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Renewable Energies and Clean Tech – Megatrends for a clean and sustainable futureDr. Matthias FawerBank Sarasin Sustainable InvestmentTBLI ConferenceZurich, 8. November 2012Sustainable Swiss Private Banking since 1841.
Our Bank – Facts at a glance Leading Swiss private bank – founded in 1841 Investment advice and asset management for private and institutional clients Active asset management with a sustainable investment philosophy based on more than 20 years of experience and an integrated approach based on the analysis of financial, social and ecological opportunities and risks Represented world wide at more than 20 locations in Switzerland, Europe, the Middle East and Asia 2
Sustainable Investment at Bank Sarasin – Significant Resources & Experience Sustainability research since 1989 Continuous build-up of staff and low fluctuation Responsible for CHF 12,7 billion / EUR 10,5 billion assets First renewable energy fund launched in 2000Number of employees working in sustainable investment The team: 74 employees 30 portfolio manager 10 sustainability analysts On average: 40 years of age 15 years of work experienceSource: Bank Sarasin, as at 30.06.2012 3
Two opposite trends convert our energy systemConventional energies Renewable energies Source: Die Presse.com Source: Blis Solar Undervalued risks Above average growth over the last ten years Finite nature of fossil fuels Technological progress Growing costs Decreasing costs 4
Renewables – success story since 12 yearsRenewable with highest growth rates 12 years of Clean Tech: Reviewof all energy sources 2000 2010 2012* Global PV-market (bn) $ 2.5 $ 90 $ 105 Investments in Renewables grew from USD 200 bn in 2010 to USD 250 bn in Annual PV-installation 0.3 GW 20.3 GW 33 GW 2011 PV-installation costs per watt $ 9.0 $ 4.0 $ 2.0 Global PV installations grew with average Global wind market (bn) $ 4.0 $ 60 $ 65 50% p.a. over last 12 years Annual wind installation 4.5 GW 39 GW 43 GW Source: Clean Edge, 2012; * assumption Bank Sarasin Costs and prices for solar power were cut in half from 2000 to 2010, and again World total World total World total Technology(Gigawatt) halved till 2012 2010 2011 2012* Wind 199 241 284 Global wind installations increased on Biomass 54 72 85 average by 30% p.a. over last 12 years Photovoltaic (PV) 40 70 103 Geothermal 11 11.2 12 Solar thermal power 1.3 1.8 2.5 Renewable share (488 GW) of global Ocean power 0.3 0.6 1.0 power capacity (5’360 GW) is 9% Total electricity from (without hydro) Renewable energies 306 397 488 Source: REN 21, 2012; 2012*: assumption Bank Sarasin 5
Renewables – initial euphoria followed by a collapse Renewable Energy stocks (e.g. Renewable energy stocks from RENIXX) won >400% till 2007 2004 to 2012 vs. MSCI World Net First loss after financial crisis in Sep. 450 400 2008 (-65%) 350 Since May 2009 steady loss of 25% 300 250 p.a. on average 200 Outperformance after Fukushima 150 100 already gone by end of April ’11 50 Aftermath of financial crisis still had a 0 01.04 09.04 05.05 01.06 09.06 05.07 01.08 09.08 05.09 01.10 09.10 05.11 01.12 09.12 negative effect on renewable energy project investments WORLD RENEWABLE ENERGY (RENIXX) MCSI WORLD On-going cuts in government support Source: Datastream schemes 6
Costs of renewable power – grid parity is near All renewable technologies have Development of power different grade of maturity, cost and production cost till 2020 growth potential 0.25 Individual learning curves and 0.20 production volumes are used for EUR/kWh 0.15 forecasts 0.10 PV with the fastest cost reduction 0.05 curve 0.00 2010 2012 2014 2016 2018 2020 In 2020 all Renewables produce Ocean Power PV CSP electricity for less than 0.15 EUR/kWh Wind Offshore Geothermal Wind Onshore Onshore Wind is and will be the Source: Nov. 2012; Bank Sarasin cheapest renewable power source 7
New set-up of power production required Load Curve Surplus RE With growing share of renewable power there will be a conflict with base load capacity (nuclear, coal) -> see upper graph GW Fluctuating solar and wind power needs to be accompanied by flexible power from hydro, Baseload bioenergy and gas -> see lower graph 0h 6h 12h 18h 24h Load Curve Load Curve with DSM* Optimum mix of wind and solar to have least storage requirement over a year is 3:1 GW Peak power can be shifted with Demand-side management (DSM) Attractive storage and/or flexible power through 0h 6h 12h 18h 24h Time of day (hour) pumped hydro, compressed air and power-to- RE from other regions & storage plants gas capacities Photovoltaic Bioenergy, Hydro, CSP & Geothermal Wind Source: Energy [R]evolution 2012; Greenpeace Intl., Amsterdam; Jun. 2012 . 8
Transformation of energy system is on its way Not only Renewables are needed. It’s a common and integrated approach for a energy revolution Renewable Smart Grid LED Clean Electric Utilities EnergiesClean FossilEnergy (Gas) Efficient Home Buildings Transmission Green E-Mobility Buildings Efficient Efficient Smart Meter Transport Products Energy Storage Source: The Economist, ABB 9
Megatrend 1 – System thinking and servicesSystem Thinking Services Energy Metering Education Marketing Energy Management Project Development Energy Storage Pre-financing Increase own Consumption Contracting Operation & Maintenance Source: Solarworld Source: Greenpeace 10
Megatrend 2 – new off grid applications Focus on new off grid applications for two billion people in Developing and Emerging Markets with no constant access to electricity (e.g. solar home systems, micro grid system for villages, hybrid systems) More Renewables offer an important support to achieve the UN- Millennium goals for better education and health care and a reduction of poverty and hungerSource: SMA Solar Source : kaco 11
Megatrend 3 – after consolidation, more innovation Current phase of overcapacities in module and turbine production keeps pressure on margins high and leads to a painful consolidation Capacity reduction leads to a more balanced supply and demand. Survivors and healthy companies introduce new area of innovation Mass production of modules and turbines is shifting towards Asia (= commodities). European companies focus on high quality premium products and/or niche products 12
Megatrend 4 – new investors in Clean Tech spaceRenewable industry has grown and matured, and therefore has becomeinteresting for new investors: New financially sound investors from the oil and gas sector such as Total invested in Sunpower and Statoil with Offshore wind activities… … to progressive energy utilities. E.g. Stadtwerke Munich with shares in Offshore wind and solar thermal power plants aim to cover 100% electricity demand from renewables by 2015)… … as well as companies from conventional sectors such as Bosch (PV, batteries), Audi (power-to-gas systems), Toshiba (bought Swiss smart meter company Landis & Gyr)… Insurance companies such as Allianz and MunichRe looking for new investment opportunities with stable return such as from renewable energy infrastructure 13
Megatrend 5 – CleanTech as growth driver for wavering world economy Renewable energies and the whole CleanTech industry will become an important driver for world economy to avoid further recession These technologies allow future investments in a sustainable and fair development with lesser harm to nature First mover countries into an energy revolution with renewables and smart grid could have an advantage of experience from a home market that can be sold/exported on a global scale Experience with “Sandy”: Derelict US-infrastructure needed investments anyway. Shift towards smarter and cleaner energy system 14
Outlook Decisive investments in global energy system over coming years. Fast changes expected Renewable technologies need to work together with utilities and grid operators to achieve the «Energiewende». Jointly working together Collaboration is needed to achieve a sound and cost efficient new energy system New progressive and global investors in Renewables such as Hanwha Group, Samsung, Foxconn and Flextronics. CleanTech/Renewables as a growth driver for world economy 15
Many thanks for your attentionSustainable Swiss Private Banking since 1841.