Global Trends in Energy, Power & Utilities
Manfred WiegandGlobal Power & Utilities LeaderSeptember 2011
www.pwc.com/utilities
19.08.2011
Content
Part 1 – Global Primary Energy Trends
Part 2 – Global Power & Utilities Trends
Part 3 – China
Part 4 – Global Renewable Energy Trends
Part 5 – Wind Energy
Part 6 – Solar Power
Part 7 – Biomass
Part 8 – Industry Consolidation
Part 9 – Investments in Power & Utilities in Brazil
2September 2011
PwC
PwC
Global Primary Energy Trends
PartSeptember 2011Global Trends in Energy, Power & Utilities
Source: IMF World Economic Outlook, July 2011
Global Primary Energy Trends
Global Economy on a Path of Fragile Recovery after strong Rebound 2009
September 20111
PwC
Global Primary Energy Trends
Development of Primary Energy¹ consumption
1.7
-1.5
0.7
2.8
5.05.4
8.7
3.8
-2.2
-0.2-1.0
1.2
3.42.6
4.2
7.3 7.3
-5.0 - 5.9 -4.9
-1.5
3.0
7.5
8.0
3.13.7
3.2 3.5
5.6
7.5
8.5
11.2
9.2
5.4
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
10,0
12,0
USA EU OECD World Non-OECD Asia Pacific China India Middle East
Growth rate by region in %
% Change 2007 over 2006% Change 2008 over 2007% Change 2009 over 2008% Change 2010 over 2009
1.8
• Strong rebound in 2010 in all regions of the world after “first time ever” negative growth in 2009• Global growth 5.6 % highest since 1973 reaching a total of ≈ 12,000 Mio toe• China (20.3 % share) surpassed US (19 % share) in 2010 as the world’s largest energy consumer• About 70 % of worldwide consumption growth occurred in non-OECD countries (thereof 38.4 % in China)
Source: BP Statistical Review of World Energy, 2011¹) incl. Renewable Energy used in Power Generation
September 20112
PwC
Global Primary Energy Trends
Development of Primary Energy¹ Consumption
-4.5
4.4
2.3
3.9
6.0
0.8
3.0
-1.4
3.6
4.3
0.8
-5.9
1.72.2
-0.4
-5.3
3.93.5
1.7
4.6
8.5
5.5
-8
-6
-4
-2
0
2
4
6
8
10
Germany Africa South Africa South & Central America
Brazil Russia
Growth rate by region in %
% Change 2007 over 2006% Change 2008 over 2007% Change 2009 over 2008% Change 2010 over 2009
-0.8
1.6
Source: BP Statistical Review of World Energy, 2011¹) incl. Renewable Energy used in Power Generation
September 20112a
PwC
-2.1
1.5
3.64.3
1.7
12.4
-0.5 -0.3
2.6
1.1
3.9
13.6
-0.9
-2.2 -2.6
-1.1
1.6
10.9
2.03.0
7.4 7.6
5.3
13.4
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
Nuclear Energy Oil Natural Gas Coal Hydroelectricity Renewables for Power Generation
Growth rate by fuel type in %% Change 2007 over 2006% Change 2008 over 2007% Change 2009 over 2008% Change 2010 over 2009
Source: BP Statistical Review of World Energy, 2011
Global Primary Energy Trends
Development of Primary Energy Consumption by Fuel Type
6.5 %
33.6 % 23.8 % 29.6 % 5.2 % 1.3 %
2010 Share of total global PE consumption
87 % 6.5 %
September 20113
PwC
Oil 28%
Gas22%
Coal24%
Nuclear Power
8%
Hydro3%
Biomass (traditional)
4%
Other Renewables
4%Biomass (modern) 7%
+ 36%
2035
16.750 MtoeØ 1,2% p.a.1)
Source: WEC: Energie für Deutschland; International Energy Agency: World Energy Outlook 2010, New Policies Scenario, PwC1) CAAGR (Compound average annual growth rate)
41%
Global Primary Energy Trends
Future Prospects of Primary Energy Consumption and Fuel Mix (2008 – 2035)
Oil33%
Gas21%
Coal27%
Nuclear Power
6%
Hydro2%
Biomass (modern)
4%
Other Renewables
1%
Biomass (traditional)
6%
12.300 Mtoe
2008
1990 2010 2035OECD countries Non-OECD countries
16,7 Mtoe12,7 Mtoe8,8 Mtoe
World energy consumption in Mtoe
46%
54%
56%
44%
67%
33%
• Fossil fuels continue to dominate but their relative share reducesfrom 81% (2008) and 87% (2010) to 74% in 2035
• Gas is the fastest growing fossil fuel (+43%)• „Modern renewables“ are tripling and their share doubles to 14%• Nuclear growth +25% = pre-Fukushima• OECD countries growth 3%; Non-OECD countries growth 64%• 2035 Non-OECD accounts for 2/3 of world PE demand
September 20114PwC
Global Primary Energy Trends
Fossil Fuels dominate Global Growth in Demand
• Demand for each fuel sourceincreases
• Fossil fuels (FF) represent 53% of growth in demand up to 2035− Gas incurrs the largest growth
(+43%) followed by coal andoil
• Other Renewables are the fastest growing fuel type with almost Φ8 %/year but come from a smallshare of 0.7 % total PE demandin 2008
Primary Energy
Source: International Energy Agency: World Energy Outlook 2010, New Policies Scenario, PwC
September 20115
PwC
Global Primary Energy Trends
Primary Energy Consumption by Region and Fuel Type
Non OECD-countries drive consumption offossil fuels and demand in primary energyand electricity (2008 – 2035)
World primary energy demand by region
+ 36%
Incremental primary energy demand by fuel and region, 2008-2035
RegionPrimary Energy
Consumption
ElectricityConsumption
India + 127% + 274%
China + 75% + 175%
Middle East + 69% + 109%
EU - 1% + 18%
OECD + 3% + 22%
Source: International Energy Agency: World Energy Outlook 2010, New Policies Scenario, PwC
September 20116
PwC
Global Primary Energy Trends
Renewables becoming the Mainstream
Primary Energy demand of modern renewable energy
Source: IEA: WEO 2010, New Policies Scenario, PwC
= Total: 840 Mtoe
= Total: 2.400 Mtoe
The consumption of modern renewable energy will triple between 2008 and 2035
September 20117
Driving force: Power sector share of RE in generation mix rises from 19 % in 2008 to 32 % in 2035
PwC
Global Primary Energy Trends
Global Investment Needs for the Energy Sector: 32.8 Trillion US$¹ over 2010-2035 CumulativeEnergy-Supply Investment
Power
generation60 %
Transmission & distribution
40% Mining
91%
Transportation
9%
Exploration and development
85 %
Refing12%
Transportation3 %
Exploration & development
64 %LNG chain
9 %
Transmission & distribution
27 %
Power 51%
$16.6 trillion
Oil 24%
$ 8.1 trillion
Gas22%
$7.1 trillion
Coal3%
$0.7 trillion
Distribution
69 %
5,900 GW
$4.8 trill. $3,3 trill.
$ 7.0 trill.$ 9.6 trill.
• Over US$1.200 bn/year is needed to modernize the global energy sector, of which 64 % will take place in non-OECD countries (16 % in China).
• Oil, gas and coal investments to supply power stations bring share of power investments up to 62 % or US$20.5 trillion.
Distribution69 %
4.8 trillion
Transmission31 %
$2.2 trill.
Renewables60 %
2,800 GW$ 5.7 trill.
Thermal40 %
3,100 GW$ 3.9 trill.
Biofuels<1%
$0.2 trillion
Source: International Energy Agency; World Energy Outlook 2010, New Policy Scenario, PwC ¹in 2009 US$
September 20118PwC
Global Primary Energy Trends
Driving Forces behind Global Energy Demand
6.9 bn
8.6 bn9.2 bn
201020352050
P
Source: WEC, UN, IEA, PwC
• + ¼ until 2035 and 1/3 until 2050.
• Slowing pace Φ 0.9 – 0.7 %/year.• All growth in Non-OECD
countries and in urban areas.• After 2035 between 7 bn and8 bn in developing countries
• India becomes most populatedcountry.
• More than doubling until 2035 with Φ 3.2 %/year.
•Non-OECD growth fastest led by China and finally India (7.9 % / 5.9 %).
• OECD growth projectedΦ 1.8 % .
• Down-side risk: debt crisis, double dip recession
• Increase of more than 20 %until 2035 and almost 1/3until 2050.
• Since 2009 more people incities than in rural areas.
• Development of Megacitiesrapidly increasing.
• 2050 = 2/3 or 6 bn people in urban areas .
• US$ 312 bn in 2009.• 37 countries ≈ 95 % of
global subsidized FF consumption.
• Almost all Non-OECD.•Universal phase out by2020 would reduce PEdemand by 5 % and CO2by 5.8 % (IEA).
Population Growth ConsumptionSubsidies
(2009/bn US$)
September 20119
51 %
62 %67 %
GP 74
153
280
P
6
8595
126
PCoal
Gas
Power
Power
Oil
Coal
UrbanizationGrowth
GDP Growth (Global GDP in
trill. US$)
PwC
Source: IEA, World Energy Outlook 2010, PwC
Global Primary Energy Trends
Limiting Factors to Global Energy Demand Growth
Drivers:• Better energy efficiency• Fuel switching• Change to less energy-intensive industries
Energy intensity (Energy needed to produce 1 Unit of GDP)
Technology Development
• Technological breakthroughs• Ongoing technological improvements
- advanced technologies- energy efficiency
• Commercialization- longevity of capital stock
• Currently approaching- CCS- Advanced Biofuels- Large CSP- Smart Grids
Projected change in Global Primary Energy intensity
September 201110
• NPS:34 % decline by 2035 projected; Φ 1.5 % p.a.
PwC
Global Primary Energy Trends
Economic Crisis brought some Relief on CO2 growth
Source: International Energy Statistics
Kyoto Target 2012
• Total global CO2 emissions rose by almost 40% until 2008 and decreased5% in 2009 recession both compared to 1990
• In 2009 we are about 9 Gt or 41% above the 2012 target set in the Kyoto protocol
September 201111PwC
22.7 22.5 22.6 22.5 22.723.1
23.9 24.1 24.1 24.124.7 24.9
25.9
27.0
28.4
29.430.0
30.931.5
30.4
20
22
24
26
28
30
32
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Global total CO2 emissions in Gt
21,5
7,711
5,425
1,602 1,5721,098 766 541 528 527 520
5.8
17.7
1.4
11.2
8.6 9.3
16.2
10.9
6.98.4
02468101214161820
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
China USA India Russia Japan Germany Canada Korea Iran UK
Mn. t CO2 (left)
t CO2/cap. (right)
Source: US Energy Information Administration, PwC
Total global CO2 emissions:30.398 mt
Φ 4.5 t / capita
Global Primary Energy Trends
Who are the main Emitters today?Ten biggest CO2 emitters and the corresponding per capita emissions (2009)
September 201112
15.3 %25.4 % 5.2 % 1.7 %3.6 % 2.5 % 1.8 % 1.7 %17.8 % 1.7 %
PwC
Share in total global CO2 emissions
Global Primary Energy Trends
What has caused historic Aggregation?
•From 1900 to 2005: the US & EU accounted for >50% of the cumulative global emissions
•China accounted for only 8% and India 2%
•In 2007 China overtook US as the biggest CO2 emitter
•Industrialization is the main driver of growth in China and India by 2005
Energy-related CO2 emissions by Region, 1900-2005
mn
tonn
es
Historic cumulative emissions were mainly driven by OECD industrialization
Source: IEA World Energy Outlook 2008, Reference Scenario September 201113
PwC
Global Primary Energy Trends
Development of Global Energy-related CO2 Emissions 2008 – 2035
12.5 12.2 11.8 11.3 10.7 10.0
15.7
19.520.8
21.923.0
24.0
28.2
31.732.6 33.2 33.7
34.0
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
2008 2015 2020 2025 2030 2035
OECD
Non-OECD
World
Source: U.S. Energy Information Administration / International Energy Outlook 2010 NPS
Global energy related CO2 emissions are expected to increase by 21 %, with OECD countries‘ emissions decreasing by 20 % and Non-OECD emissions increasing by about 53 %
September 201114
PwC
10
15
20
25
30
35
40
2008 2015 2020 2025 2030 2035New Policies Scenario450 ppm Scenario
- 13.7 Gt
+21 % over 2008650 ppm CO2eq+3.5°C²)
-26% over 2008450 ppm CO2-eq+2.0°C²)
Global Primary Energy Trends
Energy demand drives CO2 emissions
Measures:
New Policies Scenario
450 ppm Scenario
35.4 Gt
21.7 Gt
Renewables andBiofuels
Source: IEA, World Energy Outlook, 20101: IPCC 2007, 2: 450 Scenario: 2015 und 2025 estimated
Energy Savings Global CO2 Price
Nuclear Power/CCS
Development of “Clean Energy”
Subsidy reduction for fossil fuels
September 201115
Annual total global CO2 Emissions (GT)
Sustainability?
PwC
Global Primary Energy Trends
What does the 2°C Target mean for the Power & Utilities Sector?
• Decrease energy consumption byan increase in energy efficiency
• Consumers• Buildings• Industry
• Power plants• Transportation
• Decarbonisation of power generation„Clean“ energy
• Modern renewable energy• Wind on- and offshore• Solar und photovoltaik• Solar heat• Biomass/waste• Geothermal• Tidal/wave
• Conventional energy• Hydro• Nuclear
• CO2 capture and storage (coal / gas / oil)
Dramatic changes required! Continuously until 2020 but much faster and deeper:- 13.5 Trillion US$ additional investment required- China is a key contributor Reach 35 % of abatement- Phase out of fossil fuel subsidies most important in Middle East
Reduction of annual CO2 emission by ~14 Gt until 2035:1)
• Increase the use of biofuels• Ethanol• Biodiesel• Biofuel of 2nd generation
September 201116
1) Compared to the IEA WEO 2010 New Policies Scenario PwC
PwC
Global Power and Utilities Trends
PartSeptember 2011Global Trends in Energy, Power & Utilities
Global Power and Utilities Trends
Development of Power Generation¹
2.3
0.5
2,1
4.7
7.98.7
14.5
8.0
7.0
-0.9-0.1
0.3
2.0
3.9 3.6
5.6
3.3
7.4
-4.1-4.9
-4.1
1.0
2.63.3
7.1
5.5
2.1
4.33.7 3.7
5.9
8.39.1
13.2
6.0
4.5
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
USA EU OECD World Non-OECD Asia Pacific China India Middle East
Power generation growth rate in %
% Change 2007 over 2006% Change 2008 over 2007% Change 2009 over 2008% Change 2010 over 2009
• Strong rebound 2010 in all regions of the world• Global growth 5.9 % highest in last 10 years; faster growth than Primary Energy and GDP• China had strongest rebound (13.2 %) and is world’s 2nd largest electricity generator with a share
of 19.7 % (USA 20.3 %)• About 67 % of power generation growth occurred in Non-OECD countries (thereof 41.3 % in China)
Source: BP Statistical Review of World Energy, 2011¹) incl. final consumption plus own power used in power plants and network losses
September 201117
PwC
Global Power and Utilities Trends
Development of Power Generation¹
4.33.8
4.5
6.0
2.7
1.6
-2.0
3.44.2
2.1
0.1
-0.7
-4.2
-0.2
-1.4
-4.5
-6.9
7.78.4
3.5
6.2
4.4 4.7
-8
-6
-4
-2
0
2
4
6
8
10
Africa South Africa South & Central America
Brazil Russia Germany
Power generation growth rate in %
% Change 2007 over 2006
% Change 2008 over 2007
% Change 2009 over 2008
% Change 2010 over 2009
0.0
Source: BP Statistical Review of World Energy, 2011¹) incl. final consumption plus own power used in power plants and network losses
September 201117a
PwC
Oil1%
Gas21%
Coal32%Nuclear Power
14%
Hydro16%
Biomass& Waste
4%
Wind8%
Photovoltaic2%
Other Renewables2%
Oil 5%
Gas21%
Coal41%
Nuclear Power14%
Hydro16%
Biomass& Waste
1%
Wind1%
Other Renewables
1%
+ 75%
2008 2035
35.300 TWh20.183 TWh Ø 2,2% p.a.2)
Source: International Energy Agency: World Energy Outlook 2010, New Policies Scenario, PwC1) Consisting of final consumption plus power plant own use and network losses2) CAAGR (Compound average annual growth rate)
Global Power and Utilities Trends
21st Century the Era of Electricity?Development of electricity generation1) and fuel mix 2008 – 2035
• Unprecedented growth of 75 % to more than double PE increase• Significant transition towards low carbon technologies• Non-hydro renewables grow by more than 830% and their share increases from 3% to 16%• Coal-fired generation growth around 37% and remains the most dominant fuel source• Absolute usage of fossil fuels increases by 1/3 but their relative share reduces from 67% to 54%
mainly related to coal (minus nine% points)
September 201118PwC
Global Power and Utilities Trends
China and India driving Coal-fired Generation
A 34 % drop in coal-fired generation led by Europe in the OECD is offset by an almost 100% increase in non-OECD countries, especially China (+ 90 %), where 600 GW of new planned capacity exceeds the current capacity of the US, EU & Japan and India is increasing by +180%
Source: IEA: World Energy Outlook 2010 New Policies Scenario, PwC
Coal-fired electricity generation by region
September 219
+ 36 %
PwC
Global Power and Utilities Trends
Global Fuel Mix Trends in Power Generation• Coal remains dominant fuel for
power generation− Coal fired power generation will
increase by 36 % until 2035 − Growth rate for power generated by
coal until 2035o China: ≈ + 90 %o India: ≈ + 180 %o OECD: ≈ ./. 50 %o EU: ≈ ./. 60 %
• Gas with + 75 % fastest growing fossil fuel
• Nuclear needs to be watched• Renewable energy (incl. hydro) are
tripling and their share in power production rises from 18% to 32%− Hydro grows by 72 % and accounts
for half of RE share− Wind and biomass lead modern
renewables increasing 13-fold and6-fold, respectively
− Solar follows with dramatic growthrates (i.e. Solar PV x 53)
World electricity generation by type
Source: International Energy Agency: World Energy Outlook 2010, New Policies Scenario
September 201120
PwC
Global Power and Utilities Trends
Global Electricity Generation by Fuel Type and Region
Source: International Energy Agency: World Energy Outlook 2010, New Policies Scenario
Coal: absolute + 36 % (China + 90 %, India + 180 %)
September 201121
PwC
Global Power and Utilities Trends
The Global Access Challenge: Number of People without Electricity (million)
• 1.4 billion people (>20% of global population) lack access to electricity, mainly in sub-SaharanAfrica where only 28 % have access¹)
• Achieving universal access to electricity requires investment of US$ 700 bn or $33 bn per year over the next two decades. Additionally, 2.6 billion/Year would be needed for clean cooking facilities
Source: IEA: World Energy Outlook 2010,¹ )Excluding South Africa
September 201122
PwC
PwC
China
PartSeptember 2011Global Trends in Energy, Power & Utilities
China/the Asian Leap
The crucial Role of China in Global Energy Markets
September 201124
The increase in China’s energy consumption between 2000 and 2008 was more than four times greater than in the previous decade. The prospects for further growth remain very strong: energy demand per capita in China is still only 35% of the OECD average.
Source: International Energy Agency: World Energy Outlook 2010 NPS, PwC
China‘s primary energy demand is projected to climb by 2,1% per year, reaching 2/3 ofthe OECD consumption by 2035.
Total primary per-capita energy demand in China and the OECD in the New Policies Scenario
PwC
China‘s growing importance in Global Energy Market
September 201125PwC
Energy demand (in quadrillion BTU²)
CO2 Emissions (in Gt)
Population 2010: 1.34 bnGDP-Growth 2009/2010/2011: 8.7 %/9.8 %/>10 % estShare of total global GDP12.5 %/16.9 % = 2009/2015
1.3 %
5.2%
23.8%
6.5%
33.6%
29.6%
1.7 %
8.4%
27.1%
2.6%
37.2%
23.0%
0.5 %
0.7%
4.0 %
6.7%
17.6%
70.5%
Other
Nuclear
Gas
Hydro
Oil
Coal
China
U.S.
World
Primary Energy Mix 2010Total = 2,432 Mio. toe
Cumulative power generation capacity
5.17.47.6
9.410.610.711.4
14.516.5
14.0
Singapore
Israel
Switzerland
Sweden
Portugal
Belgium
Greece
Ecuador
Netherlands
China migration, 2010
Urbanization (in Mio.)
Total p
opu
liation20
10
Source: The China Greentech Report 2009, IMF 2010, UN 20119, IEA, WEO 2010 NPS²) Quadrillion BTU = 293 TWH, ¹) excl. Hong Kong and Macao
2030 China‘s CO2 emission will exceed the sum of North America, Japan and EU and 2035 that of total OECD
China
The crucial Role of China in Global EnergyMarkets and CO2-Emissions
September 201126PwC Source: International Energy Agency: World Energy Outlook 2010 NPS,
PwC
China‘s share of the projected net global increase for selectedindicators CO2 impact
• 58% of the global increase in CO2 emissions to 2035 comes from China alone.
• China‘s own emissionsincrease by 54% to 10.1 Gt, surpassing the emissionsfrom the entire OECD by2035.
• China already emits 12 % more CO2 per capita thanthe global average and is saidto overtake the per-capitalevel of EU soon after 2020.
Global Power China
Increasing Role in Renewables Manufacturing
September 201127
PwC Source: REN 21 Renewables Global Status Report 2011
Market Shares of Top 10 wind Turbine Manufacturers, 2010
Market Shares of Top 15 Solar PV Cell Manufacturers, 2010
4 top 10 manufacturersfrom China ≈ 31 % total market share end of2010
7 top 15 manufacturersfrom China ≈ 29 % total market share
PwC
Global Renewable Energy Trends
PartSeptember 2011Global Trends in Energy, Power & Utilities
Global Renewable Energy Trends
Global Case for Renewable Energy
Technological progress
Improve accessto modern
energy
Sustainability
Affordability
Employmentcreation
Security ofsupply
Heat production Power generation Transportation
Govern
men
talsup
port
Fin
ance
Renewableenergy
September 201128
PwC
Global Renewable Energy Trends
Global Renewable Energy PotentialIn theory, available renewable energy exceeds global demand
Source: BMU/PwC1) Trans-Mediterranean Renewable Energy Cooperation (TREC)
September 201129
PwC
Global Renewable Energy Trends
Commercial Maturity of RE is a Function ofComparable Costs
Source: RWE EIA incl. Infrastructure costs and an implicit $ 20 CO2 Price
September 201130PwC
100% 300% 500% 700%
Coventional coal
Advanced coal with CCS
Natural gas advanced combined cycle
Advanced nuclear
Wind onshore
Wind offshore
Solar PV
Solar thermal
Geothermal
Biomass
Hydro
More than twice as expensive as the least cost option
• Nearly all renewable technologies are more expensive than the least cost generating option at the moment – gas combined cycle turbine
• Wind offshore, Solar (thermal & PV) are up to 4x more expensive than current electricity costs
• Costs are expected to come down within next 20 years
• Geothermal and hydro have limited scaleability due to locational restrictions
• Wind onshore is at par with conventional coal…
• Intermittency
• Balancing/reserve costs
• Biomass (incl. biogas) offers biggest potential
Global Renewable Energy Trends
Dramatic historical Investment Growth in Renewable EnergyGlobal New Investment in Renewable Energy (US$)
Source: Blomberg New Energy Finance
SDC = small distributed capacity. New Investment volume adjusts for reinvested equity. Total values include estimates for undislosed deals
September 201131
• Global investment increased by 32% to US$ 211bn or 0.3% of world GDP.
• Drivers: Wind farm development in China and small rooftop PV in Europe.
• 2010 Developing countries overtook developed countries for the first time in new financial investments (US$ 72bn vs 70bn respectively).
• Total RE investment is comparable to the value of the global luxury goods market (US$ 234bn).
• Continuing low natural gas prices are a limiting factor.
PwC
Global Renewable Energy Trends
Average Annual Growth Rates of RenewableEnergy Production
September 201132
Source: Renewable Energy Policy Network for the 21 CenturyPwC
Global Renewable Energy Trends
Actual Renewable Power Capacity by Region
September 201133
Source: Renewable Energy Policy Network for the 21st centuryPwC
Global Renewable Energy Trends
Dynamic Global Developments of Renewable Energy
Source: REN 21 Renewables, Global Status Report 2011, PwCNotes: Rankings are based on absolute amounts of power generation capacity or biofuels production; per capita rankings would be quite different for many categories. Country rankings for hydropower would be different if power generation (TWh) were considered rather than power capacity (GW) because some countries rely on hydropower for baseload supply while others use it more to follow the electric load and match peaks.1 Feed-in policies total for 2010 also includes early 2011.
TOP five countries – existing capacity as of end 2010
• Lots of global activity in supportive policy making
• 96 countries have policy to support renewable power generation
• Reviews of targets ongoing in a number of countries (achievable/realistic/integrationin long-term policies)
• Policy overhauls/funding cuts for PV, retroactive (S, CZ) or for new projects (G, I)
September 201134PwC
Global Renewable Energy Trends
Investments into Renewable Energy PowerProduction
Cumulative investment in RES for electricity totals $5.7 trillion over 2010-2035;another $335 billion goes into biofuels.
Cumulative Investment in RES, 2010-2035
Source: IEA: World Energy Outlook 2010 New Policies Scenario, PwC
September 201135
PwC
Global Renewable Energy Trends
Developments of Renewables in the Power, Heatand Fuel Sector until 2035 Increase of power generation with renewables 2035
Heat generation with renewables in the industryand buildings per regions
Biofuel consumption per region
Portion of total consumption:2008: 2 %2035: 8 %
Portion of total production:2008: 19%2035: 32%
Portion oftotal consumption:2008: 10%2035: 16%
Source: IEA: WEO 2010, New Policies Scenario, PwCSeptember 2011
36PwC
Global Renewable Energy Trends
Sufficient governmental Support necessary forRenewable Energy
Global governmental support for renewables-based electricity generation by technology
• Government support remains a decisive factor for RE investments
• A total increase of 260 % from 57 bn in 2009 to 205 bn$ in 2035 is expected and for renewableenergy based electricity an increase of 250% from 40bn$ to 140bn$ in 2035
• Additional factors: increasing fuel prices and decreasing investment costs
Source: International Energy Agency: World Energy Outlook 2010, PwC
September 201137
PwC
Global Renewable Energy Trends
Political Instruments in selected Countries
Country Direct subsidies, grants
Investment orother tax deductions
Consumptiontaxes, energytaxes, turnover-tax deduction
Public investments, loans orfinancing
Australia X - - X
Canada X X X -
China X X X X
France X X X X
Germany X X X X
India X X X X
Japan X X X X
Russia X - - -
Spain X X X X
South Africa X - X X
UK X - X X
USA X X partly partly
September 201138
Source: REN21, RWE Factbook Renewable Energy 04/2010, PwC
PwC
Global Renewable Energy Trends
The Variability Challenge!Shares of variable RES in total electricity generation¹
The share of electricity generation from variable RES is set to increase considerably,imposing additional costs on power systems (+$16-$17 per MWh in EU and USA in 2035)
Source: IEA → NPSSeptember 2011
39PwC
Global Renewable Energy Trends
Impact of variable Renewable Energy on Output of Conventional Plants
September 201140
Western US simulation featuring 30% wind and 5% solar
Source: Western Wind and Solar Integration Study, GE Energy for NREL (2010)
PwC
Global Renewable Energy Trends
System Balancing: The Key Challenge of intermittent Renewable Energy
September 201141
Source: IEA PwC
Global Renewable Energy Trends
Key Considerations related to Variability and Flexibility
September 201142
Source: IEA PwC
Global Renewable Energy Trends
Major Investment Flows in Renewable Energy in 2010 (bn US$)
September 201143
Center of gravity shifting to the developing world
Source: REN 21 Renewables Global Status Report 2011, PwC, WWEA
Wind16.1 Solar
5.5
Biomassw-t-e 1.4
Other1.9
Wind andother 6.7 Small-scale
projects mainlyroof top PV34.5
Wind4.5 Solar
3.1Biomass0.8
IPO 3.5
Wind41.4 Solar
3.8
Biomassw-t-e3.7
Biofuels2.4
Wind 2.4 Small hydro 1.2
Biomassw-t-e 0.9
PwC
PwC
Wind Energy
PartSeptember 2011Global Trends in Energy, Power & Utilities
Wind Energy
Development of Global Wind Energy
Fossile Brennstoffe 81%
Capacity Growth 2010 = 24.5 %
September 201144Source: REN 21 Renewables Global Status Report 2011, PwC
WWEA
Worldwide total: 198 GW+39 GW
Total existing wind power capacitycontributed 2 – 2.5 % to global power consumption
World Market Growth Rates (%)
PwC
24.5
2010
Wind Energy
Global wind power capacity in 2010 – China surpasses Germany and USA
September 201145Source: Global Wind Energy Council – Global Wind Report 2010
• End of 2010 83 countries use windpower on a commercial basis.
• Asia, especially China (50 % of a global addition) showed the most dynamic progress in 2010.
• China doubled its wind capacity the fifth year in a row and plans >30 GW new capacity for 2011 + 12.
• With about 9.5 GW additions EU is 2 largest market. But in additions 2010 wind lost out to gas and solar PV.
• Significant construction in US (5.6 GW) and UK (1.9 GW).
PwC
Wind Energy
Offshore Windpower
September 201146
Characteristics• Better wind resource than onshore
(load factors > 35 %)• Maturing technology/industrial
scale projects• High generation rate/limited track
record of best practices• Good cost reduction potential• Growth areas: Europe, especially
UK and Germany− first projects in China and Japan− first approval in USA (CAPE
Wind/East Coast)• Tight supply situation across value
chain− for suppliers with proven
technologies− Vestas and Siemens Wind > 90%
of markets for turbines• High generation cost per Mwh• Attractive support policies• High maintenance risks
Engineering skills and scale game!
Source: GWEC – Global Wind Power Market PotentialRWE Innogy Factbook Renewable Energy
3100
1200
2010
PwC
Wind Energy
Costs
September 201147
Component costs for typical wind plants Cost structure of a typical 2 MW wind turbine installed in Europe
O & M Costs
• Insurance • Regional maintenance
• Repair • Spare parts
• Administration
Source: GWEC – Global Wind Power Market Potentialwww.wind-energy-the-facts.org
PwC
Calculation based on selected data for European wind turbine installations
Wind Energy
Financing
September 201148
Financial new investment in renewableenergy: Developed / Developing countries, 2010, and total growth on 2009, $bn
• Wind is outpacing all other RE sectors in terms of a new financial investment in 2010: + 30% to reach US$ 95bn
• More than 70% of all asset finance of newbuilt RE went into wind energy
− China: mega wind bases
− Europe: large projects EIB debt
− USA: Treasury grant proposals from 2009
• 2010: wind led public market investmentsinto RE with US$ 8.2bn (mainly b/o Enelwind power flotation)
• VC/PE amounts to 5.5 bn US$ in 2010
• Leading Development Banks: Europe: EIB, KfW, Brazil: BNDES,China: CDB
Source: Bloomberg New Energy Finance, UNEPPwC
Wind Energy
TechnologyBesides the introduction of direct drives the evolution of wind turbines is remarkable
September 201149
> Onshore turbines are now dominated by 1.5 + 2MW turbines with a recent resurgence of 800kw turbines
Source: RWE Innogy/Factbook Renewable Energy 15/03/2011
PwC
PwC
Solar Power
PartSeptember 2011Global Trends in Energy, Power & Utilities
PwC
Fossile Brennstoffe 81%
September 201150
Source: REN 21 Renewables Global Status Report 2011EPIA Global Market Outlook 2015, PwC¹) Grid connected and not grid connected
Worldwide total: 38 GW
Solar Power
Solar Photovoltaic• Solar photovoltaic (PV) capacity was added in
more than 100 countries during 2010, ensuring that PV remained the world’s fastest growing power-generation technology.
• Capacity growth rate 2010 of all PV 72 % to reach 40 GW
• PV installations producting some 50 TWh/year• PV market driver: falling costs, new
applications, strong investor interest, and continued strong policy support, accelerated tariff digressions in some countries
• For the first time since 2005: thin film‘s shareof the market declined (from 17 % in 2009 to13 % in 2010)
• EU dominates the global PV market with about 80 % or 30 GW of total installations as well as 2010 growth (≈ 13 GW)
• Germany = leading market 56 % or 7.4 GW of 2010 additions and 17.6 GW (44 %) of total installations
• The vast majority today is grid connected PV capacity in Europe; other regions have more off-grid PV
• For the first time ever, Europe added more PV than wind capacity during 2010.
Global PV growth¹)
Solar Photovoltaic: Future Prospects
Evolution of Global Cumulative installed Capacity 2010-2015 (MW)
PwCSeptember 2011
51Source: EPIA Global Market Outlook for Photovoltaik until 2015¹) National Renewable Energy Action Plan
Business as usual Condusive political support (i.e. FIT)
• PV stays incentivedriven market
• EU-growth slows
• Future markets turnto US and Asia
• Today NREAP‘s¹) inEurope targetingabout 84.4 GW PV by 2020.
• ROW expected topick up impact
Renewables Solar; Concentrating Solar Power
CSP-Technologies
PwC September 201152
Fresnel Mirrors
Solar Power Tower
Parabolic TroughCollectors
Dish/enginePlants
Source: The Climate Group, PwC, 2009
September 201153
Source: IEA: Technology Roadmap - Concentrating Solar Power,REN 21 Renewables Global Status Report 2011
PwC
• Small worldwide capacity 2010 ≈ 1.1 GW
• Spain global leader adding 400 MW in 2010 to a total of 632 MW in operation.
• Notable interest in MENA (1.2 GW pipeline/construction) incl. UAE, Algeria, Egyt, Jordan, Tunisia, and Morocco (aim 2 GW of CSP by 2010) as well as India and China
• End of 2010 2.6 GW in construction (mainly US + Spain)
• Inclusion of thermal storage and hybrid plants (ISGCC) increasing → improving base load capability
• Dramatic cost reductions in PV increasing resign risk
• Technologies / Desertec
Electricity from CSP plants as shares of total electricity consumption
Expected Growth of CSP power production by region (TWh/y)
Solar Power
Concentrated Solar Power
Renewables Desertec
Desertec : The “Solar” Vision (1)Plan: Harnessing abundant solar power in deserts to:- Promote global energy security and support climate protection- Drive local economic development- Meet renewable energy requirements of developing countries- Supply around 15% of Europe’s electricity by 2050
Promoter: - TREC: Trans-Mediterranean Renewable Energy Cooperation- Club of Rome- Hamburg Climate Protection Foundation- Jordan National Energy Research Center
Content:- Development of an integrated trans-regional renewable energy network based in Europe,
Middle East, North Africa (EUMENA)- Use range of renewable technologies CSP/PV/Wind and as option
hydro/biomass/geothermal- Transmitting power through high voltage direct current line (HVDC)- Use power to operate seawater desalination plants
PwC September 201154
Renewables Desertec
Desertec : The “Solar” Vision (2)The proposed Desertec concept
PwC Source: DESERTEC Foundation September 201155
PwC
Biomass
PartSeptember 2011Global Trends in Energy, Power & Utilities
Biomass
The Renewable Energy – Biomass Spectrum
PwC September 201156
Biomass
Heat ProductionPower Production
Transport
Solid BM MOW Biogas Liquid Biofuels
Direct FiringCO-Firing
Off-Grid Grid-connected Coal Natural Gas
Global capacity end 2010 ≈ 62 GW (est.)Total global production 2010≈ 200 + Twh (est.)
September 201157Source: IEA, Energy Progress Report
¹) CEM = Clean Energy MinisterialPwC
Biomass
Bioenergy power deployment:Bioenergy for electricity production – CEM¹ countries
• Growth in electricity production from solid biomass, biogas and renewable municipal waste and liquid biofuels has been steady since the beginning of the decade (2000 130 TWh to over 200 TWh in 2009)
• US is the leader, followed by Germany (over 22% growth per year during the last decade), Brazil has increased its capacity from less than 4 GW in 2005 to nearly 8 GW in 2010, plans to reach 11.5 GW by 2015
0
200
400
600
800
1.000
1.200
1.400 Biomass production on surplus agricultural landBio-materials
Biomass production on degraded landAgricultural residues
Animal manure
Forest residues
Organic waste
CurrentEnergyDemand
Biomass potential versus global demand (EJ)
Europe is developing rapidly:
• 800 solid biomass plants (end 2010)
• Power generation ≈ 70 Biomass≈ 30 Biogas
• 50 % are CHP-Plants
Wind onshore
Wind offshore
Biomass/biogas
Hydro Solar PV Solar CSPGeo-thermal
Direct cost <+100% >+100% <+100% <+100% >+100% >+100% <+100%
Indirect cost
Infrastructure Low High Low Low Low High Low
Dispatchability/ Predictability
Low Moderate High High Low Moderate High
Scaleability Moderate High High¹) Moderate Low Low Low
September 201158
Source: PwC ResearchPwC
Biomass
Biomass and Biogas: Big Story for Europe
¹) Limitation could be trough feedstock availabilityand logistic cost issues
September 201159
Source: Fact Book RenewableEnergy, RWE 2011
PwC
Biomass
Biomass is a viable option for “green” Capacitybut Feedstock is Key
Opportunities:
• Key advantage over other renewable technologies: ability to operate at high utilization rates and to generate base load electricity
• Still attractive market growth: Biomass potential not yet exploited by far
• Efficiency improvements of existing facilities possible through extensions and modifications
Challenges:
• Large Feedstock share of full costs; cannot be effectively hedged: strong position in feedstock supply is thus crucial
• Only limited scalability of power plants especially due to feedstock availability and logistic cost issues limit growth potential
• Securing sustainability of biomass fuel sourcing
Levelised cost structure for biomass (in €/MWh)
Operational expenditure is very dependent on feedstock costs – no possibility of hedging/long-term supply contracts Feedstock share on overall costs: 25 – 40% Feedstock costs differ depending on
feedstock type and transportation
• Nearly all renewable technologies are more expensive than the least cost generating option at the moment – gas combined cycle turbine
• Wind offshore, Solar (CSP & PV) are up to 4x more expensive than current electricity costs
− Costs are expected to come down within next 20 years
• Geothermal and hydro have limited scaleability due to geographical restrictions
• Wind onshore is at par with conventional coal…
− Intermittency
− Balancing/reserve costs
• Biomass (incl biogas) offers biggest potential
100% 200% 300% 400% 500% 600%
Coventional coal
Advanced coal with CCS
Natural gas advanced …
Advanced nuclear
Wind onshore
Wind offshore
Solar PV
Solar thermal
Geothermal
Biomass
Hydro
More than twice as expensive as the least cost option
September 201160
Source: EIA, includes infrastructure costs and an implicit $20 CO2 price
PwC
Biomass
High Cost Competitiveness and political Support are Drivers of Biomass
PwC
Industry Consolidation
PartSeptember 2011Global Trends in Energy, Power & Utilities
Power Deals
• Total deal value in the power and gas utility sectors, excluding renewables, was up 19% year-on-year, from US$98bn in 2009 to US$116bn in 2010.
• Asia Pacific bidders were involved in US$25bn worth of deals, nearly a fifth of all power deal activity worldwide and up 35% on the previous year.
• Power deals remain in the lowlands compared with the mountains of deal value in the 2005-2008 period. But the conditions are in place for a return
Renewables Deals
• The number of deals has grown by two-thirds year-on-year2009 to 2010, although total deal value is down by a third
• Solar deal volume is rivaling wind, each with just under a third share of all renewables deals.
• Chinese renewables companies are looking at major expansion with a series of IPOs on the Hong Kong stock exchange in 2010 and more planned in 2011.
• Chinese wind turbine companies Sinovel and Xinjiang Goldwind will provide competition for western manufacturers such as Vestas, Gamesa, GE and Siemens
61September 2011PwC
Industry Consolidation
Global Power & Renewables Deals Activity
62
Industry Consolidation
Power Deals in 2010
Source: PwC 2010 Power DealsPwC September 2011
All electricity and gas deals by value (US$bn)
63
Industry Consolidation
Power Deals in 2010
Source: PwC 2010 Power DealsPwC September 2011
2010 deal percentages by continent (2009 percentages shown in parenthesis)
Total sector deal activity – 2009 and 2010
64
Industry Consolidation
Renewables Deals in 2010
Source: PwC 2010 Renewables DealsPwC September 2011
Renewables deals total deal value and percentage share by sector (Deal numbers shown in parenthesis)
All renewables deals by value (US$bn) and number of deals
65
Industry Consolidation
Renewables Deals in 2010
PwC September 2011Source: PwC 2010 Renewables Deals
2010 deal percentages by continent by value of transactions(2010 total: US$33,416m)
(2009 percentages shown in parenthesis – 2009 total: US$48,799m)
66
Industry Consolidation
Renewables Deals in 2010 – by Type of Investor
PwC September 2011Source: Bloomberg New Energy Finance, UNEP
VC/PE new investment excludes PE buy-outs. Total values include estimates for undisclosed deals.
VC/PE New investment in renewable energy by technology, 2010, $bn
Public markets new investment in renewable energy by technology, 2010, $bn
Total values include estimates for undisclosed deals
Asset finance of new-build renewable energy assets by technology, 2010, $bn
PwC
Investments in Power & Utilities in Brazil
PartSeptember 2011Global Trends in Energy, Power & Utilities
Investments in Power & Utilities in Brazil
Major International Players are active
PwCSeptember 2011
67
• Brazil is on a new E.ON global expansion plan 2011
• Has strong interest in renewables assets
• By 2010 invested over €2,785 mln in Brazil• By 2015 will add 30,000MW installed capacity
and lay 52,000 km of transmission lines
• Has plans to return to Brazil after 5 years strategy of putting on hold its presence in the region.
• Bidding for thermal energy project, has small solar/PV presence, interest in biomass
• Plans to invest USD 581m by 2012• Major investments in hydro and recent
stock in 70MW wind farm in Tramandai
• 2010 investments totaled €583 million• Headcount in Brazil is 3.000 employees• Owns generation, transmission and distribution assets
• No 1 private power produce in Brazil• Hydropower: Sao Salvador 241MW, Jirau hydro plant• Numerous biowaste power production projects
• Part of international consortium for gas distribution in Rio de Janeiro
• 54,2% stock in CEG, the oldest Brazilian power company
• 2010 investment of $1bn in buying 7 Brazilian power transmission companies
• AES's largest generation business is AES Tuete in Brazil• AES Electropaulo is the largest electricity distribution company in Brazil
Source: PwC research
68
Investments in Power & Utilities in Brazil
China’s Outbound Investments by Country
PwC September 2011Source: Published by The Heritage Foundation(http://report.heritage.org/wm3133)
69
Investments in Power & Utilities in Brazil
China’s Investments to Brazil by SectorInvestment by sector – for 2006–2010, in bn US$
PwC September 2011
Source: The Heritage Foundation, “China’s Outward Investment,” at http://thf_media.s3.amazonaws.com/2010/xls/China_Global_Investment_Tracker2009.xls.
• Renewables is one of the major sectors for Chinese investments in Brazil due to government incentives
• Chinese companies experience challenges in Brazil due to:
− Overall formalities for Brazilian companies
− Registrations
− Bookkeeping
− Management (special request for foreign shareholders)
− Visa application for foreign investors
− Government approvals
− Registration of foreign capital
− Tax considerations
− Regulations on Foreign Investments in Brazil
70September 2011PwC
Investments in Power & Utilities in Brazil
Challenges for Chinese Companies in Brazil
Thank you!
And looking forward to your questions
PwC September 201171
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