Investment Dynamics in Solar Photovoltaics - The Journey so far and beyond
 

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This presentation shows solar photovoltaic market trends in 2008, the impact of the economic downturn, past and future investment trends, major drivers, and the resurgence of Germany and Japan.

This presentation shows solar photovoltaic market trends in 2008, the impact of the economic downturn, past and future investment trends, major drivers, and the resurgence of Germany and Japan.

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Investment Dynamics in Solar Photovoltaics - The Journey so far and beyond Presentation Transcript

  • 1. Investment Dynamics in Solar Photovoltaics – The Journey so Far and Beyond Sivapriya Ramakrishnan, Research Analyst Business and Financial Services, Energy and Power Systems 20th October 2009
  • 2. Focus Points Solar Photovoltaic Market Trends in 2008 Geographic Differences Impact of the Economic Downturn Investment Trends Trends in 2008 Trends in 2009 Major Drivers Resurgence of Germany and Japan Concluding Thoughts 2
  • 3. Solar Photovoltaic Market Trends – The Boom in 2008 Solar Photovoltaics Market: Annual PV Installations (Global), 1998-2008 Maximum growth in installations 20000.0 60.8 70.0 Cumulative Installed Capacity (in MW) 60.0 Growth Rate (%) 15000.0 35.3 50.0 37.6 34.3 Led by 27.0 31.0 40.0 10000.0 23.4 24.9 spurt in 21.2 22.5 30.0 installations 5000.0 20.0 in Spain 10.0 0.0 0.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year Cumulative Photovoltaic Power Installed (MW) Growth Rate (%) Note: All figures rounded; the base year is 2008. Source: Frost & Sullivan Why did installed capacity almost double in 2008? Additions in new installations primarily driven by the Spanish demand (accounting for more than 45.0 percent) followed by the Germany and Japan. New markets opened up in Europe which included France, Belgium, Portugal and Czech Republic Crude prices were spiraling and reached dizzying heights which quickly directed the global attention towards clean technology. 3
  • 4. Geographic Differences Solar Photovoltaics Market: Geographic Highlights (World), 2008 Germany - One of the largest markets, introduction of EEG enhanced growth Japan – Falling market share U.S. - Extension of ITC Italy - Combination of net metering and premium tariffs encouraging solar energy Spain - leading PV destination in 2008 South Korea - emerged as the 4th largest in terms of solar PV installations China - PV market driven by demand from German and Spanish markets Note: All figures rounded; the base year is 2008. Source: Frost & Sullivan 4
  • 5. Effects of the Economic Downturn Uncertainty regarding the implementation of Stagnation in demand due to recession and ITC reduced feed-in tariff U.S. Germany Slackening demand Looks to gain leadership in 2009 Slump in demand in U.S., Spain, reduces Feed-in tariff program manages to sustain scope for China the market China Italy Cap on installations to be a major roadblock Government incentives set to bridge falling in terms of market growth exports Spain Japan Solar Photovoltaics Market: Installed Capacity (Spain), 2008-2010 The drop in crude oil prices after peaking in July 2008, 2511.0 Slump due to Installed Capacity has marginally reduced the focus on solar PV. imposed cap and revised feed-in (MW) Shrinking of the Spanish market implies oversupply in tariffs the global market. Adding on to diminishing margins 500.0 460.0 could be the impact of reducing prices of solar modules. 2008 2009 2010 Note: All figures rounded; the base year is 2008. Source: Frost & Sullivan 5
  • 6. Investment Trends 6
  • 7. Trends in VC Investment in 2008 Growth of Solar Growth of Solar Solar Photovoltaics Market: Investment in Cleantech (World), 2008 Maximum investments secured by clean technology in Maximum investments secured by clean technology in Largest 2008. contribution is 2008. 10.0 50.0 Compostion of Solar (%) from solar 8.0 40.0 Investments in Composition of solar technologies spiked to 40.0 percent. Composition of solar technologies spiked to 40.0 percent. Cleantech ($ billion) 6.0 30.0 4.0 20.0 Q-o-Q Contribution Q-o-Q Contribution 2.0 10.0 0.0 0.0 Signs of meltdown visible in Q4 2008, the effects of which 2002 2003 2004 2005 2006 2007 2008 Signs of meltdown visible in Q4 2008, the effects of which Year have spilled over to Q1 2009. have spilled over to Q1 2009. Investments in Cleantech Composition of Solar Investments Note: All figures rounded; the base year is 2008. Source: Frost & Sullivan Technology Preferences Technology Preferences Geographic Trends Geographic Trends Solar photovoltaics accounted for almost 70.0 percent in North America leads in the number of deals with Europe Solar photovoltaics accounted for almost 70.0 percent in North America leads in the number of deals with Europe total solar technologies investment. total solar technologies investment. close behind. close behind. Thin-film PV and crystalline PV are considered promising 2008 saw aa rise in follow-on rounds due to capacity Thin-film PV and crystalline PV are considered promising 2008 saw rise in follow-on rounds due to capacity investment opportunities investment opportunities expansion. expansion. 7
  • 8. Top Venture Capital Investment Deals of 2008 Solar Photovoltaics Market: Venture Capital Investment in Solar Photovoltaics (World), 2008 Deal Value S.No Company Location Stage Investors ($ Million) EDF Energies Nouvelles, AES Solar, Riverstone 1 Nanosolar Inc U.S. 300.0 Follow-on Holdings, Energy Capital Partners, the Carlyle Group, and others Virgin Green Fund, Rockport Capital, 2 Solyndra Inc U.S. 219.0 Follow-on Argonaut Ventures, RedPoint Ventures, CMEA Ventures, and others 3 SoloPower Inc U.S. 200.0 Follow-on Undisclosed 4 OptiSolar Inc U.S 130.0 Follow-on Undisclosed Sulfurcell Intel Capital, CPE, AIG Investments, Zouk 5 Germany 134.0 Follow-on Solartechnik GmbH Ventures, BankInvest Group, and others Note: All figures rounded; the base year is 2008. Source: Frost & Sullivan 8
  • 9. Trends in VC Investment in 2009 Growth of Solar Growth of Solar Solar Photovoltaics Market: Investment in Clean Technology (World), 2009 Though solar was able to sustain the effects of the Though solar was able to sustain the effects of the 2000.0 Investments in Cleantech recession in 2008 and Q1 2009, investor inclination towards recession in 2008 and Q1 2009, investor inclination towards transportation and biofuels increased in the subsequent 1500.0 transportation and biofuels increased in the subsequent ($ million) quarters. quarters. 1000.0 500.0 Q-o-Q Contribution Q-o-Q Contribution 0.0 Q1 2009 Q2 2009 Q3 2009 Composition of solar technologies in clean tech in Q1 2009 Composition of solar technologies in clean tech in Q1 2009 Year was at 30%, Q2 saw aamassive drop at 9.% and Q3 saw aa was at 30%, Q2 saw massive drop at 9.% and Q3 saw Solar Investments Investments in Cleantech resurgence at 28.4% resurgence at 28.4% Note: All figures rounded; the base year is 2008. Source: Frost & Sullivan Technology Preferences Geographic Trends Geographic Trends Technology Preferences Solar PV and concentrated solar technologies received North America continues to lead due to the new North America continues to lead due to the new Solar PV and concentrated solar technologies received regulations and incentives. maximum investment. regulations and incentives. maximum investment. 9
  • 10. Top Venture Capital Investment Deals of 2009 Solar Photovoltaics Market: Venture Capital Investment in Solar Photovoltaics (World), 2009 Deal Value S.No Company Location Stage Investors ($ Million) Apex Venture Partners , NGEN, Yellowstone Capital , Demeter 1 SolFocus U.S. 77.6 Series C Partners, affiliates of Advanced Equities, and others 2 Solyndra Inc U.S. 198.0 Follow-on Argonaut Private Equity, and others Warburg Pincus, APEX Venture Partners, New Enterprise 3 Suniva U.S. 75.0 Series C Associates, HIG Ventures and Advanced Equities Bessemer, DAG Ventures, Flagship Ventures, 4 Kovio U.S 20.0 Series E Harris & Harris, JVP, KPCB, Mitsui Ventures, Northgate Capital, Panasonic, Pangaea, and others 5 Arava Israel 15.0 Follow-on Siemens Note: All figures rounded; the base year is 2008. Source: Frost & Sullivan 10
  • 11. Major Drivers Solar Photovoltaics Market: Investment Boosters Commercialization (World), 2008 likely to bolster market growth Young industry hungry for capital Government subsidies and Investment Boosters Investment Boosters regulatory support Falling prices of silicon make solar power competitive Market growing at the 35.0 percent over past decade Limited supply of conventional fuel sources Note: All figures rounded; the base year is 2008. Source: Frost & Sullivan 11
  • 12. Resurgence of Japan and Germany • Top 3-5 Japan Germany Past Position Past Position Prior market leadership in early 2000s Prior market leadership till 2007 Subsidies – None since 2005 Subsidies – Thriving on feed-in tariffs and subsidies Expected Growth in 2009 Expected Growth in 2009 Instead of subsidizing the market, Japan’s government has With a favorable regulatory framework and Spain’s cap on succeeded in reducing the prices of solar energy on par installations, Germany is likely to regain its global with the domestic electricity rates. With an ambitious of leadership status. The enticing feed-in tariffs still continue target of increasing the composition on solar energy in to be strongest driver. As the manufacturing hub of solar electricity generation to 30.0 percent, Japan is well on installations, Germany is all set for 2009. track. 12
  • 13. Mergers and Acquisitions Strongest Driver for Acquisitions Economies of scale Carve-outs Transitioning into eco-friendly vehicles Carve-outs by established players Attempt to foray M&A Trends in into Solar PV Automobiles Acquisitions by Investment Several renewables focused funds launched Firms Outlook for 2009 Credit crisis leaves the industry high and dry 13
  • 14. Concluding Thoughts Oversupply and market contraction expected in 2009 Oversupply and market contraction expected in 2009 Solar PV expected to regain growth as signs of recovery in most economies are visible Solar PV expected to regain growth as signs of recovery in most economies are visible R&D initiatives take off and penetration into other verticals expected R&D initiatives take off and penetration into other verticals expected Growth in start-ups with the sole focus of increasing technological efficiency Growth in start-ups with the sole focus of increasing technological efficiency Markets in other geographies show potential Markets in other geographies show potential Among clean technologies, solar is and will mostly like continue to be one of the favorite investment options. As new cost Among clean technologies, solar is and will mostly like continue to be one of the favorite investment options. As new cost effective manufacturing techniques are established in 2010 and solar cell efficiency increases, solar is expected to emerge effective manufacturing techniques are established in 2010 and solar cell efficiency increases, solar is expected to emerge stronger as the recovery begins and financial markets regain status. However, as investment in new technologies such as stronger as the recovery begins and financial markets regain status. However, as investment in new technologies such as smart grid and alternate transportation gain momentum, solar PV faces serious competition. smart grid and alternate transportation gain momentum, solar PV faces serious competition. 14
  • 15. Next Steps Request a proposal for a Growth Partnership Service or Growth Consulting Services to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2010: A Frost & Sullivan Global Congress on Corporate Growth, September 12-15 2010, San Jose, CA (www.gil-global.com) Register for the next Chairman’s Series on Growth: The CEO's Perspective on Competitive Intelligence (November 3rd) (http://www.frost.com/growth) Subscribe for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 15
  • 16. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by taking our survey. 16
  • 17. For Additional Information Johanna Haynes Angie Montoya Corporate Communications Marketing North America Corporate Communications Global Analyst Briefing Coordinator Frost & Sullivan Frost & Sullivan 210-247-3870 amontoya@frost.com Johanna.haynes@frost.com 210-247-2435 Jennifer O’Grady Lori Salazar-Malone Research Director North American Director of Sales Business and Financial Services Business and Financial Services Frost & Sullivan Frost & Sullivan jogrady@frost.com lsalazar-malone@frost.com 210.348.1019 210-247-2448 17