Bloomberg New Energy Finance EMEA Summit Commentary

Recently, I stumbled across Bloomberg New Energy Finance's work for the first time and became intrigued by their mission, viewpoint and goals.  New Energy Finance was founded in 2004 by Michael Liebreich, built up to a sizable clean energy market research firm, and later acquired by Bloomberg in 2009.

The subsidiary holds conferences across the globe throughout the year for their clients giving updates on their guidance and forecasts for the energy market.  The video above was recorded at their most recent summit.  In it, Mr Liebreich lays out a fascinating comparison of the global energy landscape from 2004 to 2017 (the "lifespan" to New Energy Finance to date).  Through this comparison I had a couple of key takeaways based on BNEF's research.

Energy forecasters envisioned a very different world than we got

Back in 2004, we expected a number of things to happen that never did.  Oil prices were supposed to stay relatively flat. The US was supposed to be a net importer of natural gas.  The world was on the verge of a wave of new nuclear reactors with the first refreshed designs since the 1960s.  Hydrogen fuel cell (HFC) cars were the future.  Solar and wind were to make modest gains in installed base, but remain expensive and a niche offering.

Obviously none of the above predictions occurred, for better or worse. All of this reinforces one simple fact:

“Energy is a complex system, interacting with all the other complex systems in our economy – finance, politics, transportation, market cycles, consumer behavior.”

— Michael Liebreich

It is a reminder that one slight miscalculation of an input to a complex system can be greatly amplified over the long term.  With any luck, a better application on data mining on a large scale will yield more accurate forecasts in the future.

Solar & Wind are closing in on 2 major tipping points

In the face of modest growth predictions back in 2004, solar and wind have exploded exponentially with approximately 400 GW and 500 GW installed to date  (although are still both minority energy sources globally).  With this meteoric rise came dramatic reductions in spot prices for renewable energy:  $25/MWh for solar and $30-35/MWh for wind (assume approximately $20/MWh for natural gas for reference).  As manufacturers continue to reap the benefits of the experience curve and demand increase, we should expect these prices to continue to come down.  This brings us to BNEF's 2 tipping points:

1. In certain markets in the near future (5+ years), BNEF is predicts that new solar and wind will both become cheaper than new natural gas and coal in terms of levelized cost (the cost of building and operating a power station).  
2. In the longer future, wind and solar could become so cheap that it will be cheaper to replace existing power stations with wind and solar (new vs. existing).

If both of these predictions come true, we will see a proliferation of wind and solar installations resulting in a much more diversified energy marketplace.

BNEF EMEA Summit - https://data.bloomberglp.com/bnef/sites/14/2017/09/BNEF-Summit-London-2017-Michael-Liebreich-State-of-the-Industry.pdf

I look forward to reading more from BNEF and hope to share some more of their insights and forecasts with you here.

First Thoughts

Global energy policy may not be the sexiest or most interesting conversation topic.  Regardless, it is one of the most important issues facing our society globally.  The way we power our homes, businesses, cars, devices and everything in between requires a huge amount effort and coordination.  And our appetite for power is only increasing.

The fact is that the majority of the world’s power generation is derived from fossil fuel that continues to contribute to global climate change.  In the short run, we continue to make improvements on fossil fuel generation efficiency and emissions reductions.  In the long run, there are numerous technologies and generation techniques being tested and adopted across the globe.  We are moving toward a much more diversified energy grid than ever before.

Reducing our environmental impact is only part of the battle.  All of these potential solutions need to be economically viable when compared to our current methods.  We will fail in the long run if reducing our environmental impact comes at too great an economic cost to any of the involved parties; producers, consumers, or governments.

Through this forum I hope to share interesting projects and ventures in the energy space with some commentary, share compiled resources and information on the energy economy, and discuss energy policy from the viewpoint of a conservative-leaning engineer.