Business of Energy - Fall Quarter

Seminar Schedule Introduction A Few Opening Questions… Presentation Today’s Schedule

Week 1: State of Energy Week 2: Energy Finance Week 3: Business of Electricity and Coal Week 4: Business of Oil & Natural Gas Week 5: Business of Wind, Solar, and Renewables Week 6: Business of New Technology: Efficiency and Storage Seminar Schedule

Work Experience: Natural gas trading analysis, mergers and acquisitions, power pricing, capital investments Background: Hampton University BS Finance; Tulane MS Finance + Energy Fun fact: Trivia nerd Introduction – Nneka Uzoh

Class Diversity Please attend all classes Contribute Facebook group NESC listserv How Do You Fit In?

Opening Questions

Business of Energy Seminars Why do we need Energy? What are the different sources of Energy? Which source is used for what?

Business of Energy Seminars All about Energy use - In one slide!

Business of Energy Seminars World energy demand grows by 53% between Energy demand growth forecast OECD - 18%; non-OECD -85% World energy consumption, (quadrillion Btu) Source: EIA - International Energy Outlook 2011 Developing countries energy consumption quickly outpaces rest

Business of Energy Seminars Which country consumes the most energy?

Business of Energy Seminars Energy consumption in the United States, China, and India, (quadrillion Btu) Source: EIA - International Energy Outlook 2011 Developing countries energy consumption quickly outpaces rest

Business of Energy Seminars Rank these in order of contribution to current World Energy pie: Coal Renewables Oil Nuclear Natural Gas

Business of Energy Seminars Oil prices expected to remain relatively high, hence slowest growth rate; Increases by 30.8% Liquids’ share declines marginally from 34% in 2008 to 29% in 2035 Liquids consumption: declines in the buildings and electric power sectors increases only in the industrial and transportation sectors Source: EIA - International Energy Outlook 2011 World energy consumption by fuel, (quadrillion Btu) Liquid fossil-fuel continues to be King, however...

Business of Energy Seminars World coal consumption increases by 49.4% while coal use in non-OECD Asia increases by 84.7% Cheapest and fastest resource for China & India to meet tremendous energy shortage Consumption declines in developed countries Source: EIA - International Energy Outlook 2011 World energy consumption by fuel, (quadrillion Btu) Coal - the grand-daddy of fuels - will be alive & kicking!

Business of Energy Seminars Total natural gas consumption increases by 53.5% Increasing supplies of unconventional natural gas, particularly in North America, help keep global markets well supplied Most rapid expansion of natural gas use is for electric power generation and industrial uses......accounting for 87% of global natural gas use increase New kid on the block... Natural Gas Source: EIA - International Energy Outlook 2011 World energy consumption by fuel, (quadrillion Btu) World natural gas consumption by end-use sector, (trillion cubic feet)

Business of Energy Seminars Remaining Recoverable Natural Gas Resources

Business of Energy Seminars While total world energy demand grows by 53.5%, Net electricity generation worldwide rises by 84.7% Non-OECD electricity generation increases by140% Reason: rising standards of living increase demand for home appliances and electronic devices, as well as the expansion of commercial services, including hospitals, office buildings, and shopping malls In the OECD nations infrastructures are more mature and population growth is relatively slow or declining; hence slower growth of 38% in electricity generation Source: EIA - International Energy Outlook 2011 OECD and non-OECD net electricity generation, (trillion kilowatthours) More Energy is used as Electricity Growth in world electricity generation and total delivered energy consumption, (index, 1990=1)

Business of Energy Seminars Natural-gas-fired electricity generation increases by 99.9% Natural Gas technology is attractive because of its: fuel efficiency, operating flexibility, relatively short planning and construction times, relatively low emissions, and relatively low capital costs. New found (unconventional) reserves guarantee supply, which reduces market prices and thus stimulates demand Source: EIA - International Energy Outlook 2011 World net electricity generation by fuel type, (trillion KWh) World net electricity generation by fuel, (trillion KWh) Electricity: Natural Gas accelerates over Coal

Business of Energy Seminars Nuclear electricity generation increases by 89.7% Non-OECD Asia, grows 976%, including an increase of 1,311% in China and 1,494% in India Attractive because: Secure source of energy Tremendous improvements in capacity utilization rates from 65% in 1990 to 80% today Fallout of the Japanese nuclear disaster - ?? Source: EIA - International Energy Outlook 2011 World net electricity generation by fuel type, (trillion KWh) World net electricity generation by fuel, (trillion KWh) Electricity: Nuclear expected to balloon... or is it?

Business of Energy Seminars With oil prices remaining high, alternative fuels are substituted for liquids-fired generation where possible, and the liquids share of generation falls from 5% in 2008 to just over 2% Liquid fuels are the only energy source for electricity generation that does not grow on a worldwide basis. The liquids share of total generation falls. Source: EIA - International Energy Outlook 2011 World net electricity generation by fuel type, (trillion KWh) Electricity: Oil is all but dead World net electricity generation by fuel, (trillion KWh)

Business of Energy Seminars Two largest contributors to the increase in global renewable electricity generation: Hydropower (55%) Wind (27%) However, the mix of the two renewable energy sources in OECD and non- OECD regions differs dramatically Hydro growth primarily from mid- to large-scale power plants expected in Brazil, China & India Growth rates for wind-powered electricity generation also are high in non-OECD countries Fastest-growing non-OECD regional market for wind power is China with a 3500% growth; share of wind in China’s total energy goes up from 2% to 22% Source: EIA - International Energy Outlook 2011 World net electricity generation by fuel type, (trillion KWh) non-OECD & Renewable Energy: Hydroelectric power is the predominant source growth World net electricity generation by fuel, (trillion KWh)

Business of Energy Seminars USA Renewables – We have multiple options

Business of Energy Seminars In OECD nations, the majority of economically exploitable hydroelectric resources already have been developed; there are few opportunities to expand large-scale hydroelectric power projects. Instead, most renewable energy growth in OECD countries is expected to come from non-hydroelectric sources, especially wind Many OECD countries, particularly those in Europe, have government policies (including feed-in tariffs,12 tax incentives, and market-share quotas) that encourage the construction of wind and other non-hydroelectric renewable electricity facilities Source: EIA - International Energy Outlook 2011 World net electricity generation by fuel type, (trillion KWh) World net electricity generation by fuel, (trillion KWh) OECD nations & Renewable Energy: Wind is the predominant source of growth

Business of Energy Seminars Maximum Return on Energy Investment

Business of Energy Seminars Levelized Costs of Electricity - Comparison

Business of Energy Seminars US Energy Subsidies 2011

Business of Energy Seminars Potential is unquestionably large, but......how quickly, hinges critically on: government support to stimulate technological advances and make renewables cost competitive with other energy sources...Share of energy demand that it can capture depends upon: technology developments addressing inherent drawbacks (e.g.. Intermittency issues) The greatest scope for increasing the use of renewables in absolute terms lies in the power sector Renewables are generally more capital intensive than fossil fuels, so the investment needed to provide the extra renewables capacity is very large How green will the Energy future be? Source: EIA - International Energy Outlook 2011

Business of Energy Seminars Renewables are expected to become increasingly competitive as fossil fuel prices rise and renewable technologies mature Government support projected to grow from $37 billion to $205 billion 63% of the support projected to go to renewables-based electricity Wholesale electricity prices increase and production costs of renewables based electricity falls Bonus Variable: tremendous opportunity in distributed applications of renewables Renewables - Light at the end of the tunnel Source: EIA - International Energy Outlook 2011

Business of Energy Seminars Thank you! Questions?

Business of Energy Seminars Source: EIA - International Energy Outlook 2011 World energy consumption by country grouping, (quadrillion Btu) How do the different regions stack up?