Power & Renewables Summit 2019 Day 2

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April 29 - 30
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Breakfast Briefing:
The Scalability Challenge: WoodMackenzie
Perspectives on the EnergyTransition
Jonny Sultoon
Wood Mackenzie
Power & Renewables
Head of Markets & Transitions,
Energy Transition Practice

woodmac.comTrusted intelligence
The Scalability Challenge
Jonathan Sultoon
Head of Markets & Transitions
jonny.sultoon@woodmac.com

Wood Mackenzie offices Wood Mackenzie Power & Renewables offices
Wood Mackenzie is ideally
positioned to support
consumers, producers and
financers of the new energy
economy.
 Acquisition of MAKE and Greentech
Media (GTM)
 Leaders in renewables, EV demand
and grid-connected storage
 Over 500 sector-dedicated analysts and
consultants globally, including 75
specifically to power and renewables
 Located close to clients and industry
contacts
About Wood Mackenzie
We provide commercial insight and access to our experts leveraging our integrated proprietary metals, energy
and renewables research platform

Market evolutions and
technology revolutions have
disrupted legacy business
models, creating a new energy
landscape
The Power Market of the Past
A top-down, flow from supply to demand
Dispatchable
Generation
Transmission Distribution
End
Customers
Tomorrow’s Decarbonized and Decentralized Power Market
A bi-directional energy network with new technologies and actors at every node reshaping power market planning and
operations
Dispatchable
Generation
Transmission Distribution End Customers
Intermittent
Generation
Energy
Storage
Advanced Metering
Infrastructure
Distributed
Generation
Electric
Vehicles
Connected
Devices
Demand Side
Management

10,000
15,000
20,000
25,000
30,000
35,000
40,000
2000 2005 2010 2015 2020 2025 2030 2035 2040
MtCO2-e
WM base case WM scenario IEA SDS
Policy, technology and investment need vast ‘scaling up’
The Challenge: global emissions falling well short of 2oC pathway
Source: Wood Mackenzie
Global carbon emissions by scenario
Direction of Energy Transition under
WM scenario
Closing this gap presents huge,
unprecedented challenges to
investors, governments,
and consumers
~3oC
~2.5oC
2oC

Hydrocarbons persist as the largest part of the energy supply mix
In rapidly accelerating transition scenarios, there is still a role for hydrocarbons, albeit much
diminished
Total primary energy demand by fuel mix
0%
25%
50%
75%
100%
Actual (2018) WM ETO (2040) WM CC (2040) IEA SDS (2040)
Coal Oil Gas Nuclear Hydro Renewables Other
85%
63% power
80%
50% power
75%
35% power
60%
20% power

Why is the scale of the Energy Transition so challenging?
In “difficult to decarbonize” segments: there is little-to-no progress on emissions reductions
Global carbon emissions* by key segmentSegment progress report
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
MtCO2-e
Steel Refining Industry other
Power RCA Transport
Sub-sector % 2018 share emissions Progress
Power 34%
Road transport 18%
Residential, commercial,
agriculture (inc. heat)
10%
Aviation, shipping,
other industry
20%
Steel 9%
Cement 9%
Energy related emissions by segment; electricity output grows 50% through the forecast period,
emissions growth < 1%
Industry other includes cement, heat, petchems, smelting, textiles, other manufacturing and
processing
*
*
Green: positive progress; Yellow: slow progress; Red: no progress*

-80
-60
-40
-20
0
20
40
60
80
100
120
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Price(US$/MWhand€/MWh)
Uruguay US: CAISO US: ERCOT US: MISO US: SPP Germany Spain
% clean generation mix
Massive renewables deployment sinks energy prices: markets must evolve to ensure returns
Power – the lowest-hanging fruit – making good progress, but…
Hourly power prices vs. clean generation penetration, CY2018

11%
5%
3%
2% 1%
20%
12%
6%
2%
1%
Lithium Cobalt Nickel Copper Lead
0
50
100
150
200
250
2015 2020 2025 2030
Road transport – could supply of metals become a major bottleneck?
The mined supply of raw materials for batteries and infrastructure present a problem
Demand CAGR for SDS vs WM EV forecastBEV and PHEV passenger car stock (millions)
WM 2030
SDS 2030

“Difficult to decarbonize” segments: renewables, renewables-based fuels, and CCS?
But what could be?
Potential fuel and feedstock shares in select industries by 2050 (UK Net Zero)
80%
10%
10%
20%
35%
20%
10%
10%
30%
50%
20%
50%
20%
5%
30%
10%
60%
30%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Trucking
Shipping
Aviation
Cement
Steel
Fuel and feedstock share
Electricity Hydrogen BioFuels Fossil Fuels + CCS Ammonia Synfuels

Finally: what could it take for Green Hydrogen to be competitive?
Electricity price and load hours are critical
Key considerations to lower cost2019 US levelized cost of green hydrogen
• Strong policy tailwinds
• Electrolyzer capex reduction
• Continued fall in electricity prices
• Greater renewables utilization
$-
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
$11
$12
$13
100% 90% 80% 70% 60% 50% 40% 30% 20% 10%
$/kg
$0.075/kWh $0.03/kWh $0/kWh
Utilization
Current range for US cost of SMR hydrogen

Thank You!
Jonathan Sultoon
Head of Markets & Transitions
jonny.sultoon@woodmac.com

Survival in a World of Negative Prices: Redefining
Market Design in High Solar & Wind Penetration Scenarios
M
Daniel
Muñoz-Álvarez
Wood Mackenzie
Power &Renewables
Senior Analyst
Spencer G.
Hanes, Jr
Duke Energy
Managing Director,
Renewables Policy
Mia
Adams
MISO
Senior Manager,
Market Strategy
Kenan
Ögelman
ERCOT
Vice President,
Commercial Operations
Matt
Futch
NREL
Global Strategy &
Business Development
Director

Deep decarbonization: The Age of 100% commitments has arrived
Commitments to hit 100% renewable / clean / carbon-free by 2050 are the new normal
“New York Latest State to Set 100% Carbon-Free Goal…”
-Power Magazine 1/16/2019
“Nevada passes bill for 50% renewables by
2030, 100% carbon free by 2050”
-Utility Dive 4/22/2019
“California approves goal for 100% carbon-free electricity
by 2045”
- The Sacramento Bee 9/10/2018
“Washington State Passes Law Requiring 100% Clean
Energy by 2045”
- Greentech Media 4/23/2019
“>120 Cities
>180 Corporations
8 investor-owned utilities (15 more 80-90% carbon free)
9 States (+DC & PR) 7 more considering”
-Greentech Media 9/20/2019

Cumulative capacity retirements since 2012 by region
A total of 150 GW has retired over the last 8 years across all markets in North America
Source: Wood Mackenzie Power & Renewables

Cumulative capacity retirements since 2012 by technology
61% (93 GW) of retired capacity corresponds to coal generation and 29% (44 GW) to gas

Accelerated deep decarbonization could result in major price suppression
California stress case with 92% renewable energy by 2040 breaks gas-power price correlation
California
reaches RE75
12 years earlier
than in base case
-66%
-$31/MWh
Weak gas-power
price correlation

Current market rules would not encourage entry under an accelerated path
towards deep decarbonization
Renewables-driven price suppression would cause significant revenue insufficiency
86% of CONE
($46/kW-yr)
Missing
money
Missing
money
26% of CONE
($30/kW-yr)

Research Presentation: Solar-plus-Storage, an
Existential Threat to Natural Gas?
Dan Finn-Foley
Wood Mackenzie Power
& Renewables
Head of Energy Storage

Solar-plus-storage – an existential threat to
natural gas?
Dan Finn-Foley
Daniel.Finn-Foley@woodmac.com
@DanFinnFoley

Framing the natural gas vs. solar-storage conversation

U.S. energy storage annual deployments will reach over 4.8 GW by 2024 – more
than half of FTM deployments will be solar-paired
U.S. energy storage annual deployment forecast, 2012-2024E (MW)
83 46 65
227 231 224 311
478
4,834
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E
Energystoragedeploymentsbysegment
(MW)
Residential Non-Residential Front-of-the-Meter

Total U.S. FTM energy storage pipeline swells to over 67 GW following latest ISO
cluster applications, 67% growth QoQ and 3x growth YoY
U.S. energy storage pipeline by quarter and market – MW capacity and % of total pipeline
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q3 2018 Q1 2019
TotalFTMenergystoragepipeline(MW)
Arizona California Colorado
Florida Hawaii Massachusetts
Nevada New Jersey New York
PJM (Exc. NJ) Texas All Others
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q3 2018 Q1 2019
TotalFTMpipelineshareovertime(%of
MW)
Arizona California Colorado
Florida Hawaii Massachusetts
Nevada New Jersey New York
PJM (Exc. NJ) Texas All Others

Potential for natural gas and solar-storage competition varies by region
Source: CAISO, ERCOT, ISO NE, MISO, NYISO, PJM, SPP
9%
3%
14%
5%
6%
15%
48%
40%
31%
3%
20%
2%
4%
54%
0%
3%
27%
16%
24%
48%
16%
8% 2%
2%
45%
3%14%
5%
23%
10%
51%
22%
6%
21%
36%
34%
19%
6%
5%
Natural gas
Coal
Nuclear
Renewables
Oil
Hydro
Other
Dual Fuel

ERCOT signposts1

ERCOT’s resource mix transition has been a story of wind’s energy’s success in
the region
Wind energy deployments in ERCOT (MW)
Source: ERCOT, Wood Mackenzie
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Totalwindenergycapacity(MW)
Cumulative MW Installed IA Signed-Financial Security Posted IA Signed-No Financial Security

ERCOT’s energy-only market has been tough on traditional peaking assets, with
little near-term investment planned
ERCOT total non-combined-cycle capacity by year (MW)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Totalnon-combined-cyclenaturalgas(MW)

Combined-cycle natural gas deployments plateau in mid-2010, with few planned
in the near-term
ERCOT cumulative combined cycle deployments (MW)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CumulativeCCGTCapacity(MW)

Interest in the ERCOT market surges for solar and storage, though signed
storage agreements total less than 100 MW
ERCOT cumulative FTM solar deployments
0
2,000
4,000
6,000
8,000
10,000
12,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
CumulativeFTMsolarcapacity(MW)

ERCOT’s interconnection queue surging – wind, solar, and storage make up
increasing share of requests, natural gas’s share shrinks
Total ERCOT interconnection queue requests by technology
0
20,000
40,000
60,000
80,000
100,000
120,000
Jul-2016 Oct-2016 Jan-2017 Apr-2017 Jul-2017 Oct-2017 Jan-2018 Apr-2018 Jul-2018 Oct-2018 Jan-2019 Apr-2019 Jul-2019
Totalqueuerequestcapacity(MW)
Gas Coal Wind Solar Battery

2 CAISO signposts

CAISO interconnection queue shows a region rapidly shifting towards solar-plus-
storage
CAISO Feb ‘17 queue projects
Feb ‘17 vs. Aug ‘19 active CAISO queue projects
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Combined Cycle
Combustion Turbine
Gas Turbine
Photovoltaic
Storage
Wind Turbine
Interconnection queue capacity (MW)
Withdrawn
Complete
Active
0
10,000
20,000
30,000
40,000
50,000
60,000
Combined Cycle
Combustion Turbine
Gas Turbine
Photovoltaic
Storage
Wind Turbine
Interconnection queue capacity (MW)
Feb-17
Aug-19

Regulated utilities begin bridging the
gap
3

Source: Pacificorp IRP
Case study – Pacificorp integrated resource plan, 2017 vs. 2019

Case study – Pacificorp integrated resource plan, 2017 vs. 2019
Source: Pacificorp IRP

2040 long-term outlook3

As total U.S. capacity increases the resource mix changes dramatically – starting
from a system relying heavily on coal and natural gas.
U.S. 2020 resource mix
Source: Wood Mackenzie long-term outlook
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2020 2030 2040
InstalledU.S.capacity(MW)
Wind Onshore Wind Offshore
Solar Utility Pump Storage
Other Renewable Other Non-Renewable
Nuclear Municipal Solid Waste
Landfill Gas Hydro
Geothermal Gas Steam
Gas Peaking Gas Cogen
Gas CC Fuel Oil Steam
Distillate Coal
Biomass Battery Storage
0%0%
21%
1%
1%
24%
2%12%
6%
0%
7%
0%0%
9%
0%0%2%
3%
0%
11%

Through 2030 traditional baseload retires - combined cycle, solar, wind grow to
meet the demand. Battery storage capacity exceeds 34 GW.
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2020 2030 2040
Landfill Gas Hydro
Distillate Coal
3%0%
12%
1%0%
25%
1%
11%3%0%
6%
0%0%
7%
0%0%2%
12%
2%
14%

By 2040 solar MW capacity exceeds combined cycle natural gas, 150 GW of
energy storage help firm the solar energy.
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2020 2030 2040
Landfill Gas Hydro
Distillate Coal
9%
0%
6%
0%0%
23%
1%
9%
0%0%5%0%0%3%0%0%1%
24%
4%
13%

Conclusions – an “existential” threat to non-peaking natural gas…?
• Near-term: deregulated markets move towards renewables and storage as interest surges. The first major
regulated utility solar-plus-storage procurements come online.
• Mid-term: regulated utilities move further towards solar-plus-storage, but potentially lean on new natural gas
depending on system needs. Disruption in wholesale markets from price-takers begins to alter conventional
generation economics.
• Long-term: renewable and storage capacity out-strips combined-cycle, but federal or accelerated state policy
action is needed to further displace natural gas as a baseload resource.
Policy, market forces, and the necessity of flexibility will decide.

Thank You!
Dan Finn-Foley
Daniel.Finn-Foley@woodmac.com
@DanFinnFoley

Panel: Winds of Change: Which Wind-Dominated State Markets
Will Become More Solar-Prone (and Vice Versa) in 2019-2029?
Colin
Smith
Wood Mackenzie
Power & Renewables
Senior Analyst, Solar
Peter
Toomey
TerraForm Power
Vice President
Commercial Strategies
Laurie
Mazer
Mazer Consulting
Principal
Helen
Brauner
7X Energy
Senior Director, Origination
M

Research Presentation: Putting a Price Tag on
the Green New Deal: What Is the Estimated Cost
of Complete Decarbonization?
Dan Shreve
Wood Mackenzie
Power & Renewables
Head of Global Wind
Energy Research

woodmac.comTrusted Intelligence
Dan Shreve, Head of Global Wind Energy Research, Wood Mackenzie
Wood Mackenzie: Energy Transition scalability challenges

Power supply
Key messages
 Wind and solar LCOE
reductions continue
 WM Long Term
Outlook (LTO) calls
for ZC 53%
 Renewables uptake
drives wholesale
power price volatility
WM baseline
falls short
 Decarbonization costs
are massive, but
technically feasible
 Infrastructure
spending required
unlike anything seen
in the US
 Power market
redesign a must
RE100 not out of
reach
 Aggressive climate
policy action could
create windfalls for
RE stakeholders
 Questions still remain
if scale is sufficient,
even with aggressive
climate policies, to
draw in O&G majors
RE100 threat or
opportunity?

54
woodmac.com
United States power grid evolving even without a federal mandate
Solar’s rise to ~20% penetration and offshore wind defines next phase of decarbonization
Energy Transition Scalability Challenges
Note: Storage excluded, reflects generation only. Zero carbon includes DG solar
Zero-carbon penetration by ISO to 2040
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
CAISO ERCOT SPP MISO PJM NYISO ISO-NE
2025 2030 2035 2040

55
woodmac.com
Wind and solar competitive as subsidies sunset
Cost effective storage and deployment innovation bring new threats to natural gas generation
Note: * Average represents unweighted average of all states
Source: Wood Mackenzie H1 2019 Carbon Policy Case, H2 2018 No Carbon Policy Case
US LCOE (US$ real) outlook by technology and carbon scenario
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2015 2020 2025 2030 2035 2040
US$(real)
Gas CC ( no carbon)
Gas CC (carbon)
Gas CT ( no carbon)
Gas CT (carbon)
Solar + Storage
Utility PV (150 MW)
Wind + Storage
Wind Offshore
Wind Onshore

56
woodmac.com
Current state of the United States power market
Renewables expansion accelerating, but true market impact remains limited
United States generation supply stack, CY2020
4000 200 1,000
0
600 800
300
1,200 1,400 1,600 1,800
-50
50
100
150
200
250
350
400
450
Cumulative capacity (GW)
DispatchCostUSD/MWh
Wind Onshore
Nuclear
Oil
Solar
Energy Storage
Coal
Hydro
Wind Offshore
Other Renewable
Gas
Renewable energy
scaling
~140GW of wind and solar
energy resources
Fossil generators makeup
most of the stack
Average dispatch cost of gas
and coal assets ~USD
35/MWh

57
woodmac.com
United States generation supply stack, CY2040
0
600
1,400
0
800
400
600400200 1,000 1,200 1,600 1,800
200
-100
100
300
500
Cumulative capacity (GW)
DispatchCostUSD/MWh
Base case scenario portends massive renewables expansion
Technology and commercial developments continue to unlock RE demand post subsidy era
Solar
Nuclear
Wind Onshore
Energy Storage
Hydro
Wind Offshore
Gas
Other Renewable
Oil
Coal
Energy storage surges
~150GW of energy storage
from almost no base in
2020Massive expansion of zero
marginal cost generators
~630GW of wind and solar
energy resources
Fossil generation shrinks
Average dispatch cost rises
to ~USD 97/MWh

58
woodmac.com
Energy prices insufficient to support higher penetrations of wind & solar
Market redesign may be more difficult to accomplish than technology deployment
Source: Wood Mackenzie, ISOs
Hourly renewables penetration and power price impact: 2018
$(10)
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
0% 10% 20% 30% 40% 50% 60% 70%
US$/MWh
Penetration (wind and solar)
CAISO [SCE]
ERCOT [West Hub]
MISO [Minn Hub]
SPP [North Hub]

59
woodmac.com
Energy prices, February, 2040 (USD/MWh)
Power generation evolution, 2020-2040 (GW) Energy prices, February, 2020 (USD/MWh)
A brief look into the future of volatility …
PJM East is set to undergo massive changes in power mix from 2020 to 2040
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
15
Nuclear
1
222
1
Coal
2 7
Storage Wind
11
Solar 2040GasOil
1
2020
195
Offshore wind dominates
Massive wind facilities in
close proximity to one
another may overwhelm
energy storage assets

woodmac.com
60
What if we push further?

61
woodmac.com
US federal budget, CY2019 (USD billions)
Can the power sector get to 100% renewables (RE100%)?
Significant capacity investments coupled with sweeping policy and regulatory reform required
RE100% challenges – a US 2040 scenario
The US would require 1,600 GW of wind and solar capacity
– this is a 160% increase on TOTAL US power generation
Massive wind and solar build-out
Adding 900 GW of additional storage capacity, representing
~17 TWh of storage capability
Utility-scale storage
The US would also need to double the size of its high-
voltage transmission infrastructure to 400,000 miles.
High-voltage transmission
Total estimated cost: US$4.5 trillion. That's an
investment of US$225 billion each year.
Total cost
107
Health Care
Pensions
1,146
916
Defense
1,203
Education
355
Welfare
Interest
371
243
Other Spending

62
woodmac.com
Spatial challenges for RE generation are overblown
RE100 land requirements ~2% of target lands, yet NIMBYISM running rampant already
Source: Wood Mackenzie, assumes use of onshore 4.2MW turbines, does not account for wind farm setbacks, solar using single axis, mono-perc module
 Typically 6-7x rotor diameter spacing
 Wind farm direct impact versus total
area impacted difference is massive
 Must account for setbacks as well
 Technology efficiencies have
meaningful impact on land intensity
 Bifacial tech helps, but only marginally
 No alternatives for dual purpose land
usage
320GW 1280GW
Onshore wind direct
impact ~30 sq km
Onshore wind total area
impact ~63,000 sq km
Utility PV total area impact
~13,000 sq km
US pasture and crop lands
~4,000,000 sq km

63
woodmac.com
Vestas V150-4.2MW turbine weight profile
Trickle down effect on global value chain is meaningful but manageable
Focus rightly on generation equipment, but impact on EPC and commodity markets massive
Source: Wood Mackenzie, Vestas, assumes onshore wind constitutes 25% of electricity generation
Cranes critical as turbine heights increase
Material % of weight Weight est.
Steel 90% 628 tonnes
Composites 4% 28 tonnes
Other Metals 2% 14 tonnes
Other Materials 4% 28 tonnes
Impact on GLOBAL steel industry in a global RE push
~40K turbines produced annually assuming 4.2MW rating
~25 million tonnes of steel required annually
World crude steel production currently 1875 Mt/yr
Only ~1% of total demand
Liebherr LR11000 crane
~15-20 units in the US
USD 8-10M cost per unit
USD 50K per day rental
In a global RE push, expectation
~+5MW onshore turbines require new cranes
~400 cranes could be necessary worldwide
Cost of ~USD 4B

64
woodmac.com
Direct Connect HVDC solution
Transmission woes may be biggest challenge to scaling
New solutions such underground HVDC lines add cost, but may overcome NIMBYism issues
SOO Green proposed route from MISO to PJM
Source: Direct Connect
HVDC cables (2x)
5” diameter ea.
525 kV
2100MW capacity
349 mile length
Right of way
(ROW)
Uses railroad ROW
Trench only 2.5ft
wide, 5ft deep
Development Construction Operation
3.5 years 3 years +50 years
Cost = USD 2.5B
USD 7MM/mile!!

65
woodmac.com
Global wind turbine market share, CY2018  2040 electricity demand = 37K TWh
» Imagine 100% of that demand is met by renewable
energy resources
 At 35% global electricity market share, global wind
demand would exceed 175 GW per year
 Wind market leaders produced < 30GW globally
in CY2018
» If current market structure was maintained, a market
leader with 20% share could earn revenues of over $30
billion per year
» Royal Dutch Shell did USD 388B in 2018
 Supply chain opportunity substantial but still
pales in comparison to scale of O&G majors
Opportunities for an “Energy Major” in global RE100 scenarios
What happens if the world follows the lead of a US RE 100 initiative?
43%
11%
12%
14%
20%
100%
Vestas
Goldwind GE
SGRE Other
Vestas
Deployed ~10GW
of wind turbines
in 2018
Revenues USD
11.5B
Global wind
leaders
Represent over
57% of global
CY2018 wind
installations

66
woodmac.com
Key Takeaways
The power market is evolving quickly and the knock-on effects of decarbonization must be
thoroughly analyzed to ensure the long term success of these endeavors
 Climate change and technology costs/capabilities are driving the decarbonization movement even
in the absence of aggressive national policies
 The expansion of renewable energy generation is inevitable, and will introduce additional volatility
to wholesale power markets
 That power market volatility must be addressed with technological solutions (long-term storage
and transmission investments) and regulatory measures (expansion of capacity markets) to
ensure grid resiliency
 Scalability challenges to extended value chain are numerous and substantial
»Transmission is the most troublesome portion of the value chain
»EPC resources will need to expand dramatically to address latest RE technology deployment
»“Energy Majors” will have global influence in RE100 scenarios, so who are the right companies to lead
the charge

68
woodmac.com
Dan Shreve
Head of Global Wind Energy Research, Wood Mackenzie
Biography Connect with Dan
Dan heads Wood Mackenzie’s global wind research practice. Dan joined Wood Mackenzie in
2017 following Woodmac’s acquisition of MAKE consulting, where Dan headed MAKE’s
operations in the Americas. Dan has a long experience in the renewable energy industry,
serving in a number of engineering and strategic management roles. Prior to joining MAKE,
Dan worked as the Global Wind Energy Market & Competitive Intelligence Leader at GE
Energy.
Dan has advised executive teams at the wind industry’s most successful firms for over ten
years, authoring major market reports and leading the execution of consulting projects. With
a solid background in engineering, sourcing and business administration, Dan supports
clients’ business objectives by providing in-depth supply chain insights and techno-
commercial advice. In addition to these services, Dan also manages and executes market
assessment, business strategy and due diligence projects. Dan is a fixture on the wind
energy conference circuit, and his views on issues impacting the wind industry issues are
regularly sought after by the global media.
Dan graduated as a mechanical engineer from Worcester Polytechnic Institute and
subsequently graduated from the US Naval Nuclear Operations Office Program where he
served as a civilian staff instructor for three years. Dan also has an MBA from the University
of New York. Dan works out of our office in Boston, U.S.
+1 781 697 6486
+1 978 448 3186
@windenergyintel
Dan.shreve@woodmac.com

69
woodmac.com
Disclaimer
Strictly Private & Confidential
 These materials, including any updates to them, are published by and remain subject to the copyright of the Wood Mackenzie group ("Wood
Mackenzie"), or its third-party licensors (“Licensors”) as relevant, and are made available to clients of Wood Mackenzie under terms agreed
between Wood Mackenzie and those clients. The use of these materials is governed by the terms and conditions of the agreement under which
they were provided. The content and conclusions contained are confidential and may not be disclosed to any other person without Wood
Mackenzie's prior written permission. Wood Mackenzie makes no warranty or representation about the accuracy or completeness of the information
and data contained in these materials, which are provided 'as is'. The opinions expressed in these materials are those of Wood Mackenzie, and do
not necessarily represent our Licensors’ position or views. Nothing contained in them constitutes an offer to buy or to sell securities, or investment
advice. Wood Mackenzie's products do not provide a comprehensive analysis of the financial position or prospects of any company or entity and
nothing in any such product should be taken as comment regarding the value of the securities of any entity. If, notwithstanding the foregoing, you or
any other person relies upon these materials in any way, Wood Mackenzie does not accept, and hereby disclaims to the extent permitted by law, all
liability for any loss and damage suffered arising in connection with such reliance.
Copyright © 2019, Wood Mackenzie Limited. All rights reserved. Wood Mackenzie is a Verisk business.

Wood Mackenzie™, a Verisk business, is a trusted intelligence provider, empowering decision-makers with unique insight
on the world’s natural resources. We are a leading research and consultancy business for the global energy, power and
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contactus@woodmac.com
www.woodmac.com

Enhancing Flexibility: How Digital Tools Can Enable DER
Participation in Wholesale Markets
M
Elta
Kolo, Ph.D.
Wood Mackenzie
Power & Renewables
Research Manager, Grid Edge
Craig
Glazer
PJM Interconnection
Vice President, Federal
Government Policy
Adam
Todorski
AutoGrid Systems
Senior Director, Product
Technology

PJM©201972
PJM Queue: Local-jurisdictional Interconnections
www.pjm.com
Local/State Interconnection Process
• Terms and conditions of interconnection
• Physical interconnection requirements
(reactive, ride thru, droop, SCADA)
• Distribution impacts
• Attachment facility
PJM New Services Queue Process
• Transmission impacts
• Market-related requirements & hardware
(incl. telemetry)
Wholesale Market
Participation
Agreement
Local/State
Interconnection
Agreement
Start
Selling in
PJMt
EDC & Interconnection
Customer
TO, Interconnection
Customer, & PJM
Path 1:
Generator
rules

PJM©201973
Wholesale DER in PJM
Total wholesale DER: > 1,000 MW across 100’s of units
• Approx. 850 MW under local authority  in PJM markets via Wholesale
Market Participation Agreement
• Additional 650 MWs in the queue with ISAs

PJM©201974
Solar, 72.5%
Coal, 2.7%
Wood, 8.4%
Other, 8.3%
Gas, 2.2%
Hydro, 1.2%
Wind, 4.7%
Distributed Energy Resources (DER) in PJM
www.pjm.com
6,520 MW*
of Distributed
Energy Resources
registered
in PJM.
The 6,520 megawatts
are made up of over
205,000 individual
generating units
registered in PJM as
DER for the purpose of
receiving Renewable
Energy Certificates.
Solar makes up 99.8%
of the total unit counts.
The majority of solar
units are rooftop solar
panels on individual
homes. *Megawatts indicates total nameplate capacity.

PJM©201975
The Jurisdictional Battle
– A False Debate
• 6520 MWs of DERs Registered in PJM
• 850 MWs of DERs under WMPAs
• Interconnection at the distribution level under state interconnection
rules in virtually all PJM states
• Opt outs deprive customers of voluntary market participation and
force more uneconomic solutions like net metering
www.pjm.com

Co-optimization Creates DERMS Value
 Improves DERMS utilization by integrating site-level and market-level value streams.
 Forecasting timing of both site and TSO/DSO peak demands and capacity events
 Optimizing dispatch to minimize peaks while meeting capacity commitments
 Example:
 PJM area C&I customer with 2,000 kW peak demand
 250 kW / 1000 kWh battery with 250 kW solar PV
 PSEG LPL Secondary rate tariff, with Basic Generation Service
Optimized for:
Energy
Savings
Demand
Charge
Savings
Coincident
Peak
Savings
Capacity
Revenues
Project
NPV @
8.0%
Project IRR
Energy and DCM Savings Only 15,369 35,418 57,587 0 119,923 10.1%
+ Coincident Peak Savings 15,544 32,622 72,738 0 217,945 11.8%
+ Battery Market Capacity (141
kW)
15,546 31,474 70,668 14,098 303,074 13.2%
+ DLC Market Capacity (200 kW) 16,036 31,772 88,496 28,720 563,100 17.3%

Networking Lunch
Tejas Dining Room Floor 1

The Digital Layer of Cost Efficiency: Reducing Wind &
Solar Operational Costs Through IoT & AI
M
Ravi
Manghani
Wood Mackenzie
Power & Renewables
Head of Solar
Cody
Craig
WEC Energy
Asset Manager, Wind &Solar
Tyler
Minetto
ThoughtTrace
Business Development Manager,
Renewables
Mahesh
Sudhakaran
IBM
Chief Digital Officer, Energy,
Environment and Utilities

Fireside Chat: Repurposing Polluting
Generation Assets Through Energy Storage
Nick Chaset
East Bay
Community Energy
Chief Executive Officer
M
Julian
Spector
Greentech Media
Staff Writer

Offshore Wind Development Across the East Coast:
The Next U.S. Renewable Boom
M
Jenny
Briot
Avangrid Renewables
Director, Offshore Business
Development
Karl-Erik
Stromsta
Greentech Media
Managing Editor
Michael
Wheeler
Equinor
Principal, Corporate Strategy

Research Presentation: The Uniqueness of the
Lone Star State, A Close Look at Power Market
Dynamics in Texas
Robert Whaley
Wood Mackenzie
Principal Analyst, Americas Power
& Renewables Research

GTM Briefing: The Uniqueness of
the Lone Star State, a Close Look at
Power Market Dynamics in Texas
Robert Whaley
Principal Analyst
Robert.Whaley@woodmac.com

New gas projects lag despite $9,000/MWh real time hourly prices
Source: ERCOT & Wood Mackenzie Power & Renewables
Net gas peaker margins were sufficiently met in 2019, but gas capacity continues to leave the
generation queue as solar projects take off
ERCOT interconnection queue MW Average annual on peak price
$/MWh

Lack of locational ORDC results in indiscriminate generation siting
70% of new queue projects target ERCOT West while gas will still be needed to manage the energy
transition
ERCOT zonal level load growth
(GWh)
ERCOT forecast supply balance
(MW)

Wind penetration challenges price formation in ERCOT
Pricing rules do not address limited number of total scarcity hours
Wind dispatch vs market heat rate
Wind impact on scarcity price
formation

New solar capacity will increasingly erode market scarcity values
Rising production costs still support average annual price growth
ERCOT average monthly price
Scarcity value declines

Storage evolution will be key to long term planning in ERCOT
2019-2020 2025-2030 2035-2040
Demand growth limits the near to mid term need for storage
Daily average price profile
($/MWh)

Electric vehicle integration can mimic storage characteristics
EVs will help absorb mid day solar surpluses if pricing incentives can entice a shift in time-of-day
charging
Optimal EV charging profiles 2040Observed EV charging profile

Solar projects will benefit from rising average prices
But will sufficiently erode the scarcity value needed to invest in new gas capacity
ERCOT Solar revenue recovery ERCOT gas peaker revenue
recovery
ERCOT NGCC revenue recovery

The locational challenge
Most existing/planned renewables are located far from load centers, in contrast to most thermal
generation
Panhandle
South
North
Houston
Panhandle
South
North
Houston
ERCOT thermal generation Planned and existing wind and solar

Key Takeaways
• Gas fired generating capacity will be needed to manage transition to an
increasingly renewable dominated grid
• However, market looks to be unable to provide the proper price signals
to time and site new supply
• Solar benefits from lack of locational price signals and quicker
development times
• Battery storage will need sufficient evolution time to fully compete with
new gas capacity in terms of grid reliability

Thank You!
Robert Whaley
Principal Analyst
Robert.Whaley@woodmac.com

Managing the EV Outburst: Shaping Demand to
Alleviate Stress on the Grid
M
Elta
Kolo, Ph.D.
Wood Mackenzie
Power & Renewables
Research Manager, Grid Edge
Katharine
Beisner
Austin Energy
Senior Project Lead,
Electric Vehicles &
Emerging Technologies
Katie
Sloan
SCE
Director, eMobility & Building
Electrification
Donald
Chung
APS
CustomerTechnology
Product Development

Closing Research Presentation: The Role of
Renewable Hydrogen in the Energy Transition
Benjamin Gallagher
Wood Mackenzie
Power & Renewables
SME, Carbon & Emerging Technology,
Energy Transition Practice

The Role of Renewable Hydrogen in
the Energy Transition
Ben Gallagher
SME Carbon & Emerging Technology
Benjamin.Gallagher@woodmac.com

Hydrogen Today1

Zeppelin Rules!

Good times bad times

Hydrogen plays an important role in many industrial applications
Refining Ammonia
Other Methanol
Steel
Source: IEA

0 2,000 4,000 6,000 8,000 10,000 12,000
Global…
Canada
Saudi Arabia
Iran
South Korea
Global…
Germany
Global…
Japan
Russia
India
U.S.
China
The existing hydrogen market is major global source of carbon
Source: Roser, Max; Ritchie, Hannah (11 May 2017). "CO₂ and other Greenhouse Gas Emissions"

Almost all of that hydrogen is produced by hydrocarbons
Source: IEA
71%
27%
1% 1%
Natural Gas
Coal
Oil
Electricity & Other

What is green hydrogen?2

Green hydrogen is produced exclusively from renewables: via electrolysis

Electrolyzer type Benefits Risks
Alkaline
• Lower costs – cheaper catalyst metals
than PEM
• Long performance history
• Uses liquid caustic electrolyte, usually
potassium hydroxide which is hazardous,
corrosive and susceptible to leakage
• Requires several minutes to ramp up and
down, so challenging for pairing with
intermittent energy resources
PEM
• Rapid response time
• Operates at high temperatures and
current densities
• Higher capex
• Lower operations and maintenance costs as
no potassium hydroxide is required
• Market is comparatively nascent
Hydrogen electrolysis has two main commercialized technologies

Why green hydrogen3

Green hydrogen is a solution to many of the problems discussed at this event
Distributed, on-site production
Negative power price mitigation
Curtailment mitigation
Long-duration storage
Alternative after PPAs expire
Value in carbon price scenario

And a way to help decarbonize several areas of the economy
Source: United States Department of Energy

Global Status of
Green Hydrogen Market
4

0 0 2 2 0 0 1 0 1 1 1 14
8
19 5 13 3
44 45
94
0
10
20
30
40
50
60
70
80
90
100
0
5
10
15
20
25
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
MWofelectrolyzersdeployedglobally
Numberofgreenhydrogenprojectsglobally
MWs of Electrolyzers Deployed Number of Projects
The green hydrogen market is moving out of the “test” phase
Source: Wood Mackenzie, IEA

0
2
4
6
8
10
12
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Projectsize(MW)
Average Project Size (MW) Largest Project (MW)
And moving into the “pilot” phase
Source: Wood Mackenzie, IEA

0
5
10
15
20
25
30
35
40
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Numberofprojects
Power Grids Industry Mobility Chemicals
Mobility
Power
Grids
Industry
CHP
Chemicals
The diversity of projects reflect the versatility of green hydrogen
Source: Wood Mackenzie & IEA

Germany France
Denmark United States
Japan United Kingdom
Australia Netherlands
Austria Norway
Canada Spain
China Switzerland
India Italy
All Others
Most projects have been deployed in Europe
Source: Wood Mackenzie & IEA

Several countries have made significant policy commitments to hydrogen adoption
Incentives*
Targets
National roadmap

The formation of the Hydrogen Council reflects a turning point in the industry
Source: The Hydrogen Council

Only a handful of investments have been made in the electrolyzer market
InvestmentAcquisition
2015 2017 2018 2019

0
500
1,000
1,500
2,000
2,500
3,000
3,500
2000 - 2019 Cumulative Installed 2020 - 2025 Project Pipeline
MW
The green hydrogen project pipeline is 12x larger than installed capacity
Source: Wood Mackenzie, IEA.

Costs5

Capex
Feedstock
O&M
Financing
Levelized cost of green hydrogen (LCOH) is highly sensitive to the cost of electricity

$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
$11.00
$12.00
$13.00
100% 90% 80% 70% 60% 50% 40% 30% 20% 10%
$/kg
Electricity prices and load hours determine competitiveness
Current range for U.S. cost of SMR hydrogen

$-
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
$11
$12
$13
$14
$15
$16
$17
$18
$19
$20
$21
$22
Australia China Germany Japan United States
$/kg
10% Load, Industrial Tariff Rate 10% Load, $0.05/kWh 30% load, $0.05/kWh 50% load, $0.05/kWh 100% Load, $0/kWh
In practice, green hydrogen production is currently non-competitive
Current range, global cost of SMR hydrogen

$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
$/kW
Stacks Balance of Plant Soft Costs
Scale will be crucial to lower CAPEX and improve competitiveness

$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
$8.50
$9.00
$9.50
$10.00
2019 2025 2030
$/kg
$0.03/kwh, 10% Load $0.03/kwh, 50% Load $0.02/kwh, 10% Load
$0.02/kwh, 50% Load $0/kwh. 10% Load $0/kwh, 50% Load
Lower CAPEX and renewable PPA prices will produce competitive
green hydrogen in Australia very soon
Current range, global cost of SMR hydrogen

$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
$8.50
$9.00
$9.50
$10.00
$10.50
$11.00
2019 2025 2030
$/kg
$0.03/kwh, 10% Load $0.03/kwh, 50% Load $0.02/kwh, 10% Load
$0.02/kwh, 50% Load $0/kwh. 10% Load $0/kwh, 50% Load
Competitiveness will be out of reach in the U.S.
Current range for U.S. cost of SMR hydrogen

• The market is immature
• A lack of competitiveness is not inhibiting growth
• But there are signs of a potential inflection point
• New policies and carbon regimes could improve
green hydrogen’s outlook
• Ultimately the trajectory of green hydrogen is tied to
the trajectory of lower cost renewables
Although green hydrogen is not competitive today, it still needs to be on your radar

Thank You!
Ben Gallagher
SME Carbon & Emerging Technology
Benjamin.Gallagher@woodmac.com
If you have any questions email me!

Power & Renewables Summit 2019 Day 2

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Power & Renewables Summit 2019 Day 2