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Solar PV’s pivotal role in
the great global energy transi5on
Dr Jeremy Legge*
Drama,c changes are beginning to sweep global energy markets
Insurgency cost down
Incumbency cost up
Three emerging megatrends are par5cularly important
Carbon ac,on
the energy of nationsRISK BLINDNESS AND THE ROAD TO RENAISSANCE
JEREMY LEGGETT
Jan 2004 – May 2013 May 2013 – Dec 2015
….as I see it in my front-‐line eyewitness chronicles
0%
25%
50%
75%
100%
1850 1870 1890 1910 1930 1950 1970 1990 2010 Percen
tage
of U
.S. E
nergy Co
nsum
ption
50 years
Wood Coal
Hydro
Oil
Natural Gas
Renewables
75%
50 years
1920
75%
2020
Nuclear
50 years
X%?
Source: S Dolezalek
System change in energy is nothing new
1913 1900
Spot the car Spot the horse
….and disrup5on can happen very fast
….not to men,on up to 70% cuts by 2050, 35 years from now
White House June 2015
The industrialised na5ons have declared the endgame on
Insurgency cost down
Incumbency cost up
Three emerging megatrends
Carbon ac,on
Source: Alliance Bernstein, April 2014
Solar PV average in 2006
Fossil fuel versus solar: price
35 years
The “Terrordome”
Alliance Bernstein, 14 April 2014
2006
Fossil fuel versus solar: price
Apple global ad campaign April 2014
Big players are smelling the coffee
Why would Apple want “every company to copy” boring and design-‐lite solar farms?
Apple Wants to Start Producing Cars as Soon as 2020 18 Feb 2015
Slough, UKUBS Urges Investors to Join Solar Revolu,on Guardian, 27 August 2014
The power of solar and storage
SSE project with Solarcentury rooTiles 2010
Source:ce:
The power of solar and storage € kWh
EU EV sales
EU fleet
Lithium baWery costs
Solar PV roof + baWery + EV price
Payback, years ROI
ROI 27 August 2014
“This will change the face of energy markets”
9 April 2014 Unlikely players
are paying very close a*en,on
20 August 2014 ….er, run that past me again?
The first U-‐turn has happened in the u5lity sector. How long before the first oil & gas company?
Source: Bloomberg NEF
The rise and rise of renewables GW per year electricity genera5on addi5ons
May 1 2015 Launch of Tesla Energy
Week 1: $800 million of indica,ve orders
And as for energy efficiency….
The best way to shrink the mountain of transi,on…. ….and the best way to create energy jobs
Insurgency cost down
Incumbency cost up
Three emerging megatrends
Carbon ac,on
Source: Douglas Westwood, from Bloomberg
Selected listed interna5onal oil companies’ upstream capex and crude-‐oil produc5on
BG, BP, COP, CVX, ENI, OXY, PBR, RDS, STO, TOT, XOM
Capex versus oil produc5on
Capex trials & tribula5ons
Kashagan $50 bn & coun,ng Shell in the Arc,c:
$5 bn & floundering
Petrobras & the sub-‐salt: $221 bn over 5 years pleeeeease
Canada & the tar sands: 50 year financing? Really?
Break-‐even oil price: assessing danger of stranding
May 2014
$1.1 trillion capex at risk by 2025 >$95
2 degree budget
“A trillion dollars of zombie investments” in planned future oil projects above $70
December 2014
Shale Drillers Feast on Junk Debt to Stay on Treadmill Apr 30 2014
Is the U.S. Shale Boom Going Bust? Apr 22 2014
1 December 2014
It gets worse….
…..an enquiry now being emulated by the G-‐20, as of April 2015
Coal entering structural decline?
Insurgency cost down
Incumbency cost up
Three emerging megatrends
Carbon ac,on
Copenhagen, Dec 2009
Our leaders may have failed in 2009, but…..
c. 100 na,ons for zero net carbon by 2050
66% of emissions are down to 90 companies
US & China envoys work together at the Lima climate summit, December 2014
…..circumstances are different now
And:
….and as for Saudi Arabia, oil consump(on is a vital factor
Economic vulnerabilitiesSaudi Arabia’s energy consumption pattern is unsustainable. The country currently consumes over one-quarter of its total oil production – some 2.8 million barrels a day.2 This means that on a ‘business as usual’ trajectory it would become a net oil importer in 2038 (see Figure 1). No one is suggesting this is the most likely outcome but the possibility does signal the urgency of the need for change. More oil reserves may be discovered and production raised, population growth may decline and new policies and technology may change consumption patterns, but in the absence of such events and with the country’s high dependence on oil revenues the economy would collapse before that point. The Ministry of Petroleum considers between $70/b and $80/b to be a fair international price for oil.3 With the price at $77/b Saudi Arabia could begin to fall into intractable deficit in its fiscal and current accounts from as early as 2022 (see Figure 2).
Figure 1: Saudi Arabia’s oil balance on a business-as-usual trajectory
Source: Chatham House research 2010. See Appendix 1 for assumptions and key sources.NGL = natural gas liquids
2 See Appendix 1 for our definition of ‘apparent consumption’. This is the figure given in BP (2011). It includes natural gas liquids (NGLs), international aviation fuel and marine bunker fuel. It differs from the figure given by Saudi Aramco, which would suggest around one-fifth of oil production is consumed domestically.
3 This is the range that Saudi government figures suggested for 2010–11 but what is considered a ‘fair price’ by Saudi Arabia tends to rise over time along with the budgetary needs. It was $35/b in 2004–05, for example. In February 2011, King Abdullah announced a $37bn handout including a 16% increase in all public-sector salaries. This $37bn is equivalent to an additional $14/b on the price of Saudi exports for 2010. A report from the Institute of International Finance estimated that the breakeven price for oil needed to balance the Saudi budget for 2011 would be $88/b, as opposed to $68/b in 2010 (IIF 2011).
2 Saudi Arabia’s Consumption Problem
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Oil consumption Saudi crude and NGL production Oil exports
20
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Consump,on Exports
Saudi crude and NGL produc,on
2025
2030
….and the proposed solu,on?
Saudi Arabia: not a drop to export by before 2030 on current trends
“We need to help Saudi Arabia become the Saudi Arabia of solar.”
A US intelligence view
Source: Wikileaks
Solarcentury experience helping to build “the Terrordome”
Early demos: UK’s first solar electric and solar hybrid rooves
UK’s first solar electric tower facade
UK’s first solar street: S Yorkshire HA
Early demos: niche applica,ons working with architects
Flat roof
• 5,220 modules • 35 km string cable • 2.6 t central inverter • EPC contract signed 13/10/09 • connec,on of system on 31/12/09 …..the en5re process took 10 weeks
Moving towards scale: large commercial rooves
Moving towards scale: 5MW above a working auto factory
Moving towards scale: installing above working railway & river
EnergyRoof for pitched roofs
Large numbers: barns
Scale: solar farms up to 50 MW
Innova,on: while manufacturers innovate at the cell level…..
….we innovate at the balance of systems level, in mul,ple ways
Result: a genera,on of Solar PV ,les and slates
UK’s first solar street: S Yorkshire HA
Result: a genera,on of solar PV ,les and slates
Result: a new BIPV megaslate cost-‐compe,,ve with modules
A brand family with a purpose Profits for a purpose: 5% dona,on to SolarAid
10 million people reached
900 local jobs created
890,000 kg CO2 averted*
£230 million in savings*
2 billion homework hours created* *over three years
SolarAid’s social enterprise, SunnyMoney has sold � 1.6 million solar lights
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
To Apr 2015
Uganda
Malawi
Zambia
Kenya
Tanzania
Pla5num GIIRS Ra5ng
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200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2006 2008 2010 2011 2012 2013 2014 2015
Cumula5
ve light sales
Peaceful solar revolu,on and educa,on: a microcosm of the solar-‐led renaissance that is within our grasp.
Thank you .jeremy.legge*@solarcentury.com www.jeremylegge*.net