Global Trends in Clean Energy Investment TBLI

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Talk given by Michael Liebreich
Chairman & CEO
New Energy Finance

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Global Trends in Clean Energy Investment TBLI

  1. 1. Global Trends in Clean Energy Investment TBLI Michael Liebreich Chairman & CEO New Energy Finance Yokohama, 28 th May 2009
  2. 2. Global new investment in clean energy, 2004 – 2008 10% of global energy infrastructure spend But the top-line hides what is happening in the past few quarters 5x increase from low level by around between 2004 and 2007 Note: Adjusts for reinvested equity. Total value includes estimates for undisclosed deals. Source: New Energy Finance [v9.02] 5% Growth 59% Growth 58% Growth 68% Growth $35bn 2004 $60bn 2005 $93bn 2006 $148bn 2007 $155bn 2008
  3. 3. Note: Values as of 13 May 2009; AMEX Oil, NASDAQ and S&P 500 rebased to 100 on 01 Jan 2003. Source: New Energy Finance, Bloomberg NEX Clean Energy Index: 2003 - 2007 0 50 100 150 200 250 300 350 400 450 500 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Exposure to energy prices Early stage Capital Hungry NEX AMEX Oil NASDAQ S&P 500 2008 2009
  4. 4. Global third party new investment in clean energy Q1 2004 – Q1 2009 ($bn) Note: Includes 4 quarter running average. 3 rd party investment only (i.e. does not include corporate and government R&D, or small residential scale projects). Does not adjusted for re-invested equity. Total values include estimates for undisclosed deals . [v9.04] Source: New Energy Finance 4.3 3.1 3.5 5.6 7.4 8.6 8.3 11.2 11.6 19.6 14.9 22.7 23.7 24.4 28.4 41.2 28.3 37.6 32.5 23.9 13.3 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09
  5. 5. ASOC new investment in clean energy Q1 2004 – Q1 2009 ($bn) [v9.04] Source: New Energy Finance Note: Includes 4 quarter running average. Financial sector investment only (i.e. Corporate and government R&D, & small residential scale projects not included). Not adjusted for re-invested equity. Total values include estimates for undisclosed deals . 1.8 4.5 6.7 7.2 6.4 6.0 6.9 5.6 3.8 3.8 4.1 2.8 1.8 2.3 1.0 1.1 1.2 1.0 1.0 0.5 0.8 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09
  6. 6. It’s exciting when you have a real crisis on your hands, when you have spent half your political life dealing with humdrum issues like the environment … Margaret Thatcher, 1982 Attitude to the environment and economy – Old School
  7. 7. Finding the new driver of our economy is going to be critical. There is no better potential driver that pervades all aspects of our economy than a new energy economy… Barack Obama, 2008 Attitude to the environment and economy – New School
  8. 8. Stimulus components targeted at clean energy By country By type Source: New Energy Finance, government agencies Note: Estimates based on disclosed information, as of 18 May 2009. Percentages indicate percentage of total stimulus which is dedicated to clean energy. N/d indicates that the total stimulus sum was not disclosed. [v9.02]
  9. 9. Wind: top project finance lenders, EU-27, 2007 & 2008 (€m and %) Source: New Energy Finance [v9.02] Note: Project finance lending converted to EUR at constant rate of 0.78968 EUR to USD 188 192 216 216 224 226 238 305 307 307 356 383 387 461 579 592 720 782 1,977 Royal Bank of Scotland European Investment Bank (EIB) Nord LB Grupo BBVA Nordic Investment Bank (NIB) HSH Nordbank BNP Paribas 412 Fortis Bank SA/NV UniCredit ING Bank Banco Espirito Santo Grupo Santander Banesto Caja Madrid Millennium BCP Sabadell Bank Group Credit Agricole SA La Caixa de Barcelona (La Caixa) Banque Federale des BP Groupe Caisse d ’ Epargne Gruppo Banca Intesa Commerzbank Group Merged/ Acquired -4% to -6% Reversion to local markets - 9% to -12% Shift to short tenor lending -20% to -30% Increase in RE lending +4% to +10% 344 619 Net impact - 23% to - 40%
  10. 10. Cost of Debt, Typical European Wind Farm Source: New Energy Finance; Bloomberg Notes: Data as of 27 May 2009; Term Swap: 8 year Euro swap rate. 0% 1% 2% 3% 4% 5% 6% 7% Jan - 05 Jul - 05 Jan - 06 Jul - 06 Jan - 07 Jul - 07 Jan - 08 Jul - 08 Jan - 09 ECB Rate 6M Euribor Term Swap Credit Insurance Project Spread
  11. 11. Weighted average silicon price for contracts before and after 30 September 2008, 2008-2015: $/kg Source: New Energy Finance Silicon Price Survey, Issue III Note: This is based on the results published in Issue III of New Energy Finance Silicon Forward Price Index. “ As at end of Q4 2008” refers to contracts as they stood before 31 December 2008, some of which have since been renegotiated. ‘As at end of Q3 2008’ refers to contracts as they stood before 30 September 2008, some of which have since been renegotiated. <ul><li>Contract prices have dropped since Q4 2008 </li></ul><ul><li>High-priced silicon contracts have been renegotiated or cancelled </li></ul><ul><li>Latest silicon spot price is $60-90/kg and Chinese silicon price is on the low end. </li></ul>198 135 55 60 67 70 83 94 107 145 100 58 67 72 75 88 2008 2009 2010 2011 2012 2013 2014 2015 Prices in contracts as at end of Q4 2008 Prices in contracts as at end of Q3 2008
  12. 12. Note: Retail prices are paid by the consumer, factory-gate by distributor. Updated as of February 2009. Construction of experience curve based on Maycock data for factory-gate prices to 1975, parameters fitted to monthly retail price curve of Solarbuzz data from December 2002. Source: Solarbuzz, Maycock, SEC filings, New Energy Finance The crystalline silicon module experience curve: $/W 0 1 2 3 4 5 6 Dec - 02 Apr - 04 Sep - 05 Jan - 07 Jun - 08 Oct - 09 Feb - 11 Experience Curve for retail prices Historical retail price data - Solarbuzz Overshoot - retail Sustained high - profit growth Soft landing - retail Chinese factory - gate prices $/W 44%
  13. 13. Figure 1. Levelised cost of energy for solar technology, with California investor-owned utility weighted average market electricity prices Source: New Energy Finance, 2009 Note: 8% return on capital, unlevered financing. 25-year project and contract life. Project-specific information attached in slides 3 and 4.
  14. 14. Biofuels: new build asset investment waves ( $bn) Source: New Energy Finance Notes: Total values include estimates for undisclosed deals. [v9.02] 2001 2002 2003 2004 2005 2006 2007 2008 Other Feedstocks Sugarcane 3.3 8.2 9.3 3.0 2.5 3.1 6.0 1.0 0.4 0.7 0.8
  15. 15. Biofuels: Next-Gen VC/PE, Q4 2006 to Q3 2008 (Investors and number of deals by country) Source: New Energy Finance Note: Disclosed deals only
  16. 16. Global Futures Emissions Scenarios and Investment Required Source: New Energy Finance Global Futures 2009, IMF’s World Economic Outlook (January 2009), IEA’s World Energy Outlook 2008. Notes: The data refers specifically to CO 2 from fuel combustion and not greenhouse gases. [v9.02] Clean energy capital requirement per year: $bn 264 373 502 548 590 2020 Peak Scenario 2005 2006 2007 2008 2010 2015 2020 2025 2030 155 148 93 59 214 269 348 408 461 Global Futures Base Scenario 2020 Peak Scenario Base scenario with recession Base scenario without recession 20 45 1990 2000 2010 2020 2030 25 30 35 40 IEA Ref. IEA 550 ppm IEA 450 ppm CO 2 emissions from fuel combustion (Gtonnes per annum)
  17. 17. Institutional investors’ clean energy investment intentions Expected allocation to clean energy investments by 2012 Expected change to clean energy allocations by 2012 Source: New Energy Finance [v9.01] 3% 22% 75% Less Unchanged More 57% 54% 50% 48% 42% 36% 32% 41% 40% 44% 48% 55% 54% 65% Projects Public Equity Carbon Private Equity More Less No change Based on106 Institutions with $1tr AUM Timber and forestry Venture Capital Agricultural commodities
  18. 18. Michael Liebreich Chairman and CEO +44 20 7092 8803 www.newenergyfinance.com www.newcarbonfinance.com [email_address] THANKS! Briefing (newsletter) Industry Intelligence (data & news) Insight (research & analysis) Carbon price forecasting Carbon project analytics Consulting & advisory Executive workshops New Energy Finance Summit Renewable Energy, Biofuels Carbon Markets Energy Efficiency & Technology Carbon Capture & Sequestration Nuclear, Water

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