ACCELERATING THE CLEAN ENERGY TRANSITION
3 June 2015
Angus McCrone
UNFCCC meeting, Bonn
1
CONTENTS
1. Steps needed
2. Investment trends in the world and in Europe
3. Technology and financing highlights
4. Policy – barriers and opportunities
STEPS NEEDED
Source: Wikimedia Commons
3
ACCELERATING THE CLEAN ENERGY TRANSITION
● Investment in renewable energy and in energy smart technologies
(efficiency, smart grid, power storage, demand response).
● Improvements in technology and reductions in cost.
● Development of financing tools to enable the transition to take
place as quickly as possible.
● Development of government and international policies to
encourage investment in renewables and energy smart
technologies. Remove fossil-fuel subsidies.
● Investment in transitional energy sources, eg coal-to-gas
switching, fast-ramp-up gas peakers, perhaps some nuclear and
carbon capture and storage.
4
ACCELERATING THE CLEAN ENERGY TRANSITION
● Investment in renewable energy and in energy smart technologies
(efficiency, smart grid, power storage, demand response).
● Improvements in technology and reductions in cost.
● Development of financing tools to enable the transition to take
place as quickly as possible.
● Development of government and international policies to
encourage investment in renewables and energy-smart
technologies. Remove fossil-fuel subsidies.
● Investment in transitional energy sources, eg coal-to-gas
switching, fast-ramp-up gas peakers, nuclear, CCS.
?
INVESTMENT TRENDS IN THE WORLD AND IN EUROPE
Source: Wikimedia Commons
6
Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D, and spending for
digital energy and energy storage projects (not reported in quarterly statistics). Source: Bloomberg New Energy Finance
NEW INVESTMENT IN CLEAN ENERGY 2004-14 ($BN)
$60bn
$88bn
$128bn
$175bn
$205bn $206bn
$272bn
$318bn
$294bn
$268bn
$310bn
46%
46%
36%
17%
0.5%
32%
17%-7%
-9%
16%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
7
Note: Total values include estimates for undisclosed deals. AF = asset finance,
SDC = small distributed capacity. Source: Bloomberg New Energy Finance
CLEAN ENERGY INVESTMENT TYPES & FLOWS 2014 ($BN)
Technology
development
Equipment
manufacturing/ scale-up
Projects
Asset and company
mergers, acquisitions,
refinancing, buy-outs
etc.
+2
+15
+14 +3
+19 53 -4
+171
+17
+74 310
+75 385
VC Corp RD&D Gov R&D PE Public markets new equity
Total company investment
Re-invested Renewable energy AF
Digital energy & storage AF
SDC Total investment
M&A/buy-outs etc.
Total transactions
8
Source: Bloomberg New Energy Finance
WORLD CLEAN ENERGY INVESTMENT, BY REGION Q1 2007 TO Q1 2015 ($BN)
0
10
20
30
40
50
60
70
80
90
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2007 2008 2009 2010 2011 2012 2013 2014 2015
Other EMEA
India
Brazil
Other AMER
Other APAC
United States
China
Europe
9
Source: Bloomberg New Energy Finance
EUROPEAN CAPACITY INVESTMENT IN RENEWABLE ENERGY, BY SUB-SECTOR 2007-Q1 2015 ($BN)
0
20
40
60
80
100
120
2007 2008 2009 2010 2011 2012 2013 2014 2015
Small-scale PV
AF - Solar Thermal
AF - PV
AF - Onshore wind
AF - Offshore wind
TECHNOLOGY AND FINANCING HIGHLIGHTS
11
Source: Bloomberg New Energy Finance
LEVELISED COST OF ELECTRICITY, SELECTED TECHNOLOGIES, $ PER MWH Q3 2009 TO H1 2015
0
50
100
150
200
250
300
350
Q32009
Q12010
Q32010
Q12011
Q32011
Q12012
Q32012
Q12013
H12014
H12015
Onshore
Offshore
Parabolic trough +storage
PV - thin film
PV - c-Si
12
WHAT HAS BEEN NEW IN EUROPEAN FINANCING IN 2014-15?
● Size of direct institutional deals: four Danish pension funds
spending EUR 600m on half of Gode Wind, La Caisse
spending GBP 644m on half of London Array.
● Biggest non-hydro project financing ever. Gemini EUR 2.8bn
offshore wind, May 2014: two pension funds (PKA and NPI)
providing subordinated loan/mezzanine of EUR 200m.
● UK quoted project funds raised another $700m last autumn,
and in February, ACS sold 51% stake in Saeta Yield, a vehicle
containing Spanish wind and solar assets, for EUR 424m, in
Madrid IPO in February.
● Morocco sees $524m financing of solar thermal plants in May,
Egypt holds first auction for wind and solar tariffs, Jordan
commissions wind and PV projects.
13
INITIAL COST OF DEBT FOR ONSHORE WIND PROJECT, EURO AREA
Source: Bloomberg New Energy Finance
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15
Italy Premium
France Premium
KfW Effect
Germany Margin
Swap Fees
Term Swap
6M Euribor
ECB Rate
14
Sources: International Energy Agency, OECD
ELECTRICITY DEMAND V GDP IN OECD COUNTRIES, 2005 = 100 2005-2014
90
95
100
105
110
115
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Electricity Supplied
GDP
15
Source: DECC
UK ELECTRICITY GENERATION (TWH) 1998-2014
0
50
100
150
200
250
300
350
400
450
1998 2000 2002 2004 2006 2008 2010 2012 2014
Other
Bioenergy
Wind and solar
Hydro
Nuclear
Gas
Oil
Coal
POLICY – BARRIERS AND OPPORTUNITIES
Source: Wikimedia Commons
17
RETROACTIVE POLICY CHANGES IN EUROPE
Major retroactive policy change
Retroactive policy change
No retroactive change
N/A
Source: Bloomberg New Energy Finance
18
LATEST EUROPEAN POLICY DEVELOPMENTS
● New UK Conservative government set to stop subsidies for new
onshore wind projects. Uncertainty over whether this includes projects
that already have planning permission.
● The German government’s first tender for PV projects saw 170
applications, heavily oversubscribing the 150MW capacity, with bids
coming in at EUR 90-100 per MWh.
● Sweden and Norway agreed to raise the production target of their REC
market, to remove oversupply of certificates.
● There is a general trend away from feed-in tariffs and green certificate
systems towards auctions for renewable capacity, eg UK, Germany,
Poland, Italy, France.
19
Note: The clearing price in 2018/19 applies to onshore wind – the price for the energy from waste projects
was capped at their administrative strike price of GBP 80/MWh. Prices are in 2012 values.
Source: Bloomberg New Energy Finance,
DECC.
UK: FIRST CFD ALLOCATION ROUND ‘POT 1’
3384 78
721
79.23 79.99 82.50
50.00
0
20
40
60
80
100
120
0
100
200
300
400
500
600
700
800
2015/16 2016/17 2017/18 2018/19
Onshore wind Solar Energy from waste with CHP
MW GBP/MWh
20
EU 28 PROGRESS TOWARD 2020 RENEWABLES TARGETS (%)
Source: Bloomberg New Energy Finance
0%
5%
10%
15%
20%
25%
30%
35%
2011/12target
2013 2020 2013 2020 2013 2020 2013 2020
OVERALL Electricity Heat Transport
21
Note: Level of interconnection is based on a country’s average daily incoming Net Transfer Capacity in 2014 and its
installed capacity. As of the end of 2014, 11 member states, including Germany, France, Spain and Italy, did not meet the
2020 target.
Source: TYNDP 2014, Bloomberg New Energy
Finance
PROGRESS MADE TOWARDS EU INTERCONNECTION TARGETS AS OF 2014
●
3% Spain
10% 2020 target
15% 2030 target
No data
22
ATMOSPHERIC CO2 AT MAUNA LOA, HAWAII, PARTS PER MILLION
382.67
401.89403.95
370
375
380
385
390
395
400
405
410
5/17/2005-5/23/2005 5/17/2014-5/23/2014 5/17/2015-5/23/2015
CO
2P
arts
Pe
r M
illi
on
Source: National Oceanic and Atmospheric Administration
23
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6/4/2015
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