Today’s Presenter Functional Expertise • 5 years of research & consulting experience, involvement in more than 40 projects. Particular expertise in: • Opportunity Assessment • Procurement Strategy • Supply Chain Management Strategy • Due Diligence for IPO/M&A activity Industry Expertise • Experience base covering broad range of energy sectors, leveraging long-standing working relationships with leading industry participants: • Renewables sector (wind, solar, tidal, hydro) • Conventional thermal energy (coal, gas) • Nuclear • Oil & Gas • Future energy (fuel cells, energy storage, smart energy)Jonathan What I bring to the TeamRobinson • Extensive track-record of energy focused research and consulting projectsSenior Consultant • Knowledge of, and relationships with, key stakeholders in the energy sector • Strong analytical skillsEnergy, EnvironmentPractice & Building Career HighlightsTechnologies Practice • Before Frost & Sullivan, worked for a political consultancy in London and for the NSW State Government in Australia.London (UK) Education and Nationality • MBus, University of Sydney; BSc Politics & Law, University of Southampton, UK National. 2
Topics for Discussion Coal Nuclear Solar Wind Smart Energy Natural Gas & Shale Gas
New coal opportunities limited to key geographies; largely refurbishment and co-firing opportunities in Europe and North America Snapshot on Key Coal-fired Power Markets Europe: Minimal orders in the next 5 years due to uncertainty Russia: Orders coming from Eastern Europe, Turkey Replacement of existing Co-firing opportunities base – extremely poor condition The United Arab India and China: United States: Emirates and Oman: Continued strong growth in both,Refurbishing/retrofitting the Preservation of gas although China will gradually focus existing base reserves more on other fuels South Africa: Prospect Major orders placed, but continual need for power; diversification into gasPoor Good Source: Frost & Sullivan
Nuclear will continue to play a role in the global fuel mix; investment in new projects likely to continue in Asia Nuclear Power Sector : Reactor Activity (Global), 2004-2011 16 14 12 Number of nuclear plants 10 Final Shutdowns 8 New connections 6 4 2 Construction initiation 0 2004 2005 2006 2007 2008 2009 2010 2011 Source: Frost & SullivanFrost & Sullivan Verdict:- High profile nuclear set-backs in Germany and Italy have minimal impact on overall market.- China, India, Russia and Korea dominate in terms of plants currently under construction. China, Russia and Korea allset to continue with orders, India uncertain.- North American new build unlikely due to low gas prices and capital constraints.- Europe – some countries remain committed, but orders will be slow to be placed.
Era of Europe’s dominance in solar PV is coming to an endCountry Policy Impact Key Solar PV Markets, Annual Installations, 2011-2012 Solar FIT introduced in Aug, 2011; emerging domestic demand will take heat Germany China away from concerns of demand recovery in Europe USA 7,500 Japan Solar FIT re-introduced in Aug, 2011 for 2,500 3,000 Japan residential and non-residential market 5,500 MW 1,100 segments 3,500 1,600 China State RPS for solar provisions, state 4,000 rebates and tax credits. DoE’s Renewable USA Energy loans guarantee can be reduced 2,000 after Solyndra scandal. National Level Policy (JNNSM) – 3 phases India with total 20,000 MW by 2022, State level policies, RPO and REC Further cuts to FIT affect the market negatively. Efforts to cap the market atGermany Annual installations, MW 2.5-3.5 GW yearly. Proposals for capping 2011 2012 new installations at 1 GW a year. Positive Neutral Negative Note: The graph is not drawn to scale
Solar costs will continue on a downward trend Solar module cost breakdown, 2011-2012 ASP/Cos t per watt 1.20 1.10 1.00 0.96 0.80 0.60 Module gross profit Module processing Cell gross profit 0.40 Cell processing Wafer gross profit Wafer processing 0.20 Poly cost 0.00 end 2011E 2012E Further drop-down in prices is likely to take place during 2012, bringing ASP below 1.00$/w by end of 2012. Over 40% of the drop will be attributed to per watt cost of poly.
Current policy developments increasingly put risk on subsidies Impact onCountry Policy Development Key Wind Markets, Annual Installations MW, Wind 2011-2012 Wind support hasn’t been France changed, contrary to solar Europe China Moratorium on new USA installations, proposal to 10,300 18,000 8,000 Spain cut FIT by 35%, plus other measures translating into 6,800 10,300 9,600 4,000 9,600 insufficient returns India 17,000 New system based on 3,200 long-term fixed contracts is 3,000 UK proposed, which may reduce return for wind farms. Positive Solar FIT reduced, Neutral proposal to cap theGermany market, Wind still Negative supported. Fed cash grant expires in Dec, Fed budget for clean 2011 2012 Annual installations, MW US energy programmes cut by the US Senate. Note: The graph is not drawn to scale
Different timelines & priorities for key players over the next decade Technology Policymakers/Regu Utility Consumer Providers lators2010 • AMI • AMI (Smart Meters, • Accommodating all • Energy Monitors • Distributed Controls, Sensors, forms of generation • AMI (Smart Meter) Automation etc.) • Advanced Transmission • Sensing & • Interoperability/ • Smart Thermostats Technologies Measurement open architecture (HVDC, FACTS) • Advanced Transmission • Integration of Technologies • Security (Grid and Distributed • Power Quality information) Generation Devices • Smart Appliances • Demand Response • Demand Response • Open Architecture • Electric • Demand response • Electric Vehicles • Energy Storage Vehicles/Plug-in2020 hybrid vehicles
The complex smart universe – relationships between these playerswill be a key factor in future development Information & Communication Technology Home Automation Utilities Compan Compan y y Comp Co Com any mpa pany ny Com Compa ny pany Telcos Smart Meter/AMI In-Home Display
Sensors and meters key components in the smart space Sensor Market Growth Forecasts (2007-2017) European Electricity Smart Meter Revenue Growth Forecasts (2010-2017) 2,500 1,600 2,000 1,400 Year-on-year growth = 15% 1,200 1,500 1,000 1,000 800 600 500 400 200 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 Source: Frost & Sullivan 2010 2017 Source: Frost & Sullivan Global sensor market size to treble in 10 years. Strong growth in “smart” sensor products
Significant boost in gas expectations since last year forecasts 500 Europe 252 Russia 465 485 246 200 107 108 North 102 America 222 2010 2015 2020 202 2010 2015 2020 139 China 107 73 2010 2015 Middle 2020 38 East 2010 2015 2020 India 2010 2015 2020 50 South Africa 74 22 34 America 69 50 2010 2015 2020 60 72 47 2010 2015 2020 2010 2015 2020 Globally the 2020 gas capacity forecasts was adjusted upwards by 7%, with the most significant regional adjustments for Asia and Europe. The substantial slowdown and in some cases elimination of nuclear power from the fuel mix, together with improved prospects for shale gas and worsening prospects for coal in developed regions are key drivers behindSource: World EnergyOutlook, Frost & Sullivan the upgrades.
Shale gas the hot global gas topic; high uncertainty over reservelevels due to lack of geological data Gas Market Production, Consumption and 1,932 Reserves, (Selected Regions) 2011 (Trillion Cubic Feet) 639 1,275 Europe (13 gas markets) North America 346 186 (USA, Canada, Mexico) 11 15 28 28 107 China 2.9 3.1 1,225 India 63 38 1,042 1.4 1.9 South America Africa* 240 217 Production 3.4 3.4 3.6 1.6 Consumption Proven Reserves Source: EIA Technically Recoverable * Libya, Algeria, South Africa, Reserves Tunisia, Morocco, Mauritania
Shale Gas Reserves in Detail Shale Gas Reserves Europe North America UK, 1700 Asia Canada, Other , 7131 10980 Poland, 5292 India, 1783 US, 24395 Pakistan, 1443 France, 5094 Mexico, 19272 China, 25100 Africa Australia Australia, Latin America 11207 Others, 1019 Algeria, 6537 Others, 6367 South Af rica, 13726 Argentina, Libya, 8207 Brazil, 6396 21904 Unit: billion cubic metres (bcm) Source: EIA, Frost & Sullivan estimates
Impact differs by region; likely to lead to greater amounts of gas-firedpower generation, but unlikely to displace conventional gas/LNG Europe The United States Major impact 2020 China Impact already felt, shale to onwards; challenges Massive potential, but account for 40% of gas to be overcome, like Europe, production by 2030 some countries challenges to be opposed overcomes Environmental Concerns When could shale gas have Technical Issues a significant impact? Water Usage Cost uncertainty vs. other gas supply sources2010-2015 2015-2020 2020-2025 2025-2030 Lack of Infrastructure
Who is active where in Europe? Germany UK Ukraine France (now halted) Hungary Poland
European energy and environment policy: implications for shale gas EU states sovereignty over natural resources – but EU regulates environment 1 and water 2 Shale gas could be covered by the EU ETS EU unlikely to provide substantial subsidies – some clearly benefit, some no 3 reserves or not exploiting
Cost uncertainty vs. other gas supply sources Cost Comparison – Pipeline Gas, LNG and Shale Gas (2009) 12 10 8 $/MBtu 6 4 2 0 Pipeline LNG Shale ( current estimates) Source: EIA World Energy Outlook 2009
Concluding Thoughts 1 Gas’s prospects continue to improve as a global fuel Renewable energy growth to continue, but subsidies under pressure – can solar 2 break through to grid parity? 3 Nuclear not dead but badly damaged 4 Distributed generation to grow, facilitated by smart/T&D investment
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