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BLOOMBERG NEW ENERGY FINANCE SUMMIT In search of the miraculous Michael Liebreich 5 April 2016

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BLOOMBERG NEW ENERGY FINANCE SUMMIT

In search of the miraculous

Michael Liebreich

5 April 2016

1 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

$62bn

$88bn

$128bn

$175bn

$206bn $207bn

$274bn

$318bn$297bn

$272bn

$316bn$329bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

20

40

60

80

100

120

140

160

CLEAN ENERGY INVESTMENT ROSE WHILE OIL PLUMMETED GLOBAL CLEAN ENERGY INVESTMENT VS WTI CRUDE SPOT 2004-15

$146/bbl

Record

investment

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). Excludes large hydro. Source: Bloomberg Intelligence, Bloomberg New Energy Finance

$37/bbl

2 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

$62bn

$88bn

$128bn

$175bn

$206bn $207bn

$274bn

$318bn$297bn

$272bn

$316bn$329bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

CLEAN ENERGY INVESTMENT ROSE WHILE OIL & GAS CAPEX FELL GLOBAL CLEAN ENERGY INVESTMENT VS OIL & GAS CAPITAL EXPENDITURE

$500bn

Note: Oil and gas CAPEX data refers to total capital spending by integrated global oil firms and US independent E&Ps. Excludes NOCs. Source: Bloomberg Intelligence, Bloomberg New Energy Finance

$321bn

0

20

40

60

80

100

120

140

160$146/bbl

$37/bbl

Oil and gas

CAPEX down

by 36% in 2015

3 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Source: UNEP, Bloomberg New Energy Finance

INVESTMENT IN POWER CAPACITY, 2008–15 ($BN)

Renewables ex large hydro

Fossil fuel

Nuclear

Large hydro

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 2013 2014 2015

4 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Source: Bloomberg New Energy Finance; ImagesSiemens; Wikimedia Commons

WORLD RECORD: 3-CENT WIND, SUB-4-CENT SOLAR (UNSUBSIDISED)

Location:

Bidder:

Signed:

Price:

Morocco

Enel Green Power

January 2016

US$ 3.0 c/kWh

ONSHORE WIND

Location:

Bidder:

Signed:

Price:

Coahuila, Mexico

Enel Green Power

March 2016

US$ 3.6 c/kWh

SOLAR PV

5 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0.1

1

10

100

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

2003

1976

1985

2008

Cumulative capacity (MW)

Current 2015 price

Note: Prices are in real (2015) USD. ‘Current price’ is $0.61/W Source: Bloomberg New Energy Finance, Maycock

WIND AND SOLAR EXPERIENCE CURVES

ONSHORE WIND LEVELISED COST ($/MWh) SOLAR PV MODULE COST ($/W)

Learning

rate 24.3%

MODULE COSTS

HAVE FALLEN

99% SINCE 1976

80% SINCE 2008

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

1,024

512

256

128

64

32

100 1,000 10,000

16

100,000 1,000,000

Learning rate 19%

1985

1999

2009

2014

2025

H2 2015

Learning rate

19%

WIND COSTS

HAVE FALLEN

50% SINCE 2009

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% Source: Bloomberg New Energy Finance

6 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

RENEWABLE ENERGY - THE MARCH OF THE PRICE SIGNAL

Market-based mechanisms – eg renewable energy auctions, certificate schemes, renewable portfolio

standards

Feed-in tariff/premiums

Mixed

Countries with auction or tender programmes

2000

7 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

RENEWABLE ENERGY - THE MARCH OF THE PRICE SIGNAL

Market-based mechanisms – eg, renewable energy auctions, certificate schemes, renewable

portfolio standards

Feed-in tariff/premiums

Mixed

Countries with auction or tender programmes

2016

8 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

AN AGE OF PLENTY…

… AN AGE OF

COMPETITION

9 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

GLOBAL NATURAL GAS PRICES ($/MMBTU REAL 2016$)

Source: Bloomberg New Energy Finance

0

2

4

6

8

10

12

14

16

18

20

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

North East AsiaLNG

BAFA (Germanyborder price forRussian gas)

NBP (UK)

Henry Hub (US)

> $8 spread

to Henry hub ~ $5 spread to

Henry Hub

~ $5 spread to

Henry Hub?

10 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

-60

-40

-20

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Pru

de

nt

lim

it

Insolvency zone

Source: Bloomberg Intelligence; Bloomberg New Energy Finance

US INDEPENDENT OIL & GAS PRODUCER SOLVENCY RATIOS

Interest cover (EBITDA/Interest expense)

Leverage (total debt to capital %)

Note: size of bubbles represents net debt position for each company

2008

11 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

-60

-40

-20

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Pru

de

nt

lim

it

Insolvency zone

Source: Bloomberg Intelligence; Bloomberg New Energy Finance

US INDEPENDENT OIL & GAS PRODUCER SOLVENCY RATIOS

Interest cover (EBITDA/Interest expense)

Leverage (total debt to capital %)

Note: size of bubbles represents net debt position for each company

2009

12 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

-60

-40

-20

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Pru

de

nt

lim

it

Insolvency zone

Source: Bloomberg Intelligence; Bloomberg New Energy Finance

US INDEPENDENT OIL & GAS PRODUCER SOLVENCY RATIOS

Interest cover (EBITDA/Interest expense)

Leverage (total debt to capital %)

Note: size of bubbles represents net debt position for each company

2010

13 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

-60

-40

-20

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Pru

de

nt

lim

it

Insolvency zone

Source: Bloomberg Intelligence; Bloomberg New Energy Finance

US INDEPENDENT OIL & GAS PRODUCER SOLVENCY RATIOS

Interest cover (EBITDA/Interest expense)

Leverage (total debt to capital %)

Note: size of bubbles represents net debt position for each company

2011

14 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

-60

-40

-20

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Pru

de

nt

lim

it

Insolvency zone

Source: Bloomberg Intelligence; Bloomberg New Energy Finance

US INDEPENDENT OIL & GAS PRODUCER SOLVENCY RATIOS

Interest cover (EBITDA/Interest expense)

Leverage (total debt to capital %)

Note: size of bubbles represents net debt position for each company

2012

15 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

-60

-40

-20

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Pru

de

nt

lim

it

Insolvency zone

Source: Bloomberg Intelligence; Bloomberg New Energy Finance

US INDEPENDENT OIL & GAS PRODUCER SOLVENCY RATIOS

Interest cover (EBITDA/Interest expense)

Leverage (total debt to capital %)

Note: size of bubbles represents net debt position for each company

2013

16 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

-60

-40

-20

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Pru

de

nt

lim

it

Insolvency zone

Source: Bloomberg Intelligence; Bloomberg New Energy Finance

US INDEPENDENT OIL & GAS PRODUCER SOLVENCY RATIOS

Interest cover (EBITDA/Interest expense)

Leverage (total debt to capital %)

Note: size of bubbles represents net debt position for each company

2014

17 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Source: Bloomberg Intelligence; Bloomberg New Energy Finance

US INDEPENDENT OIL & GAS PRODUCER SOLVENCY RATIOS

Interest cover (EBITDA/Interest expense)

Leverage (total debt to capital %)

Note: size of bubbles represents net debt position for each company

-60

-40

-20

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Pru

de

nt

lim

it

Insolvency zone

2015

$234 bn of US energy junk debt outstanding

52 companies filing Chapter 11 since start 2015

69 companies under credit ratings review

18 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0

200

400

600

800

1000

1200

1400

1600

1800

0

5

10

15

20

25

30

35

40

45

50

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Marcellus

Haynesville

Eagle Ford

Fayetteville

Barnett

Woodford

Bakken

Antrim

Utica

Other Shale

Gas rigs online0

200

400

600

800

1000

1200

1400

1600

1800

0

5

10

15

20

25

30

35

40

45

50

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Marcellus

Haynesville

Eagle Ford

Fayetteville

Barnett

Woodford

Bakken

Antrim

Utica

Other Shale

Gas rigs online

US DRY SHALE GAS PRODUCTION BY PLAY VS RIG COUNT

Source: EIA, Bloomberg New Energy Finance

Billion cubic feet per day Number of rigs online

0

200

400

600

800

1000

1200

1400

1600

1800

0

5

10

15

20

25

30

35

40

45

50

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

201

5

20

16

Marcellus

Haynesville

Eagle Ford

Fayetteville

Barnett

Woodford

Bakken

Antrim

Utica

Other Shale

Gas rigs online

Rig count

down 8-fold

2007-16

Output per rig

up 11-fold

2007-16

19 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

LNG EXPORT CAPACITY BY COUNTRY/REGION (MMTPA)

Source: Bloomberg New Energy Finance

0

100

200

300

400

500

600

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

Other

North America

Russia

East Africa

West Africa

Australia

North America

Australia

Other

Russia

West Africa

North Africa

Indonesia

Malaysia

Qatar

Demand

Pre

-FID

O

pe

rati

on

al,

un

de

r c

on

str

uc

tio

no

r p

os

t-F

ID

Note: Pre final investment decision (Pre-FID) projects with <50% chance of success are excluded.

20 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

2000 2005 2010 2015 2000 2005 2010 2015 2000 2005 2010 2015

COAL CONSUMPTION BY REGION (MTOE)

OECD - DECLINING CHINA - FLATTENING NON-OECD EX CHINA - SLOWING

Year on year % change Year on year % change Year on year % change

Source: Bloomberg New Energy Finance

-1%

1%3%

1% 1% 1%2%

-2%

-11%

6%

-2%-4%

1%

-2%-1%

2000 2005 2010 2015

-1%

1%3%

1% 1% 1%2%

-2%

-11%

6%

-2%-4%

1%

-2%-1%

2000 2005 2010 2015

-1%

1%3%

1% 1% 1%2%

-2%

-11%

6%

-2%-4%

1%

-2%-1%

2000 2005 2010 2015

-1%

1%3%

1% 1% 1%2%

-2%

-11%

6%

-2%-4%

1%

-2%-1%

2000 2005 2010 2015

5%

10%

19%17%17%

10%9%

2%

5%4%

9%

1% 2%0%

-4%

2000 2005 2010 2015

1%

5%3%

10%7% 6%

8%10%9%

4% 4%

12%

7%

11%10%

2000 2005 2010 2015

Coal consumption (Mt/yr) Coal consumption (Mt/yr) Coal consumption (Mt/yr)

1,216Mt 1,042Mt

1,900Mt 1,896Mt

876Mt 533Mt

21 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0

50

100

150

200

250

1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Note: Pre-1913, data is available only for 10-year average annual consumption Source: UK DECC, Bloomberg New Energy Finance

UK COAL DEMAND, 1860–2015 (MT/YR)

22 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

BENCHMARK THERMAL COAL PRICES ($/T REAL 2016$)

Source: Bloomberg New Energy Finance

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 2013 2014 2015 2016

ARA

Newcastle

23 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Image: various company sources

Investment Pte

COAL IN DISTRESS

24 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0

5

10

15

20

25

30

35

40

187

0

187

5

188

0

188

5

189

0

189

5

190

0

190

5

191

0

191

5

192

0

192

5

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0

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5

194

0

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5

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0

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5

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0

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5

197

0

197

5

198

0

198

5

199

0

199

5

200

0

200

5

201

0

201

5

Note: Includes NGL and processing gain, but excludes biofuels Source: IEA; CDIAC; BP; Bloomberg New Energy Finance

GLOBAL CARBON EMISSIONS FROM FOSSIL FUELS (GIGATONNES CO2/YEAR)

0.00%2.00%4.00%6.00%8.00%10.00%

30

32

34

36

5.5% 5.7% 3.1% 5.4% 4.2% 3.4% 3.4% 3.4% 3.5%

0%

2%

4%

6%

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

5.5% 5.7% 3.1% 0% 5.4% 4.2% 3.4% 3.4% 3.4% 3.5%

Global GDP growth (real)

25 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Picture: Thehigherlearning.com

CLEAN POWER PLAN

The Clean Power Plan is the

single most important step

America has ever taken in

the fight against global

climate change

President Obama

Speech 3 August 2015

26 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: PTC extension case assumes 5-year phase-out. 2015 onwards is forecast. PTC is production tax credit. ITC is investment tax credit Source: Bloomberg New Energy Finance

IMPACT OF PTC & ITC EXTENSION

2.23.3

4.96.4 7.3

9.1

3.45.5 6.1 6.7 7.4

201

1

201

2

201

3

201

4

201

5e

201

6e

2017

e

201

8e

201

9e

202

0e

202

1e

No extension

2.23.3

4.96.4 7.3

9.1

3.45.5 6.1 6.7 7.4

6.23.5

4.04.0 3.5

-2.8

201

1

201

2

201

3

201

4

201

5e

201

6e

201

7e

2018

e

201

9e

202

0e

202

1e

No extension Extension

6.7

13.9

0.6

5.1

8.7 9.4

2.1 1.42.9

4.2 3.3

5.6

10.2

3.4 1.4

201

1

201

2

201

3

201

4

201

5e

201

6e

2017

e

201

8e

201

9e

202

0e

202

1e

No extension

6.7

13.9

0.6

5.1

8.7 9.4

2.1 1.42.9

4.2 3.3

5.6

10.2

3.4 1.4

-2.8

-0.6

201

1

201

2

201

3

201

4

201

5e

201

6e

201

7e

2018

e

201

9e

202

0e

202

1e

No extension Extension

WIND INSTALLATIONS (GW) SOLAR INSTALLATIONS (GW) Additional 19GW

of wind

2016-2021

Additional 18GW

of solar

2016-2021

27 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Source: Bloomberg New Energy Finance

NEW INVESTMENT IN THE US Q1 2004-Q4 2015 ($BN)

1.21.70.9

1.72.0

3.6

2.1

4.3

6.36.56.4

10.3

7.37.4

9.4

11.4

9.611.1

8.37.3

3.1

8.7

6.55.6

6.7

9.4

7.2

12.6

5.9

16.4

18.5

9.69.2

14.8

8.09.3

3.9

9.6

6.4

16.1

8.9

12.0

10.59.18.9

13.312.1

10.4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Four quarter running average

1.21.70.9

1.72.0

3.6

2.1

4.3

6.36.56.4

10.3

7.37.4

9.4

11.4

9.611.1

8.37.3

3.1

8.7

6.55.6

6.7

9.4

7.2

12.6

5.9

16.4

18.5

9.69.2

14.8

8.09.3

3.9

9.6

6.4

16.1

8.9

12.0

10.59.18.9

13.312.1

10.4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Four quarter running average

6

?

Note: Total values include estimates for undisclosed deals. Excludes corporate and government R&D, and spending for digital energy and energy

storage projects (reported in annual statistics only).

1.9

4.0

1.62.12.5

4.02.73.12.5

5.2

2.84.13.0

5.54.13.73.3

5.84.64.74.4

7.4

5.5

7.46.8

9.0

11.5

9.17.77.6

10.7

6.76.35.85.55.34.9

2.61.9

4.94.94.2

1.4

4.3

2.2

4.3

0.60.8

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Four quarter running average

28 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Wind farms are a disaster

for the environment. They

kill the birds. They are very

expensive in terms of

energy. They're made in

China. Donald Trump

Presidential Candidate Picture: Michael Nagle/Bloomberg

TRUMP ON WIND

29 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

I am very proud that the

State of Vermont has

banned fracking. I hope

that communities all over

America do the same.

Bernie Sanders

Presidential Candidate

BERNIE ON GAS

Picture: CNN

30 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: Total values include estimates for undisclosed deals. Excludes corporate and government R&D, and spending for digital energy and energy

storage projects (reported in annual statistics only). Source: Bloomberg New Energy Finance

NEW INVESTMENT IN CHINA Q1 2004-Q4 2015 ($BN)

0.60.30.60.81.42.21.5

2.42.12.13.13.13.1

3.95.2

3.63.8

7.86.66.3

7.27.3

10.3

12.7

7.5

10.2

10.910.8

10.5

15.0

10.7

9.710.1

19.8

16.313.9

7.9

18.717.4

15.714.1

24.526.0

20.7

18.9

32.9

25.723.7

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Four quarter running average

31 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

CHINA’S ECONOMY – OFFICIAL STATISTICS

GDP (2013 USD)

0%

2%

4%

6%

8%

10%

12%

14%

0

2

4

6

8

10

12

14

2000 2005 2010 2015

Source: Bloomberg New Energy Finance, National Bureau of Statistics of China

%yoy change

0%

5%

10%

15%

20%

0

1

2

3

4

2000 2005 2010 2015

ENERGY (BN TOE)

Previous forecasts for coal consumption

subsequently revised up

0

1

2

3

4

2000 2005 2010 2015

COAL (MTCE) EMISSIONS (GTCO2E)

-5%

0%

5%

10%

15%

20%

25%

-3

0

3

6

9

12

15

2000 2005 2010 2015

32 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0%

5%

10%

15%

20%

0

50

100

150

200

2000 2005 2010 2015

Gas Coal

Nuclear Hydro

Non-hydrorenewables

CHINA POWER SECTOR INVESTMENT AND CAPACITY FACTORS

Note, Historical investment data for fossil capacity is based on real data for capacity additions and estimates of costs per unit of capacity. A

lead time of three years is assumed for fossil capacity from investment to commissioning, four years for hydro and five years for nuclear plants.

Source: Bloomberg New Energy Finance,

China National Bureau of Statistics

POWER CONSUMPTION (TWH)

INVESTMENT IN GENERATION CAPACITY ($BN/YEAR, REAL 2015$)

0%

4%

8%

12%

16%

20%

24%

0

1,000

2,000

3,000

4,000

5,000

6,000

2000 2005 2010 2015

%yoy change

Average thermal

plant capacity

factor

2011 61%

2015 49%

33 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

RENEWABLE ENERGY PROPORTION OF POWER GENERATION, 10 YEARS TO 2014 (%)

Canada

76%

US

13%

Brazil

71%

China

22%

Japan

11%

Australia

16% India

6%

S. Africa

2%

9%13%

US

61% 65%

Canada

9% 13%

Japan

16%23%

China

8%13%

Australia

16% 16%

India

1% 1%

South Africa

88%

75%

Brazil0% Lowest

50% Mid

100% HighestNote: Includes hydro Source: BP Statistical Review of Energy, Bloomberg New Energy Finance

15%

40%

Spain

4%

19%

UK

16%

44%Italy

27%

57%Denmark

10%

26%

Germany

34 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: Total values include estimates for undisclosed deals. Excludes corporate and government R&D, and spending for digital energy and energy

storage projects (reported in annual statistics only). Excludes large hydro, nuclear and natural gas. Source: Bloomberg New Energy Finance

NEW INVESTMENT IN CLEAN ENERGY IN EUROPE Q1 2004-Q4 2015 ($BN)

4.2

8.9

4.35.4

6.3

10.9

7.08.17.8

13.9

7.9

16.1

9.7

16.814.3

24.8

14.0

23.5 22.1

20.0

13.5

27.6

22.3

17.1

22.4

25.1

29.6

33.6

27.6

34.5

30.7

26.7

21.3

23.6

19.3

21.7

15.6

12.9

13.014.7

13.6

16.4

11.3

18.2

10.0

16.1

6.3

13.9

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Four quarter running average

35 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Source: Bloomberg New Energy Finance

NEW INVESTMENT – SELECTED EUROPEAN COUNTRIES Q1 2004-Q4 2015 ($BN)

Note: Total values include estimates for undisclosed deals. Excludes corporate and government R&D, and spending for digital energy and energy

storage projects (reported in annual statistics only). Excludes investment in nuclear.

2004 2015

ItalyITALY

$0bn

$20bn

$40bn

2004 2015

SpainSPAIN

2004 2015

GermanyGERMANY

2004 2015

FranceFRANCE

2004 2015

UKUK

36 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

PARIS AGREEMENT

Picture: UNFCC

37 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

The world must achieve

greenhouse gas neutrality

some time in the second half

of the century

PARIS – LONG TERM VISION

Paris Agreement

December 2015 Picture: Wikimedia

38 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

GLOBAL GREENHOUSE GAS EMISSIONS (GTCO2)

Source: UNFCCC, UNEP, Climate Action Tracker, Bloomberg New Energy Finance

30

35

40

45

50

55

60

65

1990 1995 2000 2005 2010 2015 2020 2025 2030

Historical emissions

INDC trajectory

Pre-COP21 pledges

30

35

40

45

50

55

60

65

1990 1995 2000 2005 2010 2015 2020 2025 2030

Historical emissions 2 C trajectory

INDC trajectory

Pre-COP21 pledges

39 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: The area shows energy consumption, proximity to the axes shows distribution of consumption. The cross shows centre of the area. The line is the

historical trend. Axis based on square scale. Source: Bloomberg New Energy Finance, IEA

PRIMARY ENERGY SUPPLY CHARTS (MTOE)

4,000

2,000

1,000

250

2040

Renewable energy

Natural gas

Oil Coal

Nuclear

40 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 1975 (MTOE)

4,000

2,000

1,000

250

1975

Renewable energy

Natural gas

Oil Coal

Nuclear

41 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 1980 (MTOE)

4,000

2,000

1,000

250

1980

Renewable energy

Natural gas

Oil Coal

Nuclear

42 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 1985 (MTOE)

4,000

2,000

1,000

250

1985

Renewable energy

Natural gas

Oil Coal

Nuclear

43 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 1990 (MTOE)

4,000

2,000

1,000

250

1990

Renewable energy

Natural gas

Oil Coal

Nuclear

44 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 1995 (MTOE)

4,000

2,000

1,000

250

1995

Renewable energy

Natural gas

Oil Coal

Nuclear

45 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 2000 (MTOE)

4,000

2,000

1,000

250

2000

Renewable energy

Natural gas

Oil Coal

Nuclear

46 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 2005 (MTOE)

4,000

2,000

1,000

250

2005

Renewable energy

Natural gas

Oil Coal

Nuclear

47 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 2010 (MTOE)

4,000

2,000

1,000

250

2010

Renewable energy

Natural gas

Oil Coal

Nuclear

48 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY, 2015 (MTOE)

4,000

2,000

1,000

250

2015

Renewable energy

Natural gas

Oil Coal

Nuclear

49 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY (MTOE)

4,000

2,000

1,000

250

2015

Renewable energy

Natural gas

Oil Coal

Nuclear

IEA 450ppm

2040 scenario

50 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Note: BNEF adjusted IEA NPS forecast using its own electricity generation and EV demand forecast. Renewables total excludes bioenergy. Source: Bloomberg New Energy Finance, IEA

GLOBAL PRIMARY ENERGY SUPPLY (MTOE)

4,000

2,000

1,000

250

2015

Renewable energy

Natural gas

Oil Coal

Nuclear

Paris 2100

illustrative

scenario

IEA 450ppm

2040 scenario

51 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

We need an

energy miracle

Picture: Bloomberg

ENERGY MIRACLE

Bill Gates

February 2016

52 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Picture: Bloomberg

ENERGY MIRACLE

Within the next 15 years I

expect the world will discover

a clean energy breakthrough

that will save our planet and

power our world.

Bill Gates

February 2016

53 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Baseload power price

Cost of nuclear

0

20

40

60

80

100

120

2001 2003 2005 2007 2009 2011 2013 2015

HINKLEY C PROJECTED POWER COST (GBP/MWH)

Image: EDF; Source: ECIU, Parsons Brinckerhoff, Mott MacDonald, E.On, EDF, Centrica, Bloomberg New Energy Finance

Baseload power price

Cost of nuclear

0

20

40

60

80

100

120

2001 2003 2005 2007 2009 2011 2013 2015

+126%

Hinkley

Point C

CfD

54 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

NEXT GENERATION NUCLEAR FISSION

TerraPower

TWR

Babcock & Wilcox

mPower

Terrestrial

Energy IMSR80

General Atomics

EM2 Note: Not an exhaustive list – excludes Gen IV startups such as Transatomic, Flibe and Upower, and all non-US efforts

Westinghouse

SMR

Nuscale

SMR Pictures: company websites

Holtec

SMR-160

55 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Image: Joint European Torus

NUCLEAR FUSION

56 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Source: General Fusion

ITER CADARACHE

Images: ITER collaborative; Source: various

Cost:

First Plasma:

2006

$6 bn

2019

2009

$12 bn

2019

2014

$21 bn

2020

2016

$25 bn?

2026

57 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Image: General Fusion

ENERGY MIRACLE – GENERAL FUSION?

58 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Image: Max Planck Institut für Plasmaphysik

ENERGY MIRACLE – WENDELSTEIN STELLERATOR?

59 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Image: Lockheed Martin

RENEWABLE ENERGY

60 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

ENERGY MIRACLE? SOLAR

Source: Maycock, Bloomberg New Energy Finance

1

10

100

1,000

10,000

100,000

1

5

50

1975 1980 1985 1990 1995 2000 2005 2010 2015

Crystalline silicon PV module price (2015 $/W(DC)) - LH scale

1

10

100

1,000

10,000

100,000

1

5

50

1975 1980 1985 1990 1995 2000 2005 2010 2015

Volume installed (MW) - RH scale Crystalline silicon PV module price (2015 $/W(DC)) - LH scale

$/W (DC) MW Installed

Costs down

150 x

Cumulative

installations

up 115,000x

61 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0.1%

0.2%

0.4%

0.8%

1.6%

3.1%

6.3%

12.5%

25.0%

2000 2002 2004 2006 2008 2010 2012 2014

RENEWABLES SHARE OF GENERATION, 2000–15 (% OF SYSTEM TOTAL)

Note: Y-axes are logarithmic with base 2 Source: Bloomberg New Energy Finance, BP, UNEP

WIND

Four

doublings

SOLAR

0.0%

0.0%

0.0%

0.0%

0.1%

0.2%

0.4%

0.8%

1.6%

3.1%

6.3%

12.5%

25.0%

2000 2002 2004 2006 2008 2010 2012 2014

Seven

doublings

0.05%

0.03%

0.01% 15 years 15 years

62 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Images: Gatesnotes.com, D-Light; Source Bloomberg New Energy Finance

ENERGY MIRACLE – SOLAR?

$2!

63 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

9 15

21 30

40 51

62 74

2

4 4

6

8

12

17

25

1 2 5 11

19 25

36

48

62

79

99

2010 2012 2014 2016f 2018f 2020f

Note: Large solar home systems are defined as larger than 10W solar panels. Historical data is based on Lighting Global and GOGLA data and

Bloomberg New Energy Finance estimates.

Source: Bloomberg New Energy Finance, Lighting Global,

GOGLA

OFF-GRID SOLAR USERS (MILLION HOUSEHOLDS)

Large solar home systems

Portable solar lanterns

and small home systems

or

64 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

IEA GLOBAL WIND AND SOLAR CAPACITY FORECASTS VS BNEF GW INSTALLED

WIND SOLAR

Source: IEA, Bloomberg New Energy Finance,

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

20

00

20

05

20

10

20

15

20

20

20

25

20

30

20

35

20

40

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,00020

00

20

05

20

10

20

15

20

20

20

25

20

30

20

35

20

40

05001,0001,5002,0002,500

2…

2…

2…

2…

2…

2…

2…

2…

2…

WEO 2002WEO 2004WEO 2006WEO 2008WEO 2009WEO 2010WEO 2011WEO 2012WEO 2013WEO 2014WEO 2015ActualBNEF forecast

Revised up

5-fold since

2000

Revised

up 14-fold

since

2000

65 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Picture: Viking/Penguin

BILL GATES ON THE INTERNET – 1994

The Internet has enormous

potential, but it’s important that

expectations aren’t cranked too

high. The total number of users

is still a very small portion of

the population.

Bill Gates

The Road Ahead

(written 1994)

66 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Image: Microsoft

BILL GATES INTERNET TIDAL WAVE MEMO – 1995

Now I assign the Internet

the highest level of importance.

In this memo I want to make

clear that our focus on the

Internet is crucial to every part

of our business.

Bill Gates

Memo to Microsoft Staff, 1995

67 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

276,000 orders

276,000 orders

$11.6 billion

TESLA MODEL 3

iPhone 6

10 million phones

$3.5 billion

Star Wars Force Awakens

1st Weekend box-office

$0.5 billion

– FIRST THREE DAYS

68 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Images: Tesla GM; VW; Nissan; Wikimedia Commons

EV MASS MARKET: $30,000 + 200 MILES RANGE

Tesla Model 3

BMW i3 VW e-Golf

Chevy Bolt

Nissan Leaf

69 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0

100

200

300

400

500

600

700

800

900

1,000

1,100

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Observed values: BNEF annual EV

lithium-ion battery price index

EV LITHIUM-ION BATTERY PACK PRICE ($/KWh)

Note: Forecast range based on a learning rate of 14-20%. EV cost parity is calculated on an unsubsidised total cost of ownership (TCO) basis.

Date range reflects cross over with different vehicle classes in the US. Source: Bloomberg New Energy Finance. EV lithium-ion battery price index

Observed values,

BNEF EV Lithium-Ion

battery price index

Reported future value,

major manufacturers

EV lithium-Ion battery

pack prices will have

fallen 77% between

2010 and 2018

70 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

EV LITHIUM-ION BATTERY PACK PRICE ($/KWh)

0

100

200

300

400

500

600

700

800

900

1,000

1,100

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Observed values: BNEF annual EV

lithium-ion battery price index

EV cost parity cross-over

Observed values,

BNEF EV Lithium-Ion

battery price index

Reported future value,

major manufacturers

Projected price, based on

14-19% experience curve

EV cost parity

crossover with IC

cars on capital cost

alone

Note: Forecast range based on a learning rate of 14-20%. EV cost parity is calculated on an unsubsidised total cost of ownership (TCO) basis.

Date range reflects cross over with different vehicle classes in the US. Source: Bloomberg New Energy Finance. EV lithium-ion battery price index

EV lithium-Ion battery

pack prices will have

fallen 77% between

2010 and 2018

71 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

20

40

60

80

100

120

140

2015 2020 2025 2030 2035 2040

m vehicles sold per year % of new car sales

GLOBAL LIGHT DUTY VEHICLE AND EV ANNUAL SALES, 2015–40 (M VEHICLES SOLD PER YEAR, %)

Note: forecast uses Gasoline and electricity prices from EIA’s 2015 Annual Energy Outlook ‘Low Oil Price’ scenario (ranging from $50 to $65 per barrel

between 2015 and 2025). High scenario assumes greater vehicle utilisation. Low scenario assumes $20 per barrel oil price Source: Bloomberg New Energy Finance

0%10%20%30%40%50%60%70%80%90%100%

020406080100120140

2015 2020 2025 2030 2035 2040

ICE + HEV BEV PHEV EV % of new sales

m vehicles sold per year % of new car sales

Shared vehicle

scenario

$20 oil

scenario

By 2040

Up to 50%

of new cars

will be EVs

72 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2015 2020 2025 2030 2035 2040

ELECTRICITY DEMAND FROM EVS

(TWH/YR)

ELECTRIFICATION OF TRANSPORTATION - IMPACTS

EV SALES BY REGION IN 2040

(MILLION VEHICLES)

Source: Bloomberg New Energy Finance

Europe15%

USA21%

China35%

Japan3%

Rest of the world26%

Total 41m

Total global electricity

demand excluding EVs

Electricity demand from EVs

Chinese

car industry

leadership

Around 10%

additional

power

demand

OIL DEMAND DISPLACED BY EVS

(MILLION BARRELS / DAY)

0

2

4

6

8

10

12

14

2015 2020 2025 2030 2035 2040

Rest ofthe world

Japan

Europe

USA

China

Destruction of

13m bbl/day

oil demand

73 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

Picture: Viking/Penguin

ENERGY MIRACLE

If you don’t invest in oil

and gas, you will see [an

oil price of] more than

$200 [per barrel]

Abdalla El-Badri

Secretary General, OPEC

74 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

MATCHING SUPPLY AND DEMAND IS DONE DIFFERENTLY DEPENDING ON THE TIMESCALE

II. CONTINUOUS

BALANCING

III. CONTROLLING

FREQUENCY I. PLANNING FOR

EXTREMES

Demand

Variable supply

Years to Months Days to minutes Seconds to minutes

75 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

TRANSFORMING THE GRID

Coal-fired generation

Incu

mb

en

t

tech

no

log

ies Gas-fired generation

Nuclear

Reservoir hydro

Pumped hydro

Interconnectors

Intermittent renewables

Demand response

New

tech

no

log

ies

Battery storage

Thermal storage

Chemical storage

Power to gas

Months to years

ahead

Minutes to days

ahead

2016 Seconds to

minutes after

76 Michael Liebreich BNEF Summit, New York, 5 April 2016 @MLiebreich

TRANSFORMING THE GRID

Coal-fired generation

Incu

mb

en

t

tech

no

log

ies Gas-fired generation

Nuclear

Reservoir hydro

Pumped hydro

Interconnectors

Intermittent renewables

Demand response

New

tech

no

log

ies

Battery storage

Thermal storage

Chemical storage

Power to gas

Months to years

ahead

Minutes to days

ahead

Seconds to

minutes after

2016

Future

Supergrids

Batteries Bulk storage

CCS

New services Gridchain

Unique analysis, tools and data for decision-makers driving

change in the energy system

[email protected]

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

Michael Liebreich

@MLiebreich

[email protected]

[email protected]

Thanks!