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Cleantech Tracker 2011 2012


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The Capgemini Point of view on cleantech

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Cleantech Tracker 2011 2012

  1. 1. Tr a n s f o r m t o t h e p o w e r o f d i g i t a lCleantech Tracker 2011-2012 – 3rd editionChallenges for the European renewables industryamidst worldwide competition
  2. 2. Table of Contents Editorial by Alain Chardon 04 Cleantechs are now a fully-fledged industry engaged 06 in worldwide competition ••Key metrics (global installed capacity and investments, 06 generation costs and number of competitors) show that solar PV and wind energy are now mainstream industries ••Developing countries are catching up to the pioneer cleantech 09 markets (Europe and the US) Wind: a global competition with regional supply chains 10 where Asian competitors are starting to emerge ••Onshore wind: a mature technology in a large size market 10 ••Offshore wind: the next frontier 12 Solar PV: an overheated market in 2008-2010 which should 14 stabilize in the short term before grid parity takes over The next blockbuster cleantechs: their development 16 could be hampered by the economic crisis and the lack of political momentum Key challenges ahead: innovation, operational 18 excellence, smart grid integration ••European players are more than ever engaged in an innovation 18 race – which requires not only internal competition, but also cooperation ••The European players need more than ever to look for 18 operational performance ••Solving the smart grid challenges is key to the success 19 of the European cleantech industry Conclusion 19 Cleantech Tracker 2011-2012 – 3rd edition 3
  3. 3. Editorial by Alain Chardon2005-2010 was Cleantechs, especially renewable technological maturity and expectedcharacterized by a faster energies, are a key provider of breakthroughs; sustainable jobs in Europe, with n Manufacturing & industry: globaldevelopment pace. Growth already over a million “green jobs” rankings and perspectives at arates were particularly at the end of 2011. 2012 may be at global level;high for onshore wind and crossroads with on the one hand, the n Utilities and consumers’ view: costsolar photovoltaic (PV) potential for additional job creation components and regulatory drivers. by 20201 and, on the other, thewith 27% and 49% CAGR European financial crisis and While the preceding decade, 1995-worldwide, respectively its impacts. 2005 was characterized by relatively slow development (8-9% CAGR inRenewable energies But cleantech markets are not just terms of global renewable generation4),are now a mainstream European or national markets. 2005-2010 was characterized by a Utilities and Manufacturers are now faster development pace. Growth rateselectricity generation playing in the global market. That were particularly high for onshoreindustry. is why, in order to complement wind and solar photovoltaic (PV) with our work on the renewable energy 27% and 49% CAGR worldwide, markets published every year since respectively5. Some technologies have 20062, we launched a new annual reached a commercial and industrial study called Cleantech tracker in stage characterized by a high level 2009. This study aims to monitor the of technological maturity, fair costs development of renewable energies of production, installation and as well as new energy technologies maintenance. Renewable energies are on a global scale. Our definition now a mainstream electricity generation of cleantechs includes renewable industry. The global cleantech market energies (e.g. solar, wind, marine, proved to be resilient during the biomass, etc.) and technologies that 2008-2009 financial and economic may enable saving, producing or crisis (+0.4% in 2009 on 2008 for distributing greener energy (e.g. global new investment in renewable energy storage, carbon capture and energy and +32% in 2010 on 20096). storage, etc.). To make it easier And while the pioneer markets were to compare, we chose to focus Europe and the US, Asian countries, exclusively on technologies that led by China (+29 GW of grid- produce electricity, consequently, connected renewable capacity in 2010 the production of heat is out of our and the leading market in terms of scope3. Our approach mixes different global investments since 20097) are types of analyses and viewpoints: developing quickly and have ambitious plans (China targets 200 GW of n Markets and technologies: onshore wind capacity by 2020 to installed capacity and potential generate 440 TWh of electricity development, levels of R&D, annually8). Not only has China become650,000 additional jobs compared to a business-as-usual scenario according to the European Commission1In Capgemini’s European Energy Markets Observatory (EEMO), an annual report that tracks the progress in establishing an open and competitive2electricity and gas market in EU-27(+ Norway and Switzerland) as well as the progress on the EU Climate-Energy package objectives3 We fully acknowledge that renewable thermal energy is as strategically important – if not more – as renewable electricity. Yet heat markets arehighly fragmented and therefore difficult to study4
  4. 4. a leading installer of renewableenergy, but also its Manufacturers havesurpassed those of Western companieswith, for example, Sinovel receivingfirst place in 2010 for being the topsolar PV Manufacturer.What factor will most influence theEuropean players – the Europeancrisis or the worldwide renewablemarket growth? In both cases, itis no longer about the market sizebut rather about winning the threeindustrial challenges listed below:1. Innovation: for European players, how to grab new markets wherever in the world, to position in the top leading vendors and operators and to compete successfully against international players2. Operational excellence: how to streamline the whole chain from purchasing, manufacturing, installation to operation and maintenance (O&M) to gain cost efficiency while improving operational performance and innovation capability3. Smart grids: how to manage an efficient integration of renewable energy into the grid and what transformations in terms of market design should be implementedIn this paper, we will provide asummary of our Cleantech trackerstudy as well as provide some cluesrelating to these crucial questions.We wish you an enjoyable read.4 Hydro excluded5 Renewables 2011 Global Status Report – REN21, August 20116 Global trends in renewable energy investment 2011, UNEP – Bloomberg New Energy Finance, July 20117 Renewables 2011 Global Status Report – REN21, August 20118 Country profile China – GWEC, 2011 Cleantech Tracker 2011-2012 – 3rd edition 5
  5. 5. Cleantechs are now a fully-fledged industry engaged inworldwide competitionKey metrics (global industry players envisage the Costs of renewable energiesinstalled capacity and “green market” as a bubble. have decreased, competinginvestments, generation However, these investments sometimes with fossil fuel and weathered the 2008-2009 financial nuclear generation costscosts and number of crisis remarkably well, whichcompetitors) show that demonstrates, if need be, that Drop in raw material prices,solar PV and wind energy renewable energy is a mainstream technological improvements andare now mainstream industry. In 2009, globally, new manufacturing on a larger scale haveindustries investments in large hydro and pushed costs of some renewable other renewable energies even energies down. In particular,Renewable energy (hydro surpassed new investments in onshore wind costs (long runexcluded) accounted for almost fossil fuel capacities. It is also generation costs between €42 anda third of the estimated 194 GW worth noting that the 2008-2009 €80/MWh) are now close to fossilof new electricity capacity added financial crisis was a turning point fuel (€48/MWh to €76/MWh) andglobally in 20109 in the geographical polarization nuclear generation (€34/MWh to of investments. Prior to the crisis, €62/MWh) costs13.Installation of new renewable Europe and the US attracted theenergy capacities progressed on majority of investments (mainly in Solar PV still remains the mostalmost all fronts in 2010, with wind projects); during the crisis, expensive renewable energy evenwind and solar energy having emerging countries, in particular if costs of modules have droppedalmost met or surpassed the Brazil and China, took over the by 80% in only eight years. Inmost optimistic short-term yearly US and Europe and lately, China certain sun-rich regions of theforecasts (onshore wind: 38.3 GW confirmed its position of top world with high electricity prices,realized vs. 40.8 GW forecasted10 investor. In 2011, however, the US grid parity is reached or very nearlyor solar PV: 16.6 GW realized vs. moved back ahead of China12. reached. Experts expect that due to10.1 GW forecasted11). China alonedeveloped huge onshore windcapacities, representing 50% of theworld’s newly installed capacity Table 1 – Generation capacities added in 2010 in EU-27in 2010 (vs. 36% in 2009). InEurope, 2011 and 2010 have been MW 25,000outstanding years for solar PV 18,000installations (especially roof-top), Installed 20,000which come second after gas in Decommissioned 13,246terms of new installed capacities 15,000(see Table 1). 9,295 10,000Investments have increased 4,056more than six-fold between 5,0002004 and 2010, reaching 573 405 208 200 149 145 25 25US$260 billion in 2011 - -45 -26 -107 -245 -535 -1,550From 2004 to 2008, global new -5,000investments in renewable energy s P ar at V te s al ro Fu e o d l al as CS Ga oi rP dr av in Pe le Coshowed outstanding growth rates: as yd rm om W el hy uc w la W lh he So l& N Bi e alalmost 50% on average even rg ot da Sm La Ge Tithough the evolution was differentfrom one type of renewable to Source: Market outlook for photovoltaics until 2015, EPIA – April 2011the other (see Table 2), making6
  6. 6. further technological progress and the Table 2 – Year-on-year evolution of global new investments per type of renewablecontinuous increase in electricity retailprices, grid parity will be a reality for all 2008 2009 2010European countries by 2020. Wind 23% 16% 30%Moreover, wind and solar PVcapacities now significantly impact Solar 55% 4% 52%the marginal price of electricity in Biomass -11% 14% -4%organized markets. Their marginalcosts being close to €0/MWh, Biofuels -7% -63% -20%when these capacities produce a Small hydro 16% -29% -22%substantial amount of electricity,the most inefficient and expensive Geothermal -16% -13% 43%fossil marginal plants are notrun which therefore lowers the Marine -75% 100% -50%spot marginal cost of electricity . Total 23% 0% 32%This was illustrated in July 2010in Germany: the sunny weather Source: Global trends in renewable energy investments 2011, UNEP,led the 10 GW of solar capacity Bloomberg New Energy Finance – July 2011 / Capgemini Consulting analysisto produce a high output ofelectricity14. This lowered the spotprices which benefited buyers, but strategy towards renewable energies Renovables) being reintegrated bydecreased the margin of the hydro after the German government’s the mother company. Even oil majorspeak generators in neighboring decision to phase out nuclear (Petrobras, BP, Total) are selectivelycountries (who usually make their energy, Areva, GE, etc). On the investing in cleantechs. Tenderprofits during the summer). operators’ side, the same can processes for significant projects such be observed with specialized or as the offshore wind tenders in theRenewable Manufacturers and early adopters operators (Spanish North Sea and France, attract all ofoperators as well as diversified Fotosolar, Iberdrola, Acciona, these players who, for submittingManufacturers and Utilities are French Compagnie du Vent) now their bids, get organized intobattling over market shares on followed or bought by larger consortiums gathering specializedthe cleantech market Utilities (EDF GDF SUEZ, E.ON, , companies in design, development, Enel, EDP or RWE Innogy) who construction and operation ofRenewable Manufacturers (German all have ambitious plans to further renewable energy projects, turbineQ-Cells or Enercon, Danish Vestas, develop their renewable energy manufacturers, engineering andSpanish Gamesa, etc.) have first capacities. It is worth noting that construction companies, poweremerged on the market and have the last few years have seen many of cables manufacturers and installersbeen followed by large and long- the independent players absorbed for a market of 140 GW, which isstanding Manufacturers (Siemens by large Utilities or renewables estimated to be between €400 andwho has recently revisited its subsidiaries (EDF EN, Iberdrola €500 billion by 2030.9 Renewables 2011 Global Status Report, August 2011 – REN2110 Global Wind report 2010, 2nd ed., April 2011 and Global Wind report 2009, April 2010 – GWEC11 Market Outlook for Photovoltaics until 2015, March 2011 and Market Outlook for Photovoltaics until 2014, May 2010 – EPIA12 Global investment in clean energy, January 2012 – Bloomberg New Energy Finance13 Refer to the 13th edition of Capgemini’s European Energy Markets Observatory14 From €4 to €6/MWh according to a German research institute (IZES), i.e. a price decrease for large industrials between €520 and €840 million inGermany in 2011 Cleantech Tracker 2011-2012 – 3rd edition 7
  7. 7. Table 3 – Annual new financial investments in renewable energies worldwide and per region New financial investments (US$ bn) Capacity added (GW) excluding Corporate and Government R&D, excluding biofuels and small hydro including distributed solar PV 240 80 202 65 200 Other* Other** 153 153 60 160 Biofuels 50 Biomass World 120 Biomass 40 36 Solar Solar Wind 80 Wind 20 40 0 0 2008 2009 2010 2008 2009 2010 100 50 81 80 40 63 66 Other 30 28 Other 60 EU-27 40 Solar 20 18 Biomass Wind 14 Solar 20 10 Wind 0 0 2008 2009 2010 2008 2009 2010 100 50 80 40 Other North 60 Solar 30 Other America 40 34 35 Wind 20 12 Biomass 22 9 8 Solar 20 10 0 0 Wind 2008 2009 2010 2008 2009 2010 100 50 80 40 65 60 Other 30 27 Asia & 36 49 Solar 17 Other 40 20 Biomass Oceania 20 Wind 10 9 Solar Wind 0 0 2008 2009 2010 2008 2009 2010 100 50 80 40 Other 60 Other 30 Biomass Rest of World 40 Solar Middle East, Africa and 20 Solar 20 22 Wind South America 20 16 10 2 Wind 0 2 0 0 2008 2009 2010 2008 2009 2010 Note: *Other: small hydro, geothermal, marine; **Other: Geothermal, marine Source: Global trends in renewable energy investments 2011, UNEP, Bloomberg New Energy Finance – July 2011 / Capgemini Consulting analysis8
  8. 8. Developing countries are Asian Manufacturers are now and panels are massively importedcatching up to the pioneer taking the lead over their to it from Asia. Asian players havecleantech markets (Europe European peers, which have managed to establish large companies been pioneers and industry which produce at low prices. Asand the US) leaders for the last two decades Asia now represents a major (and growing) share of the global onshoreFrom a geographical On the manufacturing front, there is wind market, there is a trend forstandpoint, the potential for a clear shift in production from the installing local/regional productiondevelopment has shifted from Western countries to Asia. Historical sites in this region, for both WesternWestern Europe and the US to European leaders now face a new and Asian Manufacturers, in orderCentral Eastern Europe and the and fierce competition from Chinese to reduce shipping costs. The cardsBRICs (and also Korean) players, for both are reshuffled both in the wind andMirroring the investments’ trend, solar PV cells and modules and solar PV industries: there are somethe potential for development of onshore wind turbines. Furthermore, bankruptcies (Solon in Germany,renewable energies projects is now most European and American Photowatt in France), companiesmainly located in areas presenting Manufacturers are progressively in difficulty (Danish Vestas orhigh economic growth perspectives, developing production capacities out German Q-cells, which are layingfavorable governmental support of their home countries in order to off employees), Western companiesand the need for competencies. The reduce costs and address new markets investing in Asia (Gamesa conqueringsituation in Europe has evolved efficiently. Manufacturing solar PV the Indian wind market), Asianunfavorably, with an expected has clearly become a global market. Manufacturers receiving the top rankslowdown in capacity added and As Europe is the lion share of the (JA Solar gaining four ranks in onlyinvestments, and weaker economic global solar PV market (80%), cells one year).perspectives for the coming years.The playing field has thus becomeinternational and many playershave well understood this shift asreflected in their strategy:n Global wind Manufacturers shift their investment focus from Europe to the USA and China,n Enel wants to pursue its growth in renewable energies in Latin America, Russia and Eastern Europe,n GDF Suez or EDF are competing in their home market, both candidates for the offshore wind projects in France, but eye also foreign markets,n Iberdrola continues its development in Latin America and in renewable energies (investments for the period 2010-12 amounted to €5.3 billion, e.g. one-third of its whole investment program). Cleantech Tracker 2011-2012 – 3rd edition 9
  9. 9. Wind: a global competition with regional supply chainswhere Asian competitors are starting to emergeOnshore wind: a mature Europe (for example Poland plans supporting the deployment of windtechnology in a large 3,350 MW by 2015 and 5,600 MW energy which is reflected by thesize market by 2020 and Romania has currently increased number of projects under 2,624 MW of capacity covered by construction (over 100 projects forOn a global scale, on-track with connection contracts15 ). 8,300 MW).aggressive targets In the US, onshore wind installations Contrary to Europe and the US,The aggressive targets established slowed down in 2010 after two China has been booming in the lastby the Global Wind Energy Council record years, due to the improved few years (with a cumulative onshore(GWEC) for 2010 have almost been profitability of gas-fired plants and a wind installed capacity doublingmet despite the economic crisis, with lack of long-term investor confidence every year between 2006 and 200938.3 GW of capacity added globally (vs. with unpredictable federal policies and a record level of investment ofa forecast of 40.8 GW) and 197 GW (no Production Tax Credit extension US$20 billion in 200916 ). This trendof cumulative installed capacity (vs. expected and no Federal Renewable was reinforced in 2010, with 50% ofa forecast of 200 GW). Long-term Energy Standard). However, 2011 global capacity added in 2010 (vs.forecasts announced in May 2011 are ended better than 2010 in terms 36% in 2009). As a result, Chinalower than those of 2009, but remain of installations (6,810 MW vs. now has a cumulative capacity ofvery high, with cumulative installed 5,116 MW) as new generation 42 GW, higher than that of the UScapacity expected to double by 2014 wind electricity costs progressively and half of that of the EU-27. The(388 GW, instead of 409 GW became affordable. In addition, country plans to continue this sametargeted in 2009 forecasts). the State governments have been trend in 2012.Europe leading the way, thoughless dynamically, the US with Table 4 – Annual onshore wind capacity sold per manufacturerups-and-downs and Chinacatching-up rapidly MW 7,000Europe (EU-27) has remained thebiggest installer of onshore wind, 6,000with 84 GW of cumulative installedcapacity in 2010. This position is due 5,000to pioneer countries such as Germany 4,386 Sinoveland the Nordics that have developed 4,000 4,057 Vestas 3,783capacities since the early 1990s. 3,743 GE GoldwindThey have been caught up recently Enercon 3,000 3,000by massive adopters in Southern 2,900 2,640 Siemens DongfangEurope such as Spain. These are 2,450 Gamesanow mature markets with stabilized 2,000 Guodian United Power 1,655 Suzlonyearly growth compared to the past 1,460 MingYang 1,182decade (around 10 additional GW 1,000 909 Nordex 788 REpowerper year in Europe in the past threeyears). The best sites have been taken - Note: Dotted lines forand projects often encounter public 2007 2008 2009 2010 Asian players and plain lines for Western playersopposition. The new growth area foronshore wind in EU-27 is Eastern Source: Companies’ annual reports and websites, Eur’Observer, BTM Consult / Capgemini Consulting consolidation15 Wind Barometer – Eur’Observer, February 201116 Country profile China referring to UNEP/Bloomberg analysis – GWEC, 201110
  10. 10. China emerging as a major presence in growing markets, European Manufacturers tried tomanufacturing base for onshore companies rebalance their workforce adapt to the changing market focuswind turbines geographically (Vestas closed four towards China and Eastern Europe: factories in Denmark and one in Gamesa is investing heavily in ChinaChina has become a major onshore Sweden in 2010 and shifted part of and India and RePower signedwind turbines manufacturing its production to Asia). Other top contracts in Turkey and, with four Chinesecompanies in the Top 10(see Table 4). American (GE) andEuropean Manufacturers (Vestas,Enercon, Gamesa) are stronglychallenged by Sinovel, Goldwin,Dongfang and United Power.They benefit from a boomingdomestic market and manage toprovide turbines of fair qualityand prices. The growth of China’swind energy sector is supportedby the government’s commitmentthrough implementation of nationalrenewable energy policies androll out of well-defined mediumand long term development plans.Since 2008, due to a short supplyof wind turbines, a new breed ofManufacturers emerged in themarket creating an oversupply in2010 and making the market priceextremely competitive. India alsoappears as a promising market, withinitiatives pushed by theIndian government17 .Western players adapting to achanging industrial landscapeIn a move to adapt to the changingmanufacturing environment,Western companies such as Vestasalign their business strategy to focusmore on markets like China andthe US due to the sluggish pace ofdevelopment in mature Europeanmarkets. As a step to maintain costcompetitiveness and to increase17 Third quarter results 2011 and the years to come – Vestas, November 201118 Renewables 2011 Global Status Report – REN21, August 2011 Cleantech Tracker 2011-2012 – 3rd edition 11
  11. 11. Offshore wind has a lot Offshore wind: the onshore wind projects, favorableof advantages in the next frontier natural conditions and strong competencies from wind turbineEuropean context, with a Until now, Europe remains Manufacturers and Oil & Gashigher social acceptance offshore platforms operators. The the only continent withthan for onshore wind significant offshore wind trend for bigger and bigger windprojects, favorable natural installed capacities turbines and more concentrated wind farms could allow biggerconditions and strong The European cumulative economies of scale than forcompetencies from wind installed capacities stands at onshore wind in the future,turbine Manufacturers 3.8 GW installed vs. 84 GW bridging the current cost gap.and Oil & Gas offshore for onshore wind. Historically, the UK and Denmark have been Injecting electricity within theplatforms operators. pioneer countries, with installed grid from offshore wind will alsoThe trend for bigger and capacities of 1.3 GW and 0.9 GW, be easier than from onshore windbigger wind turbines respectively, in 2010. The UK is electricity, as it is more predictableand more concentrated changing scale with new projects and has steadier regimes through in the North Sea, amounting to day/night periods and winter/wind farms could allow 33 GW planned as part of its summer seasons.bigger economies of scale “Round 3 expansion”. Otherthan for onshore wind in European countries also have large Will major offshore windthe future, bridging the plans to develop offshore wind projects emerge in the rest capacities in the North Sea, the of the world?current cost gap. Netherlands and Germany, and more recently in France (see Table 5). Offshore wind projects, outside of Europe, depend on the success Higher costs, but nice of flagship projects. Shanghai perspectives and higher Donghai (East Sea) Bridge project social acceptance is currently the only offshore wind farm outside Europe. Four other Today, offshore wind remains projects have also been launched costly, with an average long run by China and may be completed generation cost of €100-170/MWh by 2014. China’s offshore wind (vs. €42-80/MWh for onshore potential is estimated to be the wind). Actually, installing wind equivalent of the North Sea’s. turbines in sea areas requires Some analysts predict a strong additional investments to assess development in China by the end the geological constraints and of the decade, with an installed to evaluate the environmental capacity of 30 GW by 202019 (the risks as well as higher O&M official target set by the Chinese costs. Still, offshore wind authorities). North America is also has a lot of advantages in the developing pilot projects: Cape European context, with a higher Wind (US, 468 MW) and Nai Kun social acceptance than for (Canada, 1,750 MW).19 Offshore Wind Power report – Pike, October 201120 The Worldwatch Institute’s Climate and Energy Blog, August 201112
  12. 12. A first-mover advantage for domestic markets. With no doubt, Still, Chinese Manufacturers haveEuropean Manufacturers the US and European players started developing prototypes of a have a competitive advantage on large-size (5-6 MW) offshore windToday, European wind turbine advanced/complex technologies turbines: XEMC, Sinovel, GoldwindManufacturers benefit from a and components that remain core and Guodian United Power, to befirst-mover advantage on their elements for offshore wind turbines. launched in early 201220. Table 5 – Existing and future offshore wind capacity (MW) UK DK NO SE FI 1,586 854 2 164 26 48,596 2,472 11,394 8,279 4,293 IE EE 25 0 NO FI 3,780 1,000 SE FR 0 EE LV 0 DK LV 6,000 200 IE LT UK NL ES PL 0 0 DE PL BE 6,804 900 LU CZ SK FR DE PT AT 195 CH 0 HU SI 31,246 478 RO ES IT BG PT GR 0 4,889 GR Capacity as of June 2011 BE NL IT 195 247 0 2 11,394 1,857 5,992 2,700 Capacity in 2030 Source: EWEA / Capgemini Consulting consolidation Cleantech Tracker 2011-2012 – 3rd edition 13
  13. 13. Solar PV: an overheated market in 2008-2010 which shouldstabilize in the short term before grid parity takes over Too much success kills success, A progressive increase in the costly national feed-in-tariff US, benefiting from sun-rich schemes revised down regions Solar PV has experienced by far The situation is less gloomy in the the largest increase in global US, with solar PV installations that installed capacity due to favorable have progressively increased in the support schemes implemented by past few years, thanks to federal governments over the last four years schemes (declined at a State-level) and the dramatic drop in the costs of production tax credit (PTC), of modules from 2009 onwards. investment tax credit (ITC), the In 2010 and 2011, the bulk of this treasury grant program (TGP) rapid and unexpected growth along with the economic stimulus came from Western Europe, mostly package. Additionally, the high Germany and Italy (both countries solar radiation coupled with the accounted for nearly 60% of global high electricity prices in States market growth in 2011). However, like California is expected to make this growth proved to be very solar PV quickly competitive. The costly for countries’ budgets driving shift in projects from Concentrating several European Member States Solar Power (CSP) to solar PV also (Germany, Italy, Spain, France, stimulated the market. Czech Republic and the UK) to reduce their subsidies strongly to Chinese Manufacturers now the solar PV industry which led to a leading the world market and market downturn. Globally, capacity benefiting from a promising of solar panels manufacturing is domestic market now exceeding demand by 38%21, after a record capacity addition of China has emerged as a leading 60% in 2011. manufacturer by taking the Top 2 Table 6 – Annual solar PV capacity sold per manufacturer MW 1,600 1,507 Suntech 1,460 JA Solar 1,400 1,412 First Solar Yingli Trina Solar Q Cells 1,200 Motech Solar 1,064 Sharp 1,014 Gintech 1,000 945 Kyocera 910 SunPower 827 Canadian Solar 800 Hanwah Solar Neo Solar Power 650 REC 600 584 Solar World 522 500 Sun Earth Solar Note: Dotted lines for Asian 451 E-TON Solartech 420 players and plain lines for 400 405 Sanyo Electric Western players 347 China Sunergy Source: Companies’ annual 200 reports and websites, Eur’Observer, European Commission / Capgemini - Consulting consolidation 2007 2008 2009 201014
  14. 14. global positions in 2010 in terms of (China’s total installed capacity of n First Solar and SunPower have alsomanufacturing capacity (see Table solar power reached almost 3 GW opened facilities in Malaysia.6). European Manufacturers were by the end of 2011), increasing itstaken short and did not actually installed capacity three-fold. Grid parity is already a realitybenefit from the rapid growth in very sunny regions with highof their home market, and the A trend for consolidation electricity pricesmajority of solar PV panels were and a shift to Asia forimported from China (China & Western Manufacturers When will grid parity happen? It isTaiwan reached ca. 60% of global a matter of cost, insulation and theproduction in 2010 compared to As a consequence of increased level of local end-user electricity19% in 2006). Suntech, JA Solar, supply in the global market, the prices. The European PhotovoltaicYingli and Trina Solar more than trend towards sector consolidation Industry Association (EPIA)doubled the capacity supplied in through M&As and the move of estimates that grid parity is already2010 compared to 2009. China’s a manufacturing base to Asia is a reality in sunny regions such asaggressive move to become a global evident. For example: Los Angeles or Dubai and that gridmanufacturing hub is witnessed by parity may be generalized in Europeits increased capacity and reduced n Q-Cells, German manufacturer by 2020 to less sunny regions suchmodule price. Factory gate prices of crystalline silicon cells, almost as Berlin 23 (see Table 7). Solar PVwere down 33% year-on-year in doubled its production and moved may even be already at grid parityearly 2011 and are expected to about 50% of the production to its in the sunniest regions of Italyfall further should the supply new factory in Malaysia between (Sicilia or Sardinia) since Italianand demand imbalance continue. 2009 and 2010; residential electricity prices areThe Chinese Manufacturers have n The Norwegian manufacturer REC amongst the highest in Europe.managed to attain low prices closed three factories in Norwaydue to many reasons, including and opened one in Singapore;advantageous loans from ChineseState-owned banks. Table 7 – Solar PV grid parity per customer segment in selected European countriesChina is also planning to installsolar PV capacities on its own FR DE IT ES UKland: the country launched the Residential 3 kW 2016 2017 2015 2017 2019“Golden Sun” program in 2009 Commercial 100 kW 2018 2017 2013 2014 2017(providing subsidies to solar PVpower generation projects)22 and is Industrial 500 kW 2019 2019 2014 2017 2019now catching up with 2 GW of solar Source: Solar PV – Competing in the energy sector, September 2011, EPIAPV power installed capacity in 2011 According to the Norwegian manufacturer REC, cited in « Solaire : les acteurs européens luttent pour leur survie », Les Echos, November 15, 20112122 China Golden Sun Programme (2009, revisited in 2011) – IEA, Policies23 Solar PV: Competing in the energy sector – EPIA, September 2011 Cleantech Tracker 2011-2012 – 3rd edition 15
  15. 15. The next blockbuster cleantechs: their development couldbe hampered by the economic crisis and the lack of politicalmomentumThe three main regions With major projects ahead, CSP implemented in the 1960s, none ofactive in developing CSP could take off in the next three the other marine energy systems to four years have been successful at a large scaleare the sunny US States until now. However, as 75% of the(California, Florida …), Today, CSP remains small in scale world’s surface is covered by oceans,Spain and the Sahara compared to solar PV with only marine energy represents one of thedesert. 1.1 GW of installed capacity globally largest renewable energy sources. and 2.6 GW of additional capacity The IEA estimates the ocean energy’s planned to be operational by 201424. global potential to range between 20,000 and 90,000 TWh/year. The three main regions active in Demonstration projects are under developing CSP are the sunny US operation across Europe, North States (California, Florida …), Spain America and Asia. More than 45 and the Sahara desert. The US was wave and tidal prototypes have been a pioneer market for CSP in the tested in the ocean25. Governments’ 2000s but recently has changed interest is rising in the UK, France in that some planned projects and Portugal. In France, a national have been converted into solar PV partnership initiative, Ipanema, was projects over the last few months, created to promote the creation of due to dramatic reductions in solar marine energies. The UK government PV costs. Spain developed its CSP gives Utilities that buy electricity capacities in 2009 and 2010 at a from projects such as SeaGen very fast pace, taking the lead over double credit towards meeting the US. The favorable feed-in-tariff their renewable energy targets. scheme in Spain provided the Additionally, financial incentives are regulatory push for technological available in the form of capital grants, development, but this move is now exemption from the Climate Change hampered by the financial crisis and levy and the opportunity to sell fewer investments. The Sahara desert renewable obligation credits. could be a promising area for the development of CSP (Desertec project Biomass remains in Morocco and Saudi Arabia, Masdar under-exploited City…). Plans for CSP development are also being considered in In 2010, global power biomass installed Australia, China and India. capacity was 62 GW26, e.g. 1.5 times the solar PV installed capacity. The Marine energy is the next focus US and Brazil continue to lead the of Utilities and Manufacturers power biomass segment, while Europe focuses on ensuring the sustainable Today, marine (or ocean) installed development of this source of energy. energy capacities are still rather The biomass market for electricity small. Besides the French tidal generation picks up slowly. Major barrage of La Rance (240 MW) reasons stem from the fact that:24 Renewables 2011 Global Status Report – REN21, August 201125 Emerging Energy Research – IHS, October 201026 Direct firing or co-firing (with coal or natural gas) of solid biomass, municipal organic waste, biogas, and liquid biofuels16
  16. 16. n Sustainability benefits and social acceptance are not always so easy to establish;n Arbitrating between producing heat or electricity from biomass is not always obvious neither at the investment stage nor at the operating stage for CHPs;n It is a complex market and supply chain with many stakeholders and actors to align;n Its development time is longer than that for wind or solar PV energy, for example.Carbon Capture andStorage (CCS) is still in ademonstration phaseAlthough strongly pushed by the IEAand all the stakeholders involvedin the low-carbon economy, CCSis not taking off due to difficultiesto reach performing technologiesand too low carbon prices (short-term certificate prices plunged from€14/t on average, in 2010, to €7/t inJanuary 2012), while the long-termperspective of a worldwide post-Kyoto agreement on climate changepolicies and higher global costsfor CO2 flies away. This explainswhy there has not been noticeabledevelopment over the last two years.On the contrary, the hydrostorage is rejuvenatingThe increasing share of intermittentrenewable energy sources coupled storage systems account for 2 GW. storage projects planned and underwith the volatility of electricity In order to support a growing construction as of May 2011 ingrids is also strengthening share of intermittent renewables, Europe. The leading countriesthe need for additional energy a number of European countries are Switzerland, Portugal, Spain,storage capacities. Pumped hydro are rediscovering pumped hydro; Austria and Germany. For instance,is the only conventional and this trend has been reinforced in in Germany, new pumped storagecommercially mature grid scale countries that decided to reduce power stations have been added,storage option with a capacity of national exposure to nuclear power bringing the total new capacity136 GW worldwide at the end after the Fukushima events. In total in fast response technologies toof 2010, while the other energy there are around 17 GW of pumped over 3 GW. Cleantech Tracker 2011-2012 – 3rd edition 17
  17. 17. Key challenges ahead: innovation, operational excellence,smart grid integrationEuropean players are more than A key challenge for the European budget optimization that renewableever engaged in an innovation industry is to build “coopetition”, energies are cost-competitive, againstrace – which requires not only i.e. internal competition but also conventional power generation, andinternal competition, but also cooperation between European to gain new markets abroad.cooperation players. However, in a context of crisis, projects opposing European This suggests, for example, thatThe playing field is now global. This players and Member States can operations should be streamlined,is a threat to the home market (as lead to value destruction making as Enel Green Power has doneon the solar PV market) but also this competition adversarial and by reviewing its global portfolioan opportunity to position oneself counterproductive. Innovation needs management process to identifyin new markets and to gain market to be fostered by actively leveraging improvement opportunities andshares (as the onshore and offshore the know-how and research to design new processes andwind markets). To be competitive, capabilities not only of the established organization accordingly. Otherthe European industry needs a European cleantech supply chain, Utilities are taking the same route:strong domestic market to gain the but also of the other European hi- EDF has engaged in a transformationoperational, financial and innovation tech industries (spatial, aeronautic, program of its Generation andmomentum required to build its automotive, etc). Engineering Division to improveinternational competitiveness. processes and better make us of On the international front, European digital tools, E.ON is now organizedThe latest developments on the operators explore new markets and into five global units amongst whichoffshore wind markets reveal the entry strategies to gain market shares. are “managing generation fleet”,competitive spirit in Europe. In the Obviously, the best target countries “renewables business” and “newUK, France and other European are those combining significant build and technology” and Iberdrolacountries, governments, local ports GDP growth, a stable and favorable launched a program to improveand public authorities are getting regulatory framework supporting the the efficiency of its operations, inorganized to attract OEM and to development of renewable energies particular its O&M operations. Onbuild the Tier 1 and Tier 2 supply and a favorable economic and legal the Manufacturers’ side, Vestas ischains. All the elements are there to framework allowing the setting up of implementing a transformation planinitiate the emergence of a powerful foreign companies. The organizational with shared services and a newindustry that would see order books structure of these companies should marketing & sales organization,filled up, employment revitalized adapt to this international expansion with more focus on key accountsand operators positioned on high making it mandatory to have and a cost reduction target of €150technology products and services. clear commercial and partnership million in 2012.Technical entry barriers to the strategies with efficient processesinternational market of offshore and aligned management. European Manufacturers arewind equipment and components are continuously focusing on qualityhigher but international competition The European players need management and supply chainshould not be underestimated, more than ever to look for optimization, in order to competeas Asian Manufacturers are also operational performance with low-cost Asian players. Todeveloping their own products. To maintain competitiveness and acquirethat end, transformation programs European Utilities and complementary know-how, majorlaunched by some European Manufacturers need to engage in the Western Manufacturers have alsoManufacturers are a move in the most efficient and performing way undergone structural consolidationright direction to professionalize of manufacturing their products and acquired a series of smallertheir marketing & sales processes and piloting their services and companies in the last few years. Asand organizations, in order to operations. Improving the total cost an example, Vestas improved lostboost international sales and of ownership from manufacturing to production factor from 4.5% in 2009-provide comprehensive offerings service is now a must have, both to 2010 to ~2% in 2011, and GE Windto key accounts. demonstrate to governments seeking acquired Scanwind in 2009 and Wind18
  18. 18. Systems Tour in February 2011. Yet €700 million in 2011. It has developed exceptional UK and German incidentslessons should be learned, for instance, new offerings across the value chain of early December 2011 showed howfrom the automotive industry. Too (“SiteHunt”, “SiteDesign”, “Electrical rough measures could be implemented.much pressure on cost optimization PreDesign”, “Power Plant Controller”, High wind speed led to a high windand a simplistic way of addressing “VestasOnline Business – SCADA electricity production in both countries.purchasing processes, led to a loss v.3.9”) and built partnerships with UK and German operators were askedof long-term relationships between specialized companies (Caterpillar). to shut down their wind turbines.players and to a destruction of the Now that the renewable installed fleets UK operators received a £1 millioninnovative capacity. As mentioned have reached large sizes, much can compensation from the TSO, whileabove, innovation capability both on be learned from benchmarks from Germany tapped into its Austrianproducts and processes is a must have other decentralized industries such as reserve maintain an advantageous position automotive, air or rail services, etc.within Europe and abroad. The smart grid technological and Solving the smart grid market design developments shouldIn the onshore wind industry, challenges is key to the improve the grid efficiency and enabledeveloping O&M services is an integral success of the European better integration of intermittentpart of the strategies of European wind cleantech industry renewable energies through an array ofturbines Manufacturers, benefitting levers, ranked by increasing costs:from a large installed base in Europe The share of renewable energies in theand their long-lasting experience European electricity mix is increasing n Predictability of wind and sunand knowledge. Today, Vestas clearly significantly. However, grids were not generation;leads the global market in terms of designed to receive a high production n Industrial and commercial flexiblecumulative installed base, with 48 GW of intermittent electricity. To that demand response;(~25% of existing cumulative capacity extent, experimentations are on their n Increased modulation of fossil powerin the world and a market share of new way in several countries around the plants;added capacity of ~10% in 2010). Vestas world to design the processes and n Hydro storage;proved to be pro-active and successful technical means (the so-called smart n Residential flexible demand responsein the field of services, since its “Service grids) to integrate renewable energies and;business” now accounts for ~9-10% of in an efficient manner into the existing n Other physical and chemical storageits total revenues and should amount to and future electricity grids. The technologies.ConclusionTo conclude, markets are moving in all the value chain segmentsquickly, segments have their own and can compete internationallyspecificities, competition is fierce assuming that:and European public supportis becoming more selective. Yet n They articulate cooperation withrenewable energies are here to stay competition;for a long time, and opportunities n Drive innovation;have to be seized in and outside n Develop the proper strategy;Europe. European Utilities and n Implement it thoroughly;Manufacturers have developed n Operate efficiently.competencies, they are often present Cleantech Tracker 2011-2012 – 3rd edition 19
  19. 19. About Capgemini With around 120,000 people in 40 Capgemini Consulting is the global countries, Capgemini is one of the world’s strategy and transformation consulting foremost providers of consulting, organization of the Capgemini Group, technology and outsourcing services. specializing in advising and supporting The Group reported 2011 global revenues enterprises in significant trans- of EUR 9.7 billion. Together with its formation, from innovative strategy to clients, Capgemini creates and delivers execution and with an unstinting focus business and technology solutions on results. With the new digital economy that fit their needs and drive the results creating significant disruptions and they want. A deeply multicultural opportunities, our global team of over organization, Capgemini has developed 3,600 talented individuals work with its own way of working, the Collaborative leading companies and governments to Business ExperienceTM, and draws on master Digital Transformation, drawing Rightshore®, its worldwide delivery model. on our understanding of the digital economy and our leadership in business Rightshore® is a trademark belonging to Capgemini transformation and organizational change. Find out more at: www.capgemini-consulting.comContactsAlain ChardonPrincipal - Industry, Services and UtilitiesDirector Cleantechs & Decarbonate Your Businessalain.chardon@capgemini.comWarm acknowledgments toSopha Ang, Subhash Jha, Inderraj Gulati and Laurent Saïag.Capgemini ConsultingTour Europlaza - 20, avenue André Prothin 92927 La Défense CedexFranceTel. : +33 (0) 1 49 67 30 00Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group