What are the implications for Australia as the world, not just Europe but the US and China ramp up clean energ?. In Germany at least the opposition to clean energy subsidies that are increasingly not required seems to have muted. Will these countries end up with a huge energy production cost advantage over us, further advantaging their already impressive manufacturing strength? These are the questions we need to ask ourselves.

1. The future of
non-conventional
generation
November, 2014
John Gregg
Principal

2. 5%
SOURCE: Platts Powervision; Enerdata; IEA, Navigate analysis
Each technology has had its golden era over the past half century
Capacity added in Europe, GW
Wind and Solar
Hydro
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
0
19%
9%
5%
43%
24%
1980-1990
0
19%
18%
14%
13%
35%
1970-1980
Now is the golden era
of the non-conventional
generation

3. SOURCE: Ministry of Food, Agriculture, and Consumer Protection, Agency for Renewable Resources, Eurelectric IAP
Taskforce analysis
159
133
113
65
47
30
2116
10
6531
140
03 13 2014042001 02 0907 08 12111005 06
of their power and heat
consumption through regionally
sourced 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%

4. Europe is on the lead of non-conventional generation but other regions
are following closely
Capacity added by region 2010-2013, GW
84 81
171 559
19
Non-conventional
Conventional
74
16
100 = 100%
Asia already
added 109 GW
in 2010-13
(vs. 123 GW in
Europe)
North
America
Latam and
Africa
Asia
66
34
53
47
16 19
Europe
SOURCE: UDI; EU Energy Agemcy, Enerdata Navigate analysis

5. 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
x2,8
2013F
x4,9
2013F
2013 2013
“Big power stations in Europe could be redundant within 10-20 years as electric cars, cheaper batteries and
new solar technologies transform the way electricity is generated, stored and distributed“ – UBS, Aug. 2014
Solar power
GW, installed
450
400
Wind power
GW, installed
900
800
SOURCE: UBS; IEA World Energy Outlook

6. Future growth is based in the same fundamental drivers
Highlights Trend
=Major shift to renewable energy
is required to meet the
emission reduction target
EU Seeks Faster Renewable Energy
Integration Amid Crisis in Ukraine
IEA forecast sees renewable power
as a cost-competitive option
Environmental
concerns
Security of supply
Costs

7. Costs will continue to decrease pushing further the
deployment of the non-conventional generation
-23%55-45
70-55
SOURCE: IEA Global Solar PV database, iSuppli, Green Tech Media, LBNL DOE Sunrun, Photon
-56%
90-60
2011 2020 2011 2020
Solar
LCOE, €/MWh
200-140
Wind
LCOE, €/MWh

8. Distributed generation gains momentum across regions (examples of solar)
Additional capacity 2013-2020, Gw
16
47
Utility
scale
DG
solar
128
Wind Solar
119
DG
solar
119
Utility
scale
North America
Latin America
Asia Pacific
36
Solar
9
Wind
Africa
18
Utility
scale
DG
solar
Europe
112
SOURCE: GTM Research, EPIA, IEA, Navigate Analysis
Roughly 65%
of the capacity added in
solar will be distributed

9. 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 by
2020/2025
LCOE of batteries1
EUR/MWh
62
97
Molten salt
Li-ion
Adv. Lead-acid
are expected to have a
business case for
batteries as game
changers by 2020/25
Primary reserve, retail PV
integration 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

10. Car not needed
Sell battery
electricity to public
Hail danger in 1h
Cover photovoltaic
system
Window shades
go down
Electricity price
skyrockets at 6pm
Stop unused appliances,
sell electricity to public
message to home owner
Sensors recognize person
beyond 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 power
for 30 min
Message to home
owner – switch off
via iPhone
Refrigerator
alarms lack of milk
Send data to retailer

11. All together is causing a shift in the value pools of the electricity sector
EU value pool structure, EBIT, EUR bn
100%
Downstream
(Commercial + DG)
Centralized
renewables
T&D
Conventional
generation
134
6%
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

12. McKinsey & Company | 11
Posing threats for the traditional utilities
EU value pool, EBIT, EUR bn
Which new
players’ are best
positioned?
How can
utilities capture
and deliver the
new growth
opportunities?
To what extent are
utilities able to
develop and dare
bold moves?
SOURCE: McKinsey analysis
2010
97
30%
2030
167
40%
1990
134
14%
100% =
New
players
Traditional
utilities
86% 70%
60%
60%
SOURCE: EU 2012 “Looking Forward to 2050 Carbon and Energy Plan”; Navigate Analysis

13. T&D Renewables
Multiple growth opportunities for those utilities that dare
EU value pool, EBIT 2020 vs 2013, EUR bn
13
13
4
Downstream
30
Additional growth
opportunities
▪
▪
▪
▪
▪
Interconnectors
Transmission
Distribution
Smart grid
Central storage
▪
▪
▪
On- and off-shore wind,
centralized solar PV, biomass
Project development &
financing
O&M
▪
▪
▪
▪
▪
DG (PV, CHP)
Electrification (EVs, HPs)
Flexibility and storage
VaS (audit, insurance)
Building and equipment
efficiency
SOURCE: Navigate Analysis

14. Murray Region Futures:
Infrastructure, Planning and Population
John Gregg
A leading Australian consulting group recognised through the success of our clients
Principal
Navigate Consulting
Mobile: +61 (0) 402 493 278
Email: johng@navigateconsulting.com.au
www.navigateconsulting.com.au