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Why Italy Matters to the World
Francesco Starace is the CEO of Enel Green Power. Enel Green Power is a global leader in renewable energy with operations spanning Italy, Europe, North America and other parts of the world. In 2010, Enel Green Power had over 6,100 MW of operating capacity producing 21.8 TWh of energy globally. It also had 1.5 GW under construction and 29.2 GW in its development pipeline. Renewable energy is a fast growing industry expected to see average annual growth rates of 8.5-16% through 2020, with total investments in renewable technologies reaching €180 billion in 2010.
Why Italy Matters to the World
- 1. Enel Green PowerCase History Francesco Starace – CEO of Enel Green Power Why Italy Matters San Francisco – March 31st, 2011
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- 3. Graphical Oil Path- 1964 – 2010 OIL ROLLER COASTER RIDE This chart tracks the relationship 1979 -1980 End 2000 between oil prices and oil Iranian Record demand consumption since 1964. Global revolution, spurs a run up oil consumption is shown on the Iran – Iraq war in prices horizontal axis and oil prices shown on the vertical axis. So 1980 2008 when consumption is increasing What’s going on HIGH 1982 $100 here? Recessions and prices are flat, the line 1980 In the early 1980s, dampen moves straight right. And when oil consumption demand $90 2010 prices are rising and demand fell. This is why 1981 stops growing the line moves the chart seems to $80 Price of oil* straight up. turn around $70 2007 1983 1990 Iraq $60 invades 2009 1985 Kuwait $50 Late 1960s, early 1970s 1973 1975 Oil prices are steady and The Arab oil 1978 1990 2004 consumption grows embargo causes $40 2000 quickly prices to soar 1996 $30 1986 $20 1964 1973 1969 1997-1998 Asian financial 2001 $10 crisis Sept.11 attacks 30 40 50 60 70 80 90 World oil consumption *Average annual price of West Texas Intermediate crude oil, adjusted for inflation using the Consumer Price Index. Million barrels a day Posted prices (not spot prices) are shown before 1983. Source: Energy Information Administration, Federal Reserve, Bureau of Labor Statistics, Rocky Mountain Institute Barclays Capital Projections (Weekly Oli Data Review 23 June 2010): • Demand 2009 84,6 mb/d • Average WTI 2009 62 $/b • Demand 2010 86,1 mb/d • Average WTI 2010 85 $/b 3
- 4. Renewable Energy: agrowing industry Expected worldwide growth By technology By geography Global Global Delta Expected Invest- EGP tech. 2020 2020 Expected Technology installed installed Geography 2010 capacity growth ments presence Min Max growth base base 2009 (GW) 2010 (GW) 2009-10 (GW) % CAGR 2009-2020(1) 2010 (€bn) (GW) (GW) (GW) CAGR 2009-2020(1) North Hydro ~980 ~1,006 +26 3% 2% ~ 65 251 364 550 8% America Wind ~159 ~194 +35 +22% 16% ~ 50 Europe 432 616 1,030 9% ~54 ~60 +6 11% 22% ~ 15 Latin Biomass 172 198 330 7% America Solar ~23 ~38 +15 67% 32% ~ 50 Africa 37 57 110 11% Geothermal ~11 ~11 +0.3 3% 9% ~1 Asia 416 819 1,000 9% TOTAL ~1,227 GW ~1,309 GW +82 GW 6.7% 8.5% ~ €180bn TOTAL 1,309 2,054 3,020 8.5% Strong growth in all technologies and across all regions During 2010, total R&D investments amounted to €28bn (€11bn from corporate) Source: Enel estimates based on EPIA, GWEC, EER (2010); WEO 2010 New Policies scenario (2020 min); industry reports/McKinsey (2020 max); Ren21 “Rapporto Renewables Global Status” 2010 (2009), EGP estimates based on market capex (investments), Bloomberg New Energy Finance (R&D). (1) Calculated on 2020 max figures. 4
- 5. A global leader EGP global footprint – FY 2010 Enel Green Power Operating 6,102 MW Italy and Europe Production 21.8 TWh Operating 3,127 MW In execution 1.5 GW(1) Production 12.7 TWh Pipeline 29.2 GW(2) In execution 0.6 GW Pipeline 6.2 GW North America Operating 788 MW Production 2.6 TWh In execution 0.3 GW Pipeline 9,1 GW Iberia and Latin America Operating 2,187 MW Production 6.5 TWh In execution 0.6 GW Pipeline 13.7 GW EGP presence Unrivalled footprint in 16 countries across all main renewable technologies Note: 1) Including ENEOP 2) Including “new markets” (0,2 MW) 5
- 6. Unique generation mixand diversified geographical presence EGP portfolio overview Installed capacity by technology Production by technology FY 2010 FY 2010 2% 2% 13% 24% 42% 51% 43% 23% Total = 6.1 GW Total = 21.8 TWh In execution by technology Pipeline by technology FY 2010 FY 2010 1% 3% 6% 2% 10% 3% 86% 89% Total = 1.5 GW Total = 29,2 GW Hydro Geothermal Wind Other Well-balanced asset base 6
- 7. FY2010 profit &loss From EBITDA to net income (€m) 7
- 8. Renewable energies Technological development status Development status R&D efforts required 1 Mature • 1 R&D efforts focused on Hydro improving power Large scale On- Geo generation performances shore and reducing costs Wind Biomass & biofuel • 2 R&D required to make technologies more reliable Small Solar PV and profitable scale Off-shore 2 Early commercial Pilot Thermal Wind • 3 R&D required to let solar technologies leave the labs Develop H2 Waves -ment Tides 3 Still in the labs Time All the technologies could benefit from R&D effort – Some of them have yet to leave the labs: huge efforts will be required 8 Installed capacity
- 9. Renewable Technologies: Wind State of the art and future evolutions Factors affecting development Factors affecting development • Greater turbines resulting in reduction in costs of production • Incentive schemes in many countries 1981 2008 0,06 MW 3,0 MW • On-shore: new materials and more efficient designs allow for a greater dimension and efficiency of the turbines • Off-shore: the dimensions tend to be increased (up to 5-6 MW) in order to exploit the stronger winds available * Enel Analysis 9
- 10. WIND - Inthe past few years, turbine efficiency has increased significantly Higher efficiency at same wind speed conditions Capacity factor % Annual power production from 20 MW capacity at 6 m/s 70 GWh 60 50 M1 40 M1 53 30 M2 20 10 M2 30 0 0 1 2 3 4 5 6 7 8 9 10 +77% IEC* III IEC* II IEC* I (low wind) (med) (high) Average wind speed, m/s Note: Capacity factor for M1 is 30,1%; Capacity factor for M2 is 17% at 6 m/s wind * IEC classifications: IEC III (0-7.5 m/s); IEC II (7.5-8.5 m/s); IEC I (8.5-10.0 m/s) Source: http://www.windpower.org/en/tour/wres/pow/index.htm; 10
- 11. Renewable Technologies: Photovoltaic Solarand Concentrated Solar State of the art and future evolutions Factors affecting development Factors affecting development • Technological developments (incremental or discontinuous) reduce the costs of the panels and increase efficiency, getting closer to “grid parity”. • Incentive schemes in many countries • Traditional technologies: silicon “mono-” and “poli- cristalline” • New “thin film” technology: reduces the use of silicon (main cost component of the system) and the cost of energy production • Enel’s commitment to developing concentrated solar 11
- 12. EXAMPLE Price decrease expected in solar PV lower but similar to the high tech industry examples CAGR Percent 37-inch LCD* LCD*, PDP** price development 42-inch PDP** USD, at 2003 prices • The price reduction 5,000 path expected for solar PV module between 2008 and 4,000 2020 is lower but similar to the high tech 3,000 industry -21% -21% • As an example, LCD* 2,000 and PDP** technology -24% -24% price decreased ~20- 25% p.a. over the last 1,000 4 years 2003 2004 2005 2006 2007 * Liquid Crystal Display ** Plasma Display Panel 12 Source: ICFAI
- 13. PV Business Model Committed to the PV sector 3SUN (EGP, SHARP, STM) EGP EGP EGP Large scale Large scale Manufacturing Manufacturing Development Development EPC EPC plants O&M plants O&M IPP – ESSE(1) (EGP, SHARP) IPP – ESSE(1) IPP – ESSE(1) Large scale Large scale Development Development EPC EPC plants O&M plants O&M Retail channel (Enel.si) Turn-key installation to domestic/business customers EGP is strategically positioned across the whole PV value chain (1) EGP Sharp Solar Energy. 13
- 14. 3Sun PVFactory Joint Venture • Enel Green Power Partners (each 1/3) • Sharp • ST Microelectronics Location • Catania, at STM M6 premises Technology • Sharp triple-junction thin-film Partners’ contributions Capacity Enel Green Power : At start • 160 MW/y (Q4 2011) • Business Development • Retail Sales Network Ramp-up • + 320 MW/y (2012-14) Sharp: • Technology • ~ 320 M€ (160 MW/y) • International Sales Network Capex • ~ 770 M€ (480 MW/y) STMicroelectronics: • Manufacturing Experience and Site • Trained Personnel • ~280 people (160 MW/y) Employment • ~700 people (480 MW/y) • Over 400 people during construction 14
- 15. Enel.si: EGP RetailArm 1 Turn Key PV and other distributed renewable Solar PV and installations (mini-wind, geo-thermal heat pumps, other solar-thermal) to domestic and business customers distributed renewables Leadership in the Italian fast growing retail PV market Business 2 lines Energy efficiency and energy savings solutions for Energy domestic and business customers Efficiency Partnerships with products and technology leaders Business A strong growing franchising network with over Franchising 500 entrepreneurs franchisees with EGP brand model A unique approach to renewable distributed generation 15
- 16. Enel.si: access tothe fast growing retail market Business model Business model Over 550 franchisees locally distributed over Italy • Franchising: local entrepreneurs supported by Enel.si • Enel.si offers to retail market - through its franchising network - distributed renewable energy generation products and services and energy efficiency solutions • Enel.si provides to franchisees centralized communications, products, technical assistance, finance solutions, sales and technical training platform Opportunities Opportunities • Over 550 franchisees with local distributed points of sale • Over 250 MW photovoltaic plants installed • Refueling product pipeline with new innovative retail applications and bundle offers for residential, SOHO, small-industrials segments 16
- 17. Innovation in renewables Solarthermodynamic – Archimede Thermodynamic innovative system developed with ENEA patent, integrated with a modern combined cycle Using molten salts (fertilizers) as a fluid that can reach temperatures of about 550 °C Molten salts store the sun's heat to produce electricity even in low sunlight (even during the night) Net capacity: 4,7 MWe Gross annual production: 9,7 GWh Being constructed in Priolo Gargallo (Siracusa) Enter into exercise: July 2010 17
- 18. Geothermal Global Resources Availabilityand EGP presence • 40 plants - 775 MW* - 5,000 GWh • 460+ people involved in operation • Types: dry steam, flash steam and binary cycle • Operations since 1904 US - Nevada In operation Tenerife /Greece / Turkey 47 MW Resource evaluation US - Utah Drilling 17 MW El Salvador In operation 200 MW Italy In operation 730 MW Chile Drilling 80 MW * Consolidated MW as of December 2010. 18
- 19. Enel Green PowerGeothermal plants Binary cycle - North America Salt Wells Salt Wells and Still Water are the world largest binary cycle plants (14 MW) They are the benchmark in binary geothermal energy generation •A binary system with two fluids, hot water from underground wells heats an organic fluid and turns it into a vapor that makes the turbine generate power. •They are “Closed-loop” systems that continually replenishe the Stillwater Stillwater geothermal resource used in the power generation process, without use (33 MW) of other Natural Resources (water) •They will also be the first hybrid solar-geothermal applications in the world. 19