BRITISH INSTITUTE OF ENERGY ECONOMICS ST JOHN S COLLEGE OXFORD 20 SEPTEMBER 2012 Michael Liebreich, Chief Executive Bloomberg New Energy Finance Twitter: @MLiebreich MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 1
GLOBAL NEW INVESTMENT IN CLEAN ENERGY 2004 11 ($BN) 13% $280bn 22% $187bn 1% 31% $189bn $247bn 35% $153bn $54bn 39% $75bn 51% $113bn 2004 2005 2006 2007 2008 2009 2010 2011 Note: Includes corporate and government R&D, and small distributed capacity. Adjusted for re-invested equity. Does not include proceeds from acquisition transactions. Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 2
TOTAL INVESTMENT IN CLEAN ENERGY In energy, a billion dollars isn t cool. You know what s cool? A trillion dollars. That s cool Source: Bloomberg New Energy Finance, Columbia Pictures MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 3
FINANCIAL NEW INVESTMENT IN RENEWABLE ENERGY BY REGION, 2004-2011 ($BN) Europe North America 29.9 32.9 38.8 23.9 35.1 49.2 11.8 20.3 32.2 50.1 51.6 44.9 44.3 38.9 12.5 6.0 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Asia & Oceania 57.6 60.6 46.8 Middle East & Africa 26.1 34.2 18.4 6.4 11.7 South America 2004 2005 2006 2007 2008 2009 2010 2011 5.3 0.3 0.1 1.3 0.5 1.5 0.4 2.4 2004 2005 2006 2007 2008 2009 2010 2011 15.7 10.2 10.5 12.8 9.2 5.5 3.1 0.6 2004 2005 2006 2007 2008 2009 2010 2011 Note: New investment volume adjusts for re-invested equity. Total values include estimates for undisclosed deals. This comparison does not include small-scale projects or R&D estimates. Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 4
NEX CLEAN ENERGY INDEX 2003 2012 YTD 500 NEX NASDAQ S&P 500 400 300 200 100 0 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Note: Values as of 22 August 2012; NASDAQ and S&P 500 rebased to 100 on 01 Jan 2003 Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 5
NEX CLEAN ENERGY INDEX 2011 2012 YTD 150 140 130 120 110 100 90 80 70 60 50 NEX NASDAQ S&P 500 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Note: Values as of 22 August 2012; NASDAQ and S&P 500 rebased to 100 on 01 Jan 2011. Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 6
NEX CLEAN ENERGY INDEX 2012 YTD 150 140 130 120 110 100 90 80 70 60 50 NEX NASDAQ S&P 500 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Note: Values as of 22 August 2012; NASDAQ and S&P 500 rebased to 100 on 01 Jan 2012. Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 7
UNCOMPETITIVE TECHNOLOGY Source: Bloomberg MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 8
EUROPEAN FINANCIAL CRISIS Photo: Bloomberg MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 9
US POLITICAL CRISIS He s going to stop us from drilling our way to energy independence! He s ignoring the really bad thing beginning with C which we can t mention any more! MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 10
NEW ENERGY FINANCE UNDERLYING THESIS, 2004 Fundamental re-engineering of the world s energy industry around low carbon, more secure solutions and architecture Will cost trillions Will take decades Will be supported by government actions Will be funded largely by capital markets Source: New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 11
GLOBAL CUMULATIVE RENEWABLE ENERGY CAPACITY INSTALLATIONS BY SECTOR, 2000 12 (GW) 635 559 416 479 184 200 213 229 245 266 290 320 362 Other renewables Biomass & Waste Solar Wind Small Hydro 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Note: Other renewables includes geothermal and marine Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 12
EU NET CAPACITY ADDITIONS (GW) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 50,000 40,000 30,000 20,000 10,000 Other Gas PV Wind 0 Source: EWEA, Bloomberg New Energy Finance, MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 13
AUSTRALIA ACTUAL VS FORECASTED ELECTRICITY DEMAND, 2005 2020 (TWH) 260 250 240 230 Forecast as of August 2011 220 210 200 190 Actual annual energy demand 5% shortfall due to energy efficiency and solar 180 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: Australian Energy Market Operator, Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 14
INDUSTRY IN TRANSITION 1. Cost competitiveness 2. Supply chain 3. Intelligence (smart grid / big data, internet of things, etc) 4. Advanced transportation 5. Next-gen bioenergy 6. Geographic diversity Source: New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 15
TS ELIOT, THE HOLLOW MEN, 1925 Between the idea And the reality Between the motion And the act Falls the Shadow. MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 16
TS ELIOT, THE HOLLOW MEN, 1925 Between the idea And the reality Between the motion And the act Falls the Shadow. This is the way the world ends. Not with a bang but a whimper. MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 17
PV MODULE PRICES, 1976 2012 ($/W) 100 1976 PV MODULE PRICES HAVE FALLEN 75% SINCE 2008 10 1985 2003 1 2006 2012 2012 0.1 1 10 100 1,000 10,000 100,000 1,000,000 historic prices Chinese c-si module prices First Solar thin-film module cost Notes: Inflation adjustment using US PPI, R2 of c-si regression = 0.94, R2 of FSLR regression = 0.98; data since 2007 based on Bloomberg New Energy Finance Solar Spot Market Price Index experience curve Thin-film experience curve MW (log) Source: Paul Maycock, Bloomberg New Energy Finance, FSLR filings MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 18
AVERAGE LEVELISED COST OF ONSHORE WIND, 1984-2011 ( /MWH) 500 WIND TURBINE PRICES HAVE FALLEN 25% SINCE 2008 100 50 14% 1984 1990 2000 2004 2011 10 100 1,000 10,000 100,000 1,000,000 MW Note: Learning curve (blue line) is least square regression: R 2 = 0.88 and 14% learning rate. Source: Bloomberg New Energy Finance, ExTool MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 19
LITHIUM-ION BATTERY EXPERIENCE CURVE $/kwh 10,000 EV BATTERY PRICES HAVE FALLEN 30% SINCE 2010 Consumer Li-ion battery experience curve 1,000 1995 Q1 2012 2015 BNEF EV Li-ion battery cost forecast 2000 2005 2020 2030 Historic consumer Li-ion battery prices 100 Historic EV Li-ion battery prices 10 100 1,000 10,000 100,000 1,000,000 10,000,000 Cumulative production (MWh) Source: Battery University, MIIT, IIT, Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 20
GRID-COMPETITIVE CLEAN ENERGY New coal Best Wind Gas at $6/MMBtu = = Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 21
BLOOMBERG NEW ENERGY FINANCE GAS PRICE FORECASTS VS. NYMEX STRIP ($/MMBTU) 2013 2014 2015 2016 2017 2018 2019 2020 7 6 BNEF 5 4 NYMEX 3 2 1 0 Short -and medium-term quarterly prices Long-term annual average prices Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 22
SUPPLY CHAIN CASE STUDY - US CAR MANUFACTURERS 1903 2012 Major Manufacturers Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 23
GLOBAL LIGHT VEHICLE SALES, 2011 ( 000 VEHICLES) 67,876 43 Global auto & light commercial vehicle production 2011 EV sales Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 24
FIRST- VERSUS SECOND-GENERATION BIOFUEL PRODUCTION CAPACITY, 2010-30 (BN LITRES) 350 300 Second-gen. 250 200 First-gen. 150 100 50 0 2010 2015 2020 2025 2030 Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 25
NEW INVESTMENT IN CLEAN ENERGY BY REGION Q1 2004 Q2 2012 ($BN) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2006 2007 2008 2009 2010 2011 2012 Europe United States China Brazil Other Note: Total values include estimates for undisclosed deals. Excludes corporate and government R&D. Now includes small distributed capacity & adjustment for re-invested equity. NEW Source: Bloomberg New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 26
INDUSTRY IN TRANSITION 1. Cost competitiveness 2. Supply chain 3. Intelligence (smart grid / big data, internet of things, etc) 4. Advanced transportation 5. Next-gen bioenergy 6. Geographic diversity Source: New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 27
INDUSTRY IN TRANSITION 1. Cost competitiveness 2. Supply chain 3. Intelligence (smart grid / big data, internet of things, etc) 4. Advanced transportation 5. Next-gen bioenergy 6. Geographic diversity 7. Capital markets Source: New Energy Finance MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 28
GLOBAL CAPITAL MARKET SIZES IN PERSPECTIVE ($BN) Equity capital markets $47,000bn Source: Bloomberg New Energy Finance, Bank for International Settlements, Citi MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 29
GLOBAL CAPITAL MARKET SIZES IN PERSPECTIVE ($BN) Equity capital markets $47,000bn Debt capital markets $63,000bn Source: Bloomberg New Energy Finance, Bank for International Settlements, Citi MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 30
GLOBAL CAPITAL MARKET SIZES IN PERSPECTIVE ($BN) Equity capital markets $47,000bn Debt capital markets $63,000bn Green bond market $230bn Source: Bloomberg New Energy Finance, Bank for International Settlements, Citi MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 31
GLOBAL CAPITAL MARKET SIZES IN PERSPECTIVE ($BN) Equity capital markets $47,000bn Debt capital markets $63,000bn Green bond market $230bn Green project bond market $14bn Source: Bloomberg New Energy Finance, Bank for International Settlements, Citi MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 32
GLOBAL CAPITAL MARKET SIZES IN PERSPECTIVE ($BN) Equity capital markets $47,000bn Debt capital markets $63,000bn Green bond market $230bn Green project bond market $14bn Clean energy project bond market $3bn Source: Bloomberg New Energy Finance, Bank for International Settlements, Citi MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 33
UK CLEAN ENERGY-RELATED POLICY & REGULATION Climate Change Levy Renewables Obligation Certificates Cap & Trade - EU-ETS Cap & Trade - CDM Carbon Reduction Commitment Climate Change Act ROC banding Carbon Floor Price Feed-in-Tariffs Contracts for Difference Capacity Market CCS Commercialisation Programme Accelerated Depreciation for energy efficiency Green Deal MICHAEL LIEBREICH, OXFORD, SEPT 2012 TWITTER: @MLiebreich 34
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