28 April 2016 BNEF WIND ENERGY BRIEFING Yiyi Zhou
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200 ENERGY EXPERTS WITH STRONG KNOWLEDGE AND NETWORK ACROSS SIX CONTINENTS 90 Europe 40 San Francisco North America New York Washington DC London Munich Zurich New Delhi 40 Beijing Hong Kong Asia Pacific Seoul Tokyo 30 Africa Singapore 5 South America Sao Paulo Cape Town Sydney 2
PRODUCTS TO HELP YOU UNDERSTAND THE FUTURE OF ENERGY Solar Wind Other Renewables Gas Energy Smart Technologies Advanced Transport Carbon & RECs Markets Americas Europe, Middle East & Africa Asia Pacific 3
COMMUNITY SCALE WIND TURBINE Source: http://cn.bing.com/images/search?q=wind+turbine+community&view=detailv2&&id=8ed992341002389cdfe3eaf7e77e 924D489175F6&selectedIndex=363&ccid=LzDANnOJ&simid=607996095383866982&thid=OIP.M2f30c03673890ab014df cc2d8db46760o0&ajaxhist=0 Insert Date (go to Insert Tab, Header & Footer and Apply to All) 4
TWO TYPES OF UTILITY SCALE WIND ENERGY Onshore wind farm Offshore wind farm Source: Bloomberg New Energy Finance Insert Date (go to Insert Tab, Header & Footer and Apply to All) 5
CLEAN ENERGY INVESTMENT ROSE WHILE OIL PLUMMETED GLOBAL CLEAN ENERGY INVESTMENT VS WTI CRUDE SPOT 2004-2015 $140.00 $318bn $297bn $316bn $329bn $274bn $272bn $206bn $207bn $175bn $128bn $35.76 $62bn $88bn $37.04 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note: nominal dollars Source: Bloomberg New Energy Finance 6
CLEAN ENERGY INVESTMENT BY SECTOR 2004 2015 ($BN) Wind Solar $150 $141 $157 $139 $18 $28 $39 $60 $74 $78 $97 $82 $80 $89 $104 $108 $9 $13 $19 $36 $58 $60 $99 $113 04 05 06 07 08 09 10 11 12 13 14 15 Energy Smart Technologies (EST) 04 05 06 07 08 09 10 11 12 13 14 15 Biofuels $13 $13 $14 $18 $20 $28 $33 $36 $37 $36 $41 $41 $3 $9 $27 $27 $17 $8 $8 $8 $5 $4 $3 $1 04 05 06 07 08 09 10 11 12 13 14 15 04 05 06 07 08 09 10 11 12 13 14 15 Source: Bloomberg New Energy Finance Clean energy investment through 2015 7
CHINA IS THE FIRST SINGLE $100BN CLEAN ENERGY MARKET ANNUAL CLEAN ENERGY INVESTMENT IN FIVE COUNTRIES, 2004 2015 $150bn Germany US Japan Spain China $150bn $150bn $150bn $150bn $100bn $100bn $100bn $100bn $100bn $50bn $50bn $50bn $50bn $50bn $0bn $0bn $0bn $0bn $0bn 04 15 04 15 04 15 04 15 04 15 Note: nominal dollars Source: Bloomberg New Energy Finance 8
SHORT-TERM NEW WIND BUILD FORECAST ANNUAL WIND INSTALLATIONS BY REGIONS, INCLUDING OFFSHORE WIND, 2010 20E (GW) 12% 15% -28% 45% 27% -5% 2% 11% -8% 4% 40.5 36.3 3.9 3.2 5.3 8.0 8.9 9.6 46.7 4.1 33.6 14.8 2.7 2.2 11.7 10.9 48.8 5.5 4.2 6.9 10.6 62.1 4.1 4.8 3.5 10.4 10.7 66.8 59.1 60.4 5.7 61.5 63.8 4.6 6.5 10.2 14.0 10.5 12.1 3.9 5.1 3.2 15.1 14.5 11.6 3.5 8.9 12.3 3.7 7.1 6.2 10.0 9.0 8.1 8.3 8.1 Offshore RoW Latin America North America Europe 17.0 18.0 13.9 15.0 20.7 28.7 21.3 22.6 21.7 21.0 21.0 China 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Bloomberg New Energy Finance Note: North America includes the US and Canada. Some historical installation data has been revised. A table showing how this forecast compares to our last Quarterly Outlook can be found in the appendix. Click here for underlying data. 9
ESTIMATED GLOBAL WIND TURBINE SUPPLY 2011-14 (%, GW) 63.6 62.8 61.3 74.1 Asia = 55% 21% 20% 19% 17% 9% 9% 10% 8% 13% 15% 14% 13% 3% 3% 3% 3% 9% 9% 12% 13% 43.1% 44.3% 44.1% 45.6% Asia = 62% Rest of world Germany US Other Asia India China 2011 2012 2013 2014 Source: Bloomberg New Energy Finance. Note: Nameplate capacity represents the companies' announced production capacity. Discounted capacity represents our best estimation of actual available capacity. For details see our Wind Turbine Manufacturing Supply Model 10
ONSHORE WIND TURBINE PRICE (INFLATION CORRECTED TO 2014),1984-2016E (EUR M/MW) 3.0 Rapid reduction Plateau period Resumed decline 2.5 2.0 15GW 115GW 469GW Cumulative installed capacity 1.5 1.0 0.5 0.0 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Global (ex. China) (BNEF) Germany (ExTool) Denmark (Extool) Vestas global The US (LBL) China (BNEF) Source: Bloomberg New Energy Finance, Lawrence Berkeley National Laboratory (LBNL), ExTool study (Neij et al.2003), Vestas annual reports. 11
H2 2015 LEVELISED COST OF ELECTRICITY CENTRAL AND REGIONAL SCENARIOS ($/MWH) Note: STEG = solar thermal electric generation Source: Bloomberg New Energy Finance 12
CHINA ADDED 150GW OF GENERATION WITH NO NEW DEMAND CHINA POWER CAPACITY ADDITIONS AND YOY DEMAND GROWTH, 1995 2015 Power generation capacity additions 150GW Year-on-year demand growth 100GW 15.6% 50GW 10% 0GW 1995 2000 2005 2010 2015 0.5% Thermal Hydro Nuclear Wind Solar Source: NEA 13
ANNUAL UTILISATION HOURS AND CAPACITY FACTOR BY TECHNOLOGY, 2008-15 Annual utilisation hours 8,760 7,008 5,256 3,504 1,752 Capacity factor 100% 80% 60% 40% 20% 0 2008 2009 2010 2011 2012 2013 2014 2015 General Thermal Hydro Nuclear Wind Solar 0% Source: China Electricity Council 14
CHALLENGES FACING RENEWABLES IN CHINA WIND GENERATION AND CURTAILMENT 2011-15 (TWH) RENEWABLE ENERGY FUND DEFICIT 2016-20 ($BN) Wind generation and curtailment (TWh) 250 Curtailment ratio 25% 32.7 200 150 100 16% 14 17% 21 17 11% 14 8% 34 15% 20% 15% 10% 18.5 4.7 20.8 6.9 24.0 9.8 27.9 13.3 17.6 Deficit Renewable fund 50 5% 13.8 13.9 14.2 14.6 15.0 0 74 103 139 160 185 2011 2012 2013 2014 2015 Wind generation Wind curtailment Wind curtailment ratio 0% 2016E 2017E 2018E 2019E 2020E After seeing some improvement, wind curtailment worsened in 2015. It will worsen further in the next five years as the pace of wind project development continues unabated and China s power demand weakens. However, curtailment is much worse in some regions (north and west) than in others (south). To support its feed-in tariff, China levies a surcharge on electricity end-users, which is then collected into a renewable energy fund before being redistributed. The fund is currently insufficient to cover the subsidies and the deficit is expected to grow in the next five years, which will lead to more payment delays. 15
CHINA WIND CURTAILMENT BY PROVINCE, 2015, (FULL LOAD HOURS, %) Note: Hours represent full load hours of each province in 2015. Capacity factor can be calculated as full load hours divided by 8,760 hours. Percentage numbers in the brackets represent average curtailment rate of each province calculated as [estimated curtailed electricity generation / (actual electricity generation + estimated curtailed electricity generation)] Source: Bloomberg New Energy Finance, China Electric Council (CEC). Insert Date (go to Insert Tab, Header & Footer and Apply to All) 16
KEY BARRIERS FOR COMMUNITY LEVEL INVESTOR TO ENTER WIND MARKET High capital investment Complicated development and construction process Limited types of wind farm developers and financing model Source: Bloomberg New Energy Finance Insert Date (go to Insert Tab, Header & Footer and Apply to All) 17
CORPORATE RENEWABLE ENERGY PROCUREMENT Source: Bloomberg New Energy Finance Insert Date (go to Insert Tab, Header & Footer and Apply to All) 18
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