Ernst Rauch Munich Re 40th AIO Conference Cairo 28 May Renewable energies worldwide developments and the German perspective

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Agenda 1. About Munich Re 2. Renewable energies worldwide developments and the German perspective 3.

2 Picture source: Dii GmbH as a driver of economic development? 40 th African Insurance Organisation Conference, Cairo Ernst Rauch Head Corporate Climate Centre Climate & Renewables Agenda 1. About Munich Re 2. Renewable energies worldwide developments and the German perspective 3. Munich Re s Climate and Renewable strategy and activities 4. Energy situation in MENA and Europe 5. Future energy supply contribution from renewable energies / Desertec? 2 as a driver of economic development? 1

3 The Munich Re (Group) Munich Re (Group) Reinsurance Munich Health Primary Insurance Belgium Asset Management Key data 2012: Gross premiums written 52 bn.; Consolidated result 3.2 bn. Staff (2011): 47,206 worldwide; 11,215 reinsurance 3 Investments in renewable energies worldwide (in US$ bn) 90% of the investments were done in the solar and wind sector CAGR: approx. 31% Biofuels Small Hydro Geothermal Biomass + Waste Solar Wind Source: BNEF / UNEP Global Trends in Renewable Energy Investments as a driver of economic development? 2

Investments in renewable energies worldwide 2004-2011 (in US$ bn) Together Europe, USA and China account for nearly 80% of total investments 2011 300 250 Middle Middle East East & Africa & Africa

4 Investments in renewable energies worldwide (in US$ bn) Together Europe, USA and China account for nearly 80% of total investments Middle Middle East East & Africa & Africa Together in 2011: 5.5 bn CAGR 31% 200 Latin Latin America America & Canada & Canada (excl. (excl. US & US Brazil) & Brazil) Brazil Brazil Asia Asia & Oceania & Oceania (excl. (excl. China China & India) & India) India India China China United United States States Europe Europe Source: BNEF / UNEP Global Trends in Renewable Energy Investments Renewable electricity production in Germany (TWh) Main part by wind power and biomass 2012: approx. 25% of total electricity production Waste Biomass PV Wind Hydro Source: Statistisches Bundesamt, BMWi, u.a. 6 as a driver of economic development? 3

Investments in the construction of renewable energy plants in Germany in 2012 (in bn ) Hydro Geothermal 70 930 Investments in renewable plants 2012: 19.

5 Investments in the construction of renewable energy plants in Germany in 2012 (in bn ) Hydro Geothermal Investments in renewable plants 2012: 19.5 bn Solarthermal 990 Biomass (heat) 1,050 Biomass (electricity) 1,500 Wind 3,750 PV 11,200 Source: AEEG Stat. / BMU, Erneuerbare Energien Political targets renewable energies and emission reduction (climate targets) Country Emission reduction RE share of gross electricity consumption Other European Union 2020: -20% 2050: % (basis: 1990) 2020: 20% Reduction in primary energy consumption (-20%) via better energy efficiency Germany 2020: -40% 2050: % (basis: 1990) 2020: 35% 2050: 80% Reduction in primary energy consumption (-20%) and electricity consumption (-10%) United States 2020: -28%* (from direct sources as building energy use and fuel consumption) 2020: -13%* (from indirect sources, e.g. employee commuting) Double the share of electricity from clean energy sources to 80% by 2035 (including nuclear power sources and CCS).** Improve the energy efficiency of commercial buildings by 20% by ** * Applies to federal government investments only ** General political targets Source: different governmental websites 8 as a driver of economic development? 4

6 Munich Re s climate strategy Climate Change Renewable Energies Risk Assessment Business Opportunities Asset Management Research of natural hazards and climate change impacts Leading provider of risk transfer solutions for renewable energies / new technologies New (direct) investment options Carbon neutral company (headquarter Munich: 2009, reinsurance worldwide: 2012) Initiating flagship projects such as the Dii GmbH ( Desertec Industrial Initiative ) 9 New Business Opportunities example: innovative insurance solutions for renewable energies and new technologies Munich Re provides insurance solutions along the value chain of renewable energies and new technologies. Some cover examples: PV performance warranty cover Performance warranty cover for concentrator photovoltaic systems (CPV) Performance guarantees of CSP power plant Guarantee insurance cover for wind energy (serial loss cover) Cooperation in the renewable energy sector Cover of exploration risks for geothermal drilling projects Source: Munich Re 10 as a driver of economic development? 5

Asset Liability Management Munich Re s investments in renewable energies /

assessing technical risks Onshore windparks in Germany and UK PV power

(Amprion) as at 10/2012: Munich Re has investet some 800 m Goal 1:

5 bn in renewable energies / new technologies Goal 2: Investments of up to

7 Asset Liability Management Munich Re s investments in renewable energies / new technologies Synergies between insurance and asset management by assessing technical risks Onshore windparks in Germany and UK PV power plants in Italy and Spain / Tenerife High voltage electricity grid (Amprion) as at 10/2012: Munich Re has investet some 800 m Goal 1: Investments of up to 2.5 bn in renewable energies / new technologies Goal 2: Investments of up to 1.5 bn in infrastructural projects (e.g. transport, supply, telecommunication). Source: Munich Re Picture source: pixelio.de 11 Population development in MENA and Europe High population growth projected for the MENA region % + 40 % Source: Dii GmbH 12 as a driver of economic development? 6

8 Best conditions for solar energy production due to high solar irradiation in the MENA region Source: Dii GmbH 13 Also good wind conditions in the Mediterranean region Source: Dii GmbH 14 as a driver of economic development? 7

Electricity from the desert A long road from idea to implementation: realized first time in Egypt in 1912 1912 Construction of the world s first industrial size solar power plant in Maadi (south of

It is pumping approx. 2.000 liters water from the Nile per minute to irrigate cotton fields.

up a solar farm in Africa and southern Europe.

Under the leadership of the German Aerospace Center (DLR), feasibility studies will be prepared over the next few years.

9 Electricity from the desert A long road from idea to implementation: realized first time in Egypt in Construction of the world s first industrial size solar power plant in Maadi (south of Cairo). Five parabolic solar collectors, each 62m long, 4m wide and with a distance of 7.6m between them The solar plant connected to a power plant is producing about 55 PS. It is pumping approx liters water from the Nile per minute to irrigate cotton fields As Chairman of Messerschmitt-Bölkow-Blohm GmbH, the engineer and entrepreneur Ludwig Bölkow has been conducting research into solar cells and photovoltaic systems with the objective of setting up a solar farm in Africa and southern Europe The TREC Initiative (Trans-Mediterranean Renewable Energy Cooperation), founded in 2003 by the Club of Rome, takes up Bölkow s idea and is developing the concept. Under the leadership of the German Aerospace Center (DLR), feasibility studies will be prepared over the next few years. Source: Frank Shuman, Philadelphia and Cairo, 1913; Spiegel online; Die Zeit 15 Power generation from sun and wind energy in the deserts of the Middle East and North Africa Desertec Foundation ( Dii GmbH ( World (2005) The world s deserts receive in 6 hours the amount of energy, that mankind consumes in a hole year. (Gerhard Knies, Desertec Foundation) The graphic shows possible sites for solar and wind energy plants in the desert regions of North Afrika and the Middle East. The arrows indicate possible transmission lines. Source: Dii GmbH, Desertec Foundation 16 as a driver of economic development? 8

Goals of the Dii GmbH Industrial implementation of the Desertec -concept Main goals 2012: Roll-out Plan, time horizon 2050 2012/2013: Definition / advertisement of first reference projects (Morocco)

Geography-technologymatrix Sourcing, construction, maintenance concept TRANSMISSION Connecting MEAN countries with Europe Grid requirements and bottlenecks Transmission technologies Optimal

10 Goals of the Dii GmbH Industrial implementation of the Desertec -concept Main goals 2012: Roll-out Plan, time horizon /2013: Definition / advertisement of first reference projects (Morocco) 2013: Desert Power: Getting Started GENERATION Converting renewable energies from sun and wind in the deserts Location priorities Focus technologies Generation costs, investments and their evolution Geography-technologymatrix Sourcing, construction, maintenance concept TRANSMISSION Connecting MEAN countries with Europe Grid requirements and bottlenecks Transmission technologies Optimal transmission paths Transmission costs and evolution Scenarios for grid arrangements MARKETS Support development of renewable energy markets in MENA and European Union Prioritized focus countries and roles Market potential for desert power Potential offtakers in EUMENA Financial gap Support mechanisms to bridge the gap between costs and market level Source: Dii GmbH 17 Progress of Desert Power Roll-out plan 2050 and first projects e.g. in Morocco and Saudi Arabia Roll-out plan provided in June 2012, describing the target picture Desert Power 2050 Energy mix (EU- MENA): Cost-optimized and sustainable EUMENA energy system 53% Wind (On-/ Offshore); 25% Solar (CSP/PV) Source: Dii GmbH 18 as a driver of economic development? 9

11 Today most European and many MENA countries rely heavily on fossil fuel imports for their electricity Annual electricity mix 2010 Source: Dii GmbH 19 Affordable renewable electricity is produced in areas with optimal renewable resources Annual electricity mix 2050 Source: Dii GmbH 20 as a driver of economic development? 10

Dii GmbH Desert Power: Getting Started (bis 2020) ~50 GW renewable energies (without hydro, geothermal, biomass) as 2020 targets for MENA derived from country targets Source: Dii GmbH 21 The MENA

until 2030 Country strategy with Sonelgaz Reference Project: 1,000 MW TUNISIA: RE national strategy Country strategy with STEG ER Reference Project: 1,000 MW EGYPT: RE on the policy agenda MoU

12 Dii GmbH Desert Power: Getting Started (bis 2020) ~50 GW renewable energies (without hydro, geothermal, biomass) as 2020 targets for MENA derived from country targets Source: Dii GmbH 21 The MENA energy transition is taking off MOROCCO: RE national strategy Country strategy with MASEN Reference Project: 500 MW ALGERIA: RE national strategy Planned investment: USD 60 bn. until 2030 Country strategy with Sonelgaz Reference Project: 1,000 MW TUNISIA: RE national strategy Country strategy with STEG ER Reference Project: 1,000 MW EGYPT: RE on the policy agenda MoU with NREA (Jan. 2013) Intensive talks to all other North African and Middle Eastern countries continued JORDAN: RE strategy Current talks with Jordanian partners Source: Dii GmbH 22 as a driver of economic development? 11

13 Co-ordinated actions among key drivers Arab League Source: Dii GmbH 23 Desert Power for EU-MENA and benefits for all realization of concept would lead to economic and social benefits Europe realizes cost savings from desert power MENA creates an export industry based on desert power Annual cost savings through connection 33,500M Annual net power export to Europe 1087TWh Annual net power exchange Cost of production 1110TWh x plus transmission 43 /MWh+ 15 /MWh Savings per imported MWh Annual export = 30 /MWh = industry volume 47,000-63,000M Access to stable and affordable RE potentials Meeting climate action goals Decoupling of domestic energy supply from fossil fuels New industries, growth and job effects Source: Dii, Fraunhofer ISI Note: Net export from Europe to MENA amounts to 23TWh 24 as a driver of economic development? 12

14 Members of the Dii GmbH (As at May 2013) Shareholders Associated Partners Source: Dii GmbH 25 Picture source: Dii GmbH Thank you for your attention! Ernst Rauch Head Corporate Climate Centre Climate & Renewables Contact: Website: as a driver of economic development? 13

Desertec. Powering Europe though the Sahara

Desertec. Powering Europe though the Sahara Desertec Powering Europe though the Sahara Agenda Background and Key Players Europe Investing for Green Power Focusing on Morocco Modeling Morocco Outcome Background and Key Players Background and Key