Renewable Energy: Update, Politics, and Investment Opportunities Thomas Emmons YAE - March 9, 2018
Renewables are Rapidly Replacing Fossil Fuels Installed Operating Generating Capacity Replacement of Fossil Fuels by Renewables • Renewables (wind, solar, biomass, and geothermal) Renewables accounted for ~57% of all U.S. new installed accounted for only ~11% of installed operating generating capacity from 2015 – 2017 capacity in the U.S. as of December 2017 100% Share of New Capacity Additions 90% Solar, etc Other 80% 4% 4% Wind 70% 7% 60% 50% Hydro Natural 40% 9% 30% Gas 20% Nuclear 44% 10% 9% Coal 0% 2011 2012 2013 2014 2015 2016 2017 23% Solar Wind Natural Gas Coal Other Growth of Solar Growth of Wind Installations in 2017 down from a record 15 GW in 2016; Wind capacity has increased twenty-fold since 2001 despite that, 73% CAGR in capacity since 2011 U.S. Cumulative Wind Capacity (MW) U.S. Cumulative Solar Capacity (MWdc) 100,000 60,000 50,000 80,000 40,000 60,000 30,000 40,000 20,000 20,000 10,000 – – 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2011 2012 2013 2014 2015 2016 2017E Source: GTM Research, FERC Office of Energy Projects, American Wind Energy Association, Bloomberg New Energy Finance, EIA
Renewable le Energy Capacit ity Buil ilt, , by Technolo logy Source: Bloomberg New Energy Finance; Business Council for Sustainable Energy
Solar Costs Continue to Fall $6 $80 $5 $70 $4 $ Cost per Watt $60 $ Cost per Watt $3 $50 $2 $40 $1 $30 $0 $20 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $10 $0 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Falling Cost of Solar Systems and Rising Retail Rates Declining Costs to Deliver Projects Globally 40 Price Benchmark for Fixed-axis, Utility-scale PV Residential Solar Levelized Cost of Energy Systems (real 2016 US$/W) 35 US Average Residential Electricity Price $4 30 25 ₵USD / kWh $3 20 15 $2 10 5 $1 0 $0 2010 2011 2012 2013 2014 2015 2016 2017
Wind Energy Costs Are Fall lling • Bigger, taller turbines • Improved technology and efficiency • Lower costs – manufacturing economies
Renewables are Cost Competitive: LCOE Unsubsidized Nuclear LCOE range Coal 1H 2017 benchmark Solar PV 2H 2016 benchmark Wind - onshore Natural gas - CCGT 0 40 80 120 160 200 240 $/mWh ● Solar is now cheaper than coal on a levelized cost of energy (LCOE) basis: $54/MWh vs. $66/MWh. Solar costs continue to fall. ● Onshore wind benchmark is “tied” with CCGT, but with strong wind resources can achieve LCOEs as low as $33/MWh, even cheaper than natural gas($49/MWh). Source: Bloomberg New Energy Finance. Developed in partnership with The Business Council for Sustainable Energy. As of 1H2017.
Corporate Procurement of Renewable Energy Renewable capacity contracted by corporations, 2017 Largest corporate offtakers, 2017 (GW) Cumulative (GW) MW 4 12 Apple Inc 356 200 3.2 Google Inc 536 2.9 3 9 Kimberly-Clark 245 2.4 Facebook Inc 35 200 2 6 General Motors Co 200 1.5 T-Mobile USA 160 Anheuser-Busch InBev NV 152 1 3 0.6 Bay Area Rapid Transit 0.3 45 62 0.1 0.2 0.1 0.1 General Mills 100 0 0 Target Corp 100 2008 9 10 11 12 13 14 15 16 17 Solar Wind Solar Wind Other Cumulative ● Apple contracted 560MW of renewable energy in 2017, more than any other corporation. It signed the largest PPA ever between a corporation and a utility – a 235MW PV plant with NV Energy under the utility’s GreenEnergy Rider. ● Google signed PPAs for 536MW, to offset 100% of its global electricity demand. Kimberly-Clark, T-Mobile, General Mills and Cummins all signed their first PPAs in 2017. ● RE100: Corporations pledging to reach 100% renewable energy. Notable names: Ikea, Adobe, BofA, BMW, Bloomberg, Burberry, Citi, Coca-Cola, ClifBar, Danone, Ebay, Facebook, GM, Goldman Sachs, Google, HP, J&J, JPM, Kellogg, LEGO, Mars, Microsoft, Morgan Stanley, Nestle, Nike, P&G, Starbucks, Visa, Walmart, etc. Source: Bloomberg New Energy Finance. Developed in partnership with The Business Council for Sustainable Energy. Note: Charts show offsite PPAs only
Corp rporate Renewable le Energy Use sers, Largest by St State Walmart: 6 Target: 6 IKEA: 6 Amazon: 4 Google: 4 Source: David Gardner and Associates, April 2017
Fir irst US Offshore Win ind Proje ject – Blo lock Is Isla land
More Offshore Win ind Proje jects Comin ing • “South Fork”, LI, selling to LIPA (developed by Deepwater Wind) • 90MW, 30 mi east of Montauk, connecting at East Hampton • NJ: New Gov . Murphy reversed Gov. Christie’s stance, calling for 3.5GW by 2030 • NY Masterplan: 800MW by 2020; 2.4GW by 2030; • MA: goal of 1.6GW by 2027 • Significant economic activity on land, revitalizing ports (Quonset Point, RI)
Next xt: : Flo loatin ing Offshore Win ind Turb rbines
Transmission Projects – Stranded Win ind
Transmission Projects – Stranded Win ind
Texas CREZ – Captured St Stranded Win ind Cost: $8 billion Distance: 3600 miles Capacity: 18.5 GW Completed: 2014
Other Baseload Renewable Energy Sources • Hydropower • Now 9% of load; few new being built • Environmental impact • Geothermal • Tapping subsurface heat to generate electricity • Mostly in West; base load; small contributor • Combustion or gasification of organic materials • Wood-burning power plants (incl. pelletized wood as coal substitute) • Forest management; pine beetle in West/Canada • Waste to Energy (many types) • Methane capture (and pipeline injection, or fuel generator) • Anaerobic Digestion (manure, food waste, etc.) • Landfill gas • MSW/RDF processed to various fuel forms
Politics: Federal Tax Incentives - Supporting Renewables Wind: • 2.3c/kWh production tax credit (PTC) • Since 1992 (escalated with inflation) Solar: • 30% investment tax credit (ITC) • Since 2005 Benefit: attracted large cash investors (~40% of project cost) into generation projects, who received tax shelter in lieu of cash. (JPMorgan Chase has been a large US “tax investor”.) Extended in 2015 for 4 years, phasing out by 2021 Early House versions of the Tax Cut and Jobs Act of Dec 2017 included changes to the phase-out, but it was ultimately left intact.
Tariffs on Imported Solar Cells and Modules • 4-year tariff on imported PV solar cells and modules, from all countries • Consensus: a minor, temporary, politically-motivated cost increase for the solar industry • Tariff Schedule over 4 years: 30%, 25%, 20%, 15% • First 2.5GW of imports each year are exempt from tariffs (~20% of imports) • Many developers have stockpiled components for the next 1-2 years • Increases solar TOTAL installation costs by ~5-10% (as cells/modules are a fraction of the costs) • Tariff is MUCH lower than plaintiffs requested (their ask would have doubled the cost) • Only 1000 people employed in manufacturing solar cells/modules vs. ~250,000 in total US solar (installers, services, etc.) • Hurts the larger installation businesses more than helped the small US manufacturing businesses • Will it bring jobs? TBD: Days later, Jinko Solar (China) announced a $410mm deal with Jacksonville FL to build a factory there. Historical and Forecast U.S. Solar Installations (MWdc) 16,000 15,088 13,941 14,000 12,613 12,637 11,888 11,936 12,000 10,136 10,000 7,501 8,000 6,253 6,000 4,764 3,371 4,000 1,920 2,000 0 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E 2022E Source: GTM Research, Bloomberg New Energy Finance
State Policies Driving Renewables Adoption State Renewable Portfolio Standards (RPS) ME: 40% x 2017 WA: 15% x 2020* NH: 24.8 x 2025 ND: 10% x 2015 MT: 15% x 2015 MN: 26.5% VT: 75% x 2032 x 2025 (IOUs) OR: 5 0%x 2040* MA: 15% x 2020( new resources) 31.5% x 2020 (Xcel) 6.03% x 2016 (existing resources) (large utilities) SD: 10% x 2015 NY: 50% x 2030 WI: 10% MI: 15% x RI: 38.5% x 2035 2015 2021* † CT: 27% x 2020 IA: 105 MW IN: OH: 12.5% NJ: 20.38% RE x 2020 NV: 25% x 10% x x 2026 + 4.1% solar by 2027 IL: 25% UT: 20% x 2025* 2025 † PA: 18% x 2021† CO: 30% by 2020 x 2026 2025* † VA: 15% (IOUs) *† KS: 20% x 2020 DE: 25% x 2026* CA: 50% MO: 15% x x 2025 † DC x 2030 2021 MD: 25% x 2020 NC: 12.5% x 2021 (IOUs) DC: 5 0% x 2032 OK: 15% x NM: 20%x 2020 AZ: 15% x 2015 SC: 2% 2021 (IOUs) 2025* TX: 5,880 MW x 2015* Through 2025, RPS will drive new capacity for 189,800 GWh of renewable energy HI : 100% x 2045 Renewable portfolio standards (laws) 29 States + DC have RPS Renewable portfolio goals (8 states have goals)
Recommend
More recommend
