CLEAN ENERGY MARKET IN JAPAN AND US

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1 CLEAN ENERGY MARKET IN JAPAN AND US USJAPAN RENEWABLE ENERGY POLICY BUSINESS ROUNDTABLE, TOKYO YUGO NAKAMURA 3 DECEMBER 2012 CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

2 INVESTMENT BY COUNTRY AND SECTOR, 2011 ($BN) United States China Germany Italy Rest of EU27 India United Kingdom Japan Spain Brazil Canada France Australia Indonesia South Korea Turkey Argentina Mexico South Africa Wind Solar Other renewables Biofuels Efficiency & low carbon tech/services Note: A full description of the methodology and parameters employed for the analysis can be found in the Pew Charitable Trusts report, Who s Winning the Clean Energy Race? 2011 edition. Source: Bloomberg New Energy Finance CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

3 INVESTMENT BY COUNTRY AND FINANCING TYPE, 2011 ($BN) United States China Germany Italy Rest of EU27 India United Kingdom Japan Spain Brazil Canada France Australia Indonesia South Korea Turkey Argentina Mexico South Africa Asset finance Small distributed Public market Venture capital/private equity Note: A full description of the methodology and parameters employed for the analysis can be found in the Pew Charitable Trusts report, Who s Winning the Clean Energy Race? 2011 edition. Source: Bloomberg New Energy Finance CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

4 CONTENTS 1. Japan 2. US CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

5 JAPAN An ambitious goal to increase renewables: 2535% of power supply by 2030 Challenge for energy system transformations Feedin tariff: generous rates opened new window of opportunity Solar by far leads the market, wind to follow The government is hashing out measures to stimulate investments Regulatory easing Access to resources Streamlining application processes Reexamining safety rules Tax incentives (eg, accelerated depreciation) CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

6 JAPAN NUCLEAR POWER CAPACITY, (GW) Note: The scenario assumes no capacity will be built, and existing reactors will be closed after 40 years of operational life (except the ones with extension permissions). Source: METI, Bloomberg New Energy Finance CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

7 GOJ S POWER SUPPLY SCENARIO BY TYPE, 2010&2030 (TWH) Note: A scenario that assumes nuclear supplies 15% of power of demand in Hydro includes pumped hydro. Source: The Energy and Environment Council CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

8 GOJ S SCENARIO ON CUMULATIVE CAPACITY BY TYPE (GW) Note: A scenario that assumes renewables supply 30% of power by B&W=biomass and waste. B&W capacity in 2010 is adjusted based on Bloomberg New Energy Finance data. Hydro excludes pumped hydro. Source: The Energy and Environment Council CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

9 JAPAN RENEWABLE PROJECTS, JAN 2011NOV 2012 (MW, NUMBER OF PROJECTS) Note: Data as of 27 November B&W=biomass and waste. Projects less than 1MW are not included. Projects without specific site information are not included. Source: Bloomberg New Energy Finance CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

10 EQUITY IRR ESTIMATES UNDER THE CURRENT FIT RATES SOLAR PV: JPY 40/KWH FOR 20 YEARS 80% 80% ONSHORE WIND: JPY 22/KWH FOR 20 YEARS 73.4% 70% 60% 50% 60.3% 70% 60% 50% 40% 30% 20% 10% 8.6% 19.0% 40% 30% 20% 10% 10.3% 25.9% 0% GoJ model BNEF Japan BNEF global GOJ model BNEF Japan BNEF global Equity IRR (%) LCOE (JPY/kWh) LCOE ($/MWh) CAPEX (JPYm/MW) OPEX (JPYm/MW/yr) Capacity factor (%) Note: Other assumptions JPY 76.91/$, straight line depreciation method, 0.2%/yr inflation rate, 35.64% of corporate tax rate, construction debt ratio/lender margin 80%/225bp for solar, 70%/275bp for wind, long term debt ratio/tenor/lender margin 80%/16yrs/225bp for solar, 70%/17yr/275bp 0% GoJ model BNEF Japan BNEF global GoJ model BNEF Japan BNEF global Equity IRR (%) LCOE (JPY/kWh) LCOE ($/MWh) CAPEX (JPYm/MW) OPEX (JPYm/MW/yr) Capacity factor (%) Source: Bloomberg New Energy Finance CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

11 CONTENTS 1. Japan 2. US CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

12 US Federal programmes stimulated investment in renewables during the last four years Cash grants, tax credits, loan guarantee etc. President Obama continues to support renewables yet Many programmes are expiring Budget will be scaled down compared to his first term Wind peaks out as PTC expires in December 2012 (President is for extension) Solar continues to grow as falling system prices improve the economics States lacking solar mandates are emerging as potential markets Competitive market; renewbles need less support to commercialise CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

13 US ENERGYRELATED TAX PREFERENCES AND CRUDE OIL PRICES, ($BN, $/BBL) Note: Dollar value in 2011 dollars. Crude oil = annual average imported price. Source: Congressional Budget Office, EIA/DOE, Bloomberg New Energy Finance CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

14 US NET ELECTRIC POWER GENERATION MIX Note: Solar does not include generation from distributed PV. Source: Electric Power Monthly, EIA/DOE CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

15 PV MODULE SUPPLIERS IN THE CALIFORNIA SOLAR INITIATIVE, BY PERCENTAGE OF TOTAL MW, COUNTRY, AND QUARTER, Q Q % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 6% 7% 9% 10% 10% 9% 7% 5% 18% 13% 13% 13% 8% 12% 16% 14% 13% 15% 8% 11% 10% 11% 5% 29% 25% 7% 4% 7% 21% 29% 15% 39% 30% 19% 20% 18% 11% 15% 14% 30% 18% 15% 17% 26% 39% 26% 26% 37% 14% 48% 20% 21% 44% 42% 53% 45% 31% 20% 13% 18% 24% 30% 34% 38% 27% Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Rest of world Germany Japan US China Note: Country is of corporate headquarters, not country of manufacture. Market share based on installations for Q Q4 2011, and applications for Q1 Q Source: Bloomberg New Energy Finance, California Solar Initiative. CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

16 INSTALLATIONS PER QUARTER BY OWNERSHIP, Q Q (% SHARE) RESIDENTIAL MARKET COMMERCIALSCALE MARKET 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Thirdparty financed Hostowned Thirdparty financed Hostowned Note: Residential is defined as systems 10kW or less and where hostowner sector is labelled residential in the CSI dataset. Commercialscale is based on the hostcustomer label in the CSI dataset. Commercialscale covers only systems between 10kW and 1,000kW DC. Source: Bloomberg New Energy Finance, California Solar Initiative. CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

17 LEVELISED COST OF ENERGY Q ($/MWH) Marine wave Marine tidal STEG LFR STEG tower & heliostat STEG parabolic trough + storage Wind offshore STEG parabolic trough STEG tower & heliostat w/storage PV csi Biomass anaerobic digestion PV csi tracking Biomass gasification PV thin film Geothermal binary plant Biomass incineration Wind onshore Landfill gas Municipal solid waste Geothermal flash plant Large hydro Small hydro Nuclear Natural gas CCGT Coal fired Note: Carbon forecasts from the Bloomberg New Energy Finance European Carbon Model with an average price to 2030 of $38/mt. Coal and natural gas prices from the US EIA and BNEF. Percentage change represents change from Q JPY8/kWh JPY16/kWh JPY24/kWh JPY32/kWh JPY40/kWh 3% +2% 2% +1% LCOE BNEF EU Carbon Forecast Q Central Scenario Q Central Scenario 2% Source: Bloomberg New Energy Finance CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER % 789 1,049

18 JAPAN AND US LEADERSHIP, 2001YTD2012 Source: Bloomberg New Energy Finance CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

19 COPYRIGHT AND DISCLAIMER This publication is the copyright of Bloomberg New Energy Finance. No portion of this document may be photocopied, reproduced, scanned into an electronic system or transmitted, forwarded or distributed in any way without prior consent of Bloomberg New Energy Finance. The information contained in this publication is derived from carefully selected sources we believe are reasonable. We do not guarantee its accuracy or completeness and nothing in this document shall be construed to be a representation of such a guarantee. Any opinions expressed reflect the current judgment of the author of the relevant article or features, and does not necessarily reflect the opinion of Bloomberg New Energy Finance, Bloomberg Finance L.P., Bloomberg L.P. or any of their affiliates ("Bloomberg"). The opinions presented are subject to change without notice. Bloomberg accepts no responsibility for any liability arising from use of this document or its contents. Nothing herein shall constitute or be construed as an offering of financial instruments, or as investment advice or recommendations by Bloomberg of an investment strategy or whether or not to "buy," "sell" or "hold" an investment. CLEAN ENERGY MARKET IN JAPAN AND US, 3 DECEMBER

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H1 2014 LEVELISED COST OF ELECTRICITY - PV

H1 2014 LEVELISED COST OF ELECTRICITY - PV JENNY CHASE 4 FEBRUARY 2014 LCOE OF PV, FEBRUARY 2014 1 PV EXPERIENCE CURVE, 1976-2013 (2013 $/W) 100 Cost per W (2013 $) 1976 10 1985 2003 2006 1 2012 2013 Q3