Investment in Clean Energy by Angus McCrone, Bloomberg New Energy Finance (10.10.12)

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Angus McCrone of Bloomberg New Energy Finance presents global trends in clean tech investment.

Angus McCrone of Bloomberg New Energy Finance presents global trends in clean tech investment.

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  • 1. INVESTMENT IN CLEANENERGY: WHEN THEGOING GETS TOUGHSCOTTISH LOW-CARBON INVESTMENTCONFERENCEANGUS MCCRONE10 OCTOBER 2012/ / / / / / // / /// / / / / / / / / / / / / / / / / / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 1
  • 2. CONTENTS1. Investment trend – something to say2. Problems – the going gets rough3. Supports – coming down the track4. UK and Scotland – climb any mountain? / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 2
  • 3. CLEAN ENERGY: WHEN THE GOING GETS TOUGH Source: Wikimedia Commons / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 3
  • 4. GLOBAL TOTAL NEW INVESTMENT IN CLEAN ENERGY2004–11 ($BN) 13% $280bn $247bn 31% 1% $187bn $189bn 22% 35% $153bn 51% $113bn 39% $75bn $54bn 2004 2005 2006 2007 2008 2009 2010 2011Note: Includes corporate and government R&D, and small distributed capacity. Adjustedfor re-invested equity. Does not include proceeds from acquisition transactions Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 4
  • 5. CLEAN ENERGY INVESTMENT TYPES & FLOWS2011 ($BN) +76 356 +76 280 +164 +12 46 -6 +13 +3 +13 +5 VC Corp RD&D Gov R&D PE Publicmarketsnew Total company Re-invested Assetfinance SDC Total investment M&A/buy-outsetc. Total transactions equity investment Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 5
  • 6. NEW INVESTMENT IN CLEAN ENERGY BY COUNTRY ANDASSET CLASS, 2011, AND GROWTH ON 2010 ($BN) Growth: United States 52 55% China 51 16% Germany 31 -13% Italy 29 43% India 12 62% United Kingdom 9 59% Spain 9 45% Japan 9 24% Brazil 7 8% France 5 34% Asset finance* SDC Public markets VC/PENote: Total values include estimates for undisclosed deals. Excludes corporate and government R&D;* Asset finance volume adjusts for re-invested equity. Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 6
  • 7. CAPACITY INVESTMENT BY SECTOR, 2004–2011 ($BN) 140 120 100 Wind 80 Solar Biofuels Biomass & Waste 60 Geothermal Marine Small hydro 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 7
  • 8. RENEWABLES V FOSSIL-FUEL POWER IN 2011 • Renewable power: a net 82GW added worldwide, plus 15GW of large hydro-electric = 97GW • Fossil-fuel power: a net 106GW added worldwide • Renewable power (excluding large hydro) as a share of total generation worldwide was 6%, up from 5.1% Source: Global Trends In Clean Energy Investment 2012 (UNEP-Frankfurt School) / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 8
  • 9. CONTENTS1. Investment trend – something to say2. Problems – the going gets rough3. Supports – coming down the track4. UK and Scotland – climb any mountain? / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 9
  • 10. NEW INVESTMENT IN CLEAN ENERGY BY ASSET CLASSQ1 2004–Q2 2012 ($BN) 72.5 70.9 63.8 52.3 59.6 58.2 55.5 47.6 48.5 48.0 46.2 46.7 45.0 44.9 41.2 41.2 42.4 34.3 32.9 33.3 27.6 26.1 25.3 21.6 21.0 18.2 19.0 15.7 13.2 11.5 8.6 7.8 7.7 9.7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2006 2007 2008 2009 2010 2011 2012 Asset finance* Public markets VC/PE Small distributed capacityNote: Total values include estimates for undisclosed deals. Excludes corporate and government R&D.Now includes small distributed capacity & adjustment for re-invested equity. NEW Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 10
  • 11. GETTING TOUGH IN 2012 • Uncertainty over policy support in key countries – eg US, UK, Italy • Negative policy moves in some countries – eg Spain, Bulgaria • Financing challenges – utilities under pressure in some countries, fewer banks lending, Basel III impact on project debt tenors • Many specialist manufacturers in wind and solar struggling, because of over- capacity – eg Q-Cells, Vestas, Suntech • Climate change and clean energy sceptics still have political influence / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 11
  • 12. US WIND CAPACITY ADDITION, ASSUMING NO PTCEXTENSION, 2008-15E (GW) 19% -51% 37% 76% -87% 100% 0% 11.8 10.0 8.4 6.7 9.2 4.9 3.0 3.0 1.5 2.6 0.8 2008 2009 2010 2011 2012e 2013e 2014e 2015e Commissioned Financing secured/under construction Permitted Announced/planning begun To be announced Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 12
  • 13. NEX CLEAN ENERGY INDEX 2003 – 2012 YTDNote: Values as of 7 September 2012; NASDAQ and S&P 500 rebased to 100 on 01 Jan 2003 Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 13
  • 14. CLIMATE CHANGE AND CLEAN ENERGY SCEPTICS • Climate change is not happening • Climate change is happening, but it’s not due to human activity • Man-made climate change is happening, but it’s not worth doing anything about it • Man-made climate change is happening, it’s worth doing something about it, but not investing in renewable energy • Renewable energy is too expensive • Wind turbines are spoiling the countryside / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 14
  • 15. CONTENTS1. Investment trend – something to say2. Problems – the going gets rough3. Supports – coming down the track4. UK and Scotland – climb any mountain? / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 15
  • 16. SUPPORTIVE UNDERLYING TRENDS • Science • Costs • Geography • Economic impact / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 16
  • 17. CLIMATE CHANGE SCEPTICS • Climate change is not happening - Percentage of CO2 in atmosphere has risen from 370ppm in 2002 to 391ppm now - Arctic Sea ice reached its lowest ever last month, at roughly half the 1979-2000 average - Nine of the 10 warmest years in the modern meteorological record have occurred since 2000 (NASA) / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 17
  • 18. LEVELISED COST OF ELECTRICITY Q3 2012 ($/MWH) Marine - Wave 789 +36% Marine - Tidal 1,049 +49% STEG - LFR +9% STEG - Tower & Heliostat -3% STEG - Parabolic Trough + Storage -4% Wind - Offshore +46% STEG - Parabolic Trough +6% STEG - Tower & Heliostat w/storage -19% PV - Thin Film --36% PV - c-Si -47% PV - c-Si Tracking -54% Biomass - Anaerobic Digestion +1% Biomass - Gasification -26% Geothermal - Binary Plant +39% Biomass - Incineration -5% Wind - Onshore -15% Landfill Gas -15% Municipal Solid Waste -15% Geothermal - Flash Plant +15% Small Hydro - Large Hydro - Nuclear - Coal Fired +37 Natural Gas CCGT +32% 0 100 200 300 400 500 LCOE BNEF 2011 EU-ETS EUA Forecast Q3 2012 Central Scenario Q3 2009 Central ScenarioSource:Bloomberg New Energy Finance. Note: Carbon forecasts from the Bloomberg New Energy Finance Source: Bloomberg New Energy FinanceEuropean Carbon Model with an average price to 2020 of $30/mt. Coal and natural gas prices from the US EIA andBNEF. Percentage change represents change from Q2 2012 / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 18
  • 19. RESIDENTIAL PV PRICE PARITY $/kWh 0.40 Denmark 0.35 Germany EMEA ASOC 0.30 Italy Spain AMER Netherlands 0.25 Portugal Australia Japan France 0.20 Czech Rep Greece United KingdomSouth Korea TurkeyBrazil 0.15 United States Israel Argentina 2012 LCOE 0.10 Mexico Canada South Africa China India 2015 LCOE Russia Saudi Arabia 0.05 Indonesia 0.00 800 1300 1800 2300 kWh/kW/year 50GW Estimated residential market potentialNote: LCOE based on 6% weighted average cost of capital, 0.7%/year module degradation, 1%capex as O&M annually. $2.65/W capex assumed for 2012, $2/W for 2015. Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 19
  • 20. GLOBAL PV DEMAND, 2007-2011 AND FORECAST,CONSERVATIVE SCENARIO Historical Forecast 30.8GW 28.7GW 28.4GW 25.2GW 18.3GW 6.7GW 7.7GW 2.7GW 2007 2008 2009 2010 2011 2012 2013 2014 Germany Italy Rest of EU USA Japan China Rest of World Source: Bloomberg New Energy Finance, grid operators,Note: Data in Appendix A of the associated Report. incentive programme managers. / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 20
  • 21. DEALS IN CLEAN ENERGY IN 2012 / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 21
  • 22. ASSET FINANCE IN CLEAN ENERGY WORLDWIDE IN Q3 / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 22
  • 23. EMPLOYMENT IN WIND AND SOLAR SECTORSWORLDWIDE, 2011 AND 2020 1,200,000 1,000,000 800,000 600,000 2011 2020 400,000 200,000 0 Onshore wind Offshore wind PV Solar thermal Source: Bloomberg New Energy Finance estimates / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 23
  • 24. JOB MAN-YEARS, ONSHORE WIND, 2011 MW Jobs per MW Total jobs Wind farm operation 185100 0.10 18510 Wind farm construction 42800 1.3 55640 Manufacturing - materials 42800 0.72 30816 Manufacturing - turbines 42800 8.5 363800 Project development 42800 0.36 15408 Financial services 42800 0.1 4280 TOTAL 488454 Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 24
  • 25. JOB MAN-YEARS, OFFSHORE WIND, 2011 MW Jobs per MW Total jobs Wind farm operation 3039 0.17 517 Wind farm construction 1700 2.4 4080 Manufacturing - materials 1700 1.2 2040 Manufacturing - turbines 1700 11.7 19869 Cables and OHVS 1700 1 1700 Project development 1700 0.65 1105 Financial services 1700 0.1 170 TOTAL 29480 Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 25
  • 26. CONTENTS1. Investment trend – something to say2. Problems – the going gets rough3. Supports – coming down the track4. UK and Scotland – climb any mountain? / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 26
  • 27. UK INVESTMENT IN CLEAN ENERGY, 2004-11 ($BN) 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 2009 2010 2011 Wind Solar Biofuels Biomass & Waste Geothermal Marine Small Hydro Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 27
  • 28. DEALS IN CLEAN ENERGY IN THE UK IN 2012 • Lincs offshore wind farm financing, $1.6bn, 270MW • Viking Waste Management Norfolk waste-to-energy, $348m, 21MW • MVV Umwelt Plymouth waste-to-energy, $245m, 22.5MW • Terra Firma five wind farms (two in Scotland), $120m, 52.5MW • Carraig Gheal wind farm, $144m (debt), 60MW / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 28
  • 29. OFFSHORE WIND Source: Scira Offshore Energy / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 29
  • 30. GLOBAL OFFSHORE WIND INSTALLATIONS BY REGION,2010-20 Capacity (MW) Annual change (%) -63% 177% 82% 42% 57% 8% -24% 53% 16% 24% 9,497 Other 7,639 3,318 6,562 2,143 China 5,653 5,248 1,372 750 1,045 4,278 3,334 2,300 2,700 3,951 800 Germany 2,800 2,346 471 2,093 1,051 1,292 548 1,025 1,340 942 1,256 1,287 958 466 488 871 1,430 1,403 405 140 1,550 1,854 652 1,152 1,162 968 680 700 1,140 1,270 United Kingdom 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Bloomberg New Energy Finance / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 30
  • 31. HYDRO-ELECTRIC Source: SSE / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 31
  • 32. HYDRO-ELECTRIC • UK and Europe running out of new project opportunities • UK NREAP sees hydro capacity rising only from 4.6GW in 2011 to 4.9GW in 2020 • But key role for hydro in balancing intermittent renewable generation • And key role for pumped storage to help address grid integration issues / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 32
  • 33. WAVE AND TIDAL / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 33
  • 34. WAVE AND TIDAL • $600m spent from leading technology developers’ balance sheets so far • Several machines should be tested through this winter at EMEC • UK is centre of world activity so far, but Australia, Portugal, Scandinavia also active, Japan and China getting interested • Big engineering companies moving in: - Aquamarine – ABB - OpenHydro – DCNS - Tidal Generation – Alstom - Marine Current Turbines – Siemens - AWS Ocean Energy – Alstom - Hammerfest - Andritz / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 34
  • 35. UK RENEWABLE ENERGY ACTION PLAN FOR 2020 (DECC) 18GW 1300MW Offshore wind Wave, tidal 13GW 300MW 1.3GW 4MW 2011 2020 NREAP 2020 ROADMAP 2011 2020 NREAP 2020 ROADMAP 15GW 19TWh 13GWOnshore wind Heat pumps 5GW 0.5TWh 2011 2020 NREAP 2020 ROADMAP 2011 2020 ROADMAP / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 35
  • 36. COPYRIGHT AND DISCLAIMERThis publication is the copyright of Bloomberg New Energy Finance. No portion of this document may bephotocopied, reproduced, scanned into an electronic system or transmitted, forwarded or distributed in anyway without prior consent of Bloomberg New Energy Finance.The information contained in this publication is derived from carefully selected sources we believe arereasonable. We do not guarantee its accuracy or completeness and nothing in this document shall beconstrued to be a representation of such a guarantee. Any opinions expressed reflect the current judgment ofthe author of the relevant article or features, and does not necessarily reflect the opinion of Bloomberg NewEnergy Finance, Bloomberg Finance L.P., Bloomberg L.P. or any of their affiliates ("Bloomberg"). The opinionspresented are subject to change without notice. Bloomberg accepts no responsibility for any liability arisingfrom use of this document or its contents. Nothing herein shall constitute or be construed as an offering offinancial instruments, or as investment advice or recommendations by Bloomberg of an investment strategy orwhether or not to "buy," "sell" or "hold" an investment. / / / / INVESTMENT IN CLEAN ENERGY: WHEN THE GOING GETS TOUGH 36
  • 37. CLEAN ENERGY: WHEN THEGOING GETS TOUGHANGUS MCCRONE, AMCCRONE1@BLOOMBERG.NETMARKETSRenewable EnergyCarbon MarketsEnergy Smart TechnologiesRenewable Energy CertificatesCarbon Capture & StoragePower Subscription-based news, dataWaterNuclear and analysis to support yourSERVICES decisions in clean energy, powerInsight: research, analysis & forecasting and water and the carbon marketsIndustry Intelligence: data & analyticsNews & Briefing: daily, weekly & monthlyApplied Research: custom research & data mining sales.bnef@bloomberg.netKnowledge Services: Summit, Leadership Forums, Executive Briefings &workshops////////////////////////////