Clean disruption

Why conventional energy and

transportation will be obsolete by 2030

Tony Seba
www.tonyseba.com

February 2016

For important disclosure information please refer to the last page of this presentation.

CLSA U® Executive Education

 Introduction
CLSA U® executive education

Course instructor
Tony Seba lectures in entrepreneurship, disruption and clean
energy at Stanford University, is a serial Silicon Valley
entrepreneur and a world-renowned author and thought leader.
Seba’s work focuses on market disruption and the exponential
technology trends and product and business model innovations
that are on the cusp of disrupting the world’s major industries. He
is the author, most recently, of the best-selling book Clean
Disruption of Energy and Transportation - How Silicon Valley Will
Make Oil, Nuclear, Natural Gas, Coal, Electric Utilities and
Conventional Cars Obsolete by 2030. His previous books include
Solar Trillions - 7 Market and Investment Opportunities in the
Emerging Clean-Energy Economy and Winners Take All - 9
Fundamental Rules of High Tech Strategy.

A serial Silicon Valley entrepreneur with 20+ years of experience,

Seba was an early employee in disruptive companies including
Cisco Systems and RSA Data Security, and the award-winning
founder and CEO of PrintNation.com, a company that disrupted
the US$100bn printing industry.

Seba is an advisor to policy-makers, investors and corporations

around the world. He is on several boards of directors and
advisors, including solar accelerator and incubator Powerhouse,
mobile health and safety platform startup CloudM, solar product
innovator Everblaze, and children technology education non-profit
Hackidemia. He has also advised on the development of more
than 400MW of wind and solar power worldwide.

Seba holds an MBA from Stanford University Graduate School of

Business and a BS in computer science and engineering from the
Massachusetts Institute of Technology.

The content of this presentation handout has been kept in its original format as
requested by the course presenter.

Any comments?
Please contact Grace Hung at grace.hung@clsa.com

CLSA U® logo, CLSA U® (word mark) and CLSA University are registered trademarks of CLSA in the USA and elsewhere. 2
A stroll down memory lane

Clean Disruption - Copyright © 2001-2015 by Tony Seba

5th Ave New York City, 15 April 1900

1900:Where
is THE CAR?

Photo: Fifth Ave NYC on Easter morning 1900

Source: US National Archives

4
5th Ave New York City, 23 March 1913

1913: Where is
THE HORSE?

Photo: Easter 1913, New York. Fifth Avenue looking north

Source: George Grantham Bain Collection

Technology-based
Disruption
Rodin – Thinker - Photo: Tony Seba

Clean Disruption- Copyright © 2001-2015 by Tony Seba

6
What is a disruption?
A disruption happens when
a new product or service
helps
 create a new market and

 significantly weaken,

 transform, or

 destroy an existing product

/market category / industry

 Eg: car -> horse, PC -> typewriter,

iPod->Walkman

Clean Disruption- Copyright © 2001-2015 by Tony Seba

Fast forward to 1985

1985

Image source: GMAuthority.com

Clean Disruption- Copyright © 2001-2015 by Tony Seba

8
 Mainstream disruption forecasts
 In the mid-1980s AT&T hired McKinsey
& Co to forecast cell-phone
adoption by the year 2000

 Their (15-year) prediction:

900,000 subscribers

 The actual number was…

… 109 million
 They were off by a factor of
120x Motorola DynaTAC 8000X
from 1984
Source: Wikimedia

Source: Economist

AT&T disrupted while trillions created

120,000,000

109,000,000
Actual
100,000,000
Subscribers

80,000,000

60,000,000

40,000,000

20,000,000

Forecast
0
1985 1987 1989 1991 1993 1995 1997 1999

 AT&T's landline telephony market was disrupted US$2.4 trillion - Market cap top 15
 It missed out on a multi-trillion dollar opportunity! global internet public companies
Subscriber data source: CTIA - The Wireless Association
Internet companies: Internet Report 2015 - Mary Meeker

10
It's usually the “experts” and “insiders” who dismiss
disruptive opportunities

‘The internet will catastrophically collapse in 1996.’

- Robert Metcalfe, 1995

‘There is no reason anyone would want a computer in their

home.’
- Ken Olson, CEO, Digital Equipment Corp, 1977

‘I do not believe the introduction of motor-cars will ever

affect the riding of horses.’
- Scott-Montague, United Kingdom MP, 1903

11

Why do smart people at

smart organisations
consistently fail to
anticipate or lead market
disruptions?

Rodin – Thinker - Photo: Tony Seba

12
Four reasons why organisations consistently fail
to anticipate or lead market disruptions

1. Disruption models

2. Exponential technologies

3. Business model innovation

4. Product innovation

Clean Disruption- Copyright © 2001-2015 by Tony Seba

13

Exponential technologies
‘If the rate of change on the outside is greater than the rate of change
on the inside, the end is near.’
- Jack Welch

Clean Disruption- Copyright © 2001-2015 by Tony Seba

14
 Computing: Moore’s Law (1971-2011)

1 billion x
Logarithmic scale

 No. of transistors doubles (roughly) every two years

 Annual improvement rate ~ 41.4%
 Exponential growth in no. of transistors
Source: Wikipedia
Clean Disruption- Copyright © 2001-2015 by Tony Seba

15

PC / internet / mobile phone industries:

Covergence of exponential technologies

 Technologies improving at
exponential rates
Logarithmic Scale

 Data storage - Kryder’s Law

 Hard disk $ cost per bit down 50%
every 18 months

 Digital imaging - Hendy's Law

 Pixels per $ - 59% / year

 Network capacity: Butter’s

Law of Photonics
 The $ cost of transmitting a bit
decreases by 50% every nine
months

Source: Wikipedia, iPhone image: Amazon.com

16
 2015: Key exponential technologies
1. Sensors / Internet of Things

2. 3D printing

3. Machine learning / artificial intelligence

4. Robotics

5. 3D visualisation

6. Solar PV

7. Energy storage

8. Mobile internet & cloud

9. Big data / open data

10. Unmanned aerial vehicles / nano satellites

11. E-money / e-finance

17

Sensors: 1,000x changes in 7 years (2007-2014)

Unit Change Comments

Number of Sensors UP 1,000x From 10 million to 10 billion

Eg, from US$250/axis for gyros to US$0.75

Cost DOWN 1,000x for three axis
From W to mW and mW to µW, depending on
Power consumption DOWN 1,000x sensor

Physical Size DOWN 1,000x Eg, gyro from 2000 mm3 to 2 mm3/axis

Number of Transistors UP 1,000x From 1000s per sensor to 1,000,000s/sensor.

Source: Janusz Bryzek, TSensors

 On the road to trillions of sensors: Exponential unit growth

18
 Clean disruption of energy & transportation

1. Energy storage

2. Electric vehicles

3. Self-driving cars

4. Solar

19

1. Energy storage

Image: GreenChargeNetworks
20
Li-on battery costs dropping exponentially

 Laptop Li-on battery costs

dropped ~14% per year over 15 Photo: Telegraph.uk

years. (1)

 Investments in battery tech

increasing dramatically:

 Now three multi-trillion $

industries investing: Photo: Wikipedia

1. IT/electronics
2. Automotive &
3. Energy

 Since 2010, battery costs

Source: The Telegraph

have dropped at ~16%/year -

> ACCELERATING

(1) Clean Disruption.

21

Projected cost of Li-on battery US$/kWh

Cost of Li-on battery storage (US$/kWh)

$500

$450
$300/kWh
$400

$350
$200/kWh
$300

$250
$100/kWh
$200

$150

$100

$50

$0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Source: Clean Disruption

Assumptions: 16%/year cost improvement

22
 Tesla's battery Gigafactory
 US$5 billion investment (6,500 jobs)
 Battery pack output: 50GWh/year -> 500,000 cars/year
 Double world battery production
 Reduce battery pack costs by 30+%
 Technology innovation: "Tesla expects to increase battery pack
capacity by roughly 5% per year." (1)

Source: Tesla 23
(1) ChargeDevs Mag
Rendering!

Tesla's battery: Ahead of the curve

 Tesla Powerwall residential battery:
 US$350/kWh (7kWh or 10kWh)

 Tesla microgrid/commercial battery:

 US$250/kWh for commercial/microgrid
(100kWh)

 Market reaction:
Tesla received
US$800+ million
in orders / reservations
first week!

Sources: Tesla, Bloomberg Image: Tesla

24
 Battery megafactories are coming!

 BYD plans to add 6GWh every

year
 Could ramp up to 34GWh by 2020 -
matching Tesla's 35GWh (1)

 Foxconn and LG Chem could

add combined 22GWh (2)

 Nissan: 4.5 GWh

 Plus Samsung SDI, Apple, Bosch,
VW, etc.

 Tech cost curve could

accelerate!

(1) Reuters (2) Benchmark Minerals Picture: Samsung SDI

25

Energy storage business

model innovation

26
 Business model innovation: Storage as a service

 GreenCharge Networks, Stem offering storage-as-a-service to

reduce DEMAND CHARGES for commercial & industrial customers
 Zero-money down, 10 years

 Lower utility bills by 10-50% (1)

 Similar business model that made solar skyrocket

(1) Source: Bloomberg
Image: GreenchargeNetworks 27

Storage disruption: Residential and commercial

 Average American consumes 903kWh/month -> ~ 30kWh/day

 By 2020 it will cost US$36.8/month (US$1.2/day) for a full day of electricity
storage

Monthly cost of residential storage Target year -> 2014 2020 2024 2028

Purchase cost of battery storage system

$600 $500 $300 $200 $100 $50
(US$/kWh) ->

SaaS services Hours kWh Storage: Monthly Cost

Demand response 1 1.25 $4.6 $3.8 $2.3 $1.5 $0.8 $0.4

Avoid peak, buy low & shift usage 4 5 $18.4 $15.3 $9.2 $6.1 $3.1 $1.5

Store all solar self-generation 8 10 $36.8 $30.7 $18.4 $12.3 $6.1 $3.1

Self-sufficiency 16 20 $73.6 $61.3 $36.8 $24.5 $12.3 $6.1

Off-grid 24 30 $110.4 $92.0 $55.2 $ 36.8 $18.4 $9.2

Source: Clean Disruption

 Assumptions: 4% cost of capital (mortgage) over 20 years

28
 Storage disruption: Grid scale
 The grid works like a just-in-time supply
chain without inventory
 Grid: inefficient use of assets
 $$ billions in generating assets used just a
few hours per year
 Ex: ConEd - 32% of generation assets used
< 517 hrs/yr (5.9%) (1)
 189MW used 7 hrs (0.08%)
 1GW used 29 hrs (0.33%)
 1GW used 120 hrs (1.37%)
 Energy storage can replace generation
assets on the grid
 Peaking power = obsolete
 ‘Post 2020 there may never be another
peaker built in the US’ - NextEra Energy
CEO Jim Robo (2)

(1) Consolidated Edison of New York Presentation, "Energy Storage for the Grid", Source: Consolidated Edison of New York
New York Association for Energy Economics (NYAEE) 25 July 2013
(2) GreentechMedia

29

2. The electric vehicle disruption

Photo © Tesla Motors

30
 2013 Car of the Year: Tesla Model S
Motor trend 16 Nov 2012

‘It drives like a sports car, eager and agile and instantly
responsive. But it's also as smoothly effortless as a
Rolls-Royce and carry almost as much stuff as a Chevy
Equinox. Oh, and it'll sashay up to the valet at a
luxury hotel like a supermodel working a Paris catwalk.’

Consumer reports:
Best Car EVER! (1)

Best-selling high-end large

luxury car in America! (2)

(1) Consumer Reports, (2) Extremetech.com

Source: Motor Trends Image -Tony Seba

31

But who can afford an electric vehicle?

Photo © Tony Seba

32
 Is the electric vehicle
disruptive?

(You always need to ask)

Photo by Tony Seba

33

1. Electric motor: 5x more energy efficient

Internal combustion 50
engine
40 60

30 70

17%-21% 20 80
Energy efficiency

10 90
0 100

50
40 60

30 70
Electric motor
20 80
90%-95%
10 90 Energy efficiency

0 100
Images source: ICE - Tony Seba , Electric: BradMerritt.com
Sources: ICE – DOE, EM Wikipedia

34
 2. EVs are 10x cheaper to charge / fuel

 It costs US$15,000 to fill up a

(gas) Jeep Liberty over five years (Consumer
Reports)

 An electric Jeep Liberty would cost

US$1,565 in electricity
 Improvements in power electronics
will increase 10x

Assumptions:
 12,000 miles/year
 Tesla Roadster: 4.6 miles per kWh
 Ave retail electricity in the US.: 12¢/kWh
 Five-year cost = (60,000 miles * 0.12
US$/kWh) / 4.6 miles/kWh = US$1,565

Image: Jeep.com
Sources: Consumer Reports, DOE, Clean Disruption Source: Tesla

35

3. Maintenance: Gasoline car 2,000+ moving parts (1)

Photo © Todd McLellan

(1) Baron Funds

36
 3. EVs: 100x fewer moving parts
ICE (Gas) vehicle Electric vehicle (EV)

2,000+ moving parts (1) 18 moving parts (1)

 EVs 10x-100x cheaper to maintain!

 Tesla: Infinite Mile Warranty! (2)

Transmission, driveshaft, clutch, valves, differentials,

pistons, gears, carburetors, crankshafts...
Photos: Tony Seba
(1) Baron Funds (2) Tesla blog

37

4. EVs FAR MORE powerful than ICE

EV Torque

ICE Torque

Image Source: BRD Motorcycles

‘The Tesla’s P90D accelerates faster than $1 million gas 'supercars' from
Ferrari, McLaren, Lamborghini, Pagani, and Porsche.' (1)

(1) ChargeDecs Magazine

38
 EVs shift the price/performance equation ->
Disrupt the BASIS of COMPETITION

High$$$

Medium $$ Porsche 911 Carrera

Price

Buick Enclave Tesla Model 3

Low $

Low Performance High

EVs: Porsche performance for Buick prices!

Car Images Source:WikiMedia
Copyright © 2009-2015 by Tony Seba 39

Ok, so the EV is
DISRUPTIVE.
How long will the transition take?

Source: US National Archives Source: George Grantham Bain Collection

40
 Disruption from above:
Cost of EV with 200-mile (320km) range

80,000
Ave. gas "Affordable
SUV": US$35-40k
70,000
Cost of electric vehicle

Ave gas car cost

60,000 in US: US$31k

50,000
Ave cost of low-end
40,000 gas car in US: US$22K

30,000

20,000

10,000

0
2014 2016 2018 2020 2022 2024 2026 2028 2030
Assumptions: 4 miles/kWh, 50kWh batteries, 16% yearly improvement in battery costs,
EV costs = 3x cost of battery

Source: US DOE Vehicle Technologies Program

Source: Clean Disruption
41

Jan 9, 2016

CEO Barra unveils Bolt EV @Ces

2017 Chevy Bolt: 200-mile range
Electric Vehicle for $37,500
[unsub]
"It's more than a car, it's an
upgradeable platform for
new technologies." (1)
Image Source: Fortune

"Car-sharing, new ownership models, automated driving...

down the road."
Clean Disruption- Copyright © 2001-2016 by Tony Seba (1) Source: Fortune 42
 Ford to invest $4.5 b in Electric Cars

BBC News 11 Dec 2015

‘CEO Fields said Ford will invest $4.5 billion in

electric cars and have 13 EVs by 2020 – 40% of its
vehicles."
The company will enter the
carsharing market and
become a 'mobility
service provider', a
market worth $5 trillion.

"We [now] get zero of

that."
Source: ComputerWorld, Sept 4, 2014 Image copyright © 2015 by Tony Seba

43

Foxconn to make EV for US$15,000

ComputerWorld 4 Sep 2014

‘Foxconn, the maker of the Apple iPhone to

invest $811m to develop Electric Cars.’

‘Foxconn CEO Terry Gou

said they are targeting
EVs priced at less than
$15,000.’

Source: ComputerWorld, Sept 4, 2014 Image copyright © 2015 by Tony Seba

44
 Electric Vehicle
business model innovation
(that might accelerate the
disruption)

45

EV FREE charging

 EV Companies such as Nissan and

Tesla offering limited Free Charging
networks.
 SV Startup Volta offering FREE EV
charging in exchange for media
rights at prime high-value
properties.
 If this business model succeeds,
the EV MARGINAL COST of
energy will be ZERO

Sources: Volta, Nissan, Tesla Images: Volta Charging, Tesla 46

 EVs Generating $ Providing Services to Grid

 With Vehicle-to-grid (V2G) technology,

an Electric Vehicle (Nissan Leaf) can
power a house or a small apartment
building for a day or two.
 EVs can also provide the grid with
ancillary services that can generate
revenue for the EV owner.
 At COP21 Paris Nissan showed V2G
product that ENEL will roll out in 1Q
2016
 EVs = Power Plants on Wheels

(1) Photo: Tony Seba 47

3. The autonomous vehicle disruption

Photo: Wikipedia

48
 Nevada approves autonomous trucks

Financial Times 5 May 2015

 Daimler Benz autonomous self-driving truck approved in Nevada
 Video Link:

Video: WSJ

49

‘Nissan autonomous Car by 2018’

3 June 2014
Reuters

50
 Tesla capable of self-driving 90% of the time by 2015

2 Oct 2014
TheVerge
‘90% of your miles to be
autonomous. For sure on
highways.’ (1)

 Elon Musk [Dec 2015]:

"Fully Self-Driving within 2
years." (2)

(1) UK Daily Mail (2) Elon Musk, Tesla Photo: Tesla

51

What about the COST of autonomous vehicles?

Source: US National Archives Source: George Grantham Bain Collection

52
 What an autonomous car sees

 Google Car: 3D Machine Vision uses LIDAR

Graphic: Popular Science

53

Exponential technologies:
Machine vision - LIDAR sensors

 In 2012 Google announced that the cost of technology in its self-

driving car was ~US$150k.
 LIDAR sensor (for machine cision) was US$70k in 2012

 By the end of 2013, the

next-gen LIDAR was:
US$10k
 By Oct 2014, a SV startup
company announced
LIDAR for US$1k

Graphic source: Wikipedia

54
Source: Clean Disruption
 LIDAR: From US$70,000 to US$1,000 to US$90

 2015 Gen 1 LIDAR: ~US$1,000

 2016 - Gen 2 (solid state): US$250

 Gen 3 (postage stamp): US$90

Source: Quanergy
55

Autonomous vehicles = Computers on wheels

Image copyright © 2015 by Tony Seba

 What is the cost curve of computing power?

 to process sensor input?

56
 Year 2000: World's 1st 1-TeraFlops computer
ASCI RED - Sandia National Labs

Image: ExtremeTech Source: Wikipedia

 Space = 1,600sf (150m2)

 Power Consumption = 850kW
 Cost = US$46 million
57
Source: Wikipedia

Exponential technologies: GPU: Nvidia Drive™ PX

 Dual Tegra® X1 GPU processor

 2.3 TeraFlops
 Power consumption = 15W
 56,666x improvement

 Cost = US$59
 ~1 million x improvement

Image & data source: Nvidia

 Built for self-driving cars

 Surround computer vision (CV) with advanced rendering
 Deep learning S/W, and
 Over-the-air updates

58
Ok, cost is not an issue . . .
but is the market ready for self-
driving cars?

Rodin – Thinker - Photo: Tony Seba

59

Are consumers ready for autonomous cars?

2.8b people

Source: Cisco Systems

60
Are consumers ready for autonomous cars?

Brazil: 95% India: 86%

China: 70%

Images source: chinawshisper.com, inrix.com, ryot.org

61

Cool! We can
and also
while NOT driving!

But what's the disruptive

impact?

Rodin – Thinker - Photo: Tony Seba

62
 Business model
innovation: Car-
As-a-Service

Rodin – Thinker - Photo: Tony Seba

63

My smartphone: On-demand transportation

Plan & schedule ALL transportation needs with apps

1. Buses: Muni, NextBus
2. Trains: CaltrainMe, iBART
3. Car-sharing: Zipcar
4. Ride-sharing: Uber, Lyft
5. On-Demand Bus: VTAFlex
6. Taxis: FlyWheel

Image © 2015 by Tony Seba

64
 Cars: Hugely inefficient use of assets
 Cars are our second-largest capital expense
 Ave car costs = US$31k
 Plus opex: gasoline, insurance, maintenance,
etc

 But cars are parked 96%

of the time! (1)

 4% asset utilisation is a
disruption waiting to happen!

Photo: Tony Seba

(1) Donald Shoup

65

CAR-sharing
 Zipcar:
 On-demand individual transportation
 By the hour, by the day
 760k members and US$270m in revenues (2012)
 Share-to-own ratio: 15
 1 shared zipcar replaces 15 cars
on the road

On-demand mobility: changing

the concept of car ownership
 and reducing the need for new cars

Images: Tony Seba

Source: Clean Disruption

66
 RIDE-sharing
Companies disrupting private and public transportation.
 Connecting users with drivers
 Eg: Uber, Lyft

 Uber (started 2009):

 May 2015 - 311 cities in 58 countries (1)

 Est. 2015 bookings = US$10 billion (2)

 1 million drivers (global) (3)

 Uber worth $62.5b > GM $56.5b (4)

San Francisco figures

 No. of Uber drivers (2015): 22,000
 No. of of taxicabs (2012): 1,825 (5)

 Carpooling ~= half of Uber rides

(1) (2) (3) Business Insider

Image: Tony Seba
(4) CS Monitor
(5) Wikipedia

67

Self-driving + car-sharing:
Convergence of technology
& business model
innovation

Photo by Tony Seba

68
 Uber announced self-driving car project

TheVerge 2 Feb 2015

‘Uber announced plans with Carnegie Mellon University to

create the Uber Advanced Technologies Center: R&D of
autonomous vehicles.’

‘When there's no [driver], the cost of taking an Uber

anywhere becomes cheaper than owning a

car ownership
vehicle...and then

goes away.’ said Uber's CEO

Image: Tony Seba

69

Mashable Jan 13, 2016

GM to Launch Self-Driving LYFT fleet in Austin, TX

“The first mainstream deployment of autonomous vehicles won't be to

customers but to a ride-share platform." GM President Dan Ammann
"This makes sense for GM:
1 - An autonomous Bolt EV will be
in use 60-70% of the time.
2- Easier to create a car that works in
a known city within certain limits
below 30mph.
3- Open up new markets."

Clean Disruption- Copyright © 2001-2016 by Tony Seba Image: GM

70
 Car-as-a-service: The end of car ownership

 Mobility on demand / car-as-a-service:

 Combine
 Self-driving cars tech with
 Car/ride sharing biz model
 Cars available on-demand anytime anywhere to
take you anywhere

 Cars will go fromparking ~90+% of time to

driving ~90+% of time
 Cost / mile ~10x cheaper than car ownership
 We'll need ~80% fewer cars
 80+% fewer parking spots (1)

Photo: Tony Seba

(1) Clean Disruption

71

Clean Disruption CUBE

3d – Clean Disruption of Transportation

• Clean Disruption CUBE

Copyright © 2001-2016 by Tony Seba Video: Tony Seba72

 Helsinki, Finland: Clean disruption by 2025

 Helsinki announced intention to

build ‘mobility on demand’
platform based on self-driving
cars by 2025

 Mobile platform / app would knit

together:
 Driverless cars,
 Little buses,
 Shared bikes and
 Ferries,
 into a seamless “mobility on
demand” service
 Objective: make car ownership
(in the city) obsolete

Image: Fool.com
(1) Guardian

73

4. The solar disruption

Photo: Tony Seba 74

 Solar PV costs: DOWN 222x

Learning curve: 22%

US$100/W

¢45/W

222x

Graph source: BNEF – Economics of PV Power

75

Market: Solar PV installed capacity: UP 174x

250,000 Global installed solar PV (MW) 243,356

200,000
185,356

150,000 141,156

102,156
100,000
71,061

50,000 40,670

23,605
16,229
9,521
5,364 6,946
1,400 1,765 2,235 2,820 3,952
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Data source: EPIA, PV Magazine

 Solar PV market Cagr 2000-2015 ~41%

 Solar PV installed capacity 2000-2014 growth ~174x
76
 Energy = 100% solar by 2030?

Solar installed base (GW)

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0
2014 2016 2018 2020 2022 2024 2026 2028 2030
Source: Clean Disruption

 If solar PV continues to grow at ~41% Cagr

 100% of all energy (not just electricity) in the world would be solar by 2030

77

Can solar continue growing

at this rate?

Rodin – Thinker - Photo: Tony Seba

78
 Solar cost trends
vs
conventional energy

79

Since 1970 prices for conventional resource-

based energy sources are up 6-16x

Oil Nat gas Nuclear

Coal

Sources: DOE, Clean Disruption

80
 Solar cost improvement vs conventional energy

Oil at $30/bbl
Solar PV cost improvement Times
relative to: improvement
(1970-2015)

Petroleum 2,110x
Nuclear 2,929x
Natural Gas 3,284x
Coal 1,294x
Source: Clean Disruption

 Since 1970 solar PV has improved cost by thousands of

times relative to most conventional forms of energy
 Note: unsubsidised cost of solar PV

81

Business / financial model

innovation

82
Zero money down solar: Third-party finance

 ~80% of California residential solar PV was third-party owned & financed

(March 2012) (1)
 Including Solar PPA and leasing
 CA third-party finance = enabled substantially all growth in
residential solar…since 2009

Cash

third-party

California solar initiative Colorado Xcel energy

(1) PV Solar Report
Images source: GTM Research

83

Financial / business model innovations

Financial / business model innovations are lowering the cost of
capital and accelerating solar adoption

1. Third-party finance
 PPA & lease
2. Solar loans
3. YieldCo
4. PACE - Property Assessed Clean Energy
5. Bond-PPA hybrid
6. Crowdfunding
7. MLP - Master Limited Partnership?
8. Reit - Real Estate Investment Trust?

84
 BACK TO SOLAR COST TRENDS:

Grid parity or
god parity?

Rodin – Thinker - Photo: Tony Seba

85

DB: Grid parity in 80% global markets by 2017

 Solar at/below grid parity in 100's of markets globally TODAY

 Deutsche Bank:
Solar below grid parity in
 47 states in the US by 2016
 Up to 80% of global markets by 2017
Source: Deutsche Bank

86
 Solar growth rate
may accelerate!
(Tech S-Curve)

Rodin – Thinker - Photo: Tony Seba

87

Technology adoption S-curve (colour TV % US)

 Solar PV is a technology
 Tech adoption is not linear but follows an S-curve
Source: Technology Futures, Inc, "Practical Tips for Forecasting New Technology Adoption"

88
Graph Source: Technology Futures, Inc
Solar God parity point of no return

Image: RedOrbit.com

89

God parity by 2020 - $ rooftop solar < $ transmission

Transmission
costs ¢/kWh

4-5¢/kWh

4-5¢/kWh

 God parity: cost of (unsub) rooftop solar lower

than cost of transmission!
 Centralised generation can't compete
 Obsolete: Nuclear, natural gas and coal

Source: Clean Disruption

90
 solar + storage GOD Parity

Source: Tony Seba

 Solar and storage costs decreasing exponentially 91

Graph Seba

But not all power generation will

be rooftop, right?
What about utility scale?

Rodin – Thinker - Photo: Tony Seba

92
Utility scale solar in USA –> Dropping to ~5¢/kWh

 2015 USA PPA ~5¢/kWh (+/- 1¢/kWh) (1)

-> 3.87¢/kWh
1. NV energy solar PPA (Jul '15) (2)

 Saudi Arabia PPA 4.9¢/kWh (unsub) (Aug '15) (3)

 "Solar at 5.8¢/kWh is competitive with Oil at US$10/bbl

and gas at US$4/MMBtu" (Mar '15) (4)

(1) Source: GTM Research (2) PV Magazine (3) CleanTechnica (4) Cambridge University and PwC
93

SUMMARY

94
Summary: On the cusp of major disruption in
energy and transportation

2016:
We are HERE

Source: US National Archives

95

Clean disruption: By 2030

1. ALL energy will be solar (+wind)
 Disruption of conventional electric utilities
 Obsolete: nukes, coal, gas, diesel

2. ALL new vehicles will be electric

 Disruption of conventional car industry
 Obsolete: ICE vehicles, petroleum

3. ALL new vehicles will be driverless

 Disruption of conventional car industry, car insurance, parking

96
 Thanks!
Q&A
www.tonyseba.com

Clean Disruption:
Why conventional energy and transportation
will be obsolete by 2030

Tony Seba
www.tonyseba.com
February 2016
CLSA U® is an ongoing executive education programme
designed to bring you firsthand information. Draw your
own conclusions and make more informed investment
decisions - all in a conducive learning environment
reminiscent of university days.

Contact: Grace Hung at grace.hung@clsa.com

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