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Global Developments
in the Sustainable Energy Markets

        Virginia Sonntag-O’Brien
          REN21 / UNEP SEFI
      ...
An outcome of the Bonn renewables2004 conference


                    MISSION

  Provide international leadership for the...
• Strengthen policy frameworks for accelerating use of
RE

• Facilitate appropriate use of RE in developing
countries, inc...
The UNEP
            Sustainable Energy Finance Initiative



Foster a sustainable energy finance community
that brings to...
SOME FACTS AND PREDICTIONS

• Global warming trends very likely the result of human activities since
  1750 (IPCC)

• Most...
What does this mean?

• Energy demand must be better managed and reduced

• Energy users must shift to low-carbon technolo...
REN21 RE Global Status Report 2007 (DRAFT)

SELECTED INDICATORS                     2005     2006

Investment in Renewable...
Overall SE investment growing quickly
• Investment has more than doubled in last two years. Further 20% increase forecast
...
VC/PE Investment Soaring
     • Venture Capital/Private Equity up 163% in one year.
     • Biofuels edged out solar and wi...
Public stock markets have opened to RE
• Public markets up 140% in one year.
• Solar PV is the big winner on public capita...
Clean energy stocks volatile, but doing well
• More corrections are expected, as happened in May 2006, but few predict cra...
Financing for projects is still mostly for wind
• Wind is still the big winner at raising asset financing for projects.
• ...
VC/PE Investment in Energy Efficiency 2001-2006
                                      Source: New Energy Finance

Efficien...
Zur Anzeige w ird der QuickT im e™
                                                                    Dek ompressor „TIFF...
CHALLENGES

Investment in energy still policy-driven and public priorities are not
 only climate change, but also energy s...
To do at the local level

Encourage local industries to invest in R&D
for sustainable energy technology

Work with local f...
REN 21 Renewables Global Status Report 2007
            to be released July 2007?
                 www.ren21.net

        ...
P7_Sonntag-O'brien
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P7_Sonntag-O'brien

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P7_Sonntag-O'brien

  1. 1. Global Developments in the Sustainable Energy Markets Virginia Sonntag-O’Brien REN21 / UNEP SEFI Local Renewables 2007 Freiburg, 14 June 2007
  2. 2. An outcome of the Bonn renewables2004 conference MISSION Provide international leadership for the rapid expansion of renewable energy in developing and industrial countries – based on the cooperation of stakeholders from the energy, development and environment sectors.
  3. 3. • Strengthen policy frameworks for accelerating use of RE • Facilitate appropriate use of RE in developing countries, including strengthening the regulatory environment and expanding access to public and private financing • Build capacity to integrate, utilize, and regulate the use of RE at international, national, regional, and local levels • Facilitate collection, analysis, and dissemination of information
  4. 4. The UNEP Sustainable Energy Finance Initiative Foster a sustainable energy finance community that brings together financiers and catalyses public-private alliances to share costs and lower barriers to investment. http://sefi.unep.org Provide Information • Facilitate Networks • Develop Partnerships
  5. 5. SOME FACTS AND PREDICTIONS • Global warming trends very likely the result of human activities since 1750 (IPCC) • Most of this impact the result of the use of fossil fuels • The world needs more energy - 2/3 increase from 2001 - 2030 Experts predict doubling of energy use between 2000 and 2040, tripling by 2070, and quadrupling by 2100 • Most growth will take place in non-OECD countries • Fossil fuels will account for 83% of overall increase in energy demand up to 2030 (IEA) • Coal demand increases the most in absolute terms (China and India) • Oil is expected to remain the dominant energy source worldwide (IEA base scenario) • Renewable energy will account for 9% of power mix in 2030 (IEA WEO 2006)
  6. 6. What does this mean? • Energy demand must be better managed and reduced • Energy users must shift to low-carbon technologies like RE • New technologies must be developed that capture and sequester CO2
  7. 7. REN21 RE Global Status Report 2007 (DRAFT) SELECTED INDICATORS 2005 2006 Investment in Renewable Energy $39bn $52bn capacity (annual) RE power capacity - existing 182GW 204GW Wind power capacity - existing 59GW 74GW Grid-connected solar PV capacity 3.3GW 5.0GW (existing
  8. 8. Overall SE investment growing quickly • Investment has more than doubled in last two years. Further 20% increase forecast for 2007, taking global investment to $85 billion. • Drivers go beyond the big three (oil prices, energy security, climate change) to include many more environmental mainstream issues. $70.9bn 2006 figure is an NEF forecast 43% Growth $49.6bn 81% Growth $27.5bn 2004 2005 2006 Source: New Energy Finance Figure 1: Global Investment in Sustainable Energy, 2004 - 2006
  9. 9. VC/PE Investment Soaring • Venture Capital/Private Equity up 163% in one year. • Biofuels edged out solar and wind to raise the most risk capital in 2006. • Most investment in wind has been in manufacturing capacity, not new technology. • VCs shifting more to larger, later stage deals. • US dominates VC transactions. Clean tech in the US now ranks 5th in VC at 9.1%. • After the US, China was the second largest recipient of Venture Capital. Biofuels $804m Solar $746m $664m Wind Efficiency Demand Side : $272m Smart Distribution $163m Power Storage $134m Services & Support (Clean Energy) $127m Mfc. Capacity Technology $105m Fuel Cells Biomass and Waste $93m $36m Efficiency Supply Side : $35m Hydrogen Marine $31m $4m figures are up until mid - December Carbon Markets Source: New Energy Finance Figure 3: 2006 Venture Capital and Private Equity Investment by Sector
  10. 10. Public stock markets have opened to RE • Public markets up 140% in one year. • Solar PV is the big winner on public capital markets. • European stock markets are the main destination for IPOs. So ar l $4.4bn Biofuels $2.5bn Wind $1.2bn Other Lo Carb w on $1.2bn Other Renewables $0. 5bn Biomass & Waste $0.4bn Source: New Energy Finance Figure 4: Public Market Investment by Sector
  11. 11. Clean energy stocks volatile, but doing well • More corrections are expected, as happened in May 2006, but few predict crash. 325 rowth ued g er sectors in Cont to oth lated rre AMEX Oil unco 275 NASDAQ S&P 500 NEX ies nolog 225 Tech ojects r and p d as 175 s fuse y stock on og c RE hnol tec only 125 AMEX Oil, NASDAQ, and S&P 500 rebased – 30 December 2002 =100 75 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Figure 5. WilderHill New Energy Global Innovation Index (NEX) Source: New Energy Finance, AMEX
  12. 12. Financing for projects is still mostly for wind • Wind is still the big winner at raising asset financing for projects. • China the third largest location for asset financing, after US and Spain. Other Renewables $1.3bn Biofuels $6.4bn Biomass & Waste Wind $3.6bn $15.2bn Solar $1.4bn Source: New Energy Finance Figure 6. 2006 Asset Financing by Sector
  13. 13. VC/PE Investment in Energy Efficiency 2001-2006 Source: New Energy Finance Efficiency: Demand Side $1094m Power Storage (65/71) Smart Distribution Efficiency: Supply Side $710m (62/73) $477m $452m $441m $404m (28/31) (26/31) (54/58) (49/57) 2001 2002 2003 2004 2005 2006
  14. 14. Zur Anzeige w ird der QuickT im e™ Dek ompressor „TIFF (LZW)“ ben ötigt. SOME OBSERVATIONS Investment in new renewables Means that investors are expecting generating capacity - $21.5bn strong growth for RE Investment in new technology & manufacturing capacity - $25.2bn IEA WEO2006: RE (ex hydro) will Wind alone provided 10% of new provide 11% of new capacity capacity in 2006 and its growth has been additions between 2004 and 2015 >9x faster than the power sector as a whole (24.5% vs 2.6%) IEA WEO2006: RE will account for That would require RE growth rate to 9% of power mix in 2030 (12% under drop from >20% in 2006 to 8%. Alternative Scenario Measured by capital investment, renewable energy is already a much larger sector than current energy production figures indicate. Recent capital build up is not a sign of short-term volatility, but part of a longer trend. The trend has continued through the first half of 2007.
  15. 15. CHALLENGES Investment in energy still policy-driven and public priorities are not only climate change, but also energy security and energy access Developing countries have fast-growing energy demand and unstable capital markets, which skews investment towards fossil fuel generation (proven, understood, large-scale, less capital intensive) Regulatory frameworks needed that accelerate and reward investment to scale up deployment of sustainable energy technologies at a pace and to a level necessary to impact climate change
  16. 16. To do at the local level Encourage local industries to invest in R&D for sustainable energy technology Work with local finance institutions to develop awareness & capacity to engage in the sustainable energy sector Collect data and use it to influence policy
  17. 17. REN 21 Renewables Global Status Report 2007 to be released July 2007? www.ren21.net UNEP SEFI/New Energy Finance Global Trends in Sustainable Energy Investment 2007 to be released on 21 June 2007 www.sefi.unep.org THANK YOU!

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