Development and Expansion of Alternative Energy Markets

Dr. Chris Skinner

Director Product Platforms

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Development and Expansion of Alternative Energy Markets

Topics Why can I & OC speak on this topic ?

Why alternative energy markets ?

What are the options ?

But is alternative energy enough.......?

Where does composite technology fit

Conclusions

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Introduction

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Why is OC qualified to speak on this topic ?

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Dr. Chris Skinner Director of Product Platforms, OC Composite Solutions

Responsibility for all product lines in OC T30 / Fabrics Chopped fiber / Non Wovens Assembled Roving Chopped Strand Mat Continuous Filament mat

Patents & Publications

15 Patents & 27 publications Non Crimp Fabric Composites – Manufacturing, properties

and applications, Lomov, Woodhead Publishing 2011

Why alternative energy markets ?

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POPULATION The estimated development of the world’s population in the period to 2030-40 means that more than 8Bn people will live on the earth. 1. This population development

is stratified with big variations in growth rates by country / region

2. High levels of population growth are seen in the developing world 1.4-1.7%/pa

3. Low levels of population growth are seen in the developed world 0.2%/pa

The world is experiencing massive population growth

The World at 6 Billion – UN Population report

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Population growth is coupled with major urbanization with developing world cities delivering 50% of GDP growth*

Megacities are defined as areas of >10MM inhabitants. Middleweight cities are between 150,000 and 10MM inhabitants SOURCE: McKinsey Global Institute Cityscope 1.0

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Without action, energy demand is expected to continue to grow from 500 QBTU in 2010 to 600+ QBTU by 2020 due to an acceleration in the average growth rate of 2.2% annually until 2020, a rate significantly higher than the historical rate observed from1986. Current estimates are that by 2020 the total amount of energy consumed in the developing world will have risen from the 56% to 64%.

SOURCE: US Energy Information Administration, International Energy Outlook 2013 * QBTU: Quadrillion British Thermal Units (1 QBT = 0.5 million barrels of oil/day)

Projected world primary energy consumption expressed in Quadrillon BTU*

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Energy consumption from population growth, urbanization and GDP growth will create massive GHG emissions

Pathways to a Low-Carbon Economy; Version 2 of the Global Greenhouse Gas Abatement Cost curve; McKinsey & Company 2009

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GHG emissions rise with growth in GDP and population

IPCC, 2014: Climate Change 2014: Mitigation of Climate Change – Summary for Policymakers. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Figure SPM.9. [Edenhofer, O., R. Pichs-Madruga, Y.Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S. Schloemer, C. von Stechow, T. Zwickel and J.C. Minx (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.

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Global mean surface temperature increase as a function of cumulative total global CO2 emissions from various lines of evidence. IPCC, 2013: Climate Change 2013: The Physical Science Basis. Working Group I Contribution to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Figure SPM.10. [Stocker,T.F., D.Qin, G.-K. Plattner, M.Tignor, S.K.Allen, J.Boschung, A.Nauels, Y.Xia, V.Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, UK and New York, USA.

Science links total GHG emissions to increases in surface temperature

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We need to significantly reduce emissions to stabilize the climate*

* Versus business as usual emissions

14 • The Carbon Productivity Challenge: Curbing climate change and sustaining economic growth, McKinsey, 2011; Global Insight GDP forecast to 2037, extrapolation to 2050; McKinsey Analysis; MGI Global Energy Demand Model (transmission losses allocated to end use segment); “Curbing the growth of global energy demand, McKinsey Quarterly, July 2007

To deliver growth and the reduce emissions we need to achieve major carbon productivity

What are the options for carbon productivity ?

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Alternative Energy Sources

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Analysis of all energy sources shows they follow similar developmental trends

Historic data: Energy Balances of OECD Countries (IEA, 2009), Energy Balances of non-OECD countries (IEA 2009); Projections by Shell International Gert Jan Kramer & Martin Haigh, Nature 462, 568-569 (2009)

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The speed of energy technology development has been extensively studied. An article in Nature identified the “laws” of energy technologies.

1. Establishment phase: It takes 30 years to span the 1000-fold growth needed to get to 1-2% of primary energy demand (26% p.a.)

2. Growth phase: After the Establishment phase deployment rises linearly to its ultimate share depending on the sources economic competitivity

With the development of new technologies there are significant uncertainties which must be addressed to encourage industry to undertake the development challenge:

1. Governments must establish a “carbon price” then provide funding for basic R&D and establish energy efficiency standards.

2. There is also potential requirements for “transition incentives” to enable the massive investments to create competitive low carbon technologies.

Low carbon sources of energy are needed to drive economic growth

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Economic competitivity of alternative energy requires significant R&D

With all emerging technologies to deliver low carbon / zero carbon energy sources the R&D challenge is to drive high capital cost technologies down the capital cost learning curve as these technologies are characterized as energy sources where there is little /zero variable cost of production due to the high initial capital cost.

In technologies such as PV solar 60% of the initial capital cost

is driven by production of the cells(ref). Current estimated that cost learning for PV solar has been 23% p.a.

For wind energy 70% of the initial capital cost is driven by the

production of the turbine system (and the blade comprises 20% of turbine cost). Current cost learning is estimated at 13% p.a.

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Historical cost learning in a range of emerging energy technologies

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The H2 2014 levelized cost of electricity (central and regional scenarios in $/MWH)

But is alternative energy enough.......?

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The abatement cost for GHG today (ish)

*Abatement cost curve in 2030, Opportunities and Challenges from Climate Change for the Chemical Industry, Frankfurt 2009

24 Pathways to a Low-Carbon Economy; Version 2 of the Global Greenhouse Gas Abatement Cost curve; McKinsey & Company 2009

The abatement cost for GHG beyond “business as usual” in 2030

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To achieve a dramatic increase in carbon productivity (estimated to be 20Gt CO2 for stability) future actions need to focus on opportunities to abate the maximum amount of carbon for the minimum cost. Without this focus the world will be focused into a tradeoffs between abatement and economic growth. There are a number of conclusions: A significant portion of the abatement potential have a NEGATIVE cost to society

(i.e. would result in a positive economic return largely from savings in energy costs through energy efficient buildings or fuel efficient vehicles.

Significant levels of CO2 abatement can be achieved (27 gigtonnes of CO2) at a cost of approximately EURO 40/te . Of this amount industry and power represent less than 50% of the opportunity and the developing world (excluding China) represents >40% of the abatement opportunities.

CARBON PRODUCTIVITY requires the development of CO2 abatement technologies

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Substantial reductions in emissions will require large changes in investment patterns.

IPCC, 2014: Climate Change 2014: Mitigation of Climate Change – Summary for Policymakers. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Figure SPM.9. [Edenhofer, O., R. Pichs-Madruga, Y.Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S. Schloemer, C. von Stechow, T. Zwickel and J.C. Minx (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.

Composite technologies in abatement technologies ?

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Composite materials offer a unique balance of specific stiffness vs specific strength impacting specific abatement technologies

Source: Ashby diagram generated using software from Granta Design

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Composite materials offer a unique balance of specific stiffness vs specific strength impacting specific abatement technologies

*Abatement cost curve in 2030, Opportunities and Challenges from Climate Change for the Chemical Industry, Frankfurt 2009

Correlating the performance of composites with abatement technologies highlights wind energy & metal replacement as key themes for developments .

30 Source: Data from Windnovation analysis presented a the OC Blade design workshop, Shanghai September 2014

Wind Energy: A young industry heavily reliant on composite technologies

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Blade Length [m]

Bla

de

Mas

s kg

]

Wind Energy: Composite performance is critical in reducing the mass of longer blades

Source: Data from Windnovation analysis presented a the OC Blade design workshop, Shanghai September 2014

novWIND ationENGINEERING SOLUTIONS Gm b H

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Wind Energy: Fiber, resin and fabrication technologies are key

Performance for “low weight beam in bending”

Vehicle Light weighting: The potential to deliver significant abatement with a positive cost of saving

Source: Ashby diagram generated using software from Granta Design; Owens Corning internal information

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Vehicle Light weighting: The potential to deliver significant abatement with a positive cost of saving

• Short term: for pure weight saving, Aluminum is expected to replace steel (e.g. body panels) as composite technology is not cost competitive

• Medium-long term: enhancing function integration is requiring a full reengineering of the car modules where composites have an edge

Composites are one of the key light weight solutions

Source: Owens Corning internal information

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Delivering on insulation system adoption requires integration of product performance with building science to ensure optimum performance:

– Air infiltration

– Moisture transport

– HVAC systems

– Indoor air quality

– Construction methods

– Building operation

– Life Cycle Assessments / eco-analysis

Insulation Systems: New Build and retrofit insulation offers significant abatement potential with limited capital intensity

Conclusions

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Conclusions - Development and Expansion of Alternative Energy Markets

Megatrends of population growth, urbanization will lead to increased levels of energy consumption that will impact to climate of the planet. Major improvements in “carbon productivity” will be required to stabilize/reverse climate change.

Pathways to a Low-Carbon Economy; Version 2 of the Global Greenhouse Gas Abatement Cost curve; McKinsey & Company 2009; Gert Jan Kramer & Martin Haigh, Nature 462, 568-569 (2009);

Alternative energy sources based on renewable resources will be critical in carbon productivity. Based on established models for adoption wind and solar energy will be key between 2015-2040 in impacting carbon productivity.

Analysis shows that alternative energy sources are important but need to be part of a range of solutions delivering abatement solutions. Many technologies outside of alternative energy offer significant abatement with limited impact on economic growth. Composites have a critical role in play in both alternative energy (wind) and abatement technologies (light weighting / insulation) which will require development in fiber types, resin technologies and processing technologies to make high volume composites applications competitive against other materials.

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Thank you for your attention

If you have questions or inquiries, please contact:

Christopher.skinner@owenscorning.com

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