Clean Energy Auctions · 2 New EU renewables investment 1Q 2005 – 1Q 2018 0 5 10 15 20 25 30 35 40 45 50 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
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Clean Energy Auctions European experience and challenges
Dario Traum
October 16, 2018
1
EU 2020 RES target to be extended to 2030
0%
5%
10%
15%
20%
25%
30%
35%
40%
2005 2010 2015 2020
Share of renewables in electricity consumption
2012-2016
trend 2020
target
Renewables in electricity
consumption
The EU’s 2020 objectives are met
Source: Bloomberg New Energy Finance
2
New EU renewables investment 1Q 2005 – 1Q 2018
0
5
10
15
20
25
30
35
40
45
50
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 '18
$bn
Solar Offshore Onshore OtherVersion WF18.04
All values nominal
Source:
Bloomberg New Energy Finance
The “Golden Age” The hard landingFirst burst Lower steady state
Four quarter running average
3
0%
10%
20%
30%
40%
50%
60%
70%
2005 2010 2015 2020 2025 2030
Share of renewables in electricity consumption
EU 2030 RES target
2012-2016
trend
2020
target
Renewables in electricity
consumption
Source: Eurostat, Bloomberg NEF
High ambition for 2030 the most likely following latest negotiation results
Beyond 2020
Likely 2030
target
4
Source: Bloomberg NEF. Note: Plant level data used for Latin American auctions where support is awarded for generation, excludes renewables subsidy auctions in the
Netherlands.
Global auctioned and announced renewables capacity
5.2 9.8 9.9 13.6
35.9
57.7
21.6
41.4
7.9 5.7 9.6
0.2 0.9 1.3 2.4 3.9 7.7 10.0 14.3 19.5 22.3 32.1 42.0 55.6 91.5 149 171
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Nodate
GW
Announced / To be awarded
Awarded
Awarded (cumulative)
5
3.14.7
1.7
2.8 2.9
2.12.9
2.6
8.0
1.9
2.3
2.1
3.3
1.4
3.6
0.6
1.0
1.0
1.0
1.8
0.4 0.5 1.0 0.8
4.2 4.4
21.8
12.0
8.3
6.7
2009 2012 2013 2014 2015 2016 2017 2018 2019 2020
GW
Poland
Denmark
Greece
Netherlands
U.K.
Italy
Spain
France
Germany
Source: Bloomberg NEF. Note: auction results and announcements as of 11 July 2018.
EU renewables auctions volumes growing rapidly
Future auctions
Trends in the EU energy transition
6
“ It is time (for EDF) to
participate in a major
change of scale. Solar is
where the potential is
the largest.
Jean Berarnd Lévy
EDF CEO One Planet Summit, 2018
EDF commits to deliver 30GW by 2035
7
“ Through this transaction,
Total is actively pursuing
its development in
electricity and gas
generation and
distribution in France
and Belgium…”
Patrick Pouyanné TOTAL CEO Press release, 2018
TOTAL purchases Direct Energie
8
Source: Bloomberg NEF
Onshore wind turbulences
CfD Round 1
Round 3
Round 4
2014 auction 2016 auction
2016 auction 2017 tender
Auction 1Auction 2
Auction 3
Auction 4
Round 4
Auction 5
0
10
20
30
40
50
60
70
80
90
100
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$2017/MWh
U.K South Africa Italy Morocco Turkey Germany France
9
Source: Bloomberg NEF. Note: exchange rate at time of auction result announcement.
65.755.9
42.2 33.9 42.4 45.456.6
32.422.3
148.4128.6
101.588.0
118.0136.2
187.3
103.390.5
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Average bidsin $/MWh
Average bidsin BRL/MWh
Brazil onshore wind auction results (nominal exchange rate)
Auctions bring competitive
shock to the market
Local content target and
economic jitters increase cost of
finance and cost of equipment
No new auctions
during recession and
period of oversupply
Market
reopens
10
~9.2GW Installed and pipeline capacity
~2.8GW By 2025
Offshore wind Onshore wind Solar PV
Zero-subsidy renewable projects in Europe
Source: Bloomberg NEF. Note: right-hand figure is subsidy-free PV built or under construction in EU as of 1Q 2018.
~700MW Installed or under construction
11
Source: Bloomberg NEF
Corporate PPA capacity (MW) signed in Europe as of 1H 2018
0
200
400
600
800
1,000
1,200
1,400
1,600
2013 2014 2015 2016 2017 2018 YTD
Netherlands, Sweden and Norway Rest of Europe
12
Source: ICE, Bloomberg NEF
0
5
10
15
20
25
30
35
Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18
EUR/t
EU carbon prices have more than quadrupled since May 2017
Reform finalized; Financials enter market
on expectations of future scarcity.
Trends in the EU energy transition
13
“ I don't get the impression
that there are lots of
people out there gearing
themselves up to invest a
lot of money in those sorts
of assets.
Mark Muldowney,
BNP Paribas MD Energy & Infra Financial Times, 2017
0-subsidy renewables
14
-100
-50
0
50
100
150
200
-40
-20
0
20
40
60
80
Oct 23 Oct 24 Oct 25 Oct 26 Oct 27 Oct 28 Oct 29
GW
Pumped storage
Hydro Reservoir
Other
Offshore wind
Onshore wind
Solar
Oil
Gas
Coal
Lignite
Nuclear
Hydro RoR
Geothermal
Other renewables
Coal derived gas
Waste to Energy
Biomass
Load
Day ahead price
euros / MWh
Source: Bloomberg New Energy Finance.
Germany’s negative pricing weekend, October 2017
Power price
Power
demand
15
2020
Germany intraday generation: typical spring day
0
25
50
75
100
125
150
175
200
225
01
:00
02
:00
03
:00
04
:00
05
:00
06
:00
07
:00
08
:00
09
:00
10
:00
11
:00
12
:00
13
:00
14
:00
15
:00
16
:00
17
:00
18
:00
19
:00
20
:00
21
:00
22
:00
23
:00
00
:00
Generation (GW)
Curtail
Charging
Discharging
Solar
Wind
Peaker
Dispatchable
Nuclear
Demand
Source: Bloomberg NEF
16
2025
Germany intraday generation: typical spring day
0
25
50
75
100
125
150
175
200
225
01
:00
02
:00
03
:00
04
:00
05
:00
06
:00
07
:00
08
:00
09
:00
10
:00
11
:00
12
:00
13
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14
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16
:00
17
:00
18
:00
19
:00
20
:00
21
:00
22
:00
23
:00
00
:00
Generation (GW)
Curtail
Charging
Discharging
Solar
Wind
Peaker
Dispatchable
Nuclear
Demand
Source: Bloomberg NEF
17
2030
0
25
50
75
100
125
150
175
200
225
01
:00
02
:00
03
:00
04
:00
05
:00
06
:00
07
:00
08
:00
09
:00
10
:00
11
:00
12
:00
13
:00
14
:00
15
:00
16
:00
17
:00
18
:00
19
:00
20
:00
21
:00
22
:00
23
:00
00
:00
Generation (GW)
Curtail
Charging
Discharging
Solar
Wind
Peaker
Dispatchable
Nuclear
Demand
Germany intraday generation: typical spring day
Source: Bloomberg NEF
18
2035
0
25
50
75
100
125
150
175
200
225
01
:00
02
:00
03
:00
04
:00
05
:00
06
:00
07
:00
08
:00
09
:00
10
:00
11
:00
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:00
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:00
14
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16
:00
17
:00
18
:00
19
:00
20
:00
21
:00
22
:00
23
:00
00
:00
Generation (GW)
Curtail
Charging
Discharging
Solar
Wind
Peaker
Dispatchable
Nuclear
Demand
Germany intraday generation: typical spring day
Source: Bloomberg NEF
19
2040
0
25
50
75
100
125
150
175
200
225
01
:00
02
:00
03
:00
04
:00
05
:00
06
:00
07
:00
08
:00
09
:00
10
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11
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12
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13
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14
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15
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16
:00
17
:00
18
:00
19
:00
20
:00
21
:00
22
:00
23
:00
00
:00
Generation (GW)
Curtail
Charging
Discharging
Solar
Wind
Peaker
Dispatchable
Nuclear
Demand
Germany intraday generation: typical spring day
Source: Bloomberg NEF
21
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