7th International Forum Russian Power 2006
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7th International Forum Russian Power 2006

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7th International Forum Russian Power 2006 7th International Forum Russian Power 2006 Presentation Transcript

  • Zindel Investment Partners Alternative energy vs Traditional Alexander Abolmasov Confidential The Russian Power 2006 7th International Forum
  • Small installed capacity, but fast growth Fuel share/growth rate matrix, 2005 20% Other (geothermal, Wind turbines 18% solar, wind, 59 GW Renewable Energy Existing Capacities, 2005 et etc) 16% Power capacity annual growth, % 14% Biomass power 44 GW 12% 10% 8% Geothermal combustible Small hydro power renewables Solar thermal power 6% 9,3 GW and waste power 66 GW Ocean (tidal) 0,4 GW 4% power Solar PV, grid- natural gas hydro Solar PV, off- 0,3 GW connected grid 2% oil coal 3,1GW 2,3 GW nuclear 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% Fuel share of TPES,% Source: REN21 2006 Renewables Global Status Report, IEA, ZIP estimates 2
  • Costs Turnkey investment costs ($/kW), 2004 Typical Ene rgy Costs (ce nts/kW h), 2005 Integrated gasif ication C os ts of central grid supplies : natural gas combined cy cle (IGCC) C os ts of central grid Combined cy cle (CCGT) s upplies: c oal Traditional resources Electricity grid supplies Adv anced high temperature f rom f ossil f uels (av arage) and pressure design on coal Modern power stations on coal Thermal power station (traditional) on coal Marine Energy Marine energy Geotherm al power (plant s ize: 1-100 MW ) Geothermal power Sm all hy dro (plant size: 1-10 MW ) Small hy dro power Grid connec ted photov oltaic s (2500 kW h/m 2 per y ear) Grid connected photov oltaics Alternative Solar therm al power resources (plant s ize: 1-100 MW ) Solar thermal power Of f -shore wind (turbine size: 1,5-5 MW ) Wind energy On-shore wind (turbine size: 1-3 MW ) Biom ass power Biomass energy (plant size: 1-20 MW ) 3 8000 0 5 10 15 20 25 30 35 0 1000 2000 3000 4000 5000 6000 7000 Power le Price Wholesa onsumer Power Price Retail
  • Alternative energy – response to global trends Rising fuel prices (~2 times since 2000) Improved technology leads to high profit margins Government support (subsidies and penalties) Fossil fuels prices $80.00 $7.00 $70.00 $6.00 $60.00 $5.00 $50.00 $4.00 $40.00 $3.00 $30.00 $2.00 $20.00 $1.00 $10.00 $0.00 $0.00 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: Bloomberg, ZIP estimates oil crude prices, $ coal prices natural gas prices 4
  • But Substantial by Value • 368 global renewable companies with mcap $222bn. • TOP 50 with mcap $222bn. 5
  • Alternative energy indices 250 70 American Stock Exchange indices: 60 WilderHill Clean Energy Index (ticker: ECO); 200 WilderHill New Energy Global Innovation Index (NEX); 50 Cleantech Index (CTIUS). 150 NASDAQ indices: 40 CLEN – Clean Energy Index; Corr = 0,79 30 100 NASDAQ Clean Edge US Index. World alternative indices: 20 International Economic Platform for Renewable Energies (IWR) 50 RENIXX - Renewable Energy Industrial Index; 10 Best performing stocks: 0 0 Share price Share price Market May-05 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Jun-05 Jul-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Sep-04 Sep-05 Aug-04 Apr-05 Aug-05 Apr-06 Source: Bloomberg change change Cap 1M, % 1Y, % ($mln) Sector ECO index Oil prices Biofuels (Ethanol) 16,12 29,4 20020 Archer-Daniels-Midland Co Solar Energy 59,94 435,8 3168 Solarworld AG Fuel Cells 7,29 131,6 1377 Energy Conversion Devices Solarworld Archer-Daniels-Midland Co Energy Conversion Devices 60 80 50 45 70 50 40 60 35 40 50 30 30 25 40 20 30 20 15 20 10 10 10 5 6 0 0 0 Dec-02 Dec-03 Dec-04 Dec-05 Jan-04 Jul-04 Oct-04 Jan-05 Jul-05 Oct-05 Jan-06 Jul-06 Apr-03 Aug-03 Apr-04 Aug-04 Apr-05 Aug-05 Apr-06 Aug-06 Apr-04 Apr-05 Apr-06 Jan-03 May-03 Jan-04 May-04 Jan-05 May-05 Jan-06 May-06 Sep-03 Sep-04 Sep-05 Sep-06
  • There has been a rush of initial public offerings by biofuels companies Biopetrol Industries Biofuels Corp 35 350 30 300 25 250 Volatile stocks, but the capital 20 200 markets have an appetite for 15 150 these and many other 10 100 renewable projects. 5 50 0 0 Mar-06 Dec-05 Jan-06 Feb-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Jun-04 Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Nov-05 Investors believed in future returns. Raised £13,3m in IPO, June 2004 (AIM) Raised £74m in IPO, November 2004 (Switzerland) – 92% of market cap Market Capitalization at IPO – £22m Market Capitalization at IPO – £80,4m Stabilization: where fair value D1 Oils EOP Biodiesel 25 600 lies? 500 20 400 15 Overoptimistic investors? 300 10 200 IPO too early? 5 100 0 0 Mar-06 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Sep-05 Oct-05 Dec-05 Jan-06 Feb-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Nov-05 7 Raised £13m in IPO, October 2004 (AIM) Raised £26m in IPO, September 2005 (Germany) – 90% of market cap Market Capitalization at IPO – £34m Market Capitalization at IPO – £28,9m Source: Bloomberg
  • Biodiesel will only become more attractive as oil prices increase Announced Capacity US average fuel prices, US$/gallon 10000 10000 3.5 9000 3 8000 2.5 7000 thousands tons 2 6000 1.5 5000 5,75% EU Target 1 4000 3184 3000 0.5 Source: Clean Cities Alternative Fuel Report, DOE 2000 0 1150 Nov 2004 Mar 2005 Sep 2005 Feb 2006 Jun 2006 1000 0 Gasoline Diesel Ethanol B85 Biodiesel B20 2002 2005 2010t 8 Source: Morgan Stanley, ZIP estimates
  • European Diesel Refining Capacity 2005 Rotterdam: (52m) European Refining Capacity: Shell – 20m Finland: Western Europe – 526m BP – 18m Neste Oil - 10m Exxon – 10m Mediterranean Europe – 174m Other – 4m Germany: (96m) Hamburg: Shell - 10m UK: (87m) Ingolstadt: OMV - 5m Coryton: Antwerp: (37m) BP – 10m Esso – 5m Total SA – 17m Other – 7m Fawley: Exxon – 13m Exxon – 16m Karlsruhe: Other – 7m Shell – 5m Killingholme: Total SA – 10m Esso – 4m ConocoPhillips – 10m Ruhr – 4m ConocoPhillips – 3m Pembroke: Chevron – 10m Wilhelmshaven: Total SA – 4m ConocoPhillips – 10m Stanlow: Lingen: Shell – 12m BP – 4m Teesside: Schwedt: PetrolPlus – 5m Shell – 4m Ruhr – 4m Italy: (95m) Other – 3m ENI - 24m Le Havre: (34m) Exxon - 19m Gelsenkirchen: Total SA – 16m BP – 13m ISAB - 18m Exxon – 14m Saras – 15m Spergau: Shell – 8m Total SA – 11m Other – 17m Greece: (20m) Hellenic – 14m Hellas – 6m Spain: (60m) Repsol – 35m Fos-sur-mer: (36m) CEPSA – 25m 9 Total SA – 17m Exxon – 13m Shell – 6m Source: Morgan Stanley
  • Case-study 1: Biodiesel company D1 Oils PLC BUSINESS MODEL Key value drivers: Own Key value drivers: fully integrated, global biodiesel business plantations fully integrated, global biodiesel business model; D1 Oils model; low-cost and highly efficient feedstock –– low-cost and highly efficient feedstock Jatropha Curcas –– which is sourced for ~€365/ton Jatropha Curcas which is sourced for ~€365/ton Contract Refining Raw Materials from joint-venture plantations in India, Asia Pacific from joint-venture plantations in India, Asia Pacific Farms and Africa (this compares with ~€600/ton for and Africa (this compares with ~€600/ton for rapeseed); rapeseed); minimization of the dependency on raw minimization of the dependency on raw materials supply; JV Managed materials supply; Distribution Farms risk diversification through JV agreements. risk diversification through JV agreements. Different oil costs, €/ton 700 650 D1 Oils raised £13 million on IPO to fund the 600 D1 Oils raised £13 million on IPO to fund the continued planting of jatropha and to finance the continued planting of jatropha and to finance the 465 500 construction of its modular refinery units. construction of its modular refinery units. 365 400 334 300 200 100 0 Palm oil Jatropha oil Soy oil costs Rapeseed oil costs costs costs 10 Source: Morgan Stanley
  • D1 Oils PLC: share price fluctuations Source: Morgan Stanley • October 2004, IPO (AIM) £13m to fund the Key value drivers: Key value drivers: continued planting of jatropha and to finance the fully integrated, global biodiesel business model; fully integrated, global biodiesel business model; construction of four additional refineries by low-cost and highly efficient feedstock – Jatropha Curcas – low-cost and highly efficient feedstock – Jatropha Curcas – November 2006, five by the end of the year. which is sourced for ~€365/ton (represent 85-90% of the total which is sourced for ~€365/ton (represent 85-90% of the total production costs); •December 2006, The company has over £ 80m of production costs); Strategic co-location of plant with oil refinig in Teesside. short-term debt on the balance sheet. The debt is Strategic co-location of plant with oil refinig in Teesside. risk diversification through JV agreements. the part of the on-demand facility of £95,2m that risk diversification through JV agreements. the company expects to renegotiate at the end of Risks Risks December 2006 Long-term horizon (not enough supply till 2010) 11 Long-term horizon (not enough supply till 2010) Highly leveraged Highly leveraged Uncertainty on FAMY pricing Uncertainty on FAMY pricing
  • Com parison of different fuels Pellets Market 350% Diesel oil Cost of heat production relative to fuel oil, 300% Canada Baltics Russia 13% 11% 10% 250% Electric US Sw eden 8% power 19% 200% Shale % 150% Shale oil Coal Denm ark Fuel oil 100% 7% Peat Finland Others (less Wood chips, Austria 6% Poland Germ any than 5%) sawdust 5% 50% 5% 5% 11% Firewood Gas Source: Bioenergy International December 2005, Wood Pellet Association of Canada 0% 0 20 40 60 80 100 Price development in Germany Coefficient of efficiency, % Source: Clean Cities Alternative Fuel Report, DOE Raw Oil Wood chips, sawdust, pellets have low Wood chips, sawdust, pellets have low Natural gas costs of production and one of the costs of production and one of the highest coefficient of efficiency. highest coefficient of efficiency. Pellet market 2005 growth rate: Pellet market 2005 growth rate: Germany ––57% Germany 57% Sweden ––20-25% Sweden 20-25% Austria ––20% Austria 20% Russia ––23% Russia 23% 12 July 02 July 03 July 04 July 05 Jan 02 April 02 Oct 02 Jan 03 April 03 Oct 03 Jan 04 April 04 Oct 04 Jan 05 April 05 Oct 05 Jan 06 April 06 Source: DEPV
  • Case-study 2: Pellet Company VAPO Vapo Oy is one of the world’s leading peat industry companies and one of Finland’s largest sawmill operators. The Vapo Group consists of the Parent Company Vapo Oy and four business areas: Local Fuels, Pellets, Heat and Power, and Environment. Pellet production is the largest in the Baltic Sea Region. Vapo has pellet plants in Finland, Sweden, Estonia, Denmark and Poland. The number of Vapo’s own plants is 13. Pellets deliveries (tonnes) 600000 500000 In 2005, Vapo’s own and its partners’ pellet mills In 2005, Vapo’s own and its partners’ pellet mills 119% produced aatotal of 503 000 tonnes of pellets (57,3 400000 produced total of 503 000 tonnes of pellets (57,3 MEUR). This equals about 2,4 TWh. MEUR). This equals about 2,4 TWh. Vapo’s pellets destinations: 300000 Vapo’s pellets destinations: municipal district heating system; municipal district heating system; 80,6% power for the national grid; power for the national grid; 200000 fuel pellets for the Finnish and world markets. fuel pellets for the Finnish and world markets. 49,7% 100000 0 2002 2003 2004 2005 Source: Company data 13
  • European Wood Pellet Production 2005 Sweden: 1 356 000 tons Russia: 758 000 tons More than 240 pellet More than 240 pellet plants across Denmark: plants across 535 000 tons Europe. Europe. Germany: 388 000 tons Austria: 409 000 tons Italy: 14 169 000 tons
  • Solar Market ● Installed capacity - 30% CAGR ● The world solar photovoltaic (PV) market grew 55% in 2005, reaching $11.2bn. (2006e- $19bn) ● World solar PV industry raised more than $1,8 billion on capital markets over the past 1 year (27 transactions). ●Over 75% of global demand is now grid-connected, with Japan and Germany accounting for two-thirds of the global market. ● Profit Margin - 30%. European Solar Photovoltaic Installations European Solar PV Revenues 2500 1800 1600 2000 1400 1200 Megawatts 1500 1000 mln $ 800 1000 600 400 500 200 0 0 2001 2002 2003 2004 2005 2006e 2006e 1999 2000 2001 2002 2003 2004 2005 Source: Frost&Sullivan 15
  • Germany: Solon – 58 MWp Schott Solar – 57MWp SolarWorld – 44 MWp Solarwatt – 36 MWp Aleo Solar – 35 MWp Sunset Energietechnik – 30 MWp European Solar PV Others – 104,05 MWp Modules Production 2005: 569 MWp Netherlands: Shell Solar (Europe) – 24 MWp Belgium: Photovoltech – 3 MWp Spain: Austria: Isofoton – 40 MWp PVT-Austria – 2,6 MWp BP Solar – 19 MWp Others – 3,7 MWp Others – 13,4 MWp France: Tenesol (Total Energie) – 30 MWp Photowatt International – 29 MWp Others – 0,43 MWp Italy: 16 Helios Technology – 8 MWp S.E. Project – 8 MWp Others – 5,5016 MWp Source: European Commission Joint Research Center, ENF
  • Case-study 3: Solar Company Solarworld AG Solarworld AG - Solar group with a fully integrated solar value chain process from solar silicon as the raw material to high quality solar power generating systems. It owns silicon production assets in order to limit dependency on external silicon supply and to secure the raw material for the new sites. BUSINESS MODEL Silicon Wafer Cell Module Trading Procurement Production Production Production EBITDA (€m) Consolidated net income/loss (€m) Solarworld on 22 February Solarworld on February 2005 announced the acquisition of 2005 108.3 52 announced the acquisition of the crystalline solar activities of the crystalline solar activities of 2004 2004 the Shell Shell Group. Group. The 49.4 18.1 the The transaction includes production transaction includes production 2003 2003 11.7 -1.5 sites in the US (California, sites in the US (California, 2005 growth 2005 growth Washington State) and Washington State) and rate – 119,23% rate – 187,29% 2002 2002 11.7 -1.5 Germany, as well as distribution Germany, as well as distribution subsidiaries in Munich, subsidiaries in Munich, 2001 2001 20.7 8.7 Singapore and South Africa. Singapore and South Africa. 0 20 40 60 80 100 120 -10 0 10 20 30 40 50 60 Source: Company data 17
  • Think about New Energy!!! www.zindelfund.com 18