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ACCELERATING THE
GROWTH OF CLEANENERGYASIA CLEAN ENERGY FORUM 2011
23 JUNE 2011
MICHAEL WILSHIRE
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CONTENTS
1. About Bloomberg New Energy Finance
2. Clean Energy Investment Overview
3. Assessing the Effectiveness of Clean Energy Policy
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BLOOMBERG NEW ENERGY FINANCE (BNEF):COMPANY OVERVIEW
North AmericaNew YorkWashingtonSan Francisco
South AmericaSao Paolo
UK/EuropeLondonZurichParis
AfricaCape Town
Asia PacificBeijingHong KongNew DelhiSingapore
SydneyTokyo
BNEF Offices
Dedicated Accessto Global
Research Teams
Independent &Transparent
Analysis
Unrivaled In-depthIndustry
Interactions
Robust andProprietaryData Sets
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Policy Makers, Governments &Development Banks
BLOOMBERG NEW ENERGY FINANCE:A SMALL SELECTION OF WHO WE SERVE
Investors Investors across the financing continuum VC/PE, Project Investors (Debt/Equity) Public Market Investors - Specialist/Diversified Funds
Pension Funds, Hedge Funds
Corporations and Utilities
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CONTENTS
1. About Bloomberg New Energy Finance
2. Clean Energy Investment Overview
3. Assessing the Effectiveness of Clean Energy Policy
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$52bn
$76bn
$113bn
$151bn
$180bn $186bn
$243bn
48%
48%
34%
19%4%
30%
2004 2005 2006 2007 2008 2009 2010
GLOBAL TOTAL NEW INVESTMENT IN CLEAN ENERGY,$BN
Source: Bloomberg New Energy FinanceNote: Includes corporate and government R&D, and small distributed capacity. Adjustedfor re-invested equity. Does not include proceeds from acquisition transactions
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TOTAL NEW INVESTMENT IN CLEAN ENERGY BY REGION,2007 10 ($BN)
Source: Bloomberg New Energy FinanceNote: Includes corporate and government R&D, and small distributed capacity. Adjustedfor re-invested equity. Does not include proceeds from acquisition transactions
61.947.7
41.2
70.2
59.450.5
75.5
48.6
62.4
94.4
65.8
82.8
EMEA AMER ASOC
2007
2008
2009
2010
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DEVELOPMENT BANK FINANCING OF CLEAN ENERGYPROJECTS $BN
Source: Bloomberg New Energy Finance, development banks
1.21
0.97
1.53
0.70
0.61
0.21
0.12
0.50
0.42
0.12
2.04
1.68
1.82
0.91
1.13
1.55
2010
13.54
5.41
0.820.60
3.15
2009
8.92
2.68
2.24
2008
10.98
1.36
6.21
2007
4.53
KfWAsian Development BankChina Development BankOther
EIBBNDES
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0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
800 1,000 1,200 1,400 1,600kWh/kW/year
2015LCOE
Average residential power price
Japan
Spain
Germany
Denmark
France
Greece
Netherlands PortugalUKSlovakia
South KoreaUS
excl. CA
China
South Africa
10GW
50GW
Residentialpower market
Hawaii
ItalyTurkey
$/kWh
RESIDENTIAL PV PRICE PARITY
Source: Bloomberg New Energy FinanceNote: LCOE based on 6% weighted average cost of capital, 0.7%/year module degradation, 1%capex as O&M annually. CA is California.
2010LCOE
Average residential power price
More sun
CACA
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CONTENTS
1. About Bloomberg New Energy Finance
2. Clean Energy Investment Overview
3. Assessing the Effectiveness of Clean Energy Policy
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CUMULATIVE GRID CONNECTED WIND CAPACITY INCHINA (GW)
Source: China Electricity Council, Bloomberg New Energy Finance
1.9
11.4
10.59.87.0
9.4
3.8
11.1
1.70.7
75.3
69.169.074.2
69.171.272.273.2
63.3
42.5
Mar-11
33.9
Dec-10
31.1
45.0
2.64.2
2006
33.9
Sep-10Jun-10
20.1 23.4
2009
25.5
16.1
31.6
21.8
Mar-10
27.1
2007 2008
12.2
8.45.9
Grid connected (GW)
% connectedUnconnected (GW)
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GLOBAL WIND AND SOLAR INSTALLATIONS BY POLICYMECHANISM, 2010
Source: Bloomberg New Energy FinanceNote: All US and India installed capacity treated as 'tax incentive' scheme, China between 'feed-in tariffs' and 'tenders'.
9%
Feed-in tariff
Tax incentive
Trade & quotaMarket based
Tendering
Solar
100% = 36 GW
85%
7%
8%
Wind
100% -= 194 GW
64%
23%
3% 1%
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WIND PENETRATION AND TARIFFS UNDER DIFFERENTPOLICY REGIMES IN 2010 (%, EUR/MWH)
Note: Wind installations compared to total installed capacity in 2009. Tariffs levelised over 20 years ofplant operation. Bubbles represent total wind installed capacity in each market by 2010.
Germany
Spain
Italy
France
UK
Denmark
PortugalNetherlands
Ireland
Greece
Poland
IndiaUSA
China
25
50
75
100
125
150
0% 5% 10% 15% 20% 25% 30% 35%
Feed-in tariff
Tax incentive/mixed
Trade & quota
20GW
High deploymentrates at lower costs
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PVS SHARE OF ELECTRICITY PRODUCTION VERSUS PVS
COSTS AS % OF GDP
Note: Cost is net of wholesale electricity price. Size of bubble is cumulative installed PV at end of 2010,cost and PV electricity supply calculated on the basis of 2010. Source: Bloomberg New Energy Finance
France
Ontario
Spain
Germany
Italy - includingadditional 4GW
Italy - gridconnected only
Czech Republic
0.0%
0.1%
0.2%
0.3%
0.4%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
5GW
Share of GDP
Share of Electricity Production
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ONSHORE WIND PPA PRICES UNDER TENDERINGSYSTEMS IN LATIN AMERICA AND CHINA ( /MWH)
Source: Bloomberg New Energy Finance
54.654.856.356.962.062.864.2
92.7
108.9
Peru Brazil2010 (A-3)
China(average)
Brazil(reserve)
UruguayBrazil2009 (A-3)
MexicoArgentinaBrazil(feed-in)
-50%
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IMPACT OF FINANCIAL POLICY ON LCOE (EUR/MWH)
Source: Bloomberg New Energy Finance
69
55
67
BaseLCOE
Financialstructurepremium
FinalLCOE
12 14
Equitymargin
Tariff
6867
46
BaseLCOE
Financialstructurepremium
FinalLCOE
21
1
Equitymargin
Tariff
US TAX EQUITY MARKETGERMAN FEED-IN TARIFF MARKET
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POLICY MEASURES - CONCLUSIONS
Source: Bloomberg New Energy Finance
Feed-in tariffs minimise risks for investors across the value chainas they provide long-term cash flow visibility, though it is essentialto manage the risk of capacity overruns and costs to governments.
Policy volatility and generation price uncertainty leads to higherfinancial costs and a combination of lower returns fordevelopers or higher prices for consumers.
Tenders result in the lowest prices but the risks that aggressivebidding poses to project financing and deployment need to bemanaged.
We expect to see a strong policy shift with a focus on loweringsystem costs: several trade & quota systems may beabandoned while competitive tenders will increase.
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COPYRIGHT AND DISCLAIMER
This publication is the copyright of Bloomberg New Energy Finance. No portion of this document may bephotocopied, reproduced, scanned into an electronic system or transmitted, forwarded or distributed in any
way without prior consent of Bloomberg New Energy Finance.
The information contained in this publication is derived from carefully selected public sources we believe are
reasonable. We do not guarantee its accuracy or completeness and nothing in this document shall be
construed to be a representation of such a guarantee. Any opinions expressed reflect the current judgment of
the author of the relevant article or features, and does not necessarily reflect the opinion of Bloomberg New
Energy Finance. The opinions presented are subject to change without notice. Bloomberg New Energy
Finance accepts no responsibility for any liability arising from use of this document or its contents. Bloomberg
New Energy Finance does not consider itself to undertake Regulated Activities as defined in Section 22 of the
Financial Services and Markets Act 2000 and is not registered with the Financial Services Authority of the UK.
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ASSESSING THE EFFECTIVENESSOF CLEAN ENERGY POLICYMICHAEL WILSHIRE, GLOBAL HEAD OF ANALYSIS,[email protected]
mailto:[email protected]:[email protected]