clean energy auctions · 2 new eu renewables investment 1q 2005 – 1q 2018 0 5 10 15 20 25 30 35...

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


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

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:00

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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


16

2025


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

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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


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



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

12

:00

13

:00

14

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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



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

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10

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11

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: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



21

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clean energy auctions · 2 new eu renewables investment 1q 2005 – 1q 2018 0 5 10 15 20 25 30 35...

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