The future ofnon-conventionalgeneration

November, 2014

John GreggPrincipal

5%

SOURCE: Platts Powervision; Enerdata; IEA, Navigate analysis

Each technology has had its golden era over the past half centuryCapacity added in Europe, GW

Wind and SolarHydro

Oil

Gas

Nuclear

Coal

NuclearCoal Gas Wind and Solar

66%

0% 2%

26%

0

2010-2014

41%

4%2%

46%

6% 2%

2000-2010

8%11%

8%

40%

15%

18%

1990-2000

019%

9%5%

43%

24%

1980-1990

019%

18%

14%

13%

35%

1970-1980

Now is the golden eraof the non-conventional

generation

SOURCE: Ministry of Food, Agriculture, and Consumer Protection, Agency for Renewable Resources, Eurelectric IAPTaskforce analysis

159

133

113

65

47

302116

106531

140

03 13 2014042001 02 0907 08 12111005 06

of their power and heatconsumption through regionallysourced bio-energy

An example: decentralized generation emerged and is on the rise

Number of bio-villages in Germany

Bio-villages cover at least 50%

CAGR+56%

Europe is on the lead of non-conventional generation but other regionsare following closelyCapacity added by region 2010-2013, GW

84 81

171 559

19

Non-conventional

Conventional

74

16

100 = 100%

Asia already

added 109 GWin 2010-13(vs. 123 GW inEurope)

NorthAmerica

Latam andAfrica

Asia

66

34

53

47

16 19

Europe

SOURCE: UDI; EU Energy Agemcy, Enerdata Navigate analysis

100

50

0

150

200

300

250

350

2020 2030

2006F

2010F

200

100

0

300

400

600

500

700

20302020

2006F

2010F

Moving forward the trend will continue:the skeptics have become believers

x5,0

x5,8

x1,9

x2,2

x2,82013F

x4,92013F

2013 2013

“Big power stations in Europe could be redundant within 10-20 years as electric cars, cheaper batteries andnew solar technologies transform the way electricity is generated, stored and distributed“ – UBS, Aug. 2014

Solar powerGW, installed

450

400

Wind power

GW, installed900

800

SOURCE: UBS; IEA World Energy Outlook

Future growth is based in the same fundamental drivers

Highlights Trend

=Major shift to renewable energyis required to meet theemission reduction target

EU Seeks Faster Renewable Energy

Integration Amid Crisis in Ukraine

IEA forecast sees renewable power

as a cost-competitive option

Environmentalconcerns

Security of supply

Costs

Costs will continue to decrease pushing further thedeployment of the non-conventional generation

-23%55-4570-55

SOURCE: IEA Global Solar PV database, iSuppli, Green Tech Media, LBNL DOE Sunrun, Photon

-56%

90-60

2011 2020 2011 2020

SolarLCOE, €/MWh

200-140

WindLCOE, €/MWh

Distributed generation gains momentum across regions (examples of solar)Additional capacity 2013-2020, Gw

1647

Utilityscale

DGsolar

128

Wind Solar

119

DGsolar

119

Utilityscale

North America

Latin America

Asia Pacific

36

Solar

9

Wind

Africa

18

Utilityscale

DGsolar

Europe

112

SOURCE: GTM Research, EPIA, IEA, Navigate Analysis

Roughly 65%of the capacity added insolar will be distributed

75

138

99

85

227

100

80

60

160

140

120

240

220

200

180

40

2010 2015 2020 2025

Reduction of cost of storage could make PV + storage competitive by2020/2025

LCOE of batteries1

EUR/MWh

62

97

Molten saltLi-ion

Adv. Lead-acid

are expected to have abusiness case forbatteries as game

changers by 2020/25

Primary reserve, retail PVintegration and off-grid PV

1 Indicative values for 1 cycle per day, can vary up to 30-50% depending on specific battery and application

SOURCE: Navigate Analysis

Car not neededSell batteryelectricity to public

Hail danger in 1hCover photovoltaicsystem

Window shadesgo down

Electricity priceskyrockets at 6pmStop unused appliances,sell electricity to public

message to home owner

Sensors recognize personbeyond entry area

Turn on TV and light,

We are entering a new world of non-conventional generation and non-

A Smart energy usage

B Easy living

C Damage protection

D Safety

Cconventional demand

B 30°solar radiation

A

D Flat iron on powerfor 30 minMessage to homeowner – switch offvia iPhone

Refrigeratoralarms lack of milkSend data to retailer

All together is causing a shift in the value pools of the electricity sectorEU value pool structure, EBIT, EUR bn

100%Downstream(Commercial + DG)CentralizedrenewablesT&D

Conventionalgeneration

1346%7%

17%

69%

Yesterday

97

18%

17%

27%

37%

Today

167

23%

22%

20%

35%

Tomorrow

SOURCE: Navigate Using EU Published 2013/14 - 2021-2022 Predicated Generation Profit pools

McKinsey & Company | 11

Posing threats for the traditional utilitiesEU value pool, EBIT, EUR bn

Which newplayers’ are best

positioned?

How can

utilities captureand deliver the

new growthopportunities?

To what extent areutilities able to

develop and darebold moves?

SOURCE: McKinsey analysis

2010

97

30%

2030

167

40%

1990

134

14%

100% =Newplayers

Traditionalutilities

86% 70%

60%

60%

SOURCE: EU 2012 “Looking Forward to 2050 Carbon and Energy Plan”; Navigate Analysis

T&D Renewables

Multiple growth opportunities for those utilities that dareEU value pool, EBIT 2020 vs 2013, EUR bn

13

13

4

Downstream

30

Additional growthopportunities

▪▪▪▪▪

InterconnectorsTransmissionDistributionSmart gridCentral storage

▪

▪

▪

On- and off-shore wind,centralized solar PV, biomass

Project development &financingO&M

▪▪▪▪▪

DG (PV, CHP)Electrification (EVs, HPs)Flexibility and storageVaS (audit, insurance)Building and equipmentefficiency

SOURCE: Navigate Analysis

Murray Region Futures:Infrastructure, Planning and Population

John Gregg

A leading Australian consulting group recognised through the success of our clients

PrincipalNavigate Consulting

Mobile: +61 (0) 402 493 278Email: johng@navigateconsulting.com.auwww.navigateconsulting.com.au