matthias fawer
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TBLI CONFERENCE™ EUROPE 2012 - Zurich - SwitzerlandTRANSCRIPT
Sustainable Swiss Private Banking since 1841.
Renewable Energies and Clean Tech –Megatrends for a clean and
sustainable future
Dr. Matthias FawerBank Sarasin Sustainable InvestmentTBLI ConferenceZurich, 8. November 2012
Our Bank – Facts at a glance
Leading Swiss private bank – founded in 1841
Investment advice and asset management for private and institutional clients
Active asset management with a sustainable investment philosophy based on more than 20 years of experience and an integrated approach based on the analysis of financial, social and ecological opportunities and risks
Represented world wide at more than 20 locations in Switzerland, Europe, the Middle East and Asia
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Sustainability research since 1989 Continuous build-up of staff and low fluctuation Responsible for CHF 12,7 billion / EUR 10,5 billion assetsFirst renewable energy fund launched in 2000
The team:74 employees30 portfolio manager 10 sustainability analysts
On average:40 years of age15 years of work experience
Number of employees working in sustainable investment
Sustainable Investment at Bank Sarasin –Significant Resources & Experience
Source: Bank Sarasin, as at 30.06.2012
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Two opposite trends convert our energy system
Undervalued risks
Finite nature of fossil fuels
Growing costs
Above average growth over the last ten years Technological progressDecreasing costs
Conventional energies Renewable energies
Source: Die Presse.com Source: Blis Solar
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Renewables – success story since 12 years
Renewable with highest growth rates of all energy sources
Investments in Renewables grew from USD 200 bn in 2010 to USD 250 bn in 2011
Global PV installations grew with average 50% p.a. over last 12 years
Costs and prices for solar power were cut in half from 2000 to 2010, and again halved till 2012
Global wind installations increased on average by 30% p.a. over last 12 years
Renewable share (488 GW) of global power capacity (5’360 GW) is 9% (without hydro)
Source: Clean Edge, 2012; * assumption Bank Sarasin
12 years of Clean Tech: Review
2000 2010 2012*
Global PV-market (bn) $ 2.5 $ 90 $ 105
Annual PV-installation 0.3 GW 20.3 GW 33 GW
PV-installation costs per watt $ 9.0 $ 4.0 $ 2.0
Global wind market (bn) $ 4.0 $ 60 $ 65
Annual wind installation 4.5 GW 39 GW 43 GW
Technology(Gigawatt)World total
2010World total
2011World total
2012*
Wind 199 241 284Biomass 54 72 85Photovoltaic (PV) 40 70 103Geothermal 11 11.2 12Solar thermal power 1.3 1.8 2.5Ocean power 0.3 0.6 1.0Total electricity from Renewable energies 306 397 488
Source: REN 21, 2012; 2012*: assumption Bank Sarasin
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Renewables – initial euphoria followed by a collapse
Renewable Energy stocks (e.g. RENIXX) won >400% till 2007 First loss after financial crisis in Sep. 2008 (-65%)Since May 2009 steady loss of 25% p.a. on averageOutperformance after Fukushima already gone by end of April ’11Aftermath of financial crisis still had a negative effect on renewable energy project investments On-going cuts in government support schemes
Renewable energy stocks from 2004 to 2012 vs. MSCI World Net
Source: Datastream
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WORLD RENEWABLE ENERGY (RENIXX) MCSI WORLD
Costs of renewable power – grid parity is near
All renewable technologies have different grade of maturity, cost and growth potential
Individual learning curves and production volumes are used for forecasts
PV with the fastest cost reduction curve
In 2020 all Renewables produce electricity for less than 0.15 EUR/kWh
Onshore Wind is and will be the cheapest renewable power source
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0.00
0.05
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0.15
0.20
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2010 2012 2014 2016 2018 2020
EUR
/kW
h
Ocean Power PV CSP
Wind Offshore Geothermal Wind Onshore
Development of power production cost till 2020
Source: Nov. 2012; Bank Sarasin
New set-up of power production required
With growing share of renewable power there will be a conflict with base load capacity (nuclear, coal) -> see upper graph
Fluctuating solar and wind power needs to be accompanied by flexible power from hydro, bioenergy and gas -> see lower graph
Optimum mix of wind and solar to have least storage requirement over a year is 3:1
Peak power can be shifted with Demand-side management (DSM)
Attractive storage and/or flexible power through pumped hydro, compressed air and power-to-gas capacities
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0h 6h 12h 18h 24h
GW
Baseload
Load CurveSurplus RE
Load Curve Load Curve with DSM*
RE from other regions & storage plantsPhotovoltaicBioenergy, Hydro, CSP & Geothermal
Wind
0h 6h 12h 18h 24hTime of day (hour)
GW
Source: Energy [R]evolution 2012; Greenpeace Intl., Amsterdam; Jun. 2012 .
Source: The Economist, ABB
Smart Grid Renewable Energies
Smart Meter
Clean Electric Utilities
Clean FossilEnergy (Gas)
Transmission E-Mobility
Efficient HomeBuildings
Energy Storage
LED
EfficientProducts
Transformation of energy system is on its way
Not only Renewables are needed. It’s a common and integrated approach for a energy revolution
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GreenBuildings Efficient
Transport
Megatrend 1 – System thinking and services
System Thinking
Energy Metering
Energy Management
Energy Storage
Increase own Consumption
ServicesEducationMarketingProject Development Pre-financingContractingOperation & Maintenance
Source: Solarworld Source: Greenpeace
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Megatrend 2 – new off grid applications
Focus on new off grid applications for two billion people in Developing and Emerging Markets with no constant access to electricity (e.g. solar home systems, micro grid system for villages, hybrid systems)
More Renewables offer an important support to achieve the UN- Millennium goals for better education and health care and a reduction of poverty and hunger
Source: SMA Solar Source : kaco
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Megatrend 3 – after consolidation, more innovation
Current phase of overcapacities in module and turbine production keeps pressure on margins high and leads to a painful consolidation
Capacity reduction leads to a more balanced supply and demand. Survivors and healthy companies introduce new area of innovation
Mass production of modules and turbines is shifting towards Asia (= commodities). European companies focus on high quality premium products and/or niche products
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Megatrend 4 – new investors in Clean Tech space
Renewable industry has grown and matured, and therefore has become interesting for new investors:
New financially sound investors from the oil and gas sector such as Total invested in Sunpower and Statoil with Offshore wind activities…
… to progressive energy utilities. E.g. Stadtwerke Munich with shares in Offshore wind and solar thermal power plants aim to cover 100% electricity demand from renewables by 2015)…
… as well as companies from conventional sectors such as Bosch (PV, batteries), Audi (power-to-gas systems), Toshiba (bought Swiss smart meter company Landis & Gyr)…
Insurance companies such as Allianz and MunichRe looking for new investment opportunities with stable return such as from renewable energy infrastructure
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Megatrend 5 – CleanTech as growth driver for wavering world economy
Renewable energies and the whole CleanTech industry will become an important driver for world economy to avoid further recession
These technologies allow future investments in a sustainable and fair development with lesser harm to nature
First mover countries into an energy revolution with renewables and smart grid could have an advantage of experience from a home market that can be sold/exported on a global scale
Experience with “Sandy”: Derelict US-infrastructure needed investments anyway. Shift towards smarter and cleaner energy system
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Outlook
Decisive investments in global energy system over coming years. Fast changes expected
Renewable technologies need to work together with utilities and grid operators to achieve the «Energiewende». Jointly working together
Collaboration is needed to achieve a sound and cost efficient new energy system
New progressive and global investors in Renewables such as Hanwha Group, Samsung, Foxconn and Flextronics.
CleanTech/Renewables as a growth driver for world economy
Sustainable Swiss Private Banking since 1841.
Many thanks for your attention