Energy Transition and New Energy Opportunities Global Interdependence Center Philadelphia, PA
Eric Bradley, Senior Vice President November 5, 2015
Presentation Topics Introduction to ENGIE
North American Energy Transition
Our response to the energy transition
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Engie Overview
(1) At 100% as of 12/31/14
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North American Business Positioned to Adapt to the Energy Transition (1/2) Power and Natural Gas
Own and/or operates power, cogeneration, steam, and chilled-water facilities representing a capacity of about 13,000 MW of electricity generation, 3.4 million pounds per hour of steam, and 37,000 tons of chilled water
A renewable portfolio consisting of 32 wind, solar, hydro, and biomass assets, with a capacity of close to 1,000 MW — Average CO2 emissions of 0.52 tons/MWh in 2014 ; U.S. average is 0.58 tons /MWh — Through our natural gas plants and renewable operations, ENGIE’s average emissions were 0.44 tons /MWh in 2014
One of the largest non-residential retail energy suppliers in the U.S., offering grid electricity to over 60,000 accounts with an estimated peak load totaling nearly 10,000 MW
Power supplier to nearly 50% of Fortune 100 companies
An LNG business in New England that serves nearly every gas utility and key power producer in New England; operates busiest LNG truck loading operation in the world, helping utility customers stockpile supplies. 4
North American Business Positioned to Adapt to the Energy Transition (2/2) Services
Ecova: Total Energy and Sustainability Management
Founded in 1996, and purchased by ENGIE in 2014
Over 700 commercial and industrial clients; nearly 50 utility and energy efficiency organization clients
Processes nearly $20B in energy and resource expenditures
Saved $1.6 billion for C&I clients in past two years
ENERGY STAR award winner ten years in a row
Cofely: facilities management
Operations & Maintenance of Technical Installations
Energy & Environmental Management
Integrated Facility Management
Mechanical construction (HVAC, plumbing, controls)
Over 25 Million sq. feet of buildings under management
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Powerful Forces Are Shaping the North American Market Implications • Re-orientation of gas flows across North America, and new pricing mechanisms
Shale gas
• New uses for gas; new investment in gas-intensive manufacturing • $1+ trillion investment in supporting infrastructure
• US EPA rules & low cost gas enabling acceleration of coal/oil plant closures
Energy policy
• Energy Efficiency and subsidized renewables as a tool for compliance • Wholesale power markets in transition – policy adjustments are needed
• Distributed generation based on natural gas; distributed solar PV; batteries
Disruptive technology / digitalization
• More integrated, 2-way grid • The empowered consumer, serving as both producer and consumer • Smarter use of energy through diagnostics and automation • Mobile engagement, and higher consumer expectations, will drive service quality, ease of use, and personal customization
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Shale: Driving the Shift towards Lower Carbon Generation Dispatch cost – gas vs. coal (Texas)*
U.S. CO2 emissions from the power sector (1998-2015)
$60 $/MWh
million metric tons
$30/ton CO2
$50 $40
$30/ton CO2
$30
$4 gas
$20
$3 gas
$2.25 coal
$10 $0 Generation
CO2 emissions
Natural Gas CCGT
Coal plant (PRB)
• Monthly power sector CO2 emissions reached a 27-year low in April 2015
+
• Decline in coal-based generation driven primarily by decline in gas costs since 2008 • CO2 emissions from coal plant 2.5 times higher than CCGT; with $30/ton CO2 price a coal plant is further disadvantaged by $18/MWh
* 7 heat rate natural gas CCGT; 10 heat rate coal plant Source: EIA; ENGIE analysis
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Energy Policy: Renewables Opportunity Could Be Significant under the Clean Power Plan Estimated Change in Generation Capacity, 2015-2030 Coal retirements
New renewables 249
-104
U.S. Total
• Directional assessment: assumes mass-based compliance, with no leakage and no crossstate trading
GW
California
Northwest/Rockies
• Other estimates result in similar opportunity for renewables, with estimates from 160 GW to 270 GW over the 15 year period
Southwest ERCOT SPP MISO/MRO FRCC
• Full coal retirements from 2012 to 2030 could amount to ~110 GW (~35% of the fleet as of 2010)
SERC
PJM New York New England -40
-20
Source: EPA, SNL data, ENGIE analysis
0
20
40
60
80
100
Note: Capacity factors assumed: coal 60%, renewables: 25%
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Technology: Advanced CCGTs and Utility- scale Solar Compete for Lower-carbon Future Texas Example Economics
Required price for solar PV* $/MWh
$/MWh 5
$60
30 20 10 $45-$50
4
$50
$48
Natural gas sensitivity ($/mmBtu)
$40
$30
$20
CO2 sensitivity ($/ton)
$3 gas
H-frame CCGT new build (onpeak price)
Utility scale solar in West Texas
Source: IHS
• CCGT new build and utility scale solar not directly comparable as solar needs additional off-peak and firming support
• Various forecast project utility-scale parity (no subsidies) between 2020 and 2030 depending on region
• However, moderately higher gas prices plus a reasonable cost for carbon should make solar a competitive source of energy for the periods it operates
• U.S. Southwest is attractive now; absent ITC, equivalent carbon pricing would have to be ~$30/ton in 2017 declining to ~$15/ton by end of decade
* Southwest solar power prices based on solar resources in Phoenix, Arizona; prices shown are based on solar projects using c-Si technology. Source: ENGIE analysis; IHS
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Technology: New Lighting and Other Efficiency Gains Could Have Significant Impact on Energy Growth Efficiency gains – Commercial (2011-2040)
Residential consumption change (2011-2040)
• Federal lighting standards are driving out incandescent bulbs, with LED lighting quickly gaining traction • Lighting alone represents ~640 TWh of consumption (nearly 20% of US electricity) with full LED lighting penetration resulting in ~375 TWh reduction in consumption • Load growth could be reduced 0.6 pct points p.a. through 2020, due to LED adoption alone
Source: UBS, EIA, IHS, GSENA analysis
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Technology: Bundling Energy Efficiency plus Distributed Solar for Consumers and Businesses
Rooftop Solar PV High Efficiency HVAC High Efficiency Insulation • LED Lighting • Smart Thermostat 60W incandescent >
Rooftop Solar PV 18 SEER HVAC
Spray Foam
6W LED (540 lumens)
• ~3,000 kWh annual demand reduction
• ~300 kWh demand reduction
• < 4 year simple payback
• Federal minimum for TX available in the market is 14 SEER
• < 2 year simple payback
• 1,000 kWh demand reduction with 18 SEER single unit compared to 14 SEER single unit (with 3 tons of cooling)
Programmable thermostat
• ~8 year simple payback
• ~5,300 kWh annual generation capability for a 4kW DC unit • $600 / year bill reduction vs. $10,000 CAPEX including 30% ITC • ~16 year simple payback
• ~800 kWh demand reduction
• < 1 year simple payback
New business models are emerging that incorporate non-intrusive load monitoring/analysis plus financing innovations to offer customized ‘architected’ solutions for customers 11
At the Group level, a Lower Carbon Future Is One of Our Key Objectives Environmental, Social and Societal Responsibility: Main Targets
Recent decisions: • To stop all new coal-based power projects • Commitment to develop 100% of new power projects with low-carbon or zero-carbon technologies
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Within North America, We Are Evolving with a New Strategic Focus Opportunities in Energy Transition Context • Predictive energy management and diagnostics
Engie examples Mobile commerce
Rooftop solar
• Distributed power solutions (e.g., solar, CHP)
Retail Energy and Services
• Price responsive demand; peak demand reduction • Energy efficiency programs
Energy services
Energy consulting
• Electric vehicles
• Contracted power and Combined Heat and Power
Generation
Industrial CHP
Contracted renewables
• Utility scale and community solar • Grid services • Off-grid, remote and transport solutions
Gas
LNG distribution
• CNG (fuel stations, mobile pipelines)
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New Service Offerings to Optimize, Reduce and ‘Green’ Energy Consumption for C&I Customers
Measurement and management
+ Energy analytics and engagement
Online tools to remotely manage and benchmark multiple client locations (“see more, save more, sustain more”)
$807 million in cost savings for clients, 12.9 million t CO2e reduction in in 2014; 105 million energy efficient light bulbs distributed
Acquired October 2015; ‘Big data’ + analytics approach to perform virtual energy assessments on commercial buildings, automate energy audits and track efficiency projects
Analyzed more than 3 billion sq. ft. office space, identifying 6 TWh of annual energy savings (6% additional reduction potential in Boston*)
Conventional and renewable energy products, supplied from the grid
Economic demand response; demand charge management (VRewards program to reduce peak energy consumption)
Solar PV for C&I customers; Community solar
+ Energy supply and optimization
* From the Building Genome Project for Boston. Boston renowned for EE efforts, ranking #1 in 2013 City Energy Efficiency Scorecard Source: Ecova, Retroficiency, ENGIE
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Re-orienting Our Power Generation Activities
Combined Heat and Power (for reliability and energy efficiency)
Coal plant adjustments
Engie already an owner and operator of 1.4 GW cogeneration facilities in North America; expanding presence in Mexico
Focus has been predominantly to industrial users, but broader opportunities to serve commercial customers, critical facilities and cities/territories
Value proposition is compelling for customer: T&D savings, long-term price certainty, reliability and resiliency
Energy efficiency benefits are attractive– 25% primary energy savings vs separate heat and power
Over 80 GW installed; 40+ GW economically attractive opportunity
Mount Tom, MA: retired coal plant under evaluation for other uses, including a solar farm to serve the local community
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Natural Gas in New England and Beyond for Heating and Mobility
In addition to selling LNG into the New England gas grid, Engie’s import terminal in Everett, MA includes, — Truck-loading operation to fill LNG trailers for transport to customers in the region
Lower CO2 for transportation 2.2 2.1 8%
2.0
— A tractor filling station to fuel LNG trucks.
Road transport ~30% of Co2 emissions
kg CO2 per mile, Well-to-Wheel
1.9 1.8
Customers include fuel logistics players, LDCs and commercial clients (e.g., greenhouses) Low oil prices challenge the LNG vehicle transportation business model near-term, but long term opportunities, particularly for LNG in marine and remote/off-grid applications are attractive.
1.7 1.6 LNG/ Diesel blend
LNG SI*
Diesel
Lower CO2 in heating Ton CO2 per 100 MW consumption 80.0 60.0 64% 40.0 20.0
0.0 Gas furnace
* Spark Ignition engine Source: EIA; IHS CERA; AGA, ENGIE analysis
Oil furnace
Electric furnace
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Thank you