Does renewable energy need support mechanisms? Gianni Operto, Investment Director Zürich, November 11, 2009
Good Energies Mission Mission Energy transition & poverty alleviation Investment strategy Renewable energies & energy efficiency Diversification in Technology Stages Geography Investment style Highly pro-active approach Long term investments Ability to invest across the value chain Dummuies Windfarm Huntly Ltd. (UK) Western Bio-Energy Ltd (UK) Endurance Energies (FR) POWER FOR A BETTER WORLD 2
Why Support Mechanisms? Need to transition to renewable energy driven by Climate Change Insufficient alternatives POWER FOR A BETTER WORLD 3
The fundamental transition to RE Fossil fuels alone can not meet future energy demand 2100 65% 2000 2010 2020 2030 2040 2050 EJ/a 2100 Exajoule per year Other Renewables Solar Thermal (heat) Solar Power (PV & solar thermal) Wind 2007 Biomass 01% 0.1% Hydro Nuclear Gas Coal Oil Global primary energy scenario: Renewables 80% of primary energy by 2100 Source: German Advisory Council on Global Change WBGU Berlin 2003 www.wbgu.de POWER FOR A BETTER WORLD 4
Why Support Mechanisms? Need to transition to renewable energy driven by Climate Change Insufficient alternatives Lower cost POWER FOR A BETTER WORLD 5
The race to grid parity Utility prices and solar power generation cost (EUR/kWh) in Germany (sun energy 900KWh/year) 0.8 Residential systems 0.6 0.4 Commercial systems Commercial competitive Residential competitive Peak utility price (Germany) 0.2 Average residential & commercial power price (Germany) Grid parity in certain markets 0.0 2005 2010 2015 2020 2025 2030 2035 2040 Industrial Solar production cost Commercial Solar production cost Residential Solar production cost Assumptions 5% solar cost decline p.a. 2.5% price increase p.a. of electricity tariff Source: Solarbuzz 2006, Citigroup 06/2005 Average residential power price Average commercial power price Average industrial power price Utility bulk power price POWER FOR A BETTER WORLD 6
Technical Progress and Scale drive down cost Source: Adapted from National Renewable Energy Laboratory POWER FOR A BETTER WORLD 7
The global solar market in 2020 GW Cumulative installed capacity, Cumulative installed Annual PV capacity PV capacity additions Concentrated solar thermal power Photovoltaic (PV) 206 160 120 Annual economic demand Annual policy-driven demand Cumulative installed capacity 14 15 16 17 18 20 20 16 1 5 90 80 40 25 3 6 0 2005 2010 2015 2020 1 12 10 8 6 7 4 2 3 2 2006 2008 2010 2012 2014 2016 2018 2020 12 8 4 0 1 Estimate uses base-case scenario. Aggressive scenario predicts 400 GW in 2020 Source: The McKinsey Quarterly, June 2008 POWER FOR A BETTER WORLD 8
Investments in Clean Energy 2000-2009/Q3 140,000 USDm M&A 120,000 Project finance Capital markets* 100,000 VC/PE 124'280 127'930 80,000000 CAGR 2000-2008: 53.9% 73'337 60,000 57'632 45'351 40,000 20,000 0 4'071 3'832 4'434 7'731 10'873 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009** Note: * IPO, capital increases and convertible bonds ** until September 2009 (CAGR: Compounded Annual Growth Rate) Source: www.newenergyfinance.com POWER FOR A BETTER WORLD 9
Impact of financial crisis Panel prices (wholesale) /Wp Source: pvxchange POWER FOR A BETTER WORLD 10
PV the sun behind the clouds GW 25.00 Bryan, Garnier & Co 25.7 New Energy Finance (optimistic) New Energy Finance (conservative) AVERAGE CAGR: approx. 48% 22.3 21.9 20.00 EPIA (policy driven) EPIA (moderate) Navigant (accelerated) 18.8 18.5 17.4 15.00 Navigant (conservative) 14.9 13.8 Navigant (recession) 13.6 12.0 11.7 12.3 Dresdner Kleinwort / Commerzbank 10.8 11.1 10.5 12.22 6.0 9.7 10.7 10.00 Credit Suisse 10.7 5.6 10.3 9.6 7.3 7.9 3.1 5.5 8.8 9.1 5.6 30 3.0 61 75 7.5 6.8 6.1 2.9 6.8 6.0 6.0 2.8 2.0 5.4 5.5 5.00 2.6 4.6 1.9 4.7 4.1 4.6 17 1.7 1.4 4.6 1.1 2.4 0.3 0.3 0.4 0.6 3.8 1.3 1.6 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E Average values: 6.6 9.8 13.7 18.5 26.5 POWER FOR A BETTER WORLD 11
A perfect storm? Relative over-capacity from Gold rush Insufficient focus on driving down cost Sudden death of Spanish bonanza Project financing i dried out Bankability over new products highly challenging POWER FOR A BETTER WORLD 12
Investor s fundamentals Large and fast growing markets Secured healthy yprofit margin Controlled risk Secured revenue streams are imperative to attract required capital for industry build up! POWER FOR A BETTER WORLD 13
Summary YES, new technologies require support mechanisms but... 1. Stability more important t than absolute level l 2. Transparency of permitting (bureaucracy) 3. Technology specific 4. Adequate level POWER FOR A BETTER WORLD 14
Questions POWER FOR A BETTER WORLD 15
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