North American Cleantech Industry Key Trends and Insights February 2018 1
Headline Trends Solar Wars Coal Comeback? The Decade of Batteries? Microgrid & Smarter Grid Electricity, the New Oil? Continued Rise of Smart Water Source: Frost & Sullivan 2
Solar Wars Trump administration slaps 30% tariff on Chinese solar modules intention is to support domestic manufacturing but automation likely to limit job creation potential vs. Source: Frost & Sullivan 3
Annual Installed Capacity (MW) Solar down but not out Market has already slowed following 2016 surge. Demand would have been ~15% higher, as price increases deter some investment but 35 states have RE targets Key Takeaway: Utility solar takes the largest hit, residential resilient. Solar Power Market: Annual Installed Capacity Forecast by Project Type, North America, 2015 2025 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Utility Scale 4,617 10,845 8,435 7,394 6,885 6,190 7,893 8,731 9,386 10,126 10,488 Commercial&Industrial 1,296 1,200 1,072 995 949 898 1,183 1,346 1,517 1,680 1,703 Residential 2,187 2,955 2,543 2,421 2,366 2,363 3,123 3,522 3,972 4,344 4,509 Year Note: All figures are rounded. The base year is 2017. Source: Frost & Sullivan 4
Coal Comeback? President Trump has a strong support base amongst coal voters but 18GW closed in 2017 Source: Frost & Sullivan 5
Where is the power investment in North America? Solar and wind projected to dominate investment, coal and nuclear disappearing North American Total Investment % - 2017 2030 Coal Gas Nuclear Wind Solar Bioenergy Hydro 18 3 27 41 6 6 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2/3 of power generation investment in wind and solar 6
Installed Capacity GW The changing picture 2017 2030 Gas steady, coal 21% of capacity down to 9% - renewables 29% to 43% 1,800,000 North American Power Capacity (GW), 2017 2030 1,600,000 1,400,000 1,200,000 1,000,000 800,000 Nuclear Gas Coal Hydro 600,000 Bioenergy 400,000 Wind 200,000 0 2017 2030 Solar Note: All figures are rounded. The base year is 2017. Source: Frost & Sullivan 7
The Decade of Batteries Tesla now worth the same as Ford in 8 years continuing to drive the market in North America Tesla s consolidated PV and battery offering already being replicated Daimler launches residential storage in the US Note: All figures are rounded. The base year is 2016. Source: Frost & Sullivan 8
Unit Installations The Decade of Batteries US residential market is hotting up, will overtake Germany in 2020 Release of the revised SGIP incentive in 2017, maintenance of 30% tax income credit incentives for PV-with-storage systems beyond 2016 to 2019, removal of net-metering in Hawaii, reduction of net-metering in Arizona and growing pressure in other states to follow suit, and the adoption of residential storage as part of 3 rd party ownership models by all leading PV kit suppliers is expected to drive rapid adoption of residential battery storage adoption in the country, representing the largest global market by 2022 Average Battery Unit Size 5.0 KWh Residential Unit Sales to Market, 2016-2022 CAGR CAGR CAGR 1600000 116.9 % 99.7 % 36.5 % 13.0 KWh 120000 1400000 1200000 1000000 800000 600000 400000 200000 100000 80000 60000 40000 20000 Annual Installed Capacity (kwh) 0 2016 2017 2018 2019 2020 2021 2022 Residential Capacity (kwh) 39248 97353 184562 433853 736216 1032267 1371429 Units 6330 13896 23313 48497 72828 90367 106246 0 Note: All figures are rounded. The base year is 2016. Source: Frost & Sullivan 9
Revenue ($ Million) Microgrid & Smart Grid Extreme weather, security concerns and growth in distributed energy drive investment Microgrid revenue in North America is expected to reach $5.80 billion in 2022, up from $2.04 billion in 2015, driven largely by the commercial/campus microgrid segment ($2.67 billion by 2022). This segment and community/utility grids are expected to show the fastest growth, driven primarily by electricity supply risks during extreme weather and key areas of high DER penetration and transmission constraints increasing the business case for utility participation. Microgrid Market Revenues, North America, 2015 2022 7,000.0 CAGR = 16.1% 6,000.0 5,802.7 5,000.0 4,000.0 3,000.0 2,000.0 2,041.5 2,263.0 2,579.7 2,942.5 3,478.0 4,118.2 4,884.4 1,000.0 0.0 2015 2016 2017 2018 2019 2020 2021 2022 Commercial/Campus 898.3 1,006.1 1,177.1 1,377.2 1,625.1 1,917.6 2,262.8 2,670.1 Military 173.5 190.9 210.0 231.0 247.1 264.4 282.9 302.7 Industrial 408.3 449.1 503.0 563.4 647.9 745.1 856.8 985.4 Community/Utility 530.8 583.9 653.9 732.4 915.5 1,144.4 1,430.5 1,788.1 Rural & Island Grids 30.6 33.1 35.7 38.6 42.4 46.7 51.3 56.5 Year Note: All figures are rounded. The base year is 2015. Source: Frost & Sullivan 10
Electricity, the new oil? At least it is for now - increasing number of oil majors are venturing into the power industry. Wind, a major investment area so far. Power Market: Renewable Portfolio of Oil Majors, Global, 2017 Organization Renewable Portfolio Size (MW) Statoil 751 BP 2,259 Total 27 Shell 1,500 Note*- Shell s renewable portfolio is an approximate value, actual values are likely to differ Source: Frost & Sullivan 11
Continued Rise of Smart Water Number of issues coming together to drive investment Larger water utilities increasingly looking more at cloud benefits, water quality and monitoring Smart agriculture investment strong droughts key driver But.investments that can demonstrate a quick ROI always favoured above all others Source: Frost & Sullivan 12
Concluding Thoughts 01 Renewable investment has taken a hit, but will still be above recent historic levels 35 states have RE targets 02 EV-PV-storage axis gaining fast 03 US ahead of the rest of the world in grid investment cost to rate payers key Source: Frost & Sullivan 13