Unleashing Limitless Energy with Renewables Jérôme Pécresse, President & CEO GE Renewable Energy 1 © 2017 General Electric Company. Proprietary. All Rights Reserved. Agenda § GE Renewable Energy: Who we are ? § Renewables are mainstream power generation § Major industry trends and GE’s response Ø Growth diversifying globally Ø Trends driving hybridization Ø LCoE ¯, Competition ­ … funding a challenge Ø New players supporting offshore wind growth Ø LM Wind Power overview Ø Hydro: a key pillar of the energy transition Ø Whole industry in digital transition © 2017 General Electric Company. Proprietary. All Rights Reserved. The Digital Industrial Company $123.7B in Revenue, 295,000+ people operating in 180 countries 2016 REVENUES POWER AVIATION RENEWABLE OIL & GAS HEALTHCARE TRANSPORTATION ENERGY CONNECTIONS ENERGY & LIGHTING $27B $26.3B $10B $12.9B $18.3B $4.7B $15.1B 55K 45K 22K 34K 54K 10K 53K EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES We are a global digital industrial company, transforming industry with software-defined machines and solutions that are connected, responsive and predictive. With products and services ranging from aircraft engines, power generation and oil and gas production equipment to medical imaging, financing and industrial products. Since our incorporation in 1892, we have developed or acquired new technologies and services that have considerably broadened and changed the scope of our activities. © 2017 General Electric Company. Proprietary. All Rights Reserved. *2016 revenue numbers. Excludes LM Wind Power 3 CEO: Jérôme Pécresse GE Renewable Energy HQ: Paris, France Onshore Wind Offshore Wind Hydro LM Wind Power CEO: Pete McCabe CEO: John Lavelle CEO: Yves Rannou CEO: Marc De Jong $10B 80+ 22,000+ 400GW 25% 35,000+ 13,000 REVENUE* COUNTRIES GLOBAL INSTALLED BASE OF WORLD’S HYDRO WIND TURBINES TURBINES EMPLOYEES INSTALLED BASE INSTALLED ON PREDIX Unleashing limitless energy for our customers and the world © 2017 General Electric Company. Proprietary. All Rights Reserved. *2016 revenue numbers. Excludes LM Wind Power 4 Renewables are mainstream power generation Renewables and Gas lead growth Gas Engines 2% 3% 28% 21% Solar GT Plants $/MWh ~300GW/year Average LCoE trends 11% 160 Fossil Steam Wind Onshore 3% Other Ren 140 Solar PV Hydro Standard 4% 120 Wind Fossil Nuclear 100 19% 9% Hydro 80 60 Renewables 62% 40 of new global capacity Legend: 20 over next 10 years 0 LCoE parity in 2016 2015 2030 2040 LCoE parity by 2025 Source: GE, BNEF, IEA Declining subsidies, more auctions, competition with solar 5 © 2017 General Electric Company. Proprietary. All Rights Reserved. Global renewable electricity is outpacing all other fuels… Electricity generation by source In 2022 Renewable energy generation to expand by over a third with its share Renewable additions by technology increasing to 30% Source: IEA Renewable Energy Medium-Term Market Report 2016 6 © 2017 General Electric Company. Proprietary. All Rights Reserved. Major Industry Trends and GE’s response Whole industry in digital transition … Every generator, consumer is getting Growth diversifying globally … connected … MEAT, China, India, South-East Asia GE Actions: A Digital Ecosystem GE Actions: GE Renewable Energy’s Optimized for Renewable Energy footprint and product portfolio expanding Hydro: a key pillar of the energy Industry Trends Driving Hybridization … transition … Flexibility, grid integration challenges … mature technology enhanced by PSP Trends GE Actions: A comprehensive range of GE Actions: Hybrid and storage offerings solutions including PSP New players supporting offshore LCoE â, competition á … funding a wind growth … challenge … energy transition, portfolio … PPAs bankability, LCoE towards <$3c by diversification ‘20 GE Actions: GE Offshore Wind GE Actions: GE Renewable Energy 1) technological, geographical expansion enables and arranges PPAs 1) Power Purchase Agreement 7 © 2017 General Electric Company. Proprietary. All Rights Reserved. Renewables growth diversifying globally GLOBAL Growth Growth Growth ** 1% Growth 5% 8% Russia & CIS: 5 GW/year 8% Growth Europe: 34 GW/year 59%, 175GW China: 89 GW/year 5% NAM: 30 GW/year 70%, 27GW 29%, 1GW MENAT: 67%, 60GW 67%, 20GW 35 GW/year Growth Gas India: 37 GW/year North Asia: 15 GW/year 6% (Japan, Korea, Taiwan) Steam plants 32%, 10GW 60%, 9GW Nuclear 51%, 19GW Growth LATAM: 21 GW/year SSA: 12 GW/year Hydro 6% Growth Wind Onshore 62%, 13GW 8% 51%, 6GW South Asia: 22 GW/year Wind Offshore TOTAL RE Growth 45%, 10GW (ASEAN + ANZ) Growth PV 10% Growth 5% Storage 2% World ~300 GW/year average* *’17-’26 average orders; excludes oil recip. engines and partial coverage of very small sizes of GT, ST ** Renewables installed base CAGR over ‘17-’26 period 8 © 2017 General Electric Company. Proprietary. All Rights Reserved. GE Renewable Energy global footprint Local domain expertise across all regions Global Footprint Presence in 60+ countries Production sites Engineering sites Global businesses HQ* Global presence * Including commercial presence 9 © 2017 General Electric Company. Proprietary. All Rights Reserved. GE Diversified Wind portfolio 2MW platform … 3MW platform … 28K+ turbines in 2K+ turbines in 20+ countries 20+ countries Land 3.8-130 3.2-103 4.8-158 3.6-137 2.75-120 Constraints 2MW-107 2MW-116 1.85-87 1.85-82.5 1.7-100 MW Low High Wind speed PrudentiaL Wind fundamentals …LCOE leadership is king Tower 250m CapEx + OpEx LeveLized Cost ofEnergy (LCOE) = Annual Energy Production (AEP) Levers… 10% r in: 200m • AEP = 9% $ in LCOE • CapEx = 8% $ in LCOE • OpEx = 1% $ in LCOE 150m Wind Turbine Cost components %Cost Blades 20-30% 100m Towers 20-30% ` Gearbox 10-20% Electrical 10-20% 50m Other 10-20% ‘04 ‘12 ‘15 ‘18 ‘19 0m Output (MW) –Rotor Diam. (m) –Tower Height (m) 1.5-77-65 1.6-100-80 2.3-116-80 3.6-137-131 4.8-158-161 CAGRs AEP (GWh) -- -- -- -- -- 9% Turbine CapEx ($/MW) -- -- -- -- -- (3%) Price ($CapEx/AEP) -- -- -- -- -- (6%) Confidential. Not to be copied, distributed, or reproduced without prior approval. 10 LCOE ($/MWh) $90/MWh $55/MWh $45/MWh $40/MWh << (8%) A little bit about LM Wind Power* • Since 1978, LM Wind Power has produced DENMARK more than 185,000 blades corresponding to a Headquarters Engineering Test Center capacity of approximately 77GW CANADA Production facilities: 1 POLAND • Contributing to saving more than 147 million Production facilities: 1 CHINA Production facilities: 3 tons of CO2 per year USA TURKEY Production facilities: 2 SPAIN Production facilities: 1 • ~6,500** employees, 13 manufacturing Production facilities: 2 facilities in 8 countries on 4 continents INDIA • Rotor solutions are supplied to 30 global and Production facilities: 2 national wind turbine manufacturers, for Onshore and Offshore wind BRAZIL Production facilities: 1 LM Wind Power: a leading blade supplier to the wind industry. *Acquisition completed on April 20, 2017 © 2017 General Electric Company. Proprietary. All Rights Reserved. * *Employee number does not include contractors 12 Trends Driving Hybridization & Storage 1. Renewables reaching grid parity Australia identified 1 GW of potential Wind sites to retrofit with Solar 2. Record deployment of variable renewable generation 3. Exponential cost reductions for batteries India with 1GW Hybrid target till ‘22 4. Renewables baseload + flexibility via storage 5. Digital solutions enabling integration of multi-gen sources Brazil PLS 107/2017 bill entitles 6. Rural electrification Wind+Solar Hybrids to participate in energy auctions 7. Decarbonization 8. Emergence of distributed generation Ireland Compensation for curtailed wind to end ‘18 - case for Storage Qinghai province announced 3.3GW of Wind installations encouraging the integration of energy storage 13 © 2017 General Electric Company. Proprietary. All Rights Reserved. Hybrid Case Studies Tayabpur - India Gaildorf - Germany Red Lake Falls - US • 15 kW microgrid with solar, batteries, • 4 GE 3.4 – 137 wind turbines; @ each • 2 GE 2.3-116 wind turbines and a diesel engine wind turbine integrated water • 1MW solar power conversion • All production data transmitted in reservoir equipment real-time to Predix for analysis • Topography requirement – 150m • GE’s Wind Integrated Solar Energy • GE Predix and field agent for remote elevation for Pumped Storage (WiSE) technology platform monitoring and diagnostics • Max Boegl towers and EPC capabilities • AEP improvement • 24/7 power to electrify a village • Intermittent wind and PSP as reliable • Lower CapEx baseload power source 14 © 2017 General Electric Company. Proprietary. All Rights Reserved. Storage benefits across the electrical landscape RenewabLe integration and grid stabiLity Congestion Management and microgrid Challenges Applications RES integration or distributed energy resources Stabilization of variable RES / Microgrid Ageing of the electrical grid Grid stability (ancillary service) Management of energy flow variations Congestion management Battery Energy Storage Solution = multi-functionality Confidential. Not to be copied, distributed, or reproduced without prior approval. Typical Business Cases Wind Farm PV Integration through PPA Leverage project financing Frequency Regulation Ø Solar integration into the grid Ø Increase wind farm load factor Ø Charge when grid frequency is (ramp control) (limitations in grid connection) high (production > consummation) Ø Peak consumption management Ø Decreasing revenue risk due to predictability Ø Discharge when grid frequency is low Generated PV power vs. VPP power 1 PV Optimal