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<ul><li>1.SMRS:THE ECONOMICSAND CHALLENGES2ND ANNUAL SMALL MODULAR REACTORCONFERENCE, COLUMBIA, SCCHRIS GADOMSKI, LEAD ANALYST, NUCLEAR24 APRIL 2012/ / / / / / // / /// / / / / / / / / / / / / / / / / / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 1</li></ul><p>2. ABOUT BLOOMBERG NEW ENERGY FINANCE 200 staff in 12 offices worldwideObjective: serve clients with the best intelligence on finance, technology and policy developments in clean energy, energy efficiency and carbon marketsLondon New York Beijing San FranciscoTokyoWashington DCHong KongNew DehliSao PauloSydneyCape Town / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 2 3. BLOOMBERG NEW ENERGY FINANCE MARKETSSERVICES Renewable energy Insight: research, analysis &amp; forecasting Carbon markets Industry Intelligence: data &amp; analytics Smart technologies News &amp; Briefing: daily, weekly &amp; Renewable energy certificates monthly Carbon capture and storage Applied Research: custom research &amp;data mining Power Water Knowledge Services: Summit,Leadership Forums, Executive Briefings Nuclear &amp; workshops/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 20123 4. CONTENTS1. The economics: Q2 2012 assessment2. Major challenges3. Market opportunities4. Crititical technical and commercial factors / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 4 5. FOSSIL TECHNOLOGY LCOES ($/MWH) 140 Coal w/CO2 120 100CCGT w/CO2 80 Coal 60CCGT 40 200Q2 Q3 Q4 Q1Q2Q3Q4Q1Q2Q3 Q4Q1 2009 2010 2011 2012Note: Prices are in nominal dollars Source: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 20125 6. SOLAR TECHNOLOGY LCOES ($/MWH)35030025020015010050 0 Q2 Q3Q4 Q1Q2 Q3Q4Q1Q2 Q3Q4Q120092010 2011 2012STEG - Parabolic TroughSTEG - Parabolic Trough w/StorageSTEG - Tower &amp; Heliostat STEG - Tower &amp; Heliostat w/StorageSTEG - LFR PV - Thin FilmPV - c-SiPV - c-Si TrackingNote: Prices are in nominal dollarsSource: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 6 7. WIND TECHNOLOGY LCOES ($/MWH) 250 Wind - Offshore 200 150 Wind - Onshore 100 500Q2 Q3 Q4 Q1Q2Q3Q4Q1Q2Q3 Q4Q1 2009 2010 2011 2012Note: Prices are in nominal dollars Source: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 20127 8. LEVELISED COST OF ELECTRICITY, Q1 2012 ($/MWH)Marine - WaveNOAK 799 - Marine - TidalSMR740 - STEG - Parabolic Trough +5%STEG - LFR+5%STEG - Parabolic Trough + Storage +5% STEG - Tower &amp; Heliostat+6% Wind - Offshore+1%STEG - Tower &amp; Heliostat w/storage+6%PV - c-Si-13%PV - Thin Film-12%Biomass - Gasification -PV - c-Si Tracking-8% Biomass - Anaerobic Digestion-Biomass - Incineration+3%Municipal Solid Waste - Geothermal - Binary Plant- Wind - Onshore +4%Small Hydro -Large Hydro -Geothermal - Flash Plant-Landfill Gas - Nuclear -Coal Fired- Natural Gas CCGT +7% 0 100 200300 400500 LCOE BNEF 2011 EU-ETS EUA Forecast Q1 2012 Central Scenario Q4 2011 Central ScenarioNote: Carbon forecasts from the Bloomberg New Energy Finance European Carbon Model with anaverage price to 2020 of $33/mtCO2. Coal and natural gas prices from the US Department of Energy EIAAnnual Energy Outlook 2011 and internal forecasts. Percentage change represents change from Q4 2011. Source: Bloomberg New Energy Finance/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 20128 9. CONTENTS1. The economics: Q2 2012 assessment2. Major challenges3. Market opportunities4. Crititical technical and commercial factors / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 9 10. 2. MAJOR CHALLENGES FACING NUCLEAR1. Cheap and abundant clean natural gas2. Fukushima backlash3. Renewable investment4. Demand erosion/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 10 11. HISTORICAL AND PROJECTED GAS PRICE FORECASTS,2002-20 ($/MMBTU) 16 14 12 108 BNEF forecast64 Historical202002200420082010 20122014 2016202020062018Source: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 11 12. NO MATERIAL UPSIDE TO PRICES IN THE SHORT TERMWorking gas in underground storage (Bcf)5,0004,500 Physical storage limit4,0003,5003,0002,5002,0001,5001,0001 47 10 13 16 19 22 25 28 31 34 37 40 43 46 49 522007-10 range20112012 actual2012 estimate2013 estimateSource: Bloomberg New Energy Finance, EIA/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 12 13. ANNUAL AVERAGE WHOLESALE PRICE FORECASTS BYREGION, 2012-20 Wholesale price ($/MWh)Gas price ($/MMBtu) 808NOAK SMR 707 606PJM 505NYMISO 404CA 303SPPTX 202Gas 101 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020Note: Gas price is our base case forecast of Henry Hub.Source: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 13 14. US SUPPLY AND DEMAND, 2010-20 (BCFD)Sources of supply100100 Other SupplySupply 100 Eagle Ford Other80 80Supply Marcellus80 Eagle Ford 10060 Other SupplyWoodford Marcellus 60Eagle Ford6080 Fayetteville Woodford40 Marcellus Barnett Fayetteville 40 406020 Woodford Haynesville Barnett20 Net imports Fayetteville CBM 20 40 0 Haynesville BarnettMexico Gulf of CBM Net imports 020 Haynesville (gas) Conventional0-20 Gulf of Mexico Net imports CBM Conventional (associated) Conventional (gas) -20 0 -40 -20 Gulf of Mexico PowerSources of demand Conventional (associated) -40-20 -60 Conventional (gas) Industrial Power -40 Conventional commercial Residential &amp; (associated) Industrial -60-40 -80 Power Other Residential &amp; commercial -60 -80-60Demand Industrial LNG exports-100 OtherDemand Residential &amp; commercial Net imports20112012 2013 20142015 2016 2017 2018 2019 2020LNG exports -80-100-80Other20112012 2013 2014 Net imports Demand 2016 2015 2017 2018 Demand 2019 2020Balance LNG exports-100 -10020112012 2013 20142015 2016 20172018 20192020Net exports 2011 20122013 201420152016 2017 2018 20192020 Source: Bloomberg New Energy Finance, EIA, AL OGB, AOGC (AR), COGCC (CO), LA DNR, NM OCD, OCC (OK),PA DEP, TRRC (TX), UT DNR, VA DMME, WOGCC (WY), WV DEP / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 14 15. JAPAN NUCLEAR CAPACITY: 2010 AND PROJECTED GROWTHVS. NO NEW BUILDS, ASSUMING 40-YEAR OPERATING LIFE (GW)806870 646049502001-201040 36 1991-20001981-1990301971-1980221966-19702010 0 1970 1980 1990 2000 2010 20202030 Source: Bloomberg New Energy Finance, METI/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 201215 16. GERMAN NUCLEAR CAPACITY, 2010-23 (GW)Biblis A, Biblis B, Brunsbuttel,Isar 1, Krummel,Necharwestheim 1, Philippsburg25and Unterweser in 2011 Grohnde, Gundremmingen CGrafenrheinfeldand Brokdorf by end of 202120by end of 2015 Gundremmingen-B by end of 2017Philippsburg-2 Isar 2, Emsland15by end of 2019 and Neckarwestheim 2 by end of 202210 5 0 201020112012 2013 2014 20152016 2017 2018201920202021 2022 2023 Source: Bloomberg New Energy FInance/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 16 17. FRENCH PEAK DEMAND-SUPPLY OUTLOOK TO 2025WITH NO LIFE EXTENSIONS (GW)Nuclear life extension100Peak importsBaseload imports 80 Oil + OCGTsCCGTCoal 60Cogen + Other REWind 40 HydroNuclearPeak exports 20 Winter reference peakBaseload exportsBaseload demand 0201120142017 20202023 Source: RTE, Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 201217 18. REPLACING NUCLEAR GENERATIONELECTRICITY DEMAND AND GENERATION (TWH/YR)Planned / Projected Export - Imports + Pumped storage consumption +192 -27 +59-17-158 64 64 +34Domestic584584consumption 520542Implementation 478 needed2011 Electricity ExpectedAdditional EE 2025 Electricity 2011 Electricity Nuclear capacityIncreased New renewableAvailable 2025 Electricity demanddemand growthmeasuresdemandgenerationshutdownnuclear load energysurplusgeneration factorgenerationgeneration DEMAND GENERATIONSource: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 18 19. GLOBAL NEW (Corp R&amp;D, Gov R&amp;D, SDC and adjustment for re-inv equity) ENERGY BY Internal Note: Includes all add-ons INVESTMENT IN CLEANSECTOR ($BN)$260bn$247bn9.6 11.719.2 23.219.8 $187bn$189bn21.8 13.2 16.5 74.9$153bn 16.6 18.6Other 12.4 32.3 21.7 90.1 Energy smart technologies 15.6 Bioenergy$113bn10.4 36.1Wind12.8 67.6 73.8Solar $75bn8.1 37.4 136.6 $54bn 11.150.94.815.5 100.2 12.032.2 9.6 23.557.4 58.1 13.437.8 13.816.3 20.220042005 20062007 2008 20092010 2011Note: Includes corporate and government R&amp;D, and small distributed capacity. Adjustedfor re-invested equity. Does not include proceeds from acquisition transactionsSource: Bloomberg New Energy Finance/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 201219 20. FORECAST LARGE PV PROJECT CAPITAL COST, 201020 ($/W) $3.02$2.63 $2.32$2.11$1.98 $1.87$1.77$1.68$1.6 $1.52 $1.45 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Module Inverter Balance of plantEngineering, procurement &amp; construction otherNote: Based on historical experience curves for crystalline silicon modules and othercomponents, and the prices in the mature German market. 2010 dollars. Assumes BloombergNew Energy Finance short-term build forecasts to 2013, 20% new build growth after that.Source: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 20 21. RESIDENTIAL ELECTRICITY PRICE 2012, INSOLATION,RESIDENTIAL PV LCOE 20150.40More sunDenmark$/kWh0.35 Germany0.30 Italy Spain0.25HawaiiUnited Kingdom0.20JapanFranceAustraliaBrazilTurkey0.15South KoreaCaliforniaNew JerseyNorth IndiaIsrael CanadaArgentina0.10Texas North China Mexico RussiaSouthSouth India0.05 China Indonesia Saudi Arabia0.00 800 10001200 14001600 18002000Potential 25GW residentialEMEA ASOCAMER kWh/kW/yearPV marketNote: LCOE based on 6% weighted average cost of capital, 0.7%/year module degradation, 1%Source: Eurostat, grid operators, Bloomberg New Energycapex as O&amp;M annually. $2.34/W capex assumed for 2015 Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 21 22. BALTIMORE GAS AND ELECTRICPROJECTED PEAK DEMAND REQUIREMENTS, 2009-23 (MW)0% (Demand-side management) But what about electric cars? Source: BGE via Maryland DSM study / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 22 23. CONTENTS1. The economics: Q2 2012 assessment2. Major commercial challenges3. Market opportunities4. Critical technical and commercial factors / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 23 24. 3. MARKET OPPORTUNITIES1. Fossil fuel generation replacement, eg. US &amp; UK2. Power and desalination, MENA3. Oil sands, Alberta4. Process heat for biofuels/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 24 25. UK GENERATION CAPACITY, 2012-30 (GW)160 Biomass &amp; waste140 CCGTCCGT w/CCS120Coal100Coal w/CCS 80 Hydro 60 MarineNuclear 40Oil &amp; OCGT 20Solar0 Wind offshore2012 2014 2016 2018202020222024202620282030Wind onshoreSource: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 25 26. UK PLANNED RETIREMENTSCAPACITY (GW) 9.0 8.0 7.0CCGT 6.0 5.0Coal 4.0Nuclear 3.0 2.0Oil 1.0 0.0 2012 20132014 2015 2016 Source: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 201226 27. MENA TECHNOLOGY AND POLICY DRIVERS1. Rapidly growing energy demand at least 5% CAGR 2010-202. Economics lost opportunity cost for a barrel of oil3. Water 79% of installed global desal capacity in 20204. Contracts signed for large reactors/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 27 28. ELECTRICAL POWER GENERATED FROM OIL (GWH)120,00055%100,000 That totals 246TWh 80,000 60,000 40,000 72%98%19% 20,000 55% 0 SaudiKuwaitIraqEgyptLibyaSource: World Bank Data/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 28 29. DESALINATION OPPORTUNITIES IN MENA(M3/CAPITAL/YEAR) TOTAL RENEWABLE WATER RESOURCES PER CAPITA18,00016,00014,00012,00010,000 8,000 6,000 4,000 2,000 DESALINATION OPPORTUNITIES? 0 YemenSyriaLebanon JordanKuwait Palestine World SE AsiaESCWABahrain Iraq UAEOmanQatar America EgyptArabiaSudanSaudiNorthESCWA: Economic And Social Commission For Western Asia Source: ESCWA / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 29 30. ENERGY INPUT COST OF DESALINATION PER M3Energy cost per m3 of desalinated water$8.00$7.00$6.00MSFsa$5.00 MSFco$4.00 MEDsa$3.00 MEDco$2.00 RO$1.00$0.00$0$30 $70$110$150Opportunity cost of a barrel of oilNote: Assumes energy accounts for 75% of water supply costs. Plants with differentcapacities may use different amounts of energy. Prices are averages, representative ofaverage costs.Source: Data compiled by ESCWA/ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 30 31. DESALINATED WATER PRICES USING DIFFERENT POWERSOURCES ($/M3) 4.723.90 2.512.241.92 1.63 1.431.19 1.101.291.151.06 0.960.87 0.88 0.87 0.79 0.75 0.70 0.75 OilCoal NuclearNatural Gas MSFMSF-RO MED MED-ROROSource: IAEA, Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 201231 32. ALBERTA OIL SANDS PROJECTED PRODUCTION Source: CERIs 2011 Canadian Oil Sands Supply Costs andDevelopment Projects (2011-2045) study number 128./ / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 32 33. CANADIAN OIL SANDS NATURAL GAS DEMAND (MCF/D)DRIVING CO2 EMISSIONS (CO2 EQ. MT/YEAR)(MMcf/d)(CO2 eq. MT/year)4,000,000 200,000 180,0003,500,000 160,0003,000,000 140,0002,500,000 Nat Gas Consumption 120,000CO2 Emission2,000,000100,000 Cost of compliance80,0001,500,000 in 2022: C$3bn+ 60,0001,000,000 Total compliance 40,000 through 2045: 500,000 C$200bn 20,000 0 020072012 20172022 2027 2032 2037 2042 Source: CERIs 2011 Canadian Oil Sands Supply Costs andDevelopment Projects (2011-2045) study number 128. / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 33 34. RENEWABLE FUELS STANDARD (RFS-2), 2012(BN GALLONS) 4021bn gallons/year by 2022 of 35 new advanced biofuelsCellulosiccapacity neededbiofuel (d) 30 Other 25advanced biofuel (c) 20 Biomass- 15based diesel (b) 10 Corn-based5ethanol (a)0 2008 20102012 20142016201820202022Source: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 201234 35. RFS-2 TECHNOLOGIES TOTAL RENEWABLE FUELSADVANCED BIOFUELSOTHER RENEWABLE FUELSCELLULOSIC BIOFUEL OTHER ADVANCEDBIOMASS-BASED ETHANOLBIOBUTANOL ETHANOL/BIODIESEL OTHERBIODIESELSTARCH SUGAR TRANSESTERIFICATION FERMENTATION FERMENTATION ALGAE FEEDSTOCK TECHNOLOGYBIOBUTANOLADVANCED BIOCHEMICAL ENZYMATIC HYDROLYSIS ACID HYDROLYSISGASIFICATION FT SYNTHESIS small modular reactorPYROLYSIStechnology group targetGASIFICATION FERMENTATIONHYDROTREATMENTRenewable fuel1-generationAlgae feedstockBiochemical Thermochemicaltypetechnologiestechnologies technologiesSource: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 201235 36. BASIC THERMOCHEMICAL BIOENERGY PROCESSdrying tar CH4 Feedstock input:pyrolysisbiomass/municipalCO2 H2O waste combustion CO H2 reduction Thermo processSyngas FT synthesis Fermentation CombustionMethanol PowerSyndieselEthanolSteam Source: Bloomberg New Energy Finance / / / / SMRS: THE ECONOMICS AND CHALLENGES, 24 APRIL 2012 36 37. CONTENTS1. The economics: Q2 2012 assessment2. Major challenges3. Market opportuniti...</p>