicity. Note 2: While LOHC is cheaper than LH2 for long distance trucking, it is less likely to be used than the more commercially developed LH2. Note 3: assumes salt cavern storage for pipelines.

H2 transport costs based on distance and volume, $/kg, future best case

0.05 0.05 - 0.09 0.09 - 0.47 0.47 - 2.00

0.05 - 0.06 0.06 - 0.19 0.19 - 1.44 < 2.00

CGH2CGH2

0.54 - 0.56 0.56 - 0.75 0.75 - 1.51

CGH2CGH2

0.54 - 0.56 0.56 - 0.75 0.75 - 1.51

2+

NH3

2+

Ships

NH3

0

1

10

100

1,000

1 10 100 1,000 10,000

Distance (km)

Volume (tons/day)

Local Urban Inter-city Inter-

continental

Large

Mid

Small

Very

small

1.51 - 2.62

1.51 - 2.62

Unviable

Unviable

Transmission pipelines

Distribution pipelines

Trucks

CGH2 /LH2

CGH2 /LH2

LH2

LH2

26

Source: BloombergNEF. Note: The assumptions are detailed for each component in the tab les below. Stack based on levelized costs of production, transportation and storage. These fuel prices scenarios are all availab le in the ‘Market’ tab of EPVAL, BNEF’s project finance model.

Hydrogen delivery fuel cost scenarios, 2019-2050

1.1

2.5

3.7

0.61.4

2.2

0.80.4

1.3

2.3

3.0

4.7

1.7 1.9

3.3

1.1 1.2

1.9

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Low Mid High Low Mid High Low Mid High

2019 2030 2050

$/kg of H2 (2018 real)

Storage

Transportation

Production

37.2

33.5

29.8

26.0

22.3

18.6

14.9

11.2

7.4

3.7

0

$/MMBtu (2018 real)

(C) (W) (W) (C) (C)(PV+W) (PV) (PV+W) (PV)

Electricity source for

the electrolysis

reaction

(C) Curtailment

(PV) Utility-scale PV

(W) Onshore wind

(PV+W) PV-plus-

onshore wind

1.1

2.5

3.7

0.6

1.4

2.2

0.80.4

1.3

2.3

3.0

4.7

1.7 1.9

3.3

1.1 1.2

1.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Low Mid High Low Mid High Low Mid High

2019 2030 2050

$/kg of H2 (2018 real)

Storage

Transportation

Production

37.2

33.5

29.8

26.0

22.3

18.6

14.9

11.2

7.4

3.7

0

$/MMBtu (2018 real)

1.1

2.5

3.7

0.61.4

2.2

0.80.4

1.3

2.3

3.0

4.7

1.7 1.9

3.3

1.1 1.2

1.9

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Low Mid High Low Mid High Low Mid High

2019 2030 2050

$/kg of H2 (2018 real)

Storage

Transportation

Production

37.2

33.5

29.8

26.0

22.3

18.6

14.9

11.2

7.4

3.7

0

$/MMBtu (2018 real)

(C) (W) (W) (C) (C)(PV+W) (PV) (PV+W) (PV)

Electricity source for

the electrolysis

reaction

(C) Curtailment

(PV) Utility-scale PV

(W) Onshore wind

(PV+W) PV-plus-

onshore wind

27

Source: BloombergNEF, CSIRO. Note: Technology readiness level is measured on a scale of 1 (basic research) to 9 (proven in anoperational environment).

Technical readiness level of using hydrogen in various applications

9 98

7

6

4 4 4

Roadtransport

Powergeneration

with fuel cell

Methanolproduction

Buildingheating

Steelproduction

Industryheating

Shipping Powergenerationwith gasturbine

9 9

8

7

6

4 4 4

Roadtransport

Powergeneration

with fuel cell

Methanolproduction

Buildingheating

Steelproduction

Industryheating

Shipping Powergenerationwith gasturbine

Road transport Methanol production Building heating

9 9

8

7

6

4 4 4

Roadtransport

Powergeneration

with fuel cell

Methanolproduction

Buildingheating

Steelproduction

Industryheating

Shipping Powergenerationwith gasturbine

Road transport Methanol production Building heating

9 9

8

7

6

4 4 4

Roadtransport

Powergeneration

with fuel cell

Methanolproduction

Buildingheating

Steelproduction

Industryheating

Shipping Powergenerationwith gasturbine

Road transport Methanol production Building heatingFuel for electricity Feedstock Fuel for heat

28

Source: BloombergNEF. Note: sectoral emissions based on 2018 figures, abatement costs for renewable hydrogen delivered at $1/kg to large users, $4/kg to road vehicles.

Marginal abatement cost curve from using $1/kg hydrogen for emission reductions, by sector in 2050

0

20

40

60

80

100

120

140

160

180

0 1 2 3 4 5 6 7 8 9 10 11 12

Carbon price ($/tCO2)

GtCO2/year

Zero-cost abatement

Methanol

Gas power generation

Space and water heating

Shipping

GlassAluminum

Ammonia

Cement

Steel

Cars Buses Trucks

Oilrefining

29

Source: BloombergNEF. Note: Aluminum demand is for alumina production and aluminum recycling only. Cement demand is for process heat only. Oil refining demand is for hydrogen use only. Road transport and heating demand that is unlikely to be met by electrification only: assumed to be 50% of space and water heating, 25% of light-duty vehicles, 50% of medium-duty trucks, 30% of buses and 75% of heavy-duty trucks

Potential demand for hydrogen in different scenarios, 2050

30

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