Iberian Utilities- Looking for value amidst the energy transition

We expect global (ex-China) wind and solar PV capacity to reach 1.9TW by end of 2030 (+124GW p.a.)

Continued reductions in renewable technologies' levelised cost of energy ('LCOE', the total opex+capex cost of generation) over the past 10-15 years have led to a scenario in which wind onshore and solar present value (PV) are economically viable generation sources without any subsidies in many places around the world. We believe wind offshore will be there too in the next few years. As a result, we expect global (ex-China) wind and solar installed capacity to grow to 1.9TW (+124GW p.a.) by 2030E. Our 2030 estimate takes as its starting point the IEA's 2020-25 wind and solar PV capacity addition forecasts by region, and we expect similar growth to occur in the second half of the decade. This should lead to a twofold increase in wind generation over the course of the decade, and 9x more solar PV capacity.

60% increase in global networks capex over the next decade.

As the International Energy Agency (IEA) states in its World Energy Outlook 2020, flexibility is the cornerstone of electricity security in modern power systems. Electricity networks have a central part to play in unlocking flexibility from power plants, energy storage, and demand-side resources. Over the next few years, the IEA expects an unprecedented level of investment in electricity grids, driven by smart grid deployment, new interconnections, renewables growth, and efficiency increases. In the IEA's Sustainable Development Scenario, grids are modernised, expanded and digitalised, and annual grid investment rises to US$437bn by 2030 – up 60% from 2019. In its Stated Policies Scenario, ('STEPS'), over 2 million km of transmission and 14 million km of distribution lines are added over the next 10 years – 80% more than the network expansion over the past decade.