Sustainable Energy in America February 2015

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2015 FACTBOOK
Sustainable
Energy
in America
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Developed in partnership with the Business Council for Sustainable Energy.
February 2015
Overview
For the last three years, the Sustainable Energy in America Factbook has documented the revolution transforming how the US produces, delivers, and
consumes energy. In 2014, that revolution continued, and the long-term implications of these changes are coming into sharper focus.
To single out just a few tell-tale headlines from the hundreds of statistics presented in this report: over the 2007-14 period, US carbon emissions from the
energy sector dropped 9%, US natural gas production rose 25%, and total US investment in clean energy (renewables and advanced grid, storage, and
electrified transport technologies) totalled $386bn.
This third edition of the Factbook presents the latest updates on those trends, with special emphasis on 2014 happenings. The year was a notable one not
just in terms of progress achieved by some sustainable energy sectors but also in terms of two key developments in the broader context. The first is the
growth of the US economy, which has increased by 8% since 2007 and has been gaining steam in the past few quarters. The Factbook shows that
advances in sustainable energy have been concurrent with this growth, and have partially fuelled it. The second is the collapse of oil prices. While there is
no explicit link between oil (which in the US is used mostly for transport) and most sustainable energy technologies (which are used mostly in the power
sector), the oil price shock has a profound global impact and may result in ‘second-order’ effects which could impact US sustainable energy.
Finally, the Factbook evidence brings into focus one unmistakable theme: the broader US ecosystem is clearly preparing for a future in which sustainable
sources of energy play a much larger role. As evidence, consider these developments that surfaced or accelerated in 2014:
• Critical new policies were introduced that hinge on the promise of sustainable energy technologies. Most momentous were the Obama
administration’s power sector regulation and bilateral climate pact with China. But other key policies were rolled out that take the long view on clean
energy integration, including New York State’s plan to overhaul regulation of its electric industry to better accommodate more flexible and cleaner
sources of energy.
• Industries with significant energy-related cost exposure gravitated to the US as a base for operations. Companies for whom feedstock or energy is
a fundamental cost driver, such as firms in natural-gas-intensive industries and data centers with big electricity footprints, recognize that the economics
here are among the most attractive in the world from the perspective of energy buyers.
• Major new infrastructure projects advanced to accommodate the immense influx of these technologies. This included major expansions of natural gas
pipelines and deployments of smart grid technologies.
• More capital flowed to financial vehicles specifically aimed at sustainable energy development. This included ‘yieldcos’ and green bonds, which
should pave the way toward raising huge sums of capital needed for the sustainable energy future to come to fruition.
The Sustainable Energy in America Factbook provides a detailed look at the state of US energy and the role that a range of new technologies are playing in
reshaping the industry. The Factbook is researched and produced by Bloomberg New Energy Finance and commissioned by the Business Council for
Sustainable Energy. As always, the goal is to offer simple, accurate benchmarks on the status and contributions of new sustainable energy technologies.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
1
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
2
About the Factbook (1 of 4):
What is it and what’s new
What is it?
• Aims to augment existing, reputable sources of information on US energy
• Focuses on renewables, efficiency, natural gas
• Fills important data gaps on areas (eg, investment flows by sector, contribution of distributed energy)
• Is current through 2014 wherever possible
• Employs Bloomberg New Energy Finance data in most cases, augmented by EIA, FERC, ACEEE, ICF International,
LBNL, and other sources where necessary
• Contains the very latest information on new energy technology costs
• Has been graciously underwritten by the Business Council for Sustainable Energy
• Is in its third edition (first published in January 2013)
What’s new?
• Format: Previous editions of the Factbook have been in the form of 100-page PDF documents. This year’s edition of the
Factbook (this document) consists of Powerpoint slides showing updated charts. For those looking for more context on
any sector, last year’s edition(1) can continue to serve as a reference. The emphasis of this 2015 edition is to capture
new developments that occurred in the past year.
• Updated analysis: Most charts have been extended by one year to capture the latest data
• 2014 developments: The text in the slides highlights major changes that occurred over the past year
• New coverage: This report contains data shown for the first time in the Factbook, including analyses of: US energy
productivity, non-hydro storage policies by geography, smart meter prices, utility investment in natural gas-related
efficiency by state, potential impact of EPA Clean Power Plan, global comparisons of energy costs
(1) Last year’s edition (the 2014 Factbook) can be found here: http://www.bcse.org/factbook/pdfs/2014%20Sustainable%20Energy%20in%20America%20Factbook.pdf
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
3
About the Factbook (2 of 4):
Understanding terminology for this report
(not covered
in this
report)
OTHER
CLEAN
ENERGY
SUSTAINABLE
ENERGY
(as defined in this
report)
FOSSILFIRED /
NUCLEAR
POWER
RENEWABLE
ENERGY
• Natural gas
• CCS
•
•
•
•
•
•
•
Solar
Wind
Geothermal
Hydro
Biomass
Biogas
Waste-to-energy
• Nuclear
• Wave / tidal
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
DISTRIBUTED POWER,
STORAGE, EFFICIENCY
•
•
•
•
•
•
•
•
Small-scale renewables
CHP and WHP
Fuel cells
Storage
Smart grid / demand response
Building efficiency
Industrial efficiency (aluminum)
Direct use applications for natural gas
• Lighting
• Industrial efficiency (other industries)
TRANSPORT
• Electric vehicles
(including hybrids)
• Natural gas vehicles
• Biofuels
4
About the Factbook (3 of 4):
The sub-sections within each sector
For each sector, the report
shows data pertaining to
three types of metrics
(sometimes multiple charts
for each type of metric)
Deployment: captures how much activity
is happening in the sector, typically in
terms of new build, or supply and demand
Financing: captures the amount of
investment entering the sector
Economics: captures the costs of
implementing projects or adopting
technologies in the sector
Notes: A small number of sectors do not have slides for each of these metrics, due to scarcity of data. The section on energy efficiency also includes a set of slides dedicated to policy.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
5
About the Factbook (4 of 4):
Sponsorship of this report
• The Business Council for Sustainable Energy (BCSE) is a coalition of companies and trade associations from the
energy efficiency, natural gas and renewable energy sectors. The Council membership also includes
independent electric power producers, investor-owned utilities, public power, commercial end-users and project
developers and service providers for energy and environmental markets. Since 1992, the Council has been a
leading industry voice advocating for policies at the state, national and international levels that increase the use
of commercially-available clean energy technologies, products and services.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
6
Executive summary (1 of 5)
The long-term transformation of how the US produces and consumes energy continues…
• The US economy is becoming more energy-productive (ie, less energy-intensive). By one measure (US GDP per unit of energy consumed),
productivity has increased by 54% since 1990, by 11% since 2007, and by 1.4% over the past year (2013 to 2014). In the case of electricity, there has
been an outright decoupling between electricity growth and economic growth. Between 1950 and 1990, electricity demand grew at an annual rate of
just below 6%. Between 1990 and 2007, it grew at an annual of 1.9%. Between 2007 and 2014, annualized electricity demand growth has been… zero.
• The US power sector is decarbonizing. Natural gas is gradually displacing coal; production and consumption of natural gas hit record highs in 2014.
The contribution of renewable energy (including large hydro projects) to the country’s electricity mix rose from 8% in 2007 to an estimated 13% in 2014.
Since 2000, 93% of new power capacity built in the US has come in the form of natural gas, wind, solar, biomass, geothermal, or other renewables.
• The US clean energy sector has seen $35-65bn of investment each year since 2007 and has totalled $386bn over that period. These annual
investment tallies are much higher than the levels a decade ago ($10.3bn in 2004), indicating that the industry has greatly matured. Investment in 2014
was $51.8bn, a 7% increase from 2013 levels. The key drivers behind these numbers were: the brief window of renewed policy support for wind, the
acceleration of the rooftop solar business; and the emerging phenomenon of 'yieldcos' (publicly listed companies that own operating renewable energy
assets).
• The US transportation sector’s dependence on oil has been decreasing. Gasoline consumption is down by 8.6% since 2005, largely due to increasing
vehicle efficiency prompted by federal policy, increasing consumer preference for less thirsty vehicles, changing driving patterns (declining number of
vehicles on the road, declining miles per vehicle), and increased biofuels blending. Meanwhile, new vehicle technologies are emerging, and are only
just starting to leave what could be a large and lasting dent on oil use. At the same time, on the back of advances in shale drilling, US oil production is
up 41% since 2007, and has returned to levels not seen since the 1980s.
But in three key metrics, results of the last two years have wavered from long-term trends – though there is a silver lining to each...
• After a record year in 2012, natural gas’s contribution to the US electricity mix has slipped the last two years, and coal generation has regained some
market share. Natural gas prices have risen from historic lows seen in 2012, allowing coal to be somewhat more cost-competitive. Coal generation
dropped from 49% of US electricity in 2007 to 37% in 2012, but has since ticked up to 39% in 2013 and 2014. Nevertheless, ‘structural’ trends –
especially the retirement of coal plants – are underway that will probably lead to long-term increased market share for natural gas.
• Largely driven by this trend, US carbon emissions from the energy sector have risen since 2012, after having been on a mostly downwards trajectory
since 2007. However, as enacted and proposed policies (such as regulations on existing power plants and fuel economy standards for cars) begin to
bite, emissions are projected to go on a downward trajectory according to official US estimates.
• Uptake of key energy efficiency policies is slowing. States’ adoption of decoupling legislation and energy efficiency resource standards (EERS) has
been mostly flat since 2010 (with some exceptions), and some states have even begun to retreat from these policies. Yet a decisive federal policy
(more on this below) could, if enacted, prompt a new round of EERS-like adoptions and expansions across many states.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
7
Executive summary (2 of 5)
Still, across most sectors, the momentum for a sustainable energy future continues to build.
• Through two major policy proposals unveiled in 2014, the Obama administration signalled it is serious about tackling greenhouse gas emissions. In
June, the Environmental Protection Agency (EPA) announced a proposed policy targeting CO2 reductions in the existing power fleet. The Clean Power
Plan, which calls on states to implement their own programs for reducing carbon emissions intensity, could be the most ambitious policy ever proposed
for incentivizing the deployment of natural gas, renewable energy, and energy efficiency. According to one scenario in the EPA’s modelling, the Plan
could lead to 30% reductions from 2005 levels by 2030. (The Plan is analyzed in further depth in Section 8.1 of the report.) In November, the White
House announced that it had reached a historic climate agreement with China, with the US pledging to reduce greenhouse gas emissions by 26-28%
relative to 2005 levels by 2025, and China promising to peak CO2 emissions around 2030. Neither policy will come easy. Legal challenges to the EPA’s
proposal are underway, and achievement of the 2025 pledge will require new policy action.
• Supply and demand for natural gas are hitting all-time highs. Natural gas production has increased by 25% since 2007, driven by the emergence of
technologies and techniques to extract unconventional natural gas resources at a low cost. Sectors with demand for natural gas have been capitalizing
on this supply. In the midst of the ‘polar vortex’, in January 2014, the natural gas delivery system set daily, weekly, and monthly all-time records. Since
2010, owners of electricity generation have retired 25GW of coal plants and have announced plans to retire another 38GW by 2018 (to some extent
driven by regulation), with much of this to be offset by increased natural gas usage. In 2014, natural-gas-intensive industries brought online 10 new
projects that make use of low-cost gas (and proposed another 32 projects). To send part of the gas abroad, the industry is currently building four
terminals for the export of liquefied natural gas (LNG), three of which began construction in 2014, and many more are in the works. Natural gas
demand in 2014 hit 66.9Bcfd in 2014, up by 14% since 2008 and by an estimated 2.8% since 2013.
• And the natural gas industry is building and reconfiguring infrastructure, to reflect the changes of this shifting and speedily expanding market. For the
last 50 years, natural gas pipelines have tended to move gas in a nearly uniform south-to-north direction, from production centers on the Gulf Coast to
demand centers in the Northeast and Midwest. The prolific production coming out of two key shale plays in the Pennsylvania and Ohio area, the
Marcellus and Utica, have upset these dynamics. 'Takeaway' pipelines (the ones that get natural gas out of production areas) in the Northeast region of
the US, the home to these emergent shales, accounted for over half of transmission pipeline capacity additions in the US since 2012.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
8
Executive summary (3 of 5)
Still, across most sectors, the momentum for a sustainable energy future continues to build (continued from previous slide)
• Renewable energy occupies a prominent part of many states’ capacity mix, with 205GW installed across the country. Wind and solar have been the
fastest growing technologies, having more than tripled in capacity since 2008 (from 27GW to 87GW in 2014). Hydropower is the largest source of US
renewable energy at 79GW (excluding pumped storage). Geothermal, biomass, biogas, and waste-to-energy collectively represent 17GW of renewable
energy capacity in the US. Yet new build across geothermal and bioenergy-based power has been relatively low the past two years. These
technologies provide a steady flow of power regardless of external conditions and have comparable economics (in terms of unsubsidized levelized
costs) to some technologies that have seen wider deployment. However, hydropower, geothermal, and bioenergy-based power are suffering from not
having access to the same incentives received by faster-growing sectors and, more generally, from an absence of long-term policy certainty.
• Wind energy is the lowest cost option for utilities in some parts of the US, and solar energy beats the retail electricity prices paid by homeowners in
many states. With the support of subsidies, wind developers have been able to offer power purchase agreements (PPAs) to utilities at prices in the
$20-30/MWh range in the Midwest, Southwest, and Texas, well in the territory of ‘grid parity’ – that is to say, below the levelized cost of electricity for
fossil-fired power and below the price of wholesale power. Third-party providers of solar energy, again with the help of federal and state incentives, are
able to offer PPAs or leases to homeowners below the residential retail electricity price, achieving ‘socket parity.’ To fund these third-party systems,
these providers raised another $2.6bn in 2014, same as 2013 levels, to continue driving this business forward. At a larger scale, utility-scale solar
plants in Texas and Utah secured PPAs to sell power at $50-55/MWh (with the help of incentives), among the lowest ever recorded globally.
Corporations and other large electricity users, such as Microsoft, Yahoo!, and Washington DC-based universities, have demonstrated appetite for
renewable procurement, motivated as much by the economics as by the environmental benefits.
• Wind and solar both saw increased levels of build in 2014, but for different reasons. Solar build in 2014 was almost 50% higher than in 2013 and 24
times higher than in 2008. The industry is ramping up briskly, and project pipelines today suggest even bigger numbers for 2015 and 2016. Wind build
bounced back from only 0.5GW in 2013 to 4.9GW in 2014 and the industry is poised for bigger years in 2015 and 2016, based on current pipelines.
The ups-and-downs can be attributed to policy meanderings: the Production Tax Credit has experienced five expirations or renewals since December
2012 (the language of these renewals has enabled projects to be completed even after the legislation expires). Similar policy programs supporting a
broader range of renewable energy technologies could yield an increase in deployment of those technologies as well. Many states have access to the
feedstocks (eg, biomass, waste) needed to produce power from these technologies.
• Distributed energy is prompting a rethink of grids, business models, and buildings. In April 2014, New York State proposed reforms to its electricity
market that could reposition utilities as coordinators of distributed energy resources (which include energy efficiency, demand response, and distributed
generation). Other states have said they are watching with great curiosity. The home has become a competitive battleground, with utilities, device
vendors, third-party solar providers, and even telecom companies indicating that they may have a role to play in intelligent residential energy systems.
The fastest growing form of distributed energy is rooftop solar. The commercial and industrial sector has also demonstrated continued appetite for
combined heat and power (about 700MW per year since 2009) and continued interest in microgrids. Fuel cell activity is heavily dependent on five
states, each with supportive policies for the sector.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
9
Executive summary (4 of 5)
Still, across most sectors, the momentum for a sustainable energy future continues to build (continued from previous slide)
• A grid operator’s dream is slowly coming into focus. Utilities are investing in a smarter grid that gives granular insight into electricity supply and
consumption – enabling higher reliability, less volatile power prices, more efficient use of assets, and a cleaner electricity profile. Investments by
investor-owned utilities and standalone transmission companies into transmission and distribution infrastructure totalled a record-high $37.7bn in 2013.
Smart meters have been deployed to 39% of US electricity customers, and demand response accounts for 34GW of capacity across US markets.
Almost all of the country’s energy storage is in the form of pumped hydropower, but other forms of energy storage, such as grid-scale batteries, are
experiencing growth thanks to policies such as state procurement targets. Widespread use of storage helps grids in numerous ways, including
addressing issues such as frequency regulation, enabling penetration of intermittent renewables, deferring investments in transmission and distribution,
providing flexible resources, and alleviating the need for ‘oversizing’ (ie, sizing the grid to meet rare moments of peak usage, resulting in
underutilization of assets).
• The regions seeing the greatest measurable strides in energy efficiency are New England and the Pacific states; and the buildings seeing the most
energy efficiency efforts are commercial structures. In contrast, the regions that offer the greatest untapped opportunities are the Southeast and
Southwest of the country, and the building types that present new opportunities include small office buildings, warehouses, and storage facilities. This
comparison of leaders and laggards is based on metrics presented in this report, such as: state-wide utility efficiency savings as a percentage of retail
sales, state-by-state scorecards for energy efficiency policies, Energy Star-certified floor space for different types of buildings, and investment flows by
type of framework. Energy efficiency investment in the US through formal frameworks (mostly, investments by utilities and investments under energy
savings performance contracts) totalled an estimated $14bn in 2013. Advances in technology and policies to increase the efficiency of appliances and
buildings have played a role in reducing emissions and increasing the economy’s energy productivity. On the policy front, for example, through 2014,
6.0bn square feet of commercial floor space (around 7% of total US commercial sector floor space) was covered under energy efficiency benchmarking
or disclosure policies.
• The US has been a leader globally in carbon capture and storage (CCS), but investment is far below its peak from 2010, as government support has
waned. The country has accounted for 56% of global asset finance in CCS since 2007. Investment levels picked up again in 2014 due to the financial
close of one project, NRG’s 1.6MtCO2/year Parish power project. A significant project, Mississippi Power’s 563MW Kemper project, is making progress
and is slated to commission in 2016, but the project has faced problems with cost overruns and delays through construction.
• Policy, driving patterns, new technologies, consumer adoption trends, and fuel economics are among the factor driving change in the transport sector,
though the inflection point is probably yet to come. Tightening fuel economy standards are pushing carmakers to release more efficient vehicles; these
standards will demand a doubling in fuel economy by 2025. Sales of battery and plug-in hybrid electric vehicles increased 25% in the first three
quarters of 2014, relative to that period last year, and comprised just less than 1% share of the market for new vehicle sales towards the end of the
year. On an energy-equivalent basis, electricity has been the most competitive transport fuel in the US for over a decade, but upfront costs can still be
higher for electric vehicles than for comparable conventional vehicles. Natural gas use in vehicles has grown 6.5% per year since 2001 but was flat
from 2013 to 2014, at around 33Bcfd. The fuel can be more economical than gasoline and an attractive option for heavy-duty vehicles in particular.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
10
Executive summary (5 of 5)
The changing energy picture in this US has profound geopolitical implications
• The US finished the year as the second highest-ranked country in terms of total new dollars attracted for clean energy investment; China was first.
Global investment in the sector was $310bn in 2014, up 16% on 2013 levels, and near its 2011 peak of $318bn. Among the largest drivers of these
investment figures are the categories of asset financing for wind and financing for small distributed capacity – essentially, rooftop solar. In 2014, the US
was the world’s second-largest market for new wind installations, behind China, and third-largest for solar, behind China and Japan.
• The US is one of the most attractive markets in the world for companies whose operations entail significant energy-related costs. At 6.87¢/kWh, the
retail price of electricity for the industrial sector in the US is lower than that in other major economies, such as Europe, China, and Mexico. Natural-gasintensive industries have also been flocking to the US; domestically-sourced feedstock in the form of natural gas makes the US one of the most
economical regions for producing chemicals such as methanol and ammonia.
• Policy actions taken by the US in 2014 have set the stage for a potentially momentous global climate summit at Paris in December 2015. The USChina pact was the most notable achievement in the global climate negotiations process in 2014. In the first quarter of 2015, other nations are
expected to present their long-term commitments to addressing climate change. Such public pledges from China and the US (the world’s first and
second biggest emitters, respectively) have the potential to challenge other nations to do more as well. The summit to be held in Paris at the end of
2015 will be the most significant multilateral climate negotiations since the discussions in Copenhagen in 2009. The growth of sustainable energy is a
critical part of achieving any targets that might be struck under diplomatic deals on greenhouse gas emissions.
• The crude oil price collapse, which made headlines at the end of 2014, has been partially driven by factors in the US: surging production and declining
demand. US oil production has hit levels not seen since the 1980s and is up 41% since just 2007. Meanwhile, US consumption of gasoline has
dropped 8.6% since 2005 as US consumers drive more fuel-efficient vehicles, travel fewer miles, or use more public transportation. Crude prices hit an
annual high of $107/barrel in June 2014 then collapsed below $50 per barrel as of late January 2015. The price drop is all the more noteworthy in the
face of a strong US economy, which might otherwise have contributed to a price spike. The oil price shock is de-stabilizing regimes such as Russia,
Venezuela, and Iran.
• There is no direct link between oil prices and most sustainable energy technologies in the US. Sustainable energy transportation technologies, such as
hybrid electric vehicles, are impacted directly by what is happening in the global oil markets. But most technologies covered in the Factbook play a role
in the power sector, whereas oil is mostly used for transportation and only rarely for power. Nevertheless, there may be ‘second-order’ impacts from the
oil price turmoil. For example, investors in the public markets tend to lump together diverse energy technologies, which may explain why clean energy
stocks have taken a hit since oil prices began falling. And the drop in cost of oil could serve as an indirect stimulus into the US economy, which could
propel industrial growth and thus perhaps even more use of natural gas and renewable energy.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
11
The 2015 Factbook in context of previous editions
The first edition of the Sustainable Energy in America Factbook, published in January 2013, captured five years’ worth of changes
that had seen a rapid decarbonization of the US energy sector. From 2007 to 2012, natural gas’s contribution to electricity had
grown from 22% to 31%; installed renewable energy capacity (excluding hydropower) had doubled; and total energy use had fallen
by 6%, driven largely by advances in energy efficiency.
The second edition of the report, published February 2014, compared developments in 2013 to the longer-term trends described in
the first edition. In some cases, the tendencies had continued: natural gas production, small-scale solar installations, policy-driven
improvements in building efficiency, and electric vehicle usage had continued to gain ground, cementing five-year patterns. Other
measures – total energy consumed (up in 2013 relative to 2012), the amount of emissions associated with that energy consumption
(up), and the amount of new investment into renewable energy (down) – had bucked the longer-term trends.
This year’s Factbook documents 2014, a year in which the US economy continued to gain traction, in which some metrics deviated
from the long-term trends, and in which, overall, momentum for a sustainable energy future continued to build.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
12
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
13
US energy overview:
Economy’s energy productivity
US GDP and primary energy consumption
(indexed to 1990 levels)
1.9
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1.0
0.9
US energy productivity
($ trillion of GDP / quadrillion Btu of energy)
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
0.20
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
GDP (indexed)
Primary energy consumption (indexed)
●
The US economy is becoming more energy productive. By one measure (US GDP per unit of energy consumed), productivity
has increased by 54% since 1990, by 11% since 2007, and by 1.4% from 2013 to 2014
Source: US Energy Information Administration (EIA), Bureau of Economic Analysis, Bloomberg Terminal
Notes: Values for 2014 energy consumption are projected, accounting for seasonality, based on latest monthly values from EIA (data available through September 2014). GDP is real and chained (2009
dollars); annual growth rate for GDP for 2014 is based on consensus of economic forecasts gathered on the Bloomberg Terminal as of January 2015.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
14
US energy overview:
Energy and electricity consumption
US primary energy consumption by fuel type
(Quadrillion Btu)
US electricity demand
Demand (PWh)
105
90
Growth rate (%)
4.5
5%
4.0
4%
3.5
3%
3.0
2%
2.5
1%
2.0
0%
1.5
-1%
1.0
-2%
0.5
-3%
0.0
-4%
60
45
30
15
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
Renewables
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
75
Hydro
Natural gas
Demand
Nuclear
●
●
●
Petroleum
Annual growth rate
Coal
CAGR since 1990
Energy consumption increased by 1.0% from 2013 to 2014 (lower than GDP growth) and is down 2.4% relative to 2007 levels
The mix of energy consumption is also changing, towards lower-carbon sources: petroleum’s share of total energy has fallen
from 39% to 36%; coal has dropped from 22% to 19%; natural gas has risen from 23% to 28%, and renewables (including
hydropower) have climbed from 6% to 10%
Annualized electricity growth (CAGR) has been declining: 5.9% from 1950 to 1990, 1.9% from 1990 to 2007, 0% since 2007
Source: EIA
Source: EIA
Notes: Values for 2014 are projected, accounting for seasonality, based on latest monthly
values from EIA (data available through September 2014)
Notes: PWh stands for petawatt-hours (billion MWh). CAGR is compounded annual growth
rate. Values for 2014 are projected, accounting for seasonality, based on latest monthly values
from EIA (data available through September 2014)
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
15
US energy overview:
Electricity generation mix
US electricity generation by fuel type (%)
22% 22%
24% 24%
25%
31% 28% 27%
19.4%19.6%
20.2%19.6%
19.3%
19.0%19.4%19.4%
Renewables
(including hydro)
4,000
Natural gas
3,000
Nuclear
2,000
Nuclear
Oil
Coal
2014
2013
2012
0
2011
2014
2013
2012
2011
2010
2009
Oil
500
37% 39% 39%
Coal
2008
1,000
2010
49% 48% 44% 45%
42%
2007
●
Renewables
(including hydro)
Natural gas
1,500
0%
●
3,500
2,500
40%
20%
CHP
2009
60%
9% 10% 10% 12% 12% 13% 13%
2008
80%
4,500
8%
2007
100%
US electricity generation by fuel type (TWh)
The US electricity mix in 2014 was nearly identical to 2013 levels. Natural gas’s contribution is off of the record high achieved
in 2012, when the fuel’s prices sank to historic lows. This up-and-down in natural gas’s market share is a cyclical effect
Longer term, though, larger structural trends are afoot: the US power sector is gradually decarbonizing. Coal plants are being
retired, and natural gas and renewables are gaining ground: from 2007 to 2014, natural gas increased from 22% to 27% of
the mix, and renewables climbed from 8% to 13%
Source: EIA
Notes: Values for 2014 are projected, accounting for seasonality, based on latest monthly values from EIA (data available through October 2014). In chart at left, contribution from ‘Other’ is not shown; the
amount is minimal and consists of miscellaneous technologies including hydrogen and non-renewable waste. In chart at right, contribution from CHP is indicated by a shaded bar in each of the columns.
The hydropower portion of ‘Renewables’ includes negative generation from pumped storage.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
16
US energy overview:
Electric generating capacity build by fuel type (GW)
70
60
50
Other
Renewables
40
Hydro
Nuclear
30
Oil
Gas
20
Coal
10
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
●
Since 2000, 93% of new power capacity built in the US has been natural gas plants or renewable energy projects
Source: EIA
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
17
US energy overview:
Renewable energy capacity build by technology (GW)
20
18.1
18
16
3.3
Hydro
14
12
10
11.6
10.0
9.0
0.3
5.8
6
2
Geothermal
0.4
8
4
12.4
9.2
10.5
2.0
14.0
6.5
7.2
Biomass, biogas,
waste-to-energy
Solar
0.9
6.6
4.5
4.9
4.9
Wind
0.5
2008 2009 2010 2011 2012 2013 2014
●
●
●
●
Wind and solar both saw increased levels of build in 2014, relative to 2013 levels, but for different reasons:
Solar build increased by almost 50% from 2013 to 2014. The utility-scale side of the industry brought online projects that have
been driven by state renewable energy mandates and by the long-standing federal Investment Tax Credit (ITC). (The ITC is
due to drop in value at the end of 2016.) The small-scale side capitalized on economics that increasingly make solar an
attractive alternative to retail rates in much of the US
Wind build bounced back due to policy swings. The Production Tax Credit expired at the end of 2012, dampening build in
2013. The incentive was renewed at the beginning of 2013, and it took the industry a year to reconstruct pipelines and bring
projects to completion, hence the uptick in 2014. The pipelines show strong years in 2015-16
Other sectors – biomass, biogas, waste-to-energy, geothermal, hydro – are languishing without long-term policy certainty
Source: Bloomberg New Energy Finance, EIA
Notes: Numbers include utility-scale (>1MW) projects of all types, rooftop solar, and small- and medium-sized wind.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
18
US energy overview:
Cumulative renewable energy capacity by technology
US cumulative renewable capacity by technology
(including hydropower) (GW)
186
200
150
141
41
153
53
160
193
205
US cumulative non-hydropower renewable
capacity by technology (GW)
120
103
168
100
91
85
59
67
85
91
103
Other
renewables
100
3.4
80
67
50
100
101
101
101
101
101
40
3.1
11.1
1.2
101
3.3
3.3
12.0
11.8
11.5 2.8
1.9
4.9
53
60
41
Hydropower
59
20
3.2
36.1 40.7
3.5
13.0
12.3
8.1
3.5
13.0
20.3
13.0
Geothermal
Biomass, biogas,
waste-to-energy
Solar
66.7
61.0 61.8
47.2
Wind
25.8
2008 2009 2010 2011 2012 2013 2014
●
●
2008 2009 2010 2011 2012 2013 2014
Power-generating capacity of non-hydropower renewables surpassed hydropower capacity for the first time
US non-hydropower renewable capacity has increased by 2.5x since 2008, mostly due to new wind and solar
Source: Bloomberg New Energy Finance, EIA
Notes: Hydropower capacity includes pumped hydropower storage facilities.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
19
US energy overview:
Renewable energy generation by technology
US renewable generation by technology
(including hydropower) (TWh)
241 249 269 255
313
271 265 249
100
50
0
0
2007 2008 2009 2010 2011 2012 2013 2014
●
●
●
9
Biomass, biogas,
waste-to-energy
Solar
168 182
55 1
141
56 1
120
95
1 55 74
Wind
34
2014
Hydropower
150
58
144 15
126
57 4
15
105
56 2
15
54
15
1
2013
Other
renewables
2012
144 167
200
100
200
218 253 279
2011
105
126
194
2010
346
Geothermal
62
194 16
60
167 15
19
2009
300
250
413 422
375
279
253 16
218 17
2008
500
400
300
526
507 490 518
2007
600
US non-hydropower renewable generation by
technology (TWh)
Generation from non-hydropower renewables surpassed hydropower generation for the first time
Hydropower generation dropped in 2014, partly due to an acute drought in the western US
Non-hydropower renewables (279TWh in 2014) now account for 6.8% of US electricity, up from 2.5% in 2007
Source: Bloomberg New Energy Finance, EIA
Notes: Values for 2014 are projected, accounting for seasonality, based on latest monthly values from EIA (data available through September 2014). Includes net energy consumption by pumped
hydropower storage facilities. Does not include generation from small distributed resources, such as rooftop solar.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
20
US energy overview:
Greenhouse gas emissions, energy sector and
economy-wide (MtCO2e)
8,000
7,500
7,000
6,500
Total GHG emissions,
2005-2014e
Total GHG
emissions,
1990
Obama's
target, 2020
6,000
5,500
5,000
CO2 emissions
from energy sector,
1990-2014e
4,500
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
4,000
●
●
●
●
Over the past decade, CO2 emissions from the energy sector have been trending down: ~9.2% decrease since 2007
The short-term results show a different trend: ~3.7% increase since 2012, owing partly to increased coal generation
CO2 emissions from the energy sector make up a large portion (~83%) of total economy-wide GHG emissions, which are
down 7.6% from 2005 levels, the baseline year cited by the White House in its climate-related policy commitments
The Obama administration has made more ambitious, long-term commitments to climate reductions as part of its pact with
China (see slide in Section 2.2)
Source: Bloomberg New Energy Finance, EIA, EPA
Notes: Values for 2014 are projected, accounting for seasonality, based on latest monthly values from EIA (data available through October 2014). ‘Obama’s target’ refers to a pledge made in Copenhagen
climate talks in 2009. The target shown here assumes 17% reduction by 2020 on 2005 levels of total GHG emissions, but the actual language of the announcement left vague whether the reductions
applied to economy-wide emissions or just emissions of certain sectors. Data for total GHG emissions comes form EPA’s Inventory of US Greenhouse Gas Emissions and Sinks (1990-2012), published
April 2014. Data for CO2 emissions from the energy sector comes from the EIA’s Monthly Energy Review.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
21
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
22
Policy – key sustainable energy policy developments in
2014 (1 of 5): EPA Clean Power Plan
●
For analysis on the EPA Clean Power Plan, see Section 8.1 of this report
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
23
Policy – key sustainable energy policy developments in
2014 (2 of 5): US-China climate pact
US net GHG emissions, historical and forecast under two scenarios,
relative to 2025 target agreed upon in US-China climate pact
7,000
2005 emissions
6,000
5,000
Net emissions
(Scenario 1)
2025 emissions target
(26% below 2005)
4,000
3,000
2,000
Net emissions
(Scenario 2)
1,000
●
●
●
2029
2027
2025
2023
2021
2019
2017
2015
2013
2011
2009
2007
2005
2003
2001
0
On 11 November 2014, the US and China announced a pact to curb their greenhouse gas emissions
The US pledged to reduce its net GHG emissions by 26-28% below 2005 levels by 2025; China pledged its CO2 emissions
will cease to increase by ‘around’ 2030 and that 20% of its primary energy will be derived from zero-carbon sources by 2030
For the US, the new pledge builds off of existing and coming programs (eg, CAFE standards, EPA Clean Power Plan), but
more policy may be needed to achieve the targets
Source: Bloomberg New Energy Finance, EIA, EPA, US Department of State
Notes: Net GHG emissions includes total emissions less sequestration. Scenarios 1 and 2 show two trajectories for US emissions growth, based on a combination of Bloomberg New Energy Finance
(BNEF) forecasts, and EPA, EIA, and US Department of State analyses. Both scenarios use BNEF’s forecast for US power sector emissions, assuming full compliance with the EPA Clean Power Plan. Both
scenarios assume transportation growth as per the EIA’s AEO2014 reference case and assuming existing CAFE standards. Scenario 1 assumes residential, commercial, and industrial sectors’ energy
growth as per the EIA AEO2014 reference case; and agricultural, waste, and forestry and land use sectors’ growth as per the 2014 US Climate Action report. Scenario 2 assumes historical decline rate for
the residential and commercial sectors; assumes the industrial, agricultural, and waste sectors’ emissions level remain constant from 2013 levels; and assumes forestry and land use emissions follow the
‘high sequestration case’ in the 2014 US Climate Action report.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
24
Policy – key sustainable energy policy developments in
2014 (3 of 5): Federal legislative inaction
US wind build (GW) mapped to PTC status
16
PTC expired
Jul 1999,
extended
Dec 1999
14
12
10
PTC expired
Dec 2013,
extended midDec 2014,
expired Dec
2014
PTC expired
Dec 2003,
extended
Oct 2004
PTC expired
Dec 2001,
extended
Feb 2002
8
6
PTC expired
Dec 2012,
extended
Jan 2013
4
2
●
●
●
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
0
Congress made no major energy decisions in 2014, save for a last-gasp approval of a tax extenders package in December
Included in that package was a retroactive extension of the Production and Investment Tax Credits (PTC, ITC). But this
extension came too late for most developers, as it only had a two-week lifetime before expiring. This now means that the PTC
has expired or been extended five times since December 2012
The only other legislation that showed potential for Congressional passage, the Shaheen-Portman bill for energy efficiency,
was blocked during the final days of the 113th Congress (December 2014). The chairwoman of the Senate Energy and
Natural Resources Committee, Lisa Murkowski (R-Alaska), has pledged to move this long-stalled legislation in 2015
Source: Bloomberg New Energy Finance
Notes: For more on the PTC and ITC (their history, how they work, which technologies are applicable), see Sections 2.2 and 4.1 of the 2014 edition of the Factbook.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
25
Policy – key sustainable energy policy developments in
2014 (4 of 5): State regulatory debates
Net metering penetration by state (as % of capacity, 2013) and
locations of NEM disputes (pin location) that occurred in 2012-14
>4%
1-4%
0.01-0.1%
<0.01%
0%
●
●
●
●
Sustainable energy-related policy is heading in varying directions, depending on the state and the regulatory issue
Natural gas: continued support for production in many key markets, while in December 2014, New York State declared a ban on
fracking as the state’s health department had found “insufficient scientific evidence to affirm the safety of fracking”
Renewables: fierce debates around ‘net metering’ pitting regulated utilities vs. the solar industry (see chart above); renewable
portfolio standards (RPS) have mostly held up, though Ohio has frozen its RPS program and other states have debated
loosening or strengthening their programs
Energy efficiency: adoption of energy efficiency resource standards (EERS) has been slowing; the EERS has been eliminated
in Indiana and rolled back in Ohio. Regulators in Florida approved utilities’ request to reduce energy efficiency targets
Source: Bloomberg New Energy Finance, EIA
Notes: Accounts for net-metered capacity across all technology types. Penetration is measured relative to summer peak demand. Pins denote states that have had recent disputes regarding net metering.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
26
Policy – key sustainable energy policy developments in
2014 (5 of 5): New York’s ‘Reforming the Energy Vision’
Ratios of peak to average electricity demand in US and New York
3.0
Historical
Forecast
2.5
2.0
1.5
1.0
1990
1995
2000
2005
2010
US peakiness
●
●
●
●
2015
2020
2025
2030
NY peakiness
In April 2014, New York State released its Reforming the Energy Vision (REV) proposal, which aims to reshape the state’s
electricity sector. The core goals of the policy include:
˗
Enhanced customer knowledge; better use of ratepayer funds; increased system-wide efficiency (including reducing
peak demand); fuel diversification; improved system reliability and resilience; and reduced carbon emissions
Demand in US (and especially New York) is growing increasingly ‘peakier’ (high peak demand relative to average demand)
The policy is expected to facilitate greater penetration of distributed energy resources (eg, CHP, rooftop solar), smart grid
technologies, demand response, energy storage, microgrids, and energy efficiency
Several states have said they are watching the New York model closely
Source: Bloomberg New Energy Finance, NERC
Notes: Straight black lines are best-fit lines for the corresponding graphs.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
27
Finance: US clean energy investment (1 of 2) – total new
investment, all asset classes ($bn)
70
$65.2
60
$52.4
$48.0
50
$41.3
40
$51.8
$48.1
$43.8
$34.6
$35.4
30
$16.7
20
$10.3
10
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
●
●
Clean energy investment in the US since 2007 has been $386bn
Investment in 2014 rebounded by 7% from 2013 levels, and is 5x higher than a decade ago
Source: Bloomberg New Energy Finance
Notes: Shows total clean energy investment in the US across all asset classes (asset finance, public markets, venture capital / private equity) as well as corporate and government R&D, and small
distributed capacity (rooftop solar). The definition of ‘clean energy’ used here is: renewable energy, energy smart technologies (digital energy, energy storage, electrified transportation), and other lowcarbon technologies and activities (carbon markets value chain, companies providing services to the clean energy industry). Values in both charts include estimates for undisclosed deals and are adjusted
to account for re-invested equity. Values are in nominal dollars.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
28
Finance: US clean energy investment (2 of 2) – new
investment by asset class by sector ($bn)
Venture capital /
private equity
Public markets
Small distributed capacity
(ie, rooftop solar)
50
50
50
45
45
45
45
40
40
40
40
35
35
35
30
30
30
25
25
25
20
20
20
5.9 5.5 4.6
10
2.1 3.3
1.2
4.3
2.4 2.9 3.9
Other
Other
Other
Energy smart technologies
Energy smart technologies
Energy smart technologies
Biofuels
Biofuels
Biofuels
Wind
Wind
Wind
Solar
Solar
Solar
6.2 7.8
The largest areas of investment in 2014 were:
˗
Asset finance for utility-scale solar and wind (including wind projects seeking PTC eligibility before the incentive expired)
˗
Public markets activity – particularly equity raises for electric vehicles maker Tesla Motors and IPOs and secondary
offerings for ‘yieldcos’ (publicly-traded companies comprised of mostly operating renewable energy assets)
˗
Funding for rooftop solar installations
Source: Bloomberg New Energy Finance
Notes: See previous slide for definition of ‘clean energy’. Values are in nominal dollars. Values for VC/PE include estimates for undisclosed deals.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
29
2014
2013
2012
2011
2010
2009
2014
2013
2012
2011
2010
2009
2008
2007
5
0
0
2006
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
3.9
2.6 3.9
0.6 1.4
2008
5
2007
10
6.3
1.9 1.5
12.9
2006
4.9 4.8 3.5
0
2004
●
3.2
6.9
2014
5
0
0.4 1.3
15
15
2005
10
3.9
2005
5
10.6
6.8
2004
10
15
8.4
2013
15
2012
15.5
2011
20
18.0
2010
25
24.0
2009
25.3
23.4
23.2
2008
30
2007
28.5
2006
31.6
35
2005
46.0
2004
50
2004
Asset finance
Finance: Returns of global clean energy indices
relative to benchmarks
120
S&P 500
115
Dow Jones
110
MSCI World &
Emerging
NEX
105
100
Ardour Global
Alternative Energy
S&P Global Clean
Energy
95
●
●
●
Dec 14
Nov 14
Oct 14
Sep 14
Aug 14
Jul 14
Jun 14
May 14
Apr 14
Mar 14
Feb 14
Jan 14
90
Clean energy indices (exemplified here using the NEX, S&P Global Clean Energy, and Ardour Global Alternative Energy
Index) underperformed the broader market (represented here by global benchmarks S&P 500, Dow Jones and MSCI World &
Emerging)
The NEX, a global index of publicly traded companies active in renewables and low-carbon energy, ended the year down 2%
The volatile clean energy indices were hit hard by geopolitical uncertainty, economic stagnation in Europe, and falling oil
prices (though there is no direct link between oil and most clean energy technologies)
Source: Bloomberg New Energy Finance, Bloomberg Terminal
Notes: Indices normalised to 100 on 1 January 2014
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
30
Economics: Levelized cost of electricity (unsubsidized
across power generation technologies, H2 2014 ($/MWh)
Marine - wave
Marine - tidal
CSP - LFR
CSP - parabolic trough w/ storage
CSP - tower & heliostat w/storage
Wind - offshore
PV - c-Si tracking
PV - c-Si
PV - thin film
Biomass - gasification
Geothermal - binary plant
Wind - onshore
Municipal solid waste
Biomass - incineration
Geothermal - flash plant
Landfill gas
Large hydro
Biomass - anaerobic digestion
Small hydro
Nuclear
CHP
Natural gas CCGT
Coal fired
1037
844
0
100
200
Regional scenarios
Fossil technologies:
US
●
300
400
500
Global central scenarios
China
Europe
Australia
A number of renewable energies have comparable and, at times, cheaper LCOEs than conventional power
Source: Bloomberg New Energy Finance, EIA
Notes: LCOE is the per-MWh inflation-adjusted lifecycle cost of producing electricity from a technology assuming a certain hurdle rate (ie, after-tax, equity internal rate of return, or IRR). The target IRR used for
this analysis is 10% across all technologies. All figures are derived from Bloomberg New Energy Finance analysis. Analysis is based on numbers derived from actual deals (for inputs pertaining to capital costs
per MW) and from interviews with industry participants (for inputs such as debt/equity mix, cost of debt, operating costs, and typical project performance). Capital costs are based on evidence from actual
deals, which may or may not have yielded a margin to the sellers of the equipment; the only 'margin' that is assumed for this analysis is 10% after-tax equity IRR for project sponsor. The diamonds correspond
to the costs of actual projects from regions all over the world; the hollow circles correspond to ‘global central scenarios’ (these central scenarios are made up of a blend of inputs from competitive projects in
mature markets). For nuclear, gas, and coal, the light blue squares correspond to US-specific scenarios. ‘CHP’ stands for combined heat and power; ‘CCGT’ stands for combined cycle gas turbine; ‘c-Si’
stands for crystalline silicon; ‘CSP’ stands for concentrated solar power; ‘LFR’ stands for linear Fresnel reflector. EIA is source for capex ranges for nuclear and conventional plants.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
31
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
32
Policy: US coal power plant retirements completed
and announced by year (GW)
25
20
15
10
20
12
11
5
2
5
4
5
1
1970
1993
1994
1995
1996
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
0
3
Announced
●
●
●
Retired
US Environmental Protection Agency (EPA) regulations covering sulfur, nitrogen, and mercury emissions from power plants
will require coal units to install costly retrofit technologies. With low gas prices cutting at the margins of coal generators, many
units are being forced to retire rather than install emissions controls
The majority of announced retirements are for 2015, when the Mercury and Air Toxics Standard (MATS), which limits the
emissions of mercury and acid gases from power generators, takes effect
Many of the boilers retiring represent the oldest and least efficient coal units in the power stack
Source: Bloomberg New Energy Finance
Notes: Retirements includes conversions of plants from coal to natural gas.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
33
Deployment: US natural gas production and gasdirected rig count (Bcfd, rigs)
Production (Bcfd)
Number of rigs
80
1,800
70
1,600
60
1,400
1,200
50
1,000
40
800
30
600
20
400
10
200
0
2006
2007
2008
Shale
●
●
2009
2010
2011
Other lower 48
2012
2013
2014
Rigs
Despite falling rig counts, total US natural gas production, driven by shale gas drilling, continued to grow (5.7% year-overyear growth in 2014; 25% growth from 2007 to 2014). This is thanks to efficiency improvements in upstream production
techniques, such as pad drilling – in which multiple wells are drilled from the same site – which has become common
practice, and leads to more wells with fewer rigs
There is still a backlog of drilled but uncompleted wells in the Marcellus which have been waiting on pipeline takeaway
capacity (and, to some extent, on gathering and processing capacity). As more pipelines expand capacity or reverse direction,
this is becoming less of an issue
Source: Bloomberg New Energy Finance, EIA, Baker Hughes
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
34
Deployment: US natural gas productivity (production
per rig) by shale formation (MMcfd)
9
8
7
6
5
4
3
2
1
0
2007 2007 2008 2009 2010 2011 2012 2013 2014
●
Marcellus
Haynesville
Eagle Ford
Niobrara
Permian
Bakken
The Marcellus stands out above all gas plays in the country and singlehandedly offsets declining dry gas production from
elsewhere in the US. It houses the most economical dry gas areas and has seen the greatest improvement in rig productivity
Source: Bloomberg New Energy Finance, EIA
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
35
Deployment: Gas production in the continental US
(Bcfd)
All other regions
in the US
Eastern US
66
25
64
20
62
15
60
58
10
56
5
54
52
Dec 2009 Aug 2010 Apr 2011 Dec 2011 Aug 2012 Apr 2013 Dec 2013 Aug 2014
All other
●
●
0
Eastern US
Eastern US natural gas production continues increasing, immune to the factors that have caused declines elsewhere
Declines in other plays were primarily brought about by:
˗
Producers switching from dry gas plays into liquids-rich plays like Eagle Ford and Bakken
˗
Reduced conventional gas production
Source: Bloomberg New Energy Finance, LCI Energy
Notes: Eastern US production is mostly comprised of output from the Marcellus and Utica shales.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
36
Deployment: US natural gas pipeline installations and
materials
US existing natural gas distribution pipeline
(million miles)
US natural gas distribution mainline material
(million miles)
2.5
2.5
2.0
Services
1.5
2.0
Other
1.5
1.0
Plastic
1.0
Protected steel
0.5
0.5
Cast iron and
unprotected steel
0.0
0.0
●
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Distribution
Service and distribution pipelines – which bring gas from transmission lines to end-users – are growing at a steady pace.
Much of the additions represent not new lines but pipeline upgrades, as companies remove older networks which are made
from cast iron and unprotected steel and replace them with newer plastic / protected steel pipes that are less susceptible to
leaks
Source: Bloomberg New Energy Finance, US Department of Transportation, American Gas Association
Notes: ‘Distribution’ refers to pipelines to which customers’ service lines are attached; ‘Services’ refer to pipes which carry gas from the distribution pipelines to the customer’s meter. Numbers are not
available for 2014.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
37
Deployment: US transmission pipeline capacity
additions (Bcfd)
●
●
●
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
50
45
40
35
30
25
20
15
10
5
0
Since 2012, high-pressure interstate transmission pipeline capacity additions have shifted away from large, greenfield networks
and towards discrete, targeted projects
In 2014, first-mile takeaway pipelines in the northeastern US, to handle growing production from the Marcellus and Utica
basins, was the largest driver of new pipeline installations. Northeast takeaway lines have accounted for over half of
transmission pipeline capacity additions since 2012
New interconnection capacity from the US to Mexico was the second largest reason for new pipeline additions
Source: Bloomberg New Energy Finance, EIA
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
38
Deployment: US natural gas demand by end use
(Bcfd)
80
70
60
50
58.6
18.3
57.3
18.8
60.5
20.2
61.5
20.8
64.1
65.1
66.9
25
22.3
21.8
13.5
14.5
40
Residential
13.4
13.1
13.1
12.9
11.4
8.5
8.5
8.6
7.9
9
9.6
20
8.6
10
18.3
16.9
18.7
19.2
19.8
20.3
21.0
2008
2009
2010
2011
2012
2013
2014
30
Power
Commercial
Industrial
0
●
●
●
●
Total US annual gas demand has grown steadily, though not rapidly: 14% increase since 2008, and an estimated 2.8%
increase over the past year (2013-14)
While 2014 demand was notably higher, very little of this growth was structural. Rather, it was driven by last winter’s ‘polar
vortex’, which drove up heating-related gas demand in the residential, commercial, and industrial sectors. In the midst of the
polar vortex, in January 2014, the natural gas delivery system set daily, weekly, and monthly all-time records
Power demand was on the lower end of the historical 5-year average in response to higher natural gas prices coming out of
the harsh winter
For structural demand, 10 new industrial projects (largely expansions of existing facilities) came online in 2014
Source: EIA, Bloomberg New Energy Finance
Notes: Values for 2014 are approximated from BNEF estimates and EIA data.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
39
Deployment: US natural gas residential customers
vs. residential consumption
Sales (Bcfd)
Customers (m)
6
5
72
60
Sales
4
48
Customers
3
2
24
1
12
0
0
1970
●
●
36
1980
1990
2000
2010
Energy efficiency has kept residential consumption down even as more customers are added to the gas network, resulting in
an overall reduction in consumption per capita since the mid-1990s
The 2011-12 winter was abnormally mild; the higher consumption in 2013 represents a return-to-normal in winter
temperatures
Source: EIA
Notes: Data for 1970-2013 only.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
40
Deployment: US industrial electricity production from
on-site generation by source (TWh)
100
90
80
Gas
70
60
50
40
30
76
82
76
61
57
62
87
87
82
61
60
Other
61
20
10
0
2008
●
●
●
●
2009
2010
2011
2012
2013
Industrial sector on-site generation has contributed significantly to the growth in electric sector gas consumption since 2008
Growth in industrial sector on-site generation has slowed over the last few years, across all fuels
The majority of gas-fired capacity additions in 2013-14 were from converting facilities away from coal/petcoke, rather than
new-build facilities
There continues to be fuel-switching to natural gas at existing on-site generation facilities
Source: EIA
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
41
Financing: US midstream gas construction expenditures
($bn)
20
18
$17.1
16
$1.7
$0.7
14
12
10
$14.1
$1.2
$0.9
$12.1
$1.1
$0.6
$5.4
8
$1.1
$0.5
$15.1
$1.6
$0.6
$7.0
$1.9
$0.6
General
$8.0
Distribution
$5.7
$6.4
2
Transmission
$7.4
$5.4
Production and storage
Underground storage
$7.4
$4.9
6
4
$11.0
$17.4
$5.3
$3.5
$6.6
0
2008
●
●
2009
2010
2011
2012
2013
Investment in natural gas infrastructure has clearly jumped since 2010, hitting a high in 2013 (the last year with available
data), with more than $17bn invested across transmission, distribution, and other infrastructure
The largest investments have been directed towards pipelines for distribution
Source: American Gas Association
Notes: Values reflect expenditures reported to the AGA by different types of companies across the supply chain, including transmission companies, investor-owned local distribution companies, and
municipal gas utilities. ‘General’ includes miscellaneous expenditures such as construction of administrative buildings.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
42
Economics: Cost of supply evolution for two regions
within the Haynesville and Marcellus ($/MMBtu)
7
Technological/logistical improvements: 10-15% cost reduction
6
Targeting core
areas: playdependent, but
often >30% cost
reduction
Haynesville Tier 2
5
4
3
2
Haynesville core
(unrestricted flow)
NE Marcellus dry
core
NE Marcellus 'super
core'
1
0
2011
●
●
●
2012
2013
2014
There are two drivers bringing down unit costs for gas production
The first driver is technological / logistical improvements which have reduced unit costs substantially over the past several
years. These improvements include reducing cycle times through pad drilling, drilling longer laterals, and choke management
The second and more important driver has come from delineating the ‘core’ of plays and shifting development capital towards
these higher-priority plays and away from ‘Tier 2’ areas, where ultimate recoveries of gas are lower
Source: Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
43
Economics: Cost of generating electricity in the US
from natural gas vs. coal ($/MWh)
50
Gas
(CCGT)
40
30
Coal
20
10
0
Apr 2010
●
●
●
Apr 2011
Apr 2012
Apr 2013
Apr 2014
Power has served as the swing demand source for natural gas: when prices fall too low, gas burn rises until the differential (in
$/MWh) between the two fuels closes.
In 2014, the cold winter drove gas prices to regional highs, giving coal a comparative advantage across the US
The differential was particularly high in the northeast, where pipeline constraints resulted in especially high winter prices
Source: Bloomberg New Energy Finance
Notes: Assumes heat rates of 7,410Btu/kWh for CCGT and 10,360Btu/kWh for coal (both are fleet-wide generation-weighted medians); variable O&M of $3.15/MWh for CCGT and $4.25/MWh for coal.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
44
Economics: LCOE comparison for us natural gas vs.
coal ($/MWh) as a function of fuel price ($/MMBtu)
LCOE ($/MWh)
70
60
50
Eastern coal LCOE
Western coal
LCOE
Gas LCOE
40
$1.15/MMBtu = $20/ton
PRB (delivered)
30
20
$2.40/MMBtu = $60/ton
Appalachian
10
0
1
2
3
4
5
6
7
Fuel price ($/MMBtu)
●
●
●
●
With gas prices below $4.50/MMBtu, new natural gas plants have a lower levelized cost of electricity than new coal power
plants anywhere in the country
The EPA’s New Source Performance Standards for carbon indicates that no new coal units could be built without carbon
capture and sequestration (CCS); that technology would push coal LCOEs even higher
At 2014 prices, economics favored new natural gas plants new coal plants (even without accounting for CCS)
With futures prices suggesting gas may rise above $5/MMBtu, LCOEs for natural gas and non-CCS coal will be close in value
Source: Bloomberg New Energy Finance
Notes: Assumes heat rates of 7,410Btu/kWh for CCGT and 10,360Btu/kWh for coal (both are fleet-wide generation-weighted medians); variable O&M of $3.15/MWh for CCGT and $4.25/MWh for coal.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
45
Economics: LNG cost build, US Gulf Coast to Europe
($/MMBtu)
12
10
3.00
8
0.30
0.13
6
1.25
9.85
0.68
4
6.85
2
4.50
0
US price
●
●
●
15%
Shipping Blending
premium
Regas
Total
short-run
Fixed
charge
Total
long-run
US LNG exports are expected to be priced competitively with current global spot prices
US exports will be sold at a mark-up from Henry Hub; that mark-up captures O&M costs and a fixed charge to recuperate sunk
costs
Four US LNG export terminals are currently under construction, three of which began construction in 2014. Together, these
facilities will bring over 44MMtpa of LNG export capacity to the US by end-2019
Source: Bloomberg New Energy Finance
Notes: ‘Regas’ is regasification, or the process in which imported LNG is expanded and reconverted into gas that can be injected into the pipeline distribution network. ‘Fixed charge’ is the cost associated
with recouping upfront costs (the other costs shown here are short-run marginal costs).
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
46
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
47
Deployment: Global PV supply and demand
Global PV module production by country (GW)
45
60
38.7
40
35
29.7
30
3.3
25
18.1
20
2.7
30.1
3.3
10
7.7
2.3
5
1.8
9.9
19.1
7.0
Other
US
Norway
2.2
Germany
2.3
15
2.7
21.3
26.9
2009 2010 2011 2012 2013
●
40
30
20
10
China
48.7
50
Japan
3.1
●
Global PV demand by country (GW)
28.3
30.7
40.3 9.7
5.0
3.3 5.4
5.4 6.3
4.7
11.1
7.1
4.4
18.2 7.9 3.6
7.6
7.5
7.7
5.8
7.2 5.1 3.3
12.9 13.5
3.8
3.6
2009 2010 2011 2012 2013 2014
Rest of world
Italy
Germany
Rest of EU
US
Japan
China
Bolstered by strong uptake in China and Japan, demand for solar photovoltaic (PV) modules rose strongly, as the global
market again reduced its reliance on European demand centers
Trade disputes raged on, as the US took steps to applying tariffs on Chinese and Taiwanese solar products (which still
account for much of the market). The US tariff regime to date has increased modules prices by roughly ~$0.15, but so far lowcost Chinese producers have largely held onto market share in the US by accepting slimmer margins
Source: Bloomberg New Energy Finance
Notes: In chart at right, 2014 values represent an average of optimistic and conservative analyst estimates.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
48
Deployment: US large-scale solar build
Incremental (MW)
4,000
Cumulative capacity
Cumulative (GW)
3,847 10.0
2,749
3,000
1,872
2,000
US concentrating solar power build (MW)
8.0
6.0
4.0
978
1,000
65
329
0
2.0
.0
2009 2010 2011 2012 2013 2014
●
●
Incremental
1,000
900
800
700
600
500
400
300
200
100
0
Cumulative
capacity
Cumulative
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
US utility-scale photovoltaic build
The trend over the past six years shows dramatic growth in utility-scale PV. However, build is expected to level off this year as
the pipeline in California begins to thin (the pipeline had been driven by the state’s Renewable Portfolio Standard)
Several large concentrating solar power (ie, solar thermal electricity generation) plants were commissioned in 2014:
Abengoa’s Mojave (280MW), BrightSource’s Ivanpah (392MW) and NextEra’s Genesis (250MW) projects. But the outlook for
concentrated solar power is weak due to lost ground in relative competitiveness versus PV
Source: Bloomberg New Energy Finance
Notes: In chart at left, 2014 build represents an average of optimistic and conservative analyst estimates.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
49
Financing: US large-scale solar investment
Venture capital / private equity investment in US
solar by type of investment ($bn)
2.0
1.8
25
1.8
PE
expansion
capital
1.8
1.6
0.4
1.4
1.2
1.0
.4
.2
.0
0.6
●
20
0.9
0.9
0.4
1.1
0.2
0.6
0.3
VC latestage
15
10
1.0
0.6
0.4
0.2
0.2
CSP
7.1
0.5
VC earlystage
7.0
6.8
13.1
5
0.3
2009 2010 2011 2012 2013 2014
●
20.3
1.2
.8
.6
Asset finance for US utility-scale solar projects by
technology ($bn)
1.7
0.2
3.4
6.8
Utilityscale PV
6.5
3.2
0
2009 2010 2011 2012 2013 2014
Venture capital and private equity activity ramped up after a quiet 2013, as investors began to see opportunities around
rooftop PV (more on this in Section 5.1 of this report)
Asset finance deals for utility-scale PV continued to fall as large procurements have become increasingly rare
Source: Bloomberg New Energy Finance
Notes: Only includes electric generating assets; does not include solar thermal water heaters.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
50
Economics: Price of solar modules and experience
curve ($/W as function of global cumulative capacity)
Cost ($/W) 100
(in 2013
dollars)
1976
1985
10
2003
2006
1
2012
2013
Q4
2013
2012
10,000
100,000
0.1
1
10
100
1,000
Experience curve (c-Si)
Module prices (Maycock)
Module prices (Chinese c-Si) (BNEF)
Experience curve (thin-film)
Module prices (thin-film) (First Solar)
●
●
1,000,000
Cumulative
capacity (MW)
Module pricing has broadly followed the experience curve for costs for the past few decades. Prices dropped in 2012 due to
manufacturing overcapacity, but then ticked back up in 2013 as oversupply began to ease
Module prices are down by more than 80% relative to 2007 levels
Source: Bloomberg New Energy Finance, Paul Maycock, company filings
Notes: Prices in 2013 USD.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
51
Economics: Best-in-class capex for utility-scale PV ($/W)
4
3.24
3
Other
2.65
EPC
2
1.61
1.58
1.56
BOP
Inverter
1
1.85
Module
1.35
0.75
0.71
0.73
2012
2013
2014
0
2010
●
●
●
●
2011
The trend shows a dramatic decline in global benchmark for the cost of solar in mature markets from 2010 to 2012, followed
by a leveling out as module prices stayed relatively flat from 2012-2014
Modules prices ticked higher as the dominant theme of excess upstream overcapacity began to ease, allowing manufacturers
to eke out a profit
The best-in-class capex reflects the costs in mature market such as Germany; the cost of best-in-class utility-scale PV in the
US is in this range as well
Utility-scale solar plants in Texas and Utah have secured PPAs to sell power at $50-55/MWh (with the help of incentives),
among the lower prices ever seen globally for contracted solar power
Source: Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
52
Economics: Solar REC prices in selected US state
markets by vintage year ($/MWh)
450
MA 2015 SREC-I
400
350
MA 2014 SREC-I
300
NJ 2015 Solar
250
200
NJ 2014 Solar
150
100
MD 2014 Solar
50
0
Dec 2012
●
●
PA 2014 Solar
Apr 2013
Aug 2013
Dec 2013
Apr 2014
Aug 2014
Dec 2014
Solar projects in some parts of the country also generate revenue through the sale of solar renewable energy credits
(SRECs), procured by utilities to comply with solar carve-out programs within their states’ RPS
In 2014, Massachusetts closed its SREC-I program, and state regulators launched a new program (SREC-II) which will push
the state to 1,600MW of cumulative solar by 2020. New Jersey SRECs moved steadily higher as new build in the state was
much weaker than expected
Source: Bloomberg New Energy Finance, ICAP
Notes: Data in the charts above (“SREC prices”) are the sole property of ICAP United, Inc. Unauthorized disclosure, copying or distribution of the Information is strictly prohibited and the recipient of the
information shall not redistribute the Information in a form to a third party. The Information is not, and should not be construed as, an offer, bid or solicitation in relation to any financial instrument. ICAP
cannot guarantee, and expressly disclaims any liability for, and makes no representations or warranties, whether express or implied, as to the Information's currency, accuracy, timeliness, completeness or
fitness for any particular purpose.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
53
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
54
Deployment: US large-scale wind build (GW)
Incremental
Cumulative
15
75
13.8
Cumulative capacity
12
60
10.4
8.5
9
45
6.6
6
4.8
4.9
4.5
2.7
3
1.7
0.3
30
15
0.8
0
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
●
●
●
New build in 2014 rebounded six-fold from 2013 levels, from 0.8GW to 4.9GW
The increase was driven by the one-year extension of the Production Tax Credit (PTC) in 2013, the key federal incentive for
wind in the US. The PTC expired at the end of December 2012, was renewed January 2013, expired December 2013 (but
wind projects qualified for the incentive by starting construction in 2013), was ‘retroactively’ renewed in December 2014 and
expired again two weeks later, at the end of 2014. The current pipeline suggests healthy build for 2015-16
A majority of the build is occurring in Texas. The state recently completed a $7bn transmission build-out to connect windy
regions in the Panhandle and West Texas to demand centers. Wind in Texas is among the cheapest in the country, with an
unsubsidized levelized cost of electricity of around $50/MWh, due to high capacity factors (>50%) and low cost to build
Source: Bloomberg New Energy Finance
Notes: Includes all utility-scale wind development, including distributed turbines that are above1MW (Bloomberg New Energy Finance threshold for utility-scale).
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
55
Deployment: US wind turbine production and
contracting
US wind turbine production capacity by manufacturer
(GW)
14
11.9
12
2.0
10
8
6
12.5
Others
2.0 10.1 10.2
6.3
1.6
5.9
2.0
1.6
1.5
1.5
2.5
2.9
0.9
0.8
1.5
2.4
2.9
4
2
Nordex
Acciona
Siemens
Vestas
GE
4.1
3.8
4.7
4.7
4.7
13.8
14
0.9
7.4
US wind turbine supply contracts for commissioned
projects by commissioning year, by manufacturer (GW)
4.7
4.2
12
10
10.4
6
0.8
1.4
4.1
6.6
1.1
1.2
4.1
4.5
1.2
1.3
0.8
1.7
0.6
●
●
Siemens
2.2
4.9
Vestas
GE
5.2
.7
1.0
.2
0.6 2.8
0.5
2008 2009 2010 2011 2012 2013 2014
2.0
2008 2009 2010 2011 2012 2013 2014
Gamesa
3.0
3.4
1.6
2
Nordex
8.5
8
4
Others
2.0
2.1
Several manufacturers have closed nacelle assembly facilities in the US since 2012. These include Clipper (which was sold
by UTC to Platinum Equity and no longer manufacturers turbines), Nordex, and Mitsubishi. Several others laid off workers in
2012 and rehired them in 2013 after the PTC was extended
GE, Vestas and Siemens are the dominant manufacturers in the US market. Asian manufacturers, including Sinovel,
Goldwind, and Sany, which entered the market in 2012 when cash-based incentive was available, have not been able to
compete in a PTC environment due to their inability to secure risk-averse tax equity financing
Source: Bloomberg New Energy Finance
Notes: Production capacity measured by nacelle assembly on US soil
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
56
Deployment: US wind ownership and development
Top 10 US wind owners, as of end-2014 (MW)
NextEra Energy
10,938
Iberdrola
14
1.8
3,697
12
EDP
3,637
10
Invenergy
3,038
NRG
2,904
E.ON
2,722
Duke Energy
BP
●
16
MidAmerican Energy
EDF
●
5,443
US wind capacity commissioned by type of
developer (MW)
8
1.9
Other
6
1.8 12.0
0.8
4
1,825
2
1,627
1,531
Regulated
utility
2.3
8.2
1.1
0.7
6.6
0.6
4.0
3.9
4.8
3.8
2.1
0
0.1
0.7
2006 2007 2008 2009 2010 2011 2012 2013 2014
NextEra Energy is still the dominant wind developer in the US market. It is followed by Iberdrola (Spanish utility) and
MidAmerican Energy (the utility holding company owned by Warren Buffett’s Berkshire Hathaway)
Regulated utilities have built only a small portion of the wind assets in the country. Most utilities prefer to sign power purchase
agreements with independent generators rather than build and own the projects themselves
Source: Bloomberg New Energy Finance
Notes: In chart at left, ownership is based on ‘net ownership’ as opposed to ‘gross ownership’, to account for co-ownership. Values are based primarily on data directly from company websites. In chart at
right, ‘Other’ includes projects built by non-utilities such as independent power producers and also includes projects built by the non-regulated development arms of utilities such as Duke or NextEra; in
those cases, the projects are not supplying power to the regulated utilities’ ratepayers but rather to a third party.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
57
Financing: Asset finance for US large-scale wind
projects ($bn)
20
18
16
14
12
10
8
6
4
2
0
17.7
17.3
14.5
12.9
12.8
8.7
4.7
13.3
9.4
4.4
1.7
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
●
●
●
The pipeline for wind looks healthy for 2015-16: much of the financing secured in 2013-14 is for wind projects to be
commissioned in the coming two years
After a rush to secure construction financing in 2013 to qualify projects for the PTC, financing for new wind in 2014 declined
Investment levels were somewhat boosted in the second half of the year, following clarification issued by the Internal
Revenue Service in August regarding the level of construction needed to achieve PTC eligibility
Source: Bloomberg New Energy Finance
Notes: Values include estimates for undisclosed deals.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
58
Economics: Wind turbine price index by turbine type
and delivery date ($m/MW)
1.74
1.70
1.60 1.61
1.28 1.28 1.33 1.29 1.29 1.27
1.41
1.35 1.39
1.30
1.17
1.10 1.08
1.17 1.18 1.14
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2
2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014
WTPI
●
●
●
Old models
New models
Turbine prices have leveled off in recent years compared to the steep declines in 2009-10
Turbines with larger rotor diameters (>95m), which tend to be the newer models, are priced higher than those with smaller
rotor diameters (<95m), which tend to be the older models
Developers in most regions are electing the newer, more expensive turbines over the older models due to the increased
production from the turbine. Despite the increase in cost in per MW terms, the cost of energy in per MWh terms is lower
Source: Bloomberg New Energy Finance
Notes: Values based on Bloomberg New Energy Finance’s Global Wind Turbine Price Index. Values from the Index have been converted from EUR to USD by the average EUR/USD rate for the half year
of turbine delivery.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
59
Economics: US wind PPA prices compared to wholesale
power prices in selected markets ($/MWh)
100
90
80
70
60
PPA range
50
On-peak
40
Off-peak
30
20
10
0
California MISO New York
●
●
●
PJM
SPP
NEPOOL ERCOT
For projects commissioned in 2014, most power purchase agreements (PPAs) were signed in 2013. Pricing for those PPAs
varies by region. The cheapest PPAs were signed in the Midwestern regions of SPP (Oklahoma, Kansas, Nebraska), other
parts of the Midwest, and ERCOT (Texas). Pricing in these regions was $20-30/MWh, with reports of some PPAs starting in
the mid-teens. Many of these projects (but not all) have escalators, which increase the price 2-3% per year
Prices for PPAs signed in New England averaged around $80/MWh. This is due to higher construction costs, lower capacity
factors, and scarcity of wind projects (limited land for development, difficult permitting due to local opposition)
PPA offtakers need not only be utilities; other non-utility entities that signed PPAs for wind in 2014 included Microsoft, Yahoo!,
and a consortium of Washington DC-based organizations (universities and a hospital)
Source: Bloomberg New Energy Finance, Federal Energy Regulatory Commission, SEC filings, analyst estimates
Notes: MISO is the Midwest region; PJM is the Mid-Atlantic region; SPP is the Southwest Power Pool, covering the central southern US; NEPOOL is the New England region; ERCOT is most of Texas.
Wholesale power price is average of quarterly future power prices (based on Bloomberg Commodity Fair Value curve) maturing in calendar year 2015 for selected nodes within the region.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
60
Economics: ‘Class I’ REC prices in selected US state
markets ($/MWh)
70
60
MA 2015 Class 1
50
MA 2016 Class 1
40
CT 2015 Class 1
30
CT 2016 Class I
20
NJ 2015 Class 1
10
TX 2014 Class I
0
Dec 2012
●
●
Apr 2013
Aug 2013
Dec 2013
Apr 2014
Aug 2014
Dec 2014
New England REC prices remain high due to the difficulty with siting wind in the region. With high electricity prices, and high
REC prices, wind economics could work without the PTC
Texas, the state with the highest amount of wind capacity in the country, has the lowest REC prices due to substantial
oversupply of the credits
Source: Bloomberg New Energy Finance, Evolution, Spectron Group
Notes: ‘Class I’ generally refers to the portion of REC markets that can be served by a variety of renewables, including wind. In contrast, solar REC (SREC) markets are not Class I, as these can only be
met through solar. The ‘Class I’ component is usually the bulk of most states’ renewable portfolio standards.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
61
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
62
Deployment: US bioenergy build
US biomass-to-power build (MW)
US biogas and waste-to-energy build (MW)
600
12,000
250
7,500
500
10,000
200
6,000
Cumulative capacity
400
8,000
300
6,000
200
Cumulative capacity
150
4,500
100
3,000
50
1,500
4,000
100
2,000
0
0
0
2008
●
●
●
●
2009
2010
2011
2012
2013
2014
0
2008
2009
2010 2011 2012 2013
Biogas
Waste-to-energy
2014
Policy support measures (the Production and Investment Tax Credits) led to a spike in biomass installations in 2013 at
521MW, falling sharply to 30MW in 2014. These incentives are closed to new entrants, which will probably lead to less new
capacity in the next few years
New biogas capacity has been declining since 2010; there were no new waste-to-energy installations in 2014
In 2014, there was more biomass capacity retired (89MW) than installed (30MW), taking cumulative capacity down to 8.4GW
Congress enacted the Agriculture Act in 2014, which will match cost per ton (ie, 907kg) for biomass production, collection and
transport to conversion facilities up to $20/ton
Source: Bloomberg New Energy Finance, EIA
Source: Bloomberg New Energy Finance, EIA
Notes: Includes black liquor. 2014 results are as of end-October 2014.
Notes: Biogas category includes anaerobic digestion (projects 1MW and above except wastewater
treatment facilities) and landfill gas power. 2014 results are as of end-October 2014.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
63
Financing: US bioenergy asset finance
Asset finance for US biomass ($m)
900
1,600
1,420
800
1,400
700
1,200
925
500
39
355
400
800
584
600
200
284
600
1,000
400
Asset finance for US biogas and waste-to-energy
($m)
471
340
554
392
275
300
399
500 480
200
292
100
151
40
0
0
64
31
290
160 177
55
162 166 109
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Biogas
●
●
Waste-to-energy
Asset finance for new-build biomass, biogas and waste-to-energy fell to very low levels for 2013 and 2014 (<$50m for
biomass, just over $100m for biogas and zero for waste-to-energy). For biomass this was caused by the expiration of the
Production Tax Credit. Waste-to-energy and biogas are generally smaller sectors with fewer deals
Low levels of investment in 2013 and 2014 mean we expect to see a relatively low level of new-build for the next few years.
This is because plants take two to four years to complete construction and be commissioned; investment acts as a leading
indicator for capacity
Source: Bloomberg New Energy Finance, EIA
Source: Bloomberg New Energy Finance, EIA
Notes: Includes black liquor.
Notes: Biogas category includes anaerobic digestion (projects 1MW and above except
wastewater treatment facilities) and landfill gas power.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
64
Economics: Biomass feedstock prices; biogas and
waste-to-energy capex
Biomass feedstock prices in selected US
markets, 2011–14 ($/dry tonne)
Capex for biogas and waste-to-energy projects
by type ($m/MW)
12
45
40
40 41 39 41
35
10
35 34
33 32
31
8
28
30
23
25
Waste-toenergy
25
2011
2012
20
6
Anaerobic
digestion
2013
15
2014
4
10
2
5
0
Southeast
●
●
Northwest
Northeast
Landfill gas
0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Biomass feedstock prices stayed roughly even with 2013 levels. Demand for lumber has been increasing steadily, but is
below 2008 levels, and timber harvests in the US and Canada have also increased over the last four years, increasing supply
Investment cost for waste-to-energy, anaerobic digestion and landfill gas decreased slightly in 2014. Annual changes in these
figures can be strongly influenced by costs in individual projects; there is less capacity under development in biogas and
waste-to-energy than in other renewable sectors
Source: Bloomberg New Energy Finance, US Department of Agriculture
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
65
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
66
Deployment: US geothermal build (MW)
Incremental
Cumulative
200
4,000
175
3,500
Cumulative capacity
150
3,000
116
125
100
114.9
2,500
2,000
76
70
75
50
1,500
46
50
17
25
500
0
0
2008
●
●
1,000
2009
2010
2011
2012
2013
2014
Geothermal development has lagged behind other renewables (namely wind and solar), due to long project completion
periods (4-7 years) and high costs of development
Two projects were commissioned in 2014, totaling 46MW. Both projects are located in Nevada and have PPAs with California
municipal utilities, who can use the electricity for compliance with California's Renewable Portfolio Standard (RPS)
Source: Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
67
Financing: Asset finance for US geothermal projects
($m)
700
612
600
500
482
435
400
300
200
152
100
59
100
140
0
2008
●
●
●
2009
2010
2011
2012
2013
2014
One project, the 45MW Ormat McGinness Hill II plant located in Nevada, secured financing this year and is slated to be
commissioned in 2015. It has a PPA with NV Energy, a Nevada utility
Financing of US geothermal projects ramped significantly during 2010-11, as developers benefited from the US Treasury cash
grant program and strove to complete projects prior to the expiration of the Production Tax Credit (PTC) in end-2012
Since the expiration of the PTC, only three projects have gained financing – one each year from 2012-14.
Source: Bloomberg New Energy Finance
Notes: Values include estimates for undisclosed deals.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
68
Economics: Capex for geothermal projects by type
($m/MW)
6
5
Binary
4
3
Flash
2
1
0
2009
●
●
2010
2011
2012
2013
2014
Flash (ie steam turbines) continues to be the primary turbine choice for geothermal plants worldwide. In the US, however,
over half of the projects commissioned since 2012 have used binary turbines – which allow for geothermal production from
lower-temperature steam
Global average capex for binary production declined over the last year, not because of fundamental declines in the turbine
prices but because of comparatively cheaper debt in 2014 relative to 2013
Source: Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
69
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
70
Deployment: US hydropower build and licensed
capacity
US new hydropower capacity licensed or
exempted by FERC (MW)
US hydropower build
Incremental (MW)
Cumulative (GW)
500
500
100
Cumulative capacity
400
80
300
60
400
300
205
200
345
100
0
●
●
●
●
●
22
2009
2010
127
20
161
26
40
384
151
138
162
100
32
141
0
2011
200
2012
2013
2014
0
2009
2010
2011
2012
2013
2014
New commissioned capacity in hydropower fell to 141MW, down 95% on 2013. Policies that have since closed to new
entrants (cash grant, the Investment and Production Tax Credits) supported the wave of projects in 2011–13
New licenses and exemptions rebounded to 205MW in 2014; this should result in some financing and construction
2014 saw more activity in pumped storage (eg, FERC awarded a license to the 1.3GW Eagle Mountain facility in Southern
California, which would be the fifth-largest pumped storage plant in the US). The $2-2.6bn project seeks to capitalize on the
region’s need to integrate renewable energy
FERC started testing a two-year licensing process at a 5MW project, Free Flow Power Project 92. (The normal licensing
route can take over four years and is a major time commitment for developers.)
There is relatively little potential for building new large dams in the US. The industry hopes to unlock the potential in existing
non-powered dams. According to the Department of Energy, the largest 100 such dams could offer as much as 8GW
Source: Bloomberg New Energy Finance, EIA
Notes: 2014 results are as of end-October 2014. Excludes pumped storage.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
Source: Bloomberg New Energy Finance, FERC
Notes: The licensing figures exclude 152MW of pumped storage licensed in 2012 and
1,736MW of pumped storage licensed in 2014. 2014 results are as of end-November 2014.
71
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
72
Deployment: Total CO2 injection rate by current
status of US CCS projects (MtCO2/year)
25
20
10 projects
15
9 projects
10
5
4 projects
0
CCS operations begun
●
●
●
●
Financing secured / under
construction
There are an estimated 14 large-scale (at least 100MW capacity or at least 0.5MtCO2/yr injection rate) projects operating
globally, 10 of which are in the US
Most operational US CCS projects are at natural gas processing facilities
Three projects that have passed final investment decision, or that are under construction, are at power plants
The first CCS power project of a size above 100MW was commissioned in Canada in 2014: SaskPower Boundary Dam.
Mississippi Power's 563MW Kemper project in the US should be the next to commission. The utility has faced problems with
cost overruns and delays through construction: costs were first estimated under $2bn for the plant and CO2 capture, but this
has since risen to $4.9bn. The developers initially expected to commission the plant in 2015; they now predict commissioning
in Q2 2016. The problems have to do with the complexity of building a large project, rather than with CCS-specific concerns,
but Kemper’s challenges may make it harder to finance similar projects in the future
Source: Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
73
Financing: Asset finance for US CCS projects that
are post-financial investment decision ($m)
6,000
5,000
4,000
3,000
2,000
1,000
0
2007
●
●
●
2008
2009
2010
2011
2012
2013
2014
Asset financing for CCS projects that have passed final investment decision peaked in 2010. The lumpy distribution owes to
the high cost and low number of projects financed
Investment levels picked up again in 2014 due to the financial close of one project (NRG’s 1.6MtCO2/yr Parish power project)
Over the period shown here, 56% of global asset finance into CCS occurred in the US
Source: Bloomberg New Energy Finance
Notes: Includes demonstration and commercial scale projects (projects above 100MW or 1MtCO2/yr) post-final investment decision only. Values do not include estimates for undisclosed deals.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
74
Economics: Estimated first-of-a-kind (FOAK) capital
cost for CCS projects ($m/MW)
7
6
1.51
5
4
1.98
1.47
3
4.82
2
1.62
1
0
●
2.44
PC+MEA
PC+OXY
FOAK plant
0.71
NG+MEA
●
●
2.74
FOAK CCS
IGCC+SEL
First-of-a-kind (FOAK) costs are estimated to be significantly higher than ‘mature’ costs, depending on the technology
Yet estimates of ‘mature’ costs could be far off; deployment in the tens of gigawatts could be needed to widely lower
technology costs
One large-scale government supported project came online in Q4 2014 (SaskPower’s 110MW post-combustion Boundary
Dam power unit in Saskatchewan, Canada); the developer announced it expected 20-30% lower costs if it builds a second
project, due to engineering efficiencies
Source: Bloomberg New Energy Finance
Notes: Based on same analysis as in 2014 Factbook. Costs are based on 250MWe base plant and capture. NG+MEA is natural gas combined-cycle plant with post-combustion (amine) capture, IGCC+SEL
is integrated gasification combined cycle plant with pre-combustion (Selexol) capture, PC+MEA is pulverized coal with post-combustion (amine) capture, and PC+OXY is coal oxycombustion plant with
cryogenic CO2 capture.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
75
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
76
Deployment: US small-scale solar build by type (GW)
Incremental
Cumulative
3.0
12.0
2.5
1.9
2.0
1.0
1.0
0.0
1.3
1.4
.4
.2
.2
.6
.3
.3
.9
.5
4.0
.3
.7
8.0
.9
1.0
1.2
0.0
2009 2010 2011 2012 2013 2014
Residential
Commercial
Cumulative
●
●
Rooftop PV had a banner year in 2014, driven by strong growth in both the residential and commercial segments
Asset finance for this sector also saw a big jump ($7.8bn in 2013 to $12.9bn in 2014), despite declining systems prices (chart
for this is shown in Section 2.2, under new investments in ‘small distributed capacity’)
Source: Bloomberg New Energy Finance
Notes: Figures for 2014 are on average of optimistic and conservative analyst estimates
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
77
Financing: Cumulative funds closed by selected US
third-party PV financiers ($m)
2,250
2,000
SolarCity
1,750
Sunrun
1,500
Vivint
1,250
SunPower
1,000
750
Clean Power
Finance
SunEdison
500
Sungevity
250
NRG
Jan 09
Apr 09
Jul 09
Oct 09
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
Oct 13
Jan 14
Apr 14
Jul 14
Oct 14
0
●
In 2014, tax equity funds totalled an estimated $2.64bn, nearly equivalent to 2013 levels ($2.59bn). There have been some
high-profile tax equity investments announced in 2014, including a number of funds larger than $100m raised by NRG Home
Solar, SolarCity, and Vivint
Source: Bloomberg New Energy Finance
Notes: This represents fund size; actual capital invested is lower and non-public. Data is from publicly available documents and submissions from investors; this figure does not capture any undisclosed
deals. Each fund contains an unknown combination of equity, tax equity, or debt (or an absence of tax equity or debt). Vivint and Clean Power Finance totals include cash equity.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
78
Economics: Best-in-class capex of small-scale solar
($/W)
Best-in-class global capex of commercial-scale PV
5
Other
Best-in-class global capex of residential PV
5
4.01
4
3
2
0.47
0.52
3.20
0.51
0.36
0.62
0.38
0.51
0.62
0.25
1
2.04
1.46
2.09
0.27
0.45
2.01
1.96
Engineering,
procurement
and construction
Balance of plant
0.40
0.19
0.24
0.43
0.38
0.15
Inverter
3
0.64
0.67
0.41
0.78
0.76
0.76
Module
1
2010 2011 2012 2013 2014
●
●
4
2
0.25
0.44
0.39
0.18
0
●
4.64
Other
4.14
0.80
2.95
0.64
0.52
0.67
0.28
2.40
1.76
2.75
2.61
0.43
0.36
0.60
0.58
0.58
0.65
0.63
0.26
0.24
0.62
0.19
0.91
0.87
0.85
Engineering,
procurement and
construction
Balance of plant
Inverter
Module
0
2010 2011 2012 2013 2014
Capex for commercial-scale PV, according to the global benchmark, has leveled off close to $2/W as module prices have
stayed relatively steady
Capex for residential PV continues to see strong declines
The values shown here reflect best-in-class benchmarks for PV in mature markets such as Germany. In the US, capex is
often higher than the global benchmark for many reasons, including fragmented regulatory regimes, the prevalence of thirdparty owned solar, longer build time, higher acquisition costs and greater profit margins
Source: Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
79
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
80
Deployment: US small- and medium-scale wind build
US small-scale (≤100kW) wind build
Incremental (MW)
US medium-scale (101kW-1MW) wind build
Cumulative (MW)
Incremental (MW)
Cumulative (MW)
60
600
60
600
50
500
50
500
40
400
40
400
300
30
300
200
20
Cumulative capacity
●
14
7
10
9
4
3
9
200
12
100
4
3
2013
2012
2011
0
2010
0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0
2002
0
100
19
2009
6
19
2008
10
19
2007
18
2006
9
19
2005
10
Cumulative capacity
5
3
3
3
20
2004
17
20
2003
26
2002
30
Deployments of distributed wind (small- and medium-scale installations) declined in 2013, mirroring the trend on the utilityscale side
Source: US DOE 2013 Distributed Wind Market Report, published August 2014 (and previous editions of this report)
Notes: Previous editions of the Distributed Wind Market Report explicitly break out the medium-scale (>100kW) wind category into two segments: 101kW-1MW, and >1MW. The 2013 edition of this report
does not explicitly provide this breakout, but the authors of that report have separately provided that breakout: there was 24.8MW of deployment of >100kW installations in 2013, of which 4.4MW was in the
101kW-1MW segment.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
81
Economics: US small-scale (≤100kW) wind turbine
average size and installed cost
Average size (kW/unit)
Installation cost ($/kW)
7
$7,000
6
$6,000
4.9
5
4
$5,000
$4,000
3.3
2.6
3
1.6
2
1.1
1
0.7
1.1
$3,000
2.1
2.0
$2,000
1.1
$1,000
0
$0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Average size
Cost
●
●
●
Costs have generally risen as average size of small-scale wind turbine installations has also gone up. But in 2013, average
size of the installations dropped, while costs stayed flat
There can be wide variation in costs based on location (eg, foundation requirements vary by terrain), local labor costs, and
tower types and heights
According to the US Department of Energy’s report on distributed wind (on which all this data is based), the average levelized
cost of electricity for distributed wind installations in the 2006-13 period is 14¢/kWh (~$140/MWh) (based on 5.3MW sample
analyzed)
Source: US DOE 2013 Distributed Wind Market Report, published August 2014 (and previous editions of this report)
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
82
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
83
Deployment: US anaerobic digester operational projects
at commercial livestock farms (number of projects)
Annual net increase
Cumulative
40
300
35
Cumulative
250
30
200
25
20
150
36
15
10
23
17
5
100
22
21
50
9
0
2008
●
●
2009
2010
2011
2012
2013
2
2014
0
New activity in small-scale anaerobic digestion has dropped to very low levels. Since 2008, the number of small anaerobic
digester projects at agricultural facilities has grown. In each of the years 2008–13, there were between 20 and 36 new
operational projects, while 29 projects closed shop over that period. In the last two years, development of small anaerobic
digester projects has tailed off with only two new projects in 2014
There are currently 243 operational anaerobic digester projects at farms in the US. These facilities are generally small – with
an average size of 707kW. Of the total, 169 of these were smaller than 1MW, representing 59MW in capacity
Source: US EPA AgSTAR program
Notes: Columns show annual net increase (accounting for retirements).
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
84
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
85
Deployment: US CHP build and generation
US CHP generation (from plants tracked by EIA
generation data) (TWh)
US CHP build
Incremental (MW)
1,000
900
Cumulative capacity
800
703
665
658
700
55
36
18
600
233
216
500
277
428
400
33
156
300
415
412
200
363
239
100
0
2008
●
●
●
2009
2010
2011
Cumulative (GW)
100
956
103
90
80
282
70
604
60 Other
19
50 Commercial
264
40 Industrial
30
571
20
321
10
0
2012 2013
350
305
300
293
305
301
310
304
299
2010
2011
2012
2013
2014
250
200
150
100
50
0
2008
2009
Annual installations for combined heat and power (CHP) peaked in 2012
Data may underestimate total CHP production because it does not reflect some newer installations, which tend to be smaller in
size and not calculated in EIA estimates (see notes below)
Micro-CHP (<50kW systems installed at residences or small businesses) is a small yet growing portion the total industry. Efforts
by the EIA and a new catalog of commercializable small-scale engines might catalyze growth
Source: EIA
Notes: EIA is the best available source for generation data. However, EIA data on CHP is not comprehensive and so the
generation figures are underestimated. Specifically, EIA does not collect data for sites <1MW; EIA may not be aware of
certain installations and thus may not send these sites a survey for reporting; and EIA categorizes some CHP systems
as 'electric power' rather than 'industrial CHP', if these systems sell power to the grid while providing steam to an
Source: Bloomberg New Energy Finance, CHP Installation Database. Maintained by ICF adjacent facility. Values for 2014 are projected, accounting for seasonality, based on latest monthly values from EIA
(data available through September 2014).
International for Oak Ridge National Laboratory.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
86
Deployment: US CHP deployment by fuel and by
sector, 2013
US CHP deployment by fuel source
Oil
1%
US CHP deployment by sector
Other
3%
Other
6%
Biomass &
waste
12%
Coal
15%
Commercial
13%
Total = 83GW
Natural gas
69%
●
●
●
Total = 83GW
Industrial
81%
Natural gas remains the most common fuel source. Many large CHP plants are located close to petrochemical plants and
refineries along the Gulf Coast, where gas is both cheap and easy to access
The majority of CHP is used for industrial applications. CHP offers clear benefits when heat demand is high in relation to electric
demand, such as in a factory. However, while industrial uses makes up the majority by installed capacity, the commercial sector
is the leader by number of projects, with an equally high growth rate for new build (not pictured)
While industrial uses make up the majority of the market by installed capacity, the commercial sector is the leader by number of
projects (not pictured)
Source: Bloomberg New Energy Finance, CHP Installation Database. Maintained by ICF International for Oak Ridge National Laboratory.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
87
Financing and economics: US CHP asset finance and
capex
Asset finance for US CHP ($m)
1,433
3.5
1,400
1,200
800
3.0
1,122
963
1,000
906
872
2.5
2.0
727
600
1.5
400
1.0
200
0.5
0.0
0
2006
●
●
Capex for CHP installations ($/W)
2007
2008
2009
2010
2011
<0.5MW 0.5-3MW 3-10MW 10-40MW >40MW
Since capital costs have remained steady, ups and downs in asset finance are driven by installed capacity
Capex varies significantly depending on system size and primary technology used, starting at $2-2.57/W for smaller systems
and decreasing as sizes increase. Overall, installation prices have remained stable so system economics rely heavily on the
‘spark’ spread, or the difference between electricity prices and fuel sources. Lower natural gas prices and higher electricity
prices make CHP more attractive
Source: Bloomberg New Energy Finance, CHP Installation Database. Maintained by ICF
International for Oak Ridge National Laboratory.
Notes: Values are estimated assuming a two-year lag between financing and deployment, and
assuming a weighted average capex of $1.7m/MW in 2006, falling to $1.4m/MW by 2009, and
then increasing to $1.5m/MW in 2010 to reflect a recent trend toward smaller systems.
Financing figures are only available through 2011 since deployment figures are only available
through 2013 (and there is an assumed two-year lag between financing and deployment).
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
Source: Bloomberg New Energy Finance; EPA Combined Heat and Power Partnership,
Catalogue of CHP Technologies, prepared by ICF International.
Notes: ICF International reports that CHP capex has remained fairly constant since 2008.
BNEF data reflect capex for small CHP facilities powered by gas-fired reciprocating engines,
gas turbines and microturbines and are based on an internal survey among industry
participants.
88
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
89
Deployment: Comparison of fuel cell technology
performance and applications
Fuel cell
technology
Molten
carbonate
(MCFC)
Solid oxide
(SOFC)
Typical
Fuel type
system size
(kW)
300-3,000 Natural gas,
hydrogen, biogas
Electrical Combined heat
efficiency and power
capable
45-50%
Yes
200-2,800
Natural gas,
hydrogen, biogas
52-60%
Phosphoric acid
(PAFC)
Alkaline (AFC)
Polymer
electrolyte
membrane
(PEM)
100-400
Natural gas,
hydrogen, biogas
Hydrogen
Hydrogen
42%
Direct methanol
fuel cell (DMFC)
<10
10-100
1-100
Methanol
60%
35-60%
<40%
Applications
Distributed
generation,
utility
Distributed
generation,
utility
Yes, but typically
heat is used
internally with the
system to increase
electrical efficiency
Yes
Distributed
generation
No
Military, space
No
Backup power,
distributed
generation,
transportation,
telecom
No
Auxiliary power,
telecom
Notable US vendors
FuelCell Energy
Bloom Energy
Doosan Fuel Cell
America
Plug Power (using
Ballard stacks), Altergy
Oorja Protonics,
PolyFuel
Source: Bloomberg New Energy Finance, US Department of Energy, vendors
Notes: Most stationary fuel cells, regardless of fuel or chemistry, have capacity factors of 40-50% with over 99% availability. Fuel cells are scalable, and installation sizes can be very big; the sizes
shown here are typical numbers and in some cases reflect product sizes.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
90
Deployment: US stationary fuel cell build (MW)
Incremental
Cumulative
90
250
80
200
70
60
150
50
40
100
30
20
50
Cumulative
10
●
●
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
0
2003
0
Fuel cell projects in the US saw a noticeable uptick from 2011 to 2013 due to the announcements of several very large projects
(complete data for 2014 is not yet public). Key developments in 2014 included:
˗
Exelon announced it would fund 21MW of Bloom Energy projects at 75 sites in four states for commercial customers
˗
ClearEdge Power declared bankruptcy and was acquired by South Korean industrial firm Doosan
Most fuel cell activity in the US is concentrated in five states:
˗
California’s Self-Generation Incentive Program (SGIP) provides projects with subsidy ($1.83/W in 2014, $1.65/W in 2015)
˗
Connecticut’s fuel cell supportive policies include tax credits, net metering, and low-emission energy credits (LRECs)
˗
In 2011, Bloom Energy committed to build a manufacturing facility in Delaware at the site of an old factory. As part of that
agreement, Bloom entered into a deal with Delmarva Power and Light to install 30MW at Delmarva substations
˗
New York’s high retail electricity prices have opened the door for project development
˗
North Carolina’s capacity is based on a 10MW Bloom project which uses biogas to power an Apple data center
Source: Fuel Cells 2000, SGIP, Bloomberg New Energy Finance
Notes: Fuel cells installed before 2003 are excluded due to the expected 10-year lifetime of these installations. ‘Planned’ refers to projects which are announced and at various stages of development.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
91
Financing: Venture capital / private equity investment in
US fuel cell companies ($m)
400
380
350
300
250
216
7.0
200
380
PE
174
VC
150
50
47
1.4
46
16.8
36
57
36
2008
2009
2010
0
●
●
●
209
74
100
174
21
21
2011
2012
2013
2014
In 2011, there was a record investment of $380m, with $250m funding for Bloom Energy
Venture capital investment fell after 2011 but remained higher than in prior years. Bloom once again led the pack in 2013,
raising $130m from Credit Suisse. The other large investment in 2013 was a $36m round raised by ClearEdge Power; that
company was acquired by Doosan in July 2014, after raising $5m of VC funding earlier in the year
Asset financing has been small relative to renewable sectors such as wind and solar. Because fuel cell projects generate
substantial tax credits, tax equity financing has been popular
Source: Bloomberg New Energy Finance
Notes: Values include estimates for undisclosed deals.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
92
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
93
Deployment: US cumulative energy storage (GW)
25
20
15
10
5
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Pumped hydropower
●
●
Other
Pumped hydropower storage projects account for over 95% of installed energy storage capacity in the US. The Federal Energy
Regulatory Commission (FERC) has 3.2GW of pending licenses for new pumped storage projects (for more, see Section 4.5)
Pumped storage is generally excluded from state-level energy storage mandates or solicitations
Source: EIA, FERC, Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
94
Deployment: US announced and installed energy storage
capacity (MW)
NY: Storage subsidy in
New York City; Con
Edison considering
storage for substation
upgrade deferral
WA: $14.3m grant
for storage projects
34.5
AK
9.5
WA
10.2
OR
HI: Utilities considering
hundreds of MWs of
storage for renewables
integration
49.3
HI
NV
412.1
CA
CA: 1.3GW
storage mandate
by 2020
<10MW
<55MW
>55MW
802.3
US
0.2
MT
ID
WY
3.1
UT
1.5
AZ
1.5
CO
ND
KS
0.5
OK
52.3
TX
WI
IA
NE
3.1
NM
AZ: Storage to be
considered as
alternative to new
peaker plants
2.0
MN
SD
2.0
MO
AR
LA
24.0
NY
1.3
MI
21.8 6.1
IN
IL
- 1.5 0.3
VT NH ME
35.2
PA
29.1
OH
67.4 20.1
WV VA
1.1
NC
0.0 TN
2.0 SC
GA
MS AL
KY
2.1 MA
RI
- CT
8.3 NJ NJ: $3m grant for
storage projects
- DE
0.5 MD
- DC
-
0.1
FL
TX: City of Austin targeting
200MW by 2024; Oncor
AL AZ CA CT DE GA ID IN KS LA MD MI MS MT considering
NV NJ NYlarge-scale
ND OK PA
SC TN UT VA WV WY
storage
for transmission applications
No storage
Source: Bloomberg New Energy Finance
Notes: Does not include pumped hydropower, underground compressed air energy storage, or flooded lead-acid batteries. Minimum project size for inclusion in this analysis is 100kW or 100kWh.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
95
Deployment: US non-hydropower energy storage
capacity (MW)
Announced
Commissioned
Incremental
Cumulative
1,200
3,000
Incremental
Cumulative
70
300
1,052
1,000
2,500
800
2,000
60
250
50
200
40
600
1,500
481
150
61
30
400
1,000
312
320
39
251
200
32
500
92
25
40 41
31
15
20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010
2011
Capacity
●
●
2012
2013
10
12
0
2009
50
21
48 27
0
100
44
20
2014
Cumulative
6
0
2
5
5
10
10
4
9
6
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009
2010
2011
Capacity
2012
2013
2014
Cumulative
The US storage sector has had many bold announcements but few projects that have actually come to fruition
Policy has driven much of the activity: The 2009 American Recovery and Reinvestment Act (ARRA) funded most of the
projects that were commissioned from 2011 to the middle of 2014. The 1.3GW California energy storage mandate drove
several utilities to issue solicitations for over 565MW of storage in 2014, to be commissioned between 2015 and 2020. There
have been other storage-related policy developments elsewhere (see previous slide). In many states, storage must now be
considered by utilities in their long-term strategies to meet demand
Source: Bloomberg New Energy Finance
Notes: Does not include pumped hydropower, underground compressed air energy storage, or flooded lead-acid batteries. Minimum project size for inclusion in this analysis is 100kW or 100kWh.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
96
Deployment: Mix of applications for US non-hydropower
energy storage for announced projects (% by MW)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Other
Behind the Meter
Transmission - Investment deferral
Distribution - Investment deferral
System - Renewables integration
System - System capacity
Market - Frequency regulation
Market - Reserves
Market - Price arbitrage
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2011
●
●
●
●
2012
2013
2014
The chart shows the mix of applications for energy storage projects – ie, what is the main objective of the projects
Many announced projects received government funding for testing or proof of concept (these are marked as ‘Other’)
Despite the intuitive connection between the potential for storage to facilitate the integration of wind and solar projects, most
market-based projects have not had a renewable energy component. Instead, the key applications have been:
˗
Frequency regulation in PJM
˗
Transmission and distribution upgrade deferral
˗
Behind the meter demand charge management at commercial and industrial end user facilities
Several large frequency regulation projects have been or are being developed by AES Energy Storage, Beacon Power,
Ecoult, RES Americas, and Invenergy in the PJM region to benefit from high frequency regulation prices
Source: Bloomberg New Energy Finance
Notes: Pumped hydropower storage is not included in this chart as it would dwarf all other technologies. Empty columns represent quarters in which there were no new projects announced. ‘Other’ refers to
applications not represented in the legend; many of these are government funded technology testing or pilot projects to prove concepts. The application categories have been revised since last year’s
edition of the Factbook to better represent market terminology and trends.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
97
Deployment: Mix of technologies for US non-hydropower
energy storage for announced projects (% by MW)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Sodium nickel chloride
batteries
Supercapacitors
Flywheels
Flow batteries
Lead-based batteries
Lithium-ion batteries
Sodium sulphur batteries
Q1
Q2
Q3
2011
●
●
●
Q4
Q1
Q2
Q3
Q4
Q1
2012
Q2
Q3
2013
Q4
Q1
Q2
Q3
2014
Q4
Compressed air energy
storage
Lithium ion batteries have been the technology of choice by project developers, large and small, because:
˗
It is widely available and mass produced all over the world
˗
It can provide high power for short-duration applications (eg frequency regulation) and up to about four hours of energy
capacity for longer-duration applications (eg investment deferral, arbitrage)
˗
It has a proven track record for reliability and performance
New technologies have been tested in pilot projects supported by government stimulus funding but were announced before
2011 and are not on this chart
Many start-ups are developing new technologies for energy applications, but these companies are still developing early-stage
pilot projects or are in the earliest stage of commercial development
Source: Bloomberg New Energy Finance
Notes: Pumped hydropower storage is not included in this chart as it would dwarf all other technologies. Empty columns represent quarters in which there were no new projects announced.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
98
Financing: Venture capital / private equity investment in
US energy storage companies ($m)
500
480
450
400
159
345
350
303
48
300
240
250
196
200
150
100
50
28
106
36
214
21
79
303
298
168
161
321
121
PE
VC
139
193
121
134
70
0
2006 2007 2008 2009 2010 2011 2012 2013 2014
●
●
●
There has been over $2.3bn invested by VC/PEs in US energy storage companies since 2006, including $214m in 2014
The top investments for stationary storage in 2014 were:
˗
$47m for Aquion Energy, a sodium-ion battery company in Pennsylvania ramping up production
˗
$40m for Ambri, a liquid-metal battery company developing its first pilot projects in 2014 and 2015
˗
$29m for Primus Power, a flow battery company developing its first large-scale projects
The most notable investments in the energy storage sector in 2014 have been funds raised to develop behind-the-meter
projects for demand charge management at commercial and industrial buildings. The projects typically require no upfront
investment from the building owner and operate in a leasing structure similar to some rooftop solar projects. For these types
of projects, Stem raised $105m, Green Charge Networks raised $66m, and Coda raised $6.4m, all in 2014
Source: Bloomberg New Energy Finance
Notes: Values include estimates for undisclosed deals.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
99
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
100
Policy: US states with EERS and/or decoupling
legislation (number of states)
Electricity
Natural gas
50
50
40
40
Decoupling
only
30
EERS only
20
EERS &
decoupling
10
1990
●
●
Decoupling
only
20
EERS only
10
EERS &
decoupling
0
0
●
30
1995
2000
2005
2010
2014
1990
1995
2000
2005
2010
2014
The key policy story of the past decade has been the uptake of targets for energy efficiency resource standards (EERS) and
of decoupling legislation among US states
Momentum has slowed since 2010, and notable negative developments in 2014 include:
˗
Indiana – elimination of EERS
˗
Ohio – freezing of EERS, which essentially amounts to a rollback of the policy, as it disables long-term planning potential
˗
Florida – state regulator approved the state’s utilities’ proposal to cut energy efficiency targets by more than 90%
The proposed EPA Clean Power Plan may encourage a new wave of EERS if demand-side energy efficiency is perceived as
a cheaper alternative to renewable or nuclear generation in meeting requirements
Source: ACEEE, Bloomberg New Energy Finance
Notes: Decoupling includes all mechanisms for lost-revenue adjustments.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
101
Policy: Share of total electricity consumption by US
state and region, and electric efficiency savings by
state, 2013 (%)
ND
SD
IA
WY
ID
UT
NV
NE
MN
MA
ME
CT
NH
VT
KS
MT
PA
MO
CO
RI
Plains
(8%)
OR
MD
NY
Mid-Atlantic
(12%)
WA
DE
OH
Pacific
(11%)
CA
DC
NJ
IL
Great Lakes
(15%)
NM
OK
AZ
Southwest
(14%)
IN
MI
WI
TX
Southeast
(32%)
FL
WV
GA
AR
MS
SC
NC
LA
AL
●
●
●
KY
TN
VA
State-wide utility
electrical efficiency
savings as % of
retail sales (2013)
3.0%
2.8%
2.6%
2.4%
2.2%
2.0%
1.8%
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
The majority of states in the Pacific, Mid-Atlantic and New England regions have adopted EERS legislation, and it is in these
regions where savings account for the largest percentage of retail sales
The Southeast remains a market with untapped potential for energy efficiency, and had no major policy developments in 2014
All states in the Great Lakes region had EERS policies as of 2013. But in 2014, Indiana passed legislation repealing the
policy, and in Ohio, the policy has essentially been rolled back; these are the two states in the region with the lowest level of
savings relative to retail sales
Source: ACEEE, EIA, Bloomberg New Energy Finance
Notes: The shading for individual states indicates savings from utility electrical efficiency programs as a fraction of retail sales. State codes highlighted in red indicate EERS requirements for electric utilities.
Hawaii and Alaska not depicted.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
102
Policy: Share of total natural gas consumption by US
state and region, and natural gas program savings by
state, 2013 (%)
WY
ID
CO
SD
NE
MN
MT
CT
MA
ME
NH
RI
VT
KS
UT
PA
NV
OR
ND
IA
MO
Plains
(7%)
WA
NY
MD
Mid-Atlantic
(13%)
NJ
DC
DE
OH
CA
Pacific
(13%)
IL
Great Lakes
(15%)
NM
OK
AZ
Southwest
(20%)
IN
MI
WI
Southeast
(25%)
FL
TX
State-wide natural
gas program
savings as % of
retail sales (2013)
2.0%
1.8%
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
GA
NC
VA
MS
WV
●
●
AR
AL
LA
KY
TN
SC
As with electricity, the Southeast remains an important area for potential natural gas savings. The Southwest, particularly
Texas, is also a region with untapped potential
Generally speaking, the level of energy savings as a proportion of energy consumption is lower for natural gas than it is for
electricity, reflecting the fact that utility budgets for natural gas-saving programs are lower than they are for electricity
Source: ACEEE, EIA, Bloomberg New Energy Finance
Notes: The shading for individual states indicates savings from utility natural gas programs as a fraction of retail sales. State codes highlighted in red indicate EERS requirements for natural gas utilities.
Hawaii and Alaska not depicted.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
103
Policy: US building floor space covered under state or
local building benchmarking / disclosure policies
Percent of total US commercial sector floor
space covered by these requirements
Floor space covered by benchmarking or
disclosure requirements (million sq ft)
7,000
8%
Montgomery County (MD)
6,000
7%
Chicago (IL)
Chicago
5,000
3,000
New York City
2,000
Washington DC
●
Jul 14
Jan 14
Jul 13
Jan 13
Jul 12
Jan 12
Jul 11
Jan 11
Jul 10
Jan 10
Jul 09
Jan 09
Jul 08
Jan 08
Jul 07
Jan 07
0
Philadelphia (PA)
4%
San Francisco (SF)
3%
Seattle (WA)
2%
1,000
●
Boston (MA)
Minneapolis (MN)
5%
4,000
●
6%
New York City (NY)
Washington State
1%
Austin (TX)
0%
Washington DC
California
Percent covered
State and cities have been establishing policies around building energy use. These policies can include requiring buildings to
achieve certain energy efficiency benchmarks or mandating that buildings disclose their energy consumption
Through 2014, 6.0bn square feet of commercial floor space, or around 7% of total US commercial sector floor space, was
covered under these kinds of policies
New developments in 2014 included: (i) Montgomery County (MD) passing a bill requiring annual benchmarking for large nonresidential buildings; and (ii) Cambridge (MA) city council approving an ordinance to require benchmarking and disclosure of
building energy performance for large commercial, institutional, and multifamily buildings
Source: Institute for Market Transformation (IMT), US DOE’s Buildings Energy Data Book, Bloomberg New Energy Finance
Notes: Cambridge’s policy not shown in chart, as the square footage numbers for the city are still being tallied. Accounts for overlap between cities and states (eg, no double-counting between Seattle and
Washington State numbers). Assumes that the Buildings Energy Data Book’s definition of floor space covered at least roughly corresponds to IMT’s definition. Shaded areas show amount of floor space
covered, diamonds represent percentage of US commercial sector floor space covered. Diamonds are spaced out in irregular intervals since data about the denominator (total commercial sector floor space
in the US) is available at irregular periods (2008, 2010, 2015e). The diamond for December 2014 assumes linear growth in the denominator over 2010-15.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
104
Policy: Stringency of performance for chillers (as per
ASHRAE Standard 90.1 requirements) (y-axis measures
coefficient of performance)
10
part load (Path B)
9
8
7
part load
6
full load (Path B)
5
500-ton watercooled full load
part load (Path B)
4
part load
3
full load (Path B)
2
1
0
1975
●
●
●
100-ton air-cooled
full load
1980
1985
1990
1995
2000
2005
2010
2015
Appliance standards help drive the improvement of technologies over time
The chart shows how the standards for chillers have evolved since the late 1970s in terms of ‘coefficient of performance’
It illustrates not only the improvements in efficiency required by the standard, but the increasing level of nuance: in the early
2000s the standards began to require that systems exhibit a higher performance when operating at partial load. Since 2010, a
provision has been made within the standards to recognize the different usage profiles for systems. In the case of ‘Path B’ (as
marked on the chart), systems can have a lower performance at full load, so long as their partial load performance is
substantially higher – reflecting a different requirement for systems which will be operating primarily at part-load conditions
Source: ASHRAE 90.1-2013 Standard
Notes: ASHRAE was formerly the American Society of Heating, Refrigerating and Air Conditioning Engineers. The standard shown in the chart is part of Standard 90.1, which dictates minimum
requirements for energy efficient designs for buildings. The standard is on “continuous maintenance”, allowing it to be updated based on changes in technologies and prices. Coefficient of performance is a
measure of efficiency, based on the ratio of useful energy acquired versus energy applied; the higher the coefficient, the more efficient the system.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
105
Policy: Thermal performance standards by building
placement (R-values)
Residential buildings
Commercial buildings
50
50
45
Ceilings
40
40
35
35
30
30
Above-grade
walls
25
15
Basement
walls
10
25
Above-grade
walls
15
5
0
0
2009
2012
2015
Steel-framed
walls
10
5
2006
●
●
●
Roofs
20
20
●
●
45
2006
2009
2012
2015
Higher energy efficiency standards, in the form of increased insulation requirements, are now in place for new buildings
There is also increased attention on the energy efficiency opportunity in existing buildings. In their most recent standards
updates, both ICC and ASHRAE incorporated language around required insulation upgrades when existing roofs are
replaced. This increased attention has the potential to impact building energy use faster than changes to new construction
requirements, due to the market size for ‘re-roofing’
In 2014, 10 states adopted more stringent residential and commercial building codes
In Texas, where code adoption occurs at the local level, 39 of the state’s largest metro areas adopted higher codes
Adoption of more stringent codes drives demand for products, such as insulation, which support energy efficiency
Source: PIMA (Polyisocyanurate Insulation Manufacturers Association), NAIMA (North American Insulation Manufacturers Association), based on standards from ASHRAE and ICC
Notes: Thermal performance standards as established by ASHRAE and ICC are given in R-values, a measure of a component’s resistance to the transfer of heat (greater R-value means more resistance –
ie, better insulation). ICC is the International Code Council. ASHRAE was formerly the American Society of Heating, Refrigerating and Air Conditioning Engineers.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
106
Transportation
Policies 9
Utility & Public
Benefits
Programs & 20
Policies
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
10 (+0.5)
10 (-1.5)
9 (-0.5)
9 (-1.5)
8.5 (-0.5)
42. SC (39)
44. LA (44)
44. MO (43)
46. WV (46)
7.5 (-0.5)
6.5 (+1)
4 (+0.5)
49. SD (47)
50. WY (50)
51. ND (51)
8 (+0)
10.5 (-1)
42. NE (44)
8 (+0)
10.5 (-5)
40. IN (27)
40. KS (39)
47. AK (47)
11 (-0.5)
39. AL (39)
47. MS (47)
12 (-1.5)
38. TN (31)
33. KY (39)
12.5 (+0)
14 (-1)
13.5 (+2)
31. MT (29)
12.5 (+0.5)
14 (+2)
35. VA (36)
14.5 (+1)
30. ID (31)
31. AR (37)
35. OK (37)
16 (+3)
13 (+0)
16.5 (+1)
28. FL (27)
29. NV (33)
12.5 (-0.5)
17 (-5.5)
25. OH (18)
34. TX (33)
17 (-0.5)
25. NM (24)
35. GA (33)
17.5 (+0)
18 (+0.5)
17 (-1.5)
18.5 (-1.5)
23. UT (24)
25. DE (22)
20 (+6)
21. DC (30)
22. NH (21)
24. NC (24)
21 (-3.5)
20.5 (-1.5)
19. NJ (12)
20. PA (19)
21.5 (+1)
21.5 (+3.5)
17. HI (20)
17. WI (23)
23.5 (-1)
22.5 (-0.5)
24 (-0.5)
14. IA (12)
15. AZ (12)
24.5 (+1.5)
13. CO (16)
16. ME (16)
27 (+1)
26 (+1.5)
11. IL (9)
29 (+3.5)
12. MI (12)
30 (+2.5)
9. MD (9)
10. MN (11)
35 (-3)
33.5 (+0)
7. NY (3)
8. WA (8)
37.5 (+3)
35.5 (-0.5)
3. VT (7)
6. CT (5)
37.5 (+2)
7
37.5 (+0.5)
Building
energy codes
3. RI (6)
5
40.5 (-0.5)
Combined
Heat &
Pow er
2. CA (2)
State
Government 7
Initiatives
3. OR (4)
Appliance
Standards 2
42 (+0)
50
Score
1. MA (1)
Maximum
Policy: ACEEE state-by-state scorecard for energy
efficiency policies, 2014
Source: ACEEE, EIA, Bloomberg New Energy Finance
Notes: Numbers in parentheses at the bottom of the chart indicate 2013 ranking and at the top of the chart change in score from 2013 levels. Diamond symbols indicate 2013 score within each category.
107
Policy: US federal ESPCs executed through the DOE’s
umbrella agreement, by year and deal size
Number of ESPCs
Total contract value of the ESPCs ($m)
2,323
52
23
$100m-$500m
22
15
12
12
8
7
●
●
●
2006
2008
2010
2012
2014
859
729
$50m-$100m
<$20m
$100m-$500m
948
$20m-$50m
9
3
2004
>$500m
>$500m
30
289
410
389
314
466
2006
2008
2010
$20m-$50m
<$20m
102
40
2004
$50m-$100m
2012
2014
Federal facilities can play an exemplary role for other sectors on the benefits of energy savings performance contracts
(ESPCs) as a way of financing energy upgrades
In May 2014 President Obama issued a memorandum extending a target that had been set at the end of 2011 ($2bn worth of
contracts entered in the period 2012-13; target was extended to $4bn over the period 2012-16)
Utility energy service contracts are also a suitable vehicle for federal energy efficiency, but there is limited data on their impact
Source: Federal Energy Management Program (FEMP), US Department of Energy (DOE), Bloomberg New Energy Finance
Notes: DOE’s umbrella agreement refers to indefinite-delivery, indefinite-quantity (IDIQ) contracts between the DOE and energy service companies. Totals are summed in terms of calendar years in order to
facilitate comparison with government targets, whereas DOE sources commonly sum over fiscal years.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
108
Deployment: US commercial building energy intensity
(kBtu/sq-ft)
120
100
other
80
natural gas
60
40
electricity
20
0
1980
●
●
1985
1990
1995
2000
2005
2010
2013
The figures here are based on EIA data for the overall consumption of the commercial sector combined with the latest
information on total commercial floor space and other estimates based on previous editions of the Commercial Buildings
Energy Consumption Survey (CBECs) on the consumption profile of the commercial sector
Estimates suggest a slight increase in efficiency (slight decrease in energy intensity) since 2000; the overall trend will be
clearer once the next CBECs survey is published, expected mid-2015
Source: EIA, Bloomberg New Energy Finance
Notes: This analysis is based on (i) EIA data on US commercial building energy consumption and floor space for the years 1979, 1983, 1986,1989, 1992, 1995, 1999, 2003 and (ii) EIA data for total US
commercial sector energy consumption for every year between 1979-2013.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
109
Deployment: Energy Star-certified floor space in US
non-residential buildings by building type (bn sq-ft
of floor space)
4.0
3.5
Other
3.0
Warehouse and Storage
2.5
Lodging
2.0
Healthcare
1.5
Mercantile
1.0
Education
Offices
0.5
0.0
1999
●
●
2002
2005
2008
2011
2014
The number of buildings being certified has increased dramatically since 2006, mainly due to adoption by office buildings
Since 2009 the rate at which new buildings are being certified, across all sectors, has slowed
Source: EPA, Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
110
Deployment: Energy Star-certified floor space and total
floor space for US commercial buildings by sector and
size, 2014
Offices
Education
Mercantile
Total floorspace
Energy Star certified floorspace
Healthcare
Lodging
Warehouse and
Storage
1,000 5,000 ft2
●
●
●
5,000 10,000 ft2
10,000 25,000 ft2
25,000 50,000 100,000 - 200,000 - > 500,000
50,000 ft2 100,000 ft2 200,000 ft2 500,000 ft2
ft2
The building type with the highest proportion of certified buildings is offices, followed by education and mercantile
Outside of these segments, a negligible proportion of buildings has been certified
Virtually no buildings smaller than 50,000 ft2 have been certified
Source: EPA, EIA, Bloomberg New Energy Finance
Notes: There is not enough data for total US floor space of warehouses, lodging and educational buildings with floor space in excess of 500,000ft2.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
111
Deployment: US aluminum recycling trends
US production of primary vs. secondary
aluminum
US aluminum cans collected for recycling and %
of total cans collected
Pounds collected (m lbs)
100%
Percentage of cans collected (%)
2,400
80%
2,100
70%
70%
1,800
60%
60%
1,500
50%
50%
1,200
40%
40%
900
30%
600
20%
300
10%
90%
80%
30%
20%
10%
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
Primary
Secondary
0%
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0
0%
Pounds collected
Percentage of cans collected
●
●
●
●
The aluminum industry provides a case study for efficiency adoption in the industrial sector: production of aluminum from
secondary sources (recycled post-consumer and industrial scrap) consumes much less energy than producing new aluminum
Secondary sources have accounted for an increasing portion of US aluminum production, reaching around 70% in 2013
Recycling of aluminum has also been increasing, driven largely by the addition of imported cans into the US recycling stream
The carbon footprint of primary (new) aluminum production in the US has declined by 37% (not shown in these charts), driven
by advances in efficiency technology, increased reliance on hydropower, and voluntary efforts on the parts of the industry to
reduce emissions from their facilities (according to a 2014 report from The Aluminum Association)
Source: The Aluminum Association, US Geological Survey, US Department of Interior, US
Department of Commerce
Notes: Not shown here is the considerable share of aluminum imports consumed in the US,
which have historically met around 40% of US demand.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
Source: The Aluminum Association, Can Manufacturers Institute, Institute of Scrap Recycling
Industries
112
Financing: US utility energy efficiency spending
and budgets ($bn)
8
7.3
budget
7
6.0
5.7
6
4.7
1.0
1.1
3.8
0.8
4.7
4.8
0.8
3.9
2011
2012
5
4
3.2
3
2
1
1.9
0.3
1.6
2.5
0.3
2.2
0.6
2007
2008
2.6
1.5
budget
5.8
Natural gas
budget
Electric
3.0
0
2006
●
●
●
2009
2010
2013
From 2006 to 2011, US utility expenditure for energy efficiency sustained annual growth of over 25%
Since 2011, as the uptake of state-level policies slowed, so has growth in expenditure, growing just 5% 2011-12 (though the
budgeted amount shows potentially strong growth in 2013)
New Jersey was the state with the largest increase in utility budgets for energy efficiency, with an increase from $416m in
2012 to $592m in 2013
Source: CEE, ACEEE, Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
113
Financing: US estimated investment in energy efficiency
through formal frameworks ($bn nominal)
By framework
By sector
14
14
12
12
ESPC
10
8
Utility
ESPC
4
Utility
spending
2
Public
buildings
6
Commercial
& industrial
4
Residential
2
0
0
1990
●
●
10
8
6
●
Other
1995
2000
2005
2010 2013
1990
1995
2000
2005
2010 2013
Utility spending on energy efficiency remains the fastest-growing framework driving investment in energy efficiency. This is
driven primarily by state EERS targets and decoupling legislation
Utility spending will continue to increase if more states adopt EERS targets in response to the EPA Clean Power Plan
Energy savings performance contracts (ESPCs) are mainly focused on public buildings
Source: ACEEE, NAESCO, LBNL, CEE, IAEE, Bloomberg New Energy Finance
Notes: The value for the 2013 ESPC market size shown here, $6.2bn, is an estimate. The most recent published data from LBNL puts reported revenues at $5.3bn. In the same report, the forecast for 2013
was >$6.5bn. The $6.2bn estimate, based on a continuation of 2008-11 growth rates, sits between the most recently reported data and LBNL’s forecast.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
114
Economics: US federal ESPC activity executed through
the DOE’s umbrella agreement, grouped by cost of
saved energy (x-axis), 1998-2013
Number of ESPCs
105
Total contract value of the ESPCs ($m)
107
2,351 2,324
1,290
●
●
1,013
109
>100¢/kWh
50-100¢/kWh
20-50¢/kWh
10-20¢/kWh
5-10¢/kWh
21
2-5¢/kWh
Levelized
cost of saved
energy
<1¢/kWh
13
1-2¢/kWh
3
>100¢/kWh
50-100¢/kWh
20-50¢/kWh
1-2¢/kWh
10-20¢/kWh
<1¢/kWh
10
5-10¢/kWh
3
2-5¢/kWh
2
1,107
47
45
Levelized
cost of saved
energy
There is a broad range in the cost of energy saved under energy savings performance contracts (ESPCs). This reflects:
˗
differences in the type of energy being saved
˗
differences in the price of energy being saved
˗
the fact that energy savings are sometimes used as a means of paying for a project rather than as an economic goal in
their own right
In most cases the cost of energy savings were in the range of 5-20ȼ/kWh
Source: Federal Energy Management Program (FEMP), US Department of Energy (DOE), Bloomberg New Energy Finance
Notes: DOE’s umbrella agreement refers to indefinite-delivery, indefinite-quantity (IDIQ) contracts between the DOE and energy service companies. LCOE is calculated using 5% discount rate.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
115
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
116
Deployment: Incentive-based demand response capacity
by US ISO/RTO by delivery year (GW)
33.8
35
30.5
30
30.0
29.0
28.4
26.2
25
24.1
7.4
12.6
3.0
2.8
9.4
ERCOT
2.5
7.2
3.6
3.3
3.0
9.3
10.3
2010/11
2011/12
CAISO
NYISO
2.9
2.6
2.3
2.0
3.2
2.9
2.4
15
5
2.9
7.2
20
10
7.0
MISO
7.0
8.7
SPP
7.0
14.1
9.3
ISO-NE
PJM
3.4
0
2008/09
●
●
2009/10
2012/13
2013/14
2014/15
Most of the demand response (DR) capacity is driven by the capacity market in PJM, sold via three-year ahead auctions
˗
The 14.1GW of PJM DR capacity for the 2014/15 delivery year was sold in a May 2011 auction.
˗
PJM DR capacity sold in the 2014 auction for delivery year 2017/18 is 11GW (not shown), a marked drop in capacity
from previous years. This is due to rule changes passed by PJM making it more difficult for DR resources to quality (the
motivation for these rules is to increase the reliability and availability of DR resources throughout the year)
DR’s future in US capacity markets is in jeopardy due to a case brought up to the Supreme Court in late 2014 that will restrict
DR capacity from participation in future auctions.
Source: Bloomberg New Energy Finance, data from various independent system operators (ISOs) and regional transmission organizations (RTOs)
Notes: These figures include demand response activity driven by customer curtailment as well as behind-the-meter generation because some ISOs do not separate the two demand response sources. This
figure does not include residential demand response programs not bid into capacity markets. Years shown are in ‘delivery years’ which typically run from June to May instead of the calendar year.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
117
Deployment: US electric smart meter deployments
Smart meters deployed as a percentage of US
electricity customers
US smart meter deployments (million units)
Incremental
Cumulative
16
40%
60
30%
12
40
20%
8
12.6
12.2
20
10.0
4
5.2
5.9
4.1
3.6
0
0
2008
●
●
2009
2010
2011
2012
2013
10%
2014
0%
2008
2009
2010
2011
2012
2013
2014
Smart meter deployments hit a peak in 2010 and 2011, making use of a burst of stimulus funding awarded in 2009 (most of
the largest utilities in the US deployed smart meters using this funding). Smart meters in 2013 and 2014 have been deployed
more slowly, as smaller utilities receive approval one at a time to pay for projects using ratepayer funds
While smart meters have only been deployed to 39% of electricity customers, another type of advanced meters – those used
to automate billing, or automatic meter readers (AMR) – have been deployed to another 35% of US customers
˗
Automating the meter reading process (which can be performed by both smart meters and AMRs) is the largest cost
saving line-item for utilities when upgrading from old meters
˗
The deployment of smart meters and AMR meters, totaling 74% of customers, is approaching a saturation point in the
market that will continue to slow deployment of new projects in the US
Source: Bloomberg New Energy Finance, EIA
Notes: Charts above show values for smart meters and exclude AMR deployments. Smart meters are defined as those capable of ‘two-way communication’ (ie, grid communicates with meter and vice
versa), whereas AMRs provide one-way communication (ie, meter delivers automated readings). Some historical numbers may have changed as a result of updates to meter deployment timelines.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
118
Financing: US smart grid spending by segment ($bn)
6
5
0.5
4
3
2
1
0
1.4
●
●
1.0
2.8
0.1
0.8
5.1
0.8
1.0
3.8
1.3
0.7
1.2
1.4
3.2
0.6
0.8
1.8
2008
2009
Smart metering
●
5.2
4.7
2010
3.2
2011
Distribution automation
3.1
0.2
1.5
2.7
2012
1.6
1.3
2013
2014
Advanced smart grid projects
Smart meter deployments, which accounted for most of the overall US smart grid spending from 2010 to 2012 and which
were driven by the government stimulus in 2009, has largely dropped off due to a reduction in smart meter projects (as the
stimulus funds have run out) and due to cheaper meters being deployed
Distribution automation spending has remained fairly constant. These investments represent utility projects within the
distribution system to reduce outage frequency and durations and to more efficiently manage electricity flow within the grid
Investor-owned utilities and standalone transmission companies have been making record levels of investment into improving
the grid: $37.7bn in transmission and distribution infrastructure in 2013, according to the Edison Electric Institute. The factors
behind these investments include: “new technologies for improved system reliability,… interconnection of new sources of
generation (including renewable resources), and support for production of shale gas.” (This $37.7bn total is not explicitly
shown in the chart above, though a portion of those investments may overlap with financing that is captured in the chart.)
Source: Bloomberg New Energy Finance, Edison Electric Institute
Notes: The ‘Advanced smart grid projects’ category includes projects that are cross-cutting, including elements such as load control, home energy management and EV charging.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
119
Economics: US average smart meter sale price
($ per meter installed)
300
250
200
150
100
50
0
2009
●
●
●
2010
2011
2012
2013
2014
Meter prices increased from 2009 to 2012, probably due to increasing technical capabilities of the meters as well as the
willingness of utilities to pay for higher-priced meters (the majority of projects funded after 2009 were supported by stimulus
funding)
By 2014, stimulus-funded projects had been exhausted, and smart meters became less differentiated from one another; this,
along with competition from Chinese and Indian meter manufacturers, resulted in increasing pricing pressure
Many companies that were metering pure-plays are now differentiating into other smart grid products for transmission and
distribution infrastructure and are providing managed services, including smart grid data analytics platforms, for utilities
Source: Bloomberg New Energy Finance
Notes: Price per meter includes meters, advanced metering infrastructure communications network, associated IT spending and installation costs. Data based on total annual smart meter investment market
size and total smart meters installed in a given year; results may vary as many deployments are based on a fixed cost per meter but the meters are deployed over several years.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
120
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
121
Deployment: US electric vehicle and hybrid electric
vehicle sales
US EV sales
US HEV sales
Share (%)
1,000 units
Share (%)
1,000 units
5%
200
4%
160
120
3%
120
3%
80
2%
80
2%
40
1%
40
1%
0
0%
0
0%
200
160
BEV
PHEV
EV share in new vehicle sales
Q1
2012
●
●
●
Q3
2012
Q1
2013
Q3
2013
Q1
2014
Q3
2014
5%
HEV
HEV share in new vehicle sales
Q1
2012
Q3
2012
Q1
2013
Q3
2013
4%
Q1
2014
Q3
2014
Sales of battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) increased 25% relative to a comparable
period last year (from 77,944 in Jan-Oct 2013 to 97,501 in Jan-Oct 2014)
Sales of hybrid electric vehicles (HEV) were 387,741 units for Jan-Oct 2014; HEV sales were relatively slow this year amid
low gasoline prices
As of November 2014, there are 49 HEV models on sale in the US (same number as in 2013) compared to 8 PHEV models
(5 in 2013) and 11 BEV models (8 in 2013)
Source: Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
122
Deployment: US public electric vehicle charging stations
(number of stations)
19,410
13,392
3,394
●
●
●
588
465
442
430
465
541
2005
2006
2007
2008
2009
2010
2011
2012
2013
The number of public EV charging stations in the US has increased rapidly since early 2011
The Alternative Fuel Infrastructure Tax Credit, which included support for public and private EV charging stations, expired at
the end of 2013, was retroactively extended through the end of 2014, and has since expired
In 2014, a key player, Car Charging Group, switched its Blink Network from time-based pricing to a per-kWh fee in states that
allow this type of pricing system
Source: Alternative Fuels Data Center, Bloomberg New Energy Finance
Notes: Electric charging units, or EVSE, are counted once for each outlet available, even when multiple outlets are present at a single location. Includes legacy chargers, but does not include residential
electric charging infrastructure.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
123
Financing: Investment in US electric vehicle companies
($m)
Venture capital / private equity
Public markets
3,000
3,000
2,500
2,500
2,000
2,000
$2,506
PE
1,500
$982
1,000
500
$914
$836
1,000
$419
$213
$145
$142
2013
2014
500
$244
$382
$314
$341
2010
2011
2012
$79
0
2008
●
$1,081
VC
0
●
1,500
2009
2010
2011
2012
2008
2009
2013
2014
Venture capital and private equity firms invested over $3.6bn of private capital in the US electrified transport sector since
2008. Public markets investment stands at $4.9bn over the same period
Notable deals in 2014 included:
˗
Tesla offering $2bn in convertible bonds to fund the construction of a 35GWh ‘Gigafactory’ (to make lithium ion batteries)
in Nevada
˗
Smith Electric Vehicles raising $42m in private equity expansion capital from Sinopoly Battery Limited
Source: Bloomberg New Energy Finance
Notes: Includes battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEV), hybrid electric vehicles (HEV), fuel cell EVs (FCEV), and related infrastructure companies
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
124
Economics: US average monthly retail fuel prices ($/GGE)
5
E85
4
Gasoline
3
Diesel
2
CNG
1
Electricity
Jan 04
Apr 04
Jul 04
Oct 04
Jan 05
Apr 05
Jul 05
Oct 05
Jan 06
Apr 06
Jul 06
Oct 06
Jan 07
Apr 07
Jul 07
Oct 07
Jan 08
Apr 08
Jul 08
Oct 08
Jan 09
Apr 09
Jul 09
Oct 09
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
Oct 13
Jan 14
Apr 14
Jul 14
Oct 14
0
●
●
Compared on a $/GGE basis, electricity has been the most competitive transport fuel in the US or over a decade – though
vehicle economics is not just about fuel price but also about upfront cost (see next slide)
US regular gasoline prices, including taxes, started to fall in the second half of the year, on the back of plummeting oil prices
Source: Alternative Fuels Data Center
Notes: Fuel prices per gasoline-gallon equivalents (GGEs). Electricity prices are reduced by a factor of 3.4 because electric motors are 3.4 times more efficient than internal combustion engines. Latest
available data at time of publication was through October 2014; more updated data will undoubtedly show gasoline prices falling markedly after October.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
125
Economics: US total cost of ownership (subsidized) for select
vehicle models, 2014 ($ per vehicle)
Resale value
●
●
Upfront cost
Honda Civic
-6,254
Nissan Leaf S (BEV)
-5,613
GM Cruze
-5,939
Toyota Prius (HEV)
-8,428
Toyota Camry
-7,708
Toyota Camry LE (HEV)
-8,039
Ford Fusion
-7,364
20,951
Running cost
33,596
18,898
26,691
19,896
33,672
12,594
34,746
20,788
28,961
25,823
27,623
24,670
TCO
36,393
15,861
37,089
18,974
37,358
17,774
37,522
20,215
GM Volt (PHEV)
-9,550
32,493
15,978
38,921
Ford Fusion (HEV)
-9,248
31,777
16,506
39,035
Toyota Prius (PHEV)
-8,419
32,757
Ford Fusion SE Energi (PHEV)
-9,642
36,378
16,238
16,242
40,576
42,978
Federal purchase incentives enable BEVs to compete with gasoline-powered vehicles; HEVs are competitive without support
˗
Running costs for EVs are very cheap
˗
However, upfront prices are higher than for conventional vehicles (even with subsidies) and resale values are lower
Electric vehicles in the US receive federal incentives in the form of tax credits worth between $2,500 to $7,500 per vehicle
(the range is based on the kWh of battery capacity)
Source: Bloomberg New Energy Finance
Notes: TCO calculations assume: 10,100 miles travelled per year, 5% discount rate, 5-year use (the assumptions differ slightly from previous TCO calculations by Bloomberg New Energy Finance that
examined a 12-year vehicle life). Upfront costs shown in this chart account for federal incentive (ie, this is the upfront cost net of the applicable tax credit). BEV stands for battery electric vehicles; PHEV
stands for plug-in hybrid electric vehicles; HEV stands for hybrid electric vehicles.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
126
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
127
Deployment: US natural gas demand from natural
gas vehicles (Bcf)
35
32.9
30
24.7
22.9 23.7
25
26.0
27.3
28.7
33
30.0 30.1
20.5
18.3
20
15
14.5 15.0
10
5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
●
●
●
Natural gas use in vehicles probably stayed flat from 2013 to 2014, at around 33Bcf
Compressed natural gas (CNG) remains more widely used than liquefied natural gas (LNG)
The number of new CNG and LNG stations is also relatively flat from 2013 levels:
˗
170 new CNG fuelling stations in 2013, compared to 179 new stations as of mid Q4 2014
˗
26 new LNG fuelling stations in 2013; compared to 19 new stations as of mid Q4 2014
Source: EIA
Notes: Values for 2014 are projected, accounting for seasonality, based on latest monthly values from EIA (data available through July 2014). Data excludes gas consumed in the operation of pipelines.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
128
Financing: Capex investments by US-based Clean
Energy Fuels Corp., mostly for new natural gas
fuelling stations ($m)
180
160
140
120
100
80
60
40
20
0
$166
$43
2009
●
●
●
$164
$155
$135
$62
2010
2011
2012
2013
2014e
Clean Energy Fuels is a leading natural gas fuel supplier, owning about 15% of US retail and private CNG and LNG fuelling
stations. The company’s spending plans are used here as a proxy for financing flows into the natural gas vehicle sector
The company’s spending on asset financing, most of which is poured into building fuelling infrastructure, has declined since
2012
The biggest market for LNG fuel – heavy-duty trucks – has been slow to evolve, likely contributing to the company’s reduced
expenditures
Source: Clean Energy Fuels 2013 annual report
Notes: Figures from 2009-13 reflect 'net cash used in investing activities' as per company's cash flow statement. The amount for 2014 is based on company plans ("Our business plan calls for approximately
$135 million in capital expenditures in 2014").
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
129
Economics: US CNG prices compared with gasoline
and Henry Hub natural gas prices ($/GGE)
4.5
4.0
Retail gasoline
3.5
3.0
2.5
Retail CNG
2.0
1.5
1.0
Henry Hub gas
0.5
●
●
●
Q1 2014
Q3 2013
Q1 2013
Q3 2012
Q1 2012
Q3 2011
Q1 2011
Q3 2010
Q1 2010
Q3 2009
Q1 2009
Q3 2008
Q1 2008
Q3 2007
Q1 2007
Q3 2006
Q1 2006
0.0
Natural gas engines function almost identically to gasoline/diesel engines, but new fuelling systems are needed (a fuel-price
discount is therefore needed to incentivize consumers to convert)
Retail CNG has remained discounted to retail gasoline over 2014, and is less volatile
Retail LNG is not shown, as too few fuelling stations exist to provide average prices; however, it generally sells at a discount
to diesel, around $2.96/GGE in 2014
Source: Bloomberg New Energy Finance, Alternative Fuels Data Center
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
130
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
131
EPA Clean Power Plan (1 of 4): Overview
​
Change in power
sector emissions by
state from 2012 to
2030 under one
potential compliance
scenario from the
EPA’s Clean Power
plan
-83%
WA
-42%
OR
​
-43%
NV
+7%
CA
+8%
MT
-49%
ID
-31%
WY
-21%
UT
-46%
AZ
​ -68% -96%
VT NH
ME
+1%
ND
-52%
MN
-4%
SD
+10%
NE
-23%
CO
+10%
KS
-41%
OK
-4%
NM
-42%
TX
-33%
WI
-29%
IA
-20%
IL
+14%
MO
-53%
NY
-19%
MI
-28%
PA
-2%
OH
-15%
IN
+3%
KY
+0% -35%
VA
WV
-20% TN
-51%
AR
-62% -32%
AL
-55% MS
LA
-30%
GA
-53% MA
+37% RI
-43% CT
-53% NJ
-33% DE
-15% MD
​ DC
-21%
NC
-36%
SC
-33%
FL
●
●
●
●
●
The EPA announced the Clean Power Plan on June 2014; the agency is currently reviewing comments submitted in response
to the Plan, and is due to finalize the plan by summer 2015
It calls on states to implement their own programs (or band with other states) for reducing carbon emissions intensity of its
existing power fleet. This could result in the most ambitious US policy ever for natural gas, renewables, and energy efficiency
According to one scenario in the EPA’s modelling, the Plan could lead to 30% reductions from 2005 levels by 2030
The legal and political debates, including lawsuits by states and negatively impacted generators, have just begun
The following slides present analysis on state-specific potential compliance paths; power generation forecasts; and energy
efficiency implications under the Plan (a detailed description of how the Plan would work is beyond the scope of this report)
Source: Bloomberg New Energy Finance, based on analysis of EPA Clean Power Plan’s modelling
Notes: Darker colors indicate deeper emissions cuts. Yellow states may actually increase their overall emissions, while remaining in compliance with the EPA’s Clean Power Plan. Data is not available for
Alaska and Hawaii; Vermont and DC are not covered by the EPA’s regulations. Data is based on EPA modelling and EPA historical emissions inventories.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
132
EPA Clean Power Plan (2 of 4): How EPA crafted(*)
the 2012-2030 reduction targets for adjusted
emission rates (AERs**) for each state
Energy
efficiency
efforts
25%
2,250
Nuclear build
3%
Carbon-intensive
states
Dirty states
2,000
2012 adjusted
emissions rate
(AER)
1,750
CCGT
redispatch
39%
Renewable
energy boost
23%
Coal heat
rate
improvement
10%
1,500
US-wide, adjusted
emissions rates must
fall from 1,516lb/MWh
to 1,003lb/MWh from
2012-30
1,250
1,000
750
500
2030 AER standard drops due to a
combination of Abatement Block efforts
‘Clean’
states
Clean
states
250
CCGT redispatch
Coal heat rate improvement
Renewable energy boost
Nuclear build
United States
Montana
Kentucky
Wyoming
West Virginia
Nebraska
North Dakota
Missouri
Kansas
Indiana
Tennessee
Illinois
Maryland
Ohio
Wisconsin
Utah
Iowa
Colorado
Michigan
North Carolina
Arkansas
South Carolina
New Mexico
Hawaii
Pennsylvania
Minnesota
Georgia
Louisiana
Arizona
Alabama
Oklahoma
Alaska
South Dakota
Virginia
Texas
Delaware
Florida
Mississippi
Nevada
New York
Massachusetts
New Jersey
Rhode Island
New Hampshire
Connecticut
Washington
Oregon
California
Maine
Idaho
0
Energy efficiency efforts
Source: EPA Clean Power Plan, EPA eGRID data, Bloomberg New Energy Finance
Note: CCGT is combined cycle gas turbine. (*) In coming up with these AER reduction targets, the EPA devised a methodology for each abatement block and applied that to each state to come up with one
potential path for compliance; this analysis shown here reflects that compliance path. However, states would be able to choose other paths for compliance, so long as the reduction targets are achieved.
(**) The Clean Power Plan is based on reductions of emissions intensity ratio (units of greenhouse gas emissions per unit of power generated). However, due to regulatory scope limitations and other
factors, the particular metric that the Clean Power Plan targets is an adjusted version of that ratio. Explanation of that ratio is beyond the scope of this report.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
133
EPA Clean Power Plan (3 of 4): US power generation mix
by technology under two scenarios according to the EPA
(TWh)
Clean Power Plan
(one particular scenario under the Plan*)
BAU
5,000
4,000
4,000
3,000
3,000
2,000
2,000
1,000
1,000
0
0
Coal
Oil
Gas
(CC)
Gas
(other)
Nuclear
Biomass
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
5,000
Hydro
Geothermal
Wind
Solar
Other
Efficiency
Source: EIA historical data, results from the EPA-licensed Integrated Planning Model (IPM), Bloomberg New Energy Finance
Note: BAU is business-as-usual (ie, forecasts assuming no new policy). Gas CC is combined cycle gas turbines. (*) The scenario shown here for the Clean Power Plan is one of various scenarios modelled
by the EPA that would achieve Clean Power Plan compliance; this scenario corresponds to the one referred to as ‘Option 1 – State’.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
134
Table of contents
1. Introduction
2. A look across
the US energy
sector
2.1 Bird’s-eye view
5.1 Small-scale solar
2.2 Policy, finance, economics
5.2 Small- and medium-scale wind
5. Distributed
power and
storage
3. Natural gas
4. Large-scale
renewable
electricity and
CCS
5.3 Small-scale biogas
5.4 Combined heat and power and
waste-heat-to-power
4.1 Solar (PV, CSP)
5.5 Fuel cells (stationary)
4.2 Wind
5.6 Energy storage
4.3 Biomass, biogas, waste-to-energy
4.4 Geothermal
4.5 Hydropower
4.6 CCS
6. Demandside energy
efficiency
7. Sustainable
transportation
6.1 Energy efficiency
6.2 Smart grid and demand response
7.1 Electric vehicles
7.2 Natural gas vehicles
8.1 EPA Clean Power Plan
8. Themes
8.2 Global context
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
135
Global context: Total new investment in clean energy
by country or region ($bn)
350
$318
$310
$294
300
$272
$268
250
$205
200
Other EMEA
$206
Other APAC
$175
Other AMER
$128
150
100
$88
$60
●
●
●
$3
$10
2004
$53
$67
$68
$43
$89
China
US
$17
$41
$26
$40
$9
$17
$11
$35
$44
$35
$48
$65
$52
$48
$52
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
50
0
Europe
Total new investment in clean energy globally increased for the first time in three years and is near its 2011 peak
US investment levels were up in 2014 and are second highest in the world on a country basis
Among the largest drivers of these investment figures are the categories of asset financing for wind and financing for small
distributed capacity – essentially, rooftop solar. In 2014, the US was the world’s second-largest market for new wind
installations, behind China, and third-largest for solar, behind China and Japan
Source: Bloomberg New Energy Finance
Notes: For definition of clean energy, see slide in Section 2.2 of this report titled ‘Finance: US clean energy investment (1 of 2) – total new investment, all asset classes ($bn)’ . AMER is Americas; APAC is
Asia-Pacific; EMEA is Europe, Middle East, and Africa.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
136
Global context: Energy prices (1 of 2) – average electricity
rates for the industrial sector by country (USD/MWh)
300
Germany
250
Japan
200
Mexico
150
China
100
India
Canada
50
US
●
●
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
US, and North America broadly, has among the lowest costs of electricity in the world for industrial customers (6.87¢/kWh for
the US industrial sector in 2013, according to the EIA)
Regions in the US with especially low costs of power include the Midwest, Southwest, and Northwest
Source: Bloomberg New Energy Finance, government sources (EIA for the US)
Notes: Prices are averages (and in most cases, weighted averages) across all regions within the country.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
137
Global context: Energy prices (2 of 2) – production costs
of gas-intensive industries by region and feedstock ($/t)
Methanol
Ammonia
900
900
800
800
700
700
600
600
500
500
400
400
300
300
200
200
100
100
0
2005
●
●
●
2007
2009
2011
2013
0
2005
Asia (gas)
Western
Europe (gas)
US Midwest
(gas)
US Gulf
Coast (gas)
Asia (coal)
2007
2009
2011
2013
Low natural gas prices have given a comparative advantage in operating costs to US chemical sector operations, such as
production of methanol and ammonia
In 2014, gas-intense industries brought online 10 new projects that make use of low-cost gas (and proposed another 32
projects)
The only region-feedstock combination with comparable economics is coal gasification in Asia
Source: Bloomberg New Energy Finance
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
138
Global context: Climate negotiations – comparative
emissions and GDP by region
Cumulative
historical
emissions
USA
25%
0%
10%
EU
20%
20%
USA
19%
30%
China
12%
40%
EU
17%
USA
14%
EU
9%
Japan
Russia 4%
India
7%
3%
50%
China
11%
China
26%
60%
Rest of the world
28%
70%
80%
Russia Japan
11%
4%
Russia
5%
90%
1850-2014*
100%
Rest of the world
34%
India
6%
Rest of the world
36%
1990
2014*
Emissions
S
USA
27%
USA
26%
EU
34%
EU
26%
Russia
3%
China
9%
Japan
13%
Japan
9%
Rest of the world
21%
Rest of the world
25%
1990
2014*
GDP
●
●
Policy actions taken by the US in 2014 (including the EPA Clean Power Plan proposal and the US-China climate pact) have
set the stage for a potentially momentous global climate summit at Paris in December 2015
In the first quarter of 2015, other nations are expected to present their long-term commitments to addressing climate change.
Hopes for some kind of comprehensive deal are higher than they have been since Copenhagen in 2009
Source: Bloomberg New Energy Finance, World Bank, IMF, WRI
Notes: GDP measured in constant 2005 USD, emissions are total CO2e. Data used in BNEF estimates have been sourced from the World Economic Outlook Database (IMF), World Bank Data Catalogue,
CAIT 2.0 (WRI). (*) indicates estimate.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
139
Global context: US-related causes and implications of
falling oil prices (1 of 2) – demand
US average fuel-economy rating (weighted by
sales) of purchased new vehicles (MPG)
US gasoline consumption (bn gallons per year)
160
27
140
25
120
100
23
80
21
60
40
19
20
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
●
Average fuel
economy
rating by MY
17
0
●
●
Monthly fuel
economy
rating
15
Oct 07 Oct 08 Oct 09 Oct 10 Oct 11 Oct 12 Oct 13 Oct 14
Gasoline use in the US continues to trend down (126.4bn gallons per year in 2014, an 8.6% reduction from the peak in 2005)
Tightening corporate average fuel economy (CAFE) standards and emissions targets are pushing carmakers to release more
fuel efficient vehicle models. CAFE regulations have already fostered a significant increase in the sales-weighted average fuel
economy of newly purchased vehicles. These regulations demand a further doubling in fuel economy by 2025
In addition to improved efficiency, other factors driving down gasoline consumption are: changing driving patterns (miles
driven per vehicle, and total number of vehicles on the road, have peaked and are slowly declining) and the introduction of
alternative fuels
Source: EIA
Source: UMTRI, Bloomberg New Energy Finance
Notes: Analysis is based on daily averages of ‘total gasoline all sales / deliveries by prime
supplier’. Values for 2014 are projected, accounting for seasonality, based on latest monthly
values from EIA (data available through October 2014).
Notes: Relies on combined city/highway EPA fuel economy ratings.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
140
Global context: US-related causes and implications of
falling oil prices (2 of 2) – supply
US monthly crude oil production (million barrels per month)
350
300
250
200
150
100
50
1970
1971
1973
1975
1977
1979
1981
1982
1984
1986
1988
1990
1992
1993
1995
1997
1999
2001
2003
2004
2006
2008
2010
2012
2014
0
●
●
●
●
●
The US is producing its own supply of crude oil at a level not seen since the 1980s; production has zoomed from 5.1m barrels
per day on average in 2007 to 9.0m barrels per day in October 2014, a 41% increase
Supply (this slide) and demand (previous slide) factors in the US have been among the drivers behind falling oil prices, which
collapsed below $50 per barrel as of mid-January 2015.
The price drop is especially noteworthy given the strong US economy, which might otherwise have contributed to a price spike
Lower oil prices are placing repressive foreign regimes – such as Russia, Venezuela, and Iran – under substantial pressure
There is no direct link between oil prices and most sustainable energy technologies in the US. Most of those technologies play
a role in the power sector, whereas oil is mostly used for transportation and only rarely for power in the US. Nevertheless,
there may be ‘second-order’ impacts from the oil price turmoil. The drop in cost of oil could serve as an indirect stimulus into
the US economy, which could propel even more use of natural gas and renewable energy
Source: EIA
Notes: Data through October 2014.
© Bloomberg Finance L.P. 2015. Developed in partnership with The Business Council for Sustainable Energy.
141
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142
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