68
STATE OF INDIA'S ENERGY TRANSITION Task Force on Climate-Related Financial Disclosures Mumbai Shantanu Jaiswal 22 September 2016
STATE OF INDIA'S ENERGY TRANSITION
Task Force on Climate-Related
Financial Disclosures
Mumbai Shantanu Jaiswal
22 September 2016
1
1. Power sector investment
2. Shift in generation technologies
3. Need for more clean energy
4. Corporate procurement
5. Energy storage and electrified transport
22 September 2016
2
CLEAN ENERGY INVESTMENT ROSE WHILE OIL PLUMMETED GLOBAL CLEAN ENERGY INVESTMENT VS WTI CRUDE SPOT 2004-15
$146/bbl
Record
investment
$37/bbl
0
20
40
60
80
100
120
140
160
Source: Bloomberg Intelligence, Bloomberg New
Energy Finance
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). Excludes large hydro.
22 September 2016
3
$62bn
$88bn
$128bn
$175bn
$206bn $207bn
$274bn
$318bn$297bn
$272bn
$316bn$329bn
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
CLEAN ENERGY INVESTMENT ROSE WHILE OIL & GAS CAPEX FELL GLOBAL CLEAN ENERGY INVESTMENT VS OIL & GAS CAPITAL EXPENDITURE
$500bn
Note: Oil and gas CAPEX data refers to total capital spending by integrated global oil firms and US independent
E&Ps. Excludes NOCs.
Source: Bloomberg Intelligence, Bloomberg New
Energy Finance
$321bn
0
20
40
60
80
100
120
140
160$146/bbl
$37/bbl
Oil and gas
CAPEX down by
36% in 2015
22 September 2016
4
ASIA IS NOW THE LARGEST REGION FOR NEW INVESTMENT ANNUAL CLEAN ENERGY INVESTMENT, 2004 – 2015
$0bn
$50bn
$100bn
$150bn
$200bn
$250bn
$300bn
$350bn
04 05 06 07 08 09 10 11 12 13 14 150%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
04 05 06 07 08 09 10 11 12 13 14 15
EMEA
AMER
APAC
Source: Bloomberg New Energy Finance Note: nominal dollars
22 September 2016
5
CLEAN ENERGY INVESTMENT BY REGION 2004 – 2015 ($BN)
Europe United States
China Asia ex-China
Source: Bloomberg New Energy Finance
$29 $38
$52
$73 $88 $91
$122 $132
$98
$69 $72 $59
04 05 06 07 08 09 10 11 12 13 14 15
$11 $17 $35 $41 $44
$36 $48
$64 $55 $48 $52 $56
04 05 06 07 08 09 10 11 12 13 14 15
$3 $9 $11 $17 $26
$40 $44 $52
$67 $68
$94 $111
04 05 06 07 08 09 10 11 12 13 14 15
$15 $17 $20 $24 $26 $25 $36
$46 $46 $59 $66 $69
04 05 06 07 08 09 10 11 12 13 14 15
22 September 2016
6
$3 $9 $27 $27
$17 $8 $8 $8 $5 $4 $3 $1
04 05 06 07 08 09 10 11 12 13 14 15
$13 $13 $14 $18 $20 $28 $33 $36 $37 $36 $41 $41
04 05 06 07 08 09 10 11 12 13 14 15
Wind Solar
Energy Smart Technology Biofuels
Source: Bloomberg New Energy Finance
$18 $28
$39
$60 $74 $78
$97 $82 $80
$89 $104 $108
04 05 06 07 08 09 10 11 12 13 14 15
$9 $13 $19 $36
$58 $60
$99
$150 $141
$113
$139 $157
04 05 06 07 08 09 10 11 12 13 14 15
WIND AND SOLAR ARE MOST OF CLEAN ENERGY INVESTMENT ANNUAL CLEAN ENERGY INVESTMENT BY TECHNOLOGY, 2004 – 2015 ($BN)
22 September 2016
7
0.1
1
10
100
1 10 100 1,000 10,000 100,000 1,000,000
Experience curve Historic prices (Maycock) Chinese c-Si module prices (BNEF)
1976
1985
2003
2012
Cumulative capacity (MW)
2015
Source: Bloomberg New Energy Finance, Paul Maycock
Source: Bloomberg New Energy Finance, Lawrence Berkeley National
Laboratory, ExTool study (Neij et al, 2003), Vestas annual reports Note:
data is inflation corrected to 2014 prices
RENEWABLE ENERGY IS GETTING CHEAPER
● Renewable energy technologies, in particular Solar PV and wind, are getting cheaper. Costs have now fallen to such an extent that solar and
wind are competitive with fossil fuel power plants in many parts of the world (see next slide).
● We expect cost reductions to continue and for wind and PV to viably compete with coal and gas without the need for government subsidies in
an expanding number of places around the globe over the next 10 years.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1980 1985 1990 1995 2000 2005 2010 2015
Germany
Denmark
US
Global(ex. China)
China
LEARNING CURVE FOR PV MODULES ($/W) WIND TURBINE PRICES, 1984-2015 (€M/MW)
PV module costs have consistently fallen
by around 24% for every doubling of
cumulative global installed capacity
Wind turbine costs have fallen
by around 3% per year since
1980. The equivalent learning
rate is a drop in costs of 9%
for every doubling of
cumulative global installed
capacity
22 September 2016
8
WIND AND SOLAR PROJECT CAPEX IN INDIA FY2013-14 TO FY2016-17 (INRM/MW)
Source: Bloomberg New Energy Finance
WIND
59.8 60.4 61.9 62.0
0
10
20
30
40
50
60
70
80
90
FY2013-14 FY2014-15 FY2015-16 FY2016-17
33.6 37.733.2 32.8
1.72.5
2.5 2.5
9.56.0
5.0 3.5
10.5 5.0
5.03.5
6.05.0
4.53.5
10.5
6.0
5.54.4
8.0
6.9
4.9
2.8
0
10
20
30
40
50
60
70
80
90
FY2013-14 FY2014-15 FY2015-16 FY2016-17
Preliminary and pre-operativeexpenses
Cables, transformers andother connection costs
Power conditioning unit
Mounting structures
Civil and general works
Land
Modules
79.7
69.1
60.6
53.0
SOLAR
22 September 2016
9
RENEWABLE ENERGY - THE MARCH OF THE PRICE SIGNAL
22 September 2016
10
Source: Bloomberg New Energy Finance; ImagesSiemens; Wikimedia
Commons
WORLD RECORD: 3-CENT WIND, SUB-4-CENT SOLAR (UNSUBSIDISED)
Location:
Bidder:
Signed:
Price:
Morocco
Enel Green Power
January 2016
US$ 3.0 c/kWh
ONSHORE WIND
Location:
Bidder:
Signed:
Price:
Coahuila, Mexico
Enel Green Power
March 2016
US$ 3.6 c/kWh
SOLAR PV
22 September 2016
11
Federal auctions (buyer NTPC) State auctions
Location Andhra
Pradesh I
Andhra
Pradesh II
Rajasthan Madhya
Pradesh
Telangana Punjab Uttarakhand
Target 500MW 350MW 420MW 300MW 2,000MW 500MW 170MW
Results date Nov 2015 Dec 2015 Jan 2016 Jul 2015 Aug 2015 Sep 2015 Oct 2015
Lowest bid
price
INR/kWh 4.63 4.63 4.34 5.05 5.17 5.09 5.57
$/MWh 68.46 68.46 64.17 74.67 76.45 75.26 82.36
Developer SunEdison SoftBank Fortum SkyPower SkyPower Photon Rays Power
Developer
type
Foreign Foreign Foreign Foreign Foreign Indian Indian
Project size
of the bid
500MW 350MW 70MW 50MW 50MW 50MW 10MW
LOWEST BID PRICES IN INDIAN AUCTIONS SINCE Q3 2015 (INR/KWH)
22 September 2016
12
1. Power sector investment
2. Shift in generation technologies
3. Need for more clean energy
4. Corporate procurement
5. Energy storage and electrified transport
22 September 2016
13
Source: Bloomberg New Energy Finance
GLOBAL POWER DEMAND GROWTH, 2012-40
Negative Low Medium High
Note: low < 0.5%, Medium 0.5-4%, High >4%
22 September 2016
14
GLOBAL INSTALLED CAPACITY 2015 AND 2040 AND PROJECTED CAPACITY ADDITIONS, BY TECHNOLOGY (GW)
Source: Bloomberg New Energy Finance
31%
26%
5%
18%
7%
4% 7% 2%
16%
15%
4% 12% 13%
29%
4% 8%
0GW
100GW
200GW
300GW
400GW
500GW
600GW
2016 2020 2025 2025 2030 2040
Coal Gas Nuclear Hydro Wind Solar Other Flexible capacity
2015: 6,418GW 2040: 13,464GW
22 September 2016
15
0GW
100GW
200GW
300GW
2016 2020 2025 2030 2035 2040
0GW
100GW
200GW
300GW
2016 2020 2025 2030 2035 2040
0GW
100GW
200GW
300GW
2016 2020 2025 2030 2035 2040
ANNUAL POWER GENERATION CAPACITY ADDITIONS 2016 – 2040 (GW)
0GW
100GW
200GW
300GW
2016 2020 2025 2030 2035 2040
0GW
100GW
200GW
300GW
2016 2020 2025 2030 2035 2040
0GW
100GW
200GW
300GW
2016 2020 2025 2030 2035 2040
Solar 6.5% CAGR
Gas -2.4% CAGR Nuclear -2.6% CAGR Hydro -6.0% CAGR
Wind 2.6% CAGR Coal -1.4% CAGR
Source: Bloomberg New Energy Finance New Energy Outlook 2016
22 September 2016
16
RENEWABLE ENERGY PROPORTION OF POWER GENERATION- INTERMITTENT ENERGY (WIND & SOLAR), 2014 (%)
Source: Bloomberg New Energy Finance
Brazil
3%
India
5%
China
5%
Australia
8%
France
3%
US
4%
Mexico
3%
UK
9%
Japan
5%
Germany
16%
0
1-5%
6-10%
11-25%
26-50%
50+%
Note: This only shows the combination of wind and solar energy generation. All numbers come from
BNEF’s New Energy Outlook 2015
ME + Africa
0%
22 September 2016
17
RENEWABLE ENERGY PROPORTION OF POWER GENERATION- INTERMITTENT ENERGY (WIND & SOLAR) , 2040 (%)
Source: Bloomberg New Energy Finance
Brazil
34%
India
32%
China
37%
France
30%
Australia
52% ME + Africa
26%
US
24%
Mexico
32%
Note: This only shows the combination of wind and solar energy generation. All numbers come from
BNEF’s New Energy Outlook 2015
UK
63%
Japan
20%
Germany
77%
0
1-5%
6-10%
11-25%
26-50%
50+%
22 September 2016
18
Note: “Rest of World” (mostly Russia and Central Asia) is an additional $1.4trn.
POWER GENERATION INVESTMENT BY REGION 2016 – 2040 (2015 $-REAL)
Asia
Pacific
$5.5trn $1.8trn Americas
$1.2trn Europe
$1.4trn
Middle East
and Africa
Source: Bloomberg New Energy Finance New Energy Outlook 2016
22 September 2016
19
INDIA INSTALLED CAPACITY 2015 AND 2040 AND PROJECTED CAPACITY ADDITIONS, BY TECHNOLOGY (GW)
Source: Bloomberg New Energy Finance
2015: 289GW 2040: 1,221GW
60%
8% 3%
16%
9%
2% 2% 0%
31%
6%
3% 9% 8%
31%
1% 11%
0
10
20
30
40
50
60
70
80
2016 2020 2025 2030 2035 2040
Coal Gas Nuclear Hydro Wind Solar Other Flexible capacity
22 September 2016
20
GERMANY POWER FLEET SINCE 2000 CUMULATIVE GW AND POWER MIX
Source: Bloomberg New Energy Finance
0GW
25GW
50GW
75GW
100GW
'00 '05 '10 '15
0%
25%
50%
75%
100%
'00 '05 '10 '15
Cumulative renewable capacity Generation fleet
Fossil
Nuclear
Renewable
22 September 2016
21
1. Power sector investment
2. Shift in generation technologies
3. Need for more clean energy
4. Corporate procurement
5. Energy storage and electrified transport
22 September 2016
22
There is an urgent
need to develop
sources of renewable
energy
LAUDATO SI
Pope Francis
Picture: Wikimedia
22 September 2016
23
WIND AND SOLAR CAPACITY FORECASTS SINCE 2010 BNEF, IEA
BNEF renewables forecasts have always outpaced IEA forecasts, and were closer to
actual installed wind and solar capacity.
Source: Bloomberg New Energy Finance, IEA
IEA - 2015
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
IEA - 2014
IEA - 2010
IEA - 2011IEA - 2012
IEA - 2013
BNEF - 2011
BNEF - 2013
BNEF - 2014BNEF - 2015
2015 wind and solar capacity ~670GW
22 September 2016
24
INDIA’S RENEWABLE ENERGY INSTALLED CAPACITY (GW)
Source: Bloomberg New Energy Finance Note: does not include hydro > 25MW as it
is not categorised as renewable energy by the government.
6 7 10 12 15 16 19 23 27 30 3540
4760
7183
98
116
137
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
Small hydro
Biomass
Wind
Solar
2022 target: 175GW
22 September 2016
25
INDIA’S RENEWABLE ENERGY INSTALLED CAPACITY (GW)
Source: Bloomberg New Energy Finance Note: does not include hydro > 25MW as it
is not categorised as renewable energy by the government.
6 7 10 12 15 16 19 23 27 30 3540
4760
7183
98
116
137
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
Small hydro
Biomass
Wind
Solar
2022 target: 175GW
22 September 2016
26
Coal, wind & solar capacity factors
Source: Bloomberg New Energy Finance
China Generation
CHINA GENERATION
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
20122015 2020 2025 2030 2035 2040
Solar thermal
Small-scale PV
Utility-scale PV
Offshore wind
Onshore wind
Biomass/WtE
Geothermal
Hydro
Nuclear
Oil
Gas
Coal
Coal
Wind
Solar
0%
10%
20%
30%
40%
50%
60%
2012 2015 2020 2025 2030 2035 2040
27
CHINA ELECTRICITY MARKET REFORM DRIVERS
● Air quality is a major health risk for much of north China.
● Soil and water pollution are risks as well, and there is competing demand for water
in arid northern China.
Pollution
● China has ambitious targets for renewable energy as part of its Five Year Plans.
● The government seeks new business models and revenue streams for renewable
generators, in addition to existing feed-in tariffs.
Competition for renewables
● Thermal fleet capacity utilization is extremely low and will likely go lower thanks to
new capacity additions.
● Renewable generators suffer curtailment due to thermal prioritization and would
benefit from new market approaches.
Solving overcapacity
Source: Bloomberg New Energy Finance
The government wants to control pollution and increase competition
22 September 2016
28
SO2 EMISSION LIMITS FOR EXISTING COAL PLANTS (mg/m3)
Source: Bloomberg New Energy Finance
India 200-600
China 400
US 160-400
EU 400
Note: Existing plants in India are defined as those commissioned till December 2016. Existing plants in
China mean projects commissioned till 2012.
22 September 2016
29
SO2 EMISSION LIMITS FOR NEW COAL PLANTS (mg/m3)
Source: Bloomberg New Energy Finance
India 100
China 35-100
US 160
EU 200
Note: New plants in India are defined as those commissioned after December 2016. New plants in China
mean projects commissioned after 2012.
22 September 2016
30
NOX EMISSION LIMITS FOR EXISTING COAL PLANTS (mg/m3)
Source: Bloomberg New Energy Finance
India 300-600
China 400
US 117-640
EU 200-500
Note: Existing plants in India are defined as those commissioned till December 2016. Existing plants in
China mean projects commissioned till 2012.
22 September 2016
31
NOX EMISSION LIMITS FOR NEW COAL PLANTS (mg/m3)
Source: Bloomberg New Energy Finance
India 100
China 35-100
US 117
EU 200-500
Note: New plants in India are defined as those commissioned after December 2016. New plants in China
mean projects commissioned after 2012.
22 September 2016
32
DUST/PARTICULATE MATTER EMISSION LIMITS FOR EXISTING COAL PLANTS (mg/m3)
Source: Bloomberg New Energy Finance
India 50-100
China 400
US 22.5
EU 50
Note: Existing plants in India are defined as those commissioned till December 2016. Existing plants in
China mean projects commissioned till 2012.
22 September 2016
33
DUST/PARTICULATE MATTER EMISSION LIMITS FOR NEW COAL PLANTS (mg/m3)
Source: Bloomberg New Energy Finance
India 30
China 35-100
US 22.5
EU 50
Note: New plants in India are defined as those commissioned after December 2016. New plants in China
mean projects commissioned after 2012.
22 September 2016
34
AGE OF COAL AND LIGNITE POWER PLANTS IN INDIA
Source: Bloomberg New Energy Finance, Central Electricity Authority Note: includes
plants commissioned till March 2014
Life
MW
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 64 66
Beyond operaional life
20,972MW 35,635MW
Mid life
22 September 2016
35
POWER SECTOR CO2 EMISSIONS (MTCO2)
EU, US, CHINA, INDIA & SE ASIA (Index, 2012=100) GLOBAL EMISSIONS
NEO2016
NEO2015
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2012 2015 2020 2025 2030 2035 2040
China
US Europe
India
SE Asia
0
50
100
150
200
250
300
350
400
2012 2015 2020 2025 2030 2035 2040
Source: Bloomberg New Energy Finance Source: Bloomberg New Energy Finance
36
30
35
40
45
50
55
60
65
1990 1995 2000 2005 2010 2015 2020 2025 2030
Historical emissions2 C trajectory
INDC trajectory
Pre-COP21 pledges
GtCO2e/yr
THE INTENDED NATIONALLY DETERMINED CONTRIBUTIONS (INDCS) DON’T GET YOU TO 2°C
● Over 160 countries that together account for 95% of global emissions have submitted their INDCs to the UN ahead of Paris.
● The estimated impact of the pledges made so far is a net reduction of around 5.5GtCO2e/yr by 2030, or a cumulative reduction of 37Gt over
2016-30.
● This is not enough to put the world on a 2°C trajectory, which would require further reductions of 15-20Gt/yr by 2030.
● According to the IPCC, the world’s remaining ‘carbon budget’ is around 1,000GtCO2e. Even if the INDCs are implemented, the budget is
likely to be exhausted by mid-century.
Source: Bloomberg New Energy Finance,
UNFCCC, UNEP
Note: ‘INDC’ refers to intended nationally determined contributions submitted by countries to the UNFCCC as part of the Durban
Platform negotiations – INDCs represent a country’s post-2020 low carbon and emission reduction targets
22 September 2016
37
$0trn
$1trn
$2trn
$3trn
$4trn
$5trn
2015-2020
2021-2025
2026-2030
2031-2035
2036-2040
$2.1trn $1.9trn $1.8trn $1.8trn
$1.7trn
LOW-CARBON INVESTMENT IN BAU AND 2°C SCENARIOS 2015 – 2040
Source: Bloomberg New Energy Finance and CERES,
Mapping the Gap: the Road from Paris
$6.9trn
to 2040
Global business as usual
Wind, solar, biomass, geothermal
Nuclear and large hydro
$0trn
$1trn
$2trn
$3trn
$4trn
$5trn
2015-2020
2021-2025
2026-2030
2031-2035
2036-2040
$3.5trn
$4.4trn
$4.1trn
$3.4trn
$2.6trn
$12.1trn
to 2040
Global 2° C scenario
Note: Real 2015 dollars
BAU is “business as usual”
22 September 2016
38
1. Power sector investment
2. Shift in generation technologies
3. Need for more clean energy
4. Corporate procurement
5. Energy storage and electrified transport
22 September 2016
39
Source: Bloomberg New Energy Finance
KEY NON-TRADITIONAL PPA OFFTAKERS BY INDUSTRY
22 September 2016
40
CORPORATE PROCUREMENT OF CLEAN ENERGY SOARS 2006 – 2015
Source: Bloomberg New Energy Finance
Note: “DoD” is Department of Defense. “GSA” is General Services Administration.
0MW 500MW 1,000MW 1,500MW
Amazon
US DoD
Wal-Mart
Equinix
IKEA
Kaiser Permanente
Microsoft
US GSA
Wind Solar Biomass & Waste
0MW
1,000MW
2,000MW
3,000MW
4,000MW
06 07 08 09 10 11 12 13 14 15
Top 10 US procurers of clean energy Procurement by year
22 September 2016
41
Notes: See 12 November 2015 Research Note, Direct power purchases in China: goodbye grid?, for additional details. Source: Bloomberg New Energy Finance
CORPORATE PROCUREMENT = A GLOBAL PHENOMENON (3 OF 3)
In China, direct power purchasing accelerated in 2015, with companies like Apple looking to green it supply chain.
18GWh
8%
21GWh, 6%
21GWh
6%
19GWh
5%
39GWh
12%
18GWh
8% 10GWh
4%
4GWh
4%
2GWh
1%
10GWh
6%
2015 planned direct
purchase amount as a
percentage of 2014 total
generation
2014 provincial total
generation (represented
by size of the pie)
22 September 2016
42
Notes: See 23 March 2016 Insight Dataset, Mexico corporate PPA database, additional details. Source: Bloomberg New Energy Finance
CORPORATE PROCUREMENT = A GLOBAL PHENOMENON (1 OF 3)
In Mexico, companies like Cemex, Walmart and Home Depot have signed over 2GW of direct supply contracts with
renewable facilities since 2008.
Mexico’s renewable self-supply capacity installed by technology, 2008-15
25MW
277MW
125MW172MW
301MW266MW
801MW
275MW
2008 09 10 11 12 13 14 15
Wind
Biomass & Waste
Small hydro
Geothermal
Solar
22 September 2016
43
Source: Bloomberg New Energy Finance
COMPANIES BUYING CLEAN ENERGY IN BANGALORE (INDIA)
Information technology and
communications
Food & Beverages
and Hospitality Energy
Industrials and
Healthcare
Note: this is a sample list
22 September 2016
44
Note: IPPs are independent power producers Source: Bloomberg New Energy Finance, Bangalore Electricity Supply Company
IPPS SUPPLYING CLEAN ENERGY CORPORATES IN BANGALORE (INDIA)
Renewable independent
power producer
Key investor
Renewable independent
power producer Major investors
22 September 2016
45
WARREN BUFFETT, IN HIS ANNUAL LETTER TO INVESTORS 2016
Historically, the survival of a local electric
company did not depend on its efficiency.
In fact, a 'sloppy' operation could do just fine
financially.
That’s because utilities were usually the sole
supplier of a needed product and were allowed
to price at a level that gave them a prescribed
return upon the capital they employed.
“
”
Warren Buffett
Source: Berkshire Hathaway
22 September 2016
46
Note: FY2015 and FY2016 numbers are estimates from BESCOM
Source: Bloomberg New Energy Finance,
Bangalore Electricity Supply Company
UNITS SOLD AND REVENUES BY CUSTOMER CATEGORY
Units sold to different customer segments (TWh) Revenues by customer category (INR bn)
0%
2%
5%
7%
9%
12%
14%
0
5
10
15
20
25
30
FY
201
0
FY
201
1
FY
201
2
FY
201
3
FY
201
4
FY
201
5e
FY
201
6e
0%
3%
6%
8%
11%
14%
17%
19%
22%
0
20
40
60
80
100
120
140
160
FY
2010
FY
2011
FY
2012
FY
2013
FY
2014
FY
2015e
FY
201
6e
0%2%5%7%9%12%14%0
50
F…
Others HT Commercial HT
Industrial HT Others LT
Industrial LT Agriculture LT
Commercial LT Residential LT
% of units sold and reveneus from Commercial HT (right axes)
22 September 2016
47
AVERAGE RETAIL TARIFF INCREASES OVER FY2010–FY2014
Source: Bloomberg New Energy Finance, Electricity Regulatory
Commissions of the respective states, Central Electricity Authority.
Note: Simple averages, excludes agriculture category as its tariffs are highly subsidised.
For methodology see Appendix B:, for data of each sub-category refer here.
State Commercial Domestic
Large and heavy
industry Railway
Small and
medium industry Average
Andhra Pradesh 48% 43% 78% 69% 58% 59%
Chhattisgarh 33% 33% 23% 24% 20% 26%
Delhi 54% 63% 56% 61% 61% 59%
Gujarat -16% -5% -4% -9% -4% -7%
Haryana 39% 26% 24% 18% 35% 28%
Jharkhand 51% 79% 2% 36% 51% 44%
Karnataka 14% 18% 21% 9% 23% 17%
Kerala 12% 51% 46% 35% 44% 37%
Madhya Pradesh 26% 33% 41% 36% 29% 33%
Maharashtra 7% 1% 23% 46% 4% 16%
Orissa 55% 88% 66% 54% 70% 66%
Punjab 115% 49% 48% 55% 45% 62%
Rajasthan 41% 53% 40% 39% 37% 42%
Tamil Nadu 28% 86% 44% 31% 27% 43%
Uttar Pradesh 47% 59% 50% 72% 51% 56%
West Bengal 40% 41% 61% 59% 58% 52%
Average 37% 45% 39% 40% 38% 40%
Colour codes Maximum >50% 30–50% <30% Minimum
48
Source: Bloomberg New Energy Finance
A POTENTIAL DEATH SPIRAL FOR INDIAN DISTRIBUTION UTILITIES
Big customers with high tariffs
opt out due to:
● increasing retail tariffs and poor service
● falling costs of renewables/socket parity
● supportive regulation for grid access
● cash availability
● environmental concerns
Creating problems in
● capital availability for grid
augmentation/management
● increasing retail tariffs for all
customers (highest rise in
households and agriculture due to
lack of cross subsidy)
Leading to
● reduced grid reliability
● deteriorating services
● stranded assets/investment
programmes
Causing
● increased interest in rooftop
solar/net metering
● smaller consumers to opt-out
● further capex requirements
for grid management
22 September 2016
49
BLOOMBERG BUSINESSWEEK 1 FEBRUARY 2016
Source: Bloomberg Businessweek
22 September 2016
50
Source: Bloomberg New Energy Finance
UTILITY STRATEGY DECISION TREE
FIGHT FLIGHT ADAPT
SEEK TO SLOW AND HALT RE
DEPLOYMENT
BUSINESS - AS - USUAL
POSITION COMPANY
TO BENEFIT FROM RE
INTRA - REGIONAL
DEVELOPMENT (cannibalistic)
EXTRA - REGIONAL
DEVELOPMENT
(non - cannibalistic)
PASSIVE
INVESTMENT
(projects)
ACTIVE
INVESTMENT
(platforms)
ENABLING
TECHNOLOGY
SERVICE
PROVISION
LOBBY FOR WEAKER
RE SUPPORT
PUSH ANTI - RE
REGULATORY REFORM EXIT THE MARKET
TAKE NO ACTION TO ADDRESS
OR BENEFIT FROM RE
22 September 2016
51
Strategy Description Pros Cons
Service
provision for
large
consumers
Provide the option to
large commercial and
industrial consumers
to consume clean
energy through tie-ups
with renewable power
producers
Low capital investment option
Avoid fuel price escalations on
consumer bills as clean energy
producers agree to a long-term
$/MWh rate
Existing billing and customer
relationship systems can be
modified to meet the needs
Utility may still not be the lowest cost
provider
Staff training needed
Investments
in enabling
technology
Discom invests in
assets or companies
that enhances the
grid's ability to absorb
higher penetration of
renewable energy
Benefit from growth of renewable
energy
Can be viewed as favourable by
the regulators who can allow
specific return on equity on such
investments
Higher growth in renewable energy
can further cannibalise core business
of power sales
Increase in power prices due to
capital investments may aggravate
consumer relationship (particularly
with non-PV/renewables consuming
ones)
Service
provision for
small
consumers
Partner with PV
system providers to
increase use of
rooftop solar
Low capital investment option
Leverages discoms's core
competence in dealing with end
consumers
Can cannibalise core business of
power sales
Requires training of staff
Partner's performance effects
reputation
Source: Bloomberg New Energy Finance
POTENTIAL ADAPT STRATEGIES FOR INDIAN DISCOMS
22 September 2016
52
1. Power sector investment
2. Shift in generation technologies
3. Need for more clean energy
4. Corporate procurement
5. Energy storage and electrified transport
22 September 2016
53
Bloomberg New Energy Finance Note: these figures are different than those forecast in our 2015 EV battery price outlook. We
have updated our forecast battery demand growth figures, which impacts cost.
EV LITHIUM-ION BATTERY PACK COSTS AND GLOBAL LITHIUM-ION DEMAND FROM EVS, 2010–2030 ($/KWH, GWH)
Annual demand in GWh $/kWh
$120/kWh
0
200
400
600
800
1,000
1,200
0
200
400
600
800
1,000
1,200
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Global EV li-iondemand
BNEF observedvalues
Moderatescenario: 14%learning rate
Aggressivescenario: 22%learning rate
BNEF observed values: annual lithium-ion battery price index2010-15
22 September 2016
54
Note: Values from 2010-2014 are based on BNEF’s annual battery price index, *2015 based on H1 data. For more see here:
https://www.bnef.com/Insight/10299. Cumulative production is based on total EVs sold and their respective battery pack size. Source: Bloomberg New Energy Finance
EV LITHIUM-ION BATTERY PACKS & CRYSTYALLINE SI PV MODULES: HISTORICAL COST REDUCTIONS
1 10 100 1,000 10,000 100,000
0
1
10
100
0
1
10
100
1 10 100 1,000 10,000 100,000 1,000,000
Cumulative lithium-ion EV battery pack production (MWh)
Cumulative crystalline PV module production (MW)
Cry
sta
llin
e S
i P
V M
od
ule
pri
ce
(US
D/W
)
Lith
ium
-ion
ba
ttery
pa
ck p
rice
(US
D/W
h)
m=15.5%
m=26.3%
EV LI-ION BATTERYPACK
PRICES HAVE FALLEN
60% SINCE 2010
22 September 2016
55
Note: Electric vehicles includes hybrid, plug-in-hybrid and fully electrified. Source: Bloomberg New Energy Finance.
PV AND LITHIUM-ION SUPPLY CHAINS
SILICON CONSUMPTION BY
SECTOR
% of production
2% 5%9%
13%15%
0%
20%
40%
60%
80%
100%
2006 2008 2010 2012 2014
Consumer electronics
EVs and stationary energy
25%29%
56%56%
68%
81%85%
88%89%
2006 2008 2010 2012 2014
Semiconductor industry
Solar industry
2% 5%9%
13%15%
0%
20%
40%
60%
80%
100%
2006 2008 2010 2012 2014
Consumer electronics
EVs and stationary energy
25%29%
56%56%
68%
81%85%
88%89%
2006 2008 2010 2012 2014
Semiconductor industry
Solar industry
LITHIUM-ION BATTERY SALES
BY SECTOR
% of capacity sold
22 September 2016
56
BILL GATES, IN HIS “THE INTERNET TIDAL WAVE” MEMO 1995
Source: Wired Magazine
The PC wasn’t perfect. Aspects of the PC
were arbitrary or even poor. However a
phenomena grew up around the IBM PC that
made it a key element of everything that would
happen for the next 15 years.
“
Bill Gates
22 September 2016
57
BILL GATES, IN HIS “THE INTERNET TIDAL WAVE” MEMO 1995
The PC wasn’t perfect. Aspects of the PC
were arbitrary or even poor. However a
phenomena grew up around the IBM PC that
made it a key element of everything that would
happen for the next 15 years. Companies that
tried to fight the PC standard often had good
reasons for doing so but they failed because
the phenomena overcame any weaknesses
that resisters identified.
“
”
Bill Gates
Source: Wired Magazine
22 September 2016
58
RESIDENTIAL ENERGY STORAGE PLAYERS
Specialist storage providers Energy companies
Solar companies Consumer electronics companies
Source: Bloomberg New Energy Finance Note: Illustrative, not comprehensive list
22 September 2016
59
35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
140
2015 2020 2025 2030 2035 2040
ICE +HEV
BEV
PHEV
EV % ofnewsales
m vehicles sold per year % of new car sales
GLOBAL LIGHT DUTY VEHICLE AND EV YEARLY SALES 2015-40 (MILLION VEHICLES SOLD PER YEAR, %)
Source: Bloomberg New Energy Finance Note: ICE+HEV = internal combustion engine and hybrid vehicles, BEV = battery electric
vehicles, PHEV = plug-in hybrid electric vehicles.
22 September 2016
60
0
2
4
6
8
10
12
14
2015 2020 2025 2030 2035 2040
Rest of theworld
Japan
Europe
USA
China
Note: we calculate the number of barrels displaced by multiplying the cumulative number of EVs on the road in a given year by the average vehicle miles travelled by
the EV, divided by the average miles per gallon of an internal combustion engine vehicle on the road, divided by 365, divided by 42, which is the number of gallons in
one barrel. Our figures likely understate actual crude oil displacement given that one barrel of crude oil produces around 19.5 gallons of gasoline and 12 gallons of
diesel. Our calculation treats a barrel displaced as entirely made of finished transportation fuel. Source: Bloomberg New Energy Finance
M barrels per day
Scenario Average vehicle
lifetime
2040 average MPG of
replaced ICE vehicle
2040 average vehicle
miles travelled
Implied 2040 fuel
displacement (bpd)
Base 14 years 45 13,400 8.6m
CRUDE OIL DISPLACEMENT FROM EV SALES 2015-40 – BASE CASE (MILLION BARRELS PER DAY)
22 September 2016
61
M barrels per day
0
2
4
6
8
10
12
14
2015 2020 2025 2030 2035 2040
Rest of theworld
Japan
Europe
USA
China
Scenario Average vehicle
lifetime
2040 average MPG of
replaced ICE vehicle
2040 average vehicle
miles travelled
Implied 2040 fuel
displacement (bpd)
Aggressive 14 years 45 22,600 13m
CRUDE OIL DISPLACEMENT FROM EV SALES 2015-40 – AGGRESSIVE CASE (MILLION BARRELS PER DAY)
Note: we calculate the number of barrels displaced by multiplying the cumulative number of EVs on the road in a given year by the average vehicle miles travelled by
the EV, divided by the average miles per gallon of an internal combustion engine vehicle on the road, divided by 365, divided by 42, which is the number of gallons in
one barrel. Our figures likely understate actual crude oil displacement given that one barrel of crude oil produces around 19.5 gallons of gasoline and 12 gallons of
diesel. Our calculation treats a barrel displaced as entirely made of finished transportation fuel. Source: Bloomberg New Energy Finance
22 September 2016
62
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2015 2020 2025 2030 2035 2040
Rest of theworld
Japan
Europe
USA
China
ELECTRICITY DEMAND FROM ELECTRIC VEHICLES 2015-40 (PETAWATT HOURS)
Source: Bloomberg New Energy Finance
Note: Assume an average EV consumes 0.3kWh per mile driven, assumes PHEVs e-miles on their
battery pack will go from 6,700 in 2015 to 18,700 by 2040. We assume BEVs vehicle e-mile
travelled rises from 10,700 in 2015 to 23,600 in 2040. Assumes 14 year average EV lifespan.
= 11% of 2015 global electricity demand
22 September 2016
63
LONG-RANGE, MID-PRICED ELECTRIC VEHICLE TIMELINE
Price band ($)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
0 50 100 150 200 250 300 350
Tesla Roadster
2008
Tesla Model X
2015
Tesla Model S
2012
Porsche Mission E
2020
Audi Q6 e-tron
2018
Chevrolet Bolt
2016
Tesla Model 3
2017
Nissan Leaf?
2018
BMW i3
2014
VW e-golf
2015
Nissan Leaf
2011
Mitsubishi i-MiEV
2012
Kia Soul
2015
VW Budd-e?
2020
Skoda?
2021
VW e-golf?
2018
Volvo?
2019
e-range (miles)
●Automakers announced
$27bn in R&D funding towards
greening their fleets in 2015.
Most going towards vehicle
electrification
Source: Bloomberg New Energy Finance,
respective companies
Note: Selected US battery electric vehicles (BEV) only. Positions are representative and do not
indicate exact prices or range. Back labels = currently available, green labels = forthcoming models
with specifications and timeline released. Blue labels = announced but limited details confirmed.
Range is based on manufacturers statements, not on any specific test cycle.
22 September 2016
64
ACTEW AGL CEO ON POWER STORAGE SYSTEMS 2015
Source: Sydney Morning Herald
It's what our customers want
and if we don't supply what
they want, they'll ask another
retailer to supply it, so I guess
we'd better be in it.
-Michael Costello, CEO
“
”
Panasonic
Residential Storage Battery System LJ-SK84A
22 September 2016
65
There is still a need to
develop adequate storage
technologies.
LAUDATO SI – INTEGRATION
Pope Francis Picture: Wikimedia
22 September 2016
66
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Bloomberg New Energy Finance.
The information contained in this publication is derived from carefully selected sources we believe are reasonable. We do
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COPYRIGHT AND DISCLAIMER
22 September 2016
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