The European Energy Market and beyond: is green growth still an option?

1

October 5th ,2012

2

Gas Natural Fenosa Group

Gas distribution 2,000 MW CCC

Mexico

Telecommunications Guatemala

Electricity

Distribution

Nicaragua

50 MW hydro

Costa Rica

Electricity distribution and 30 MW hydro and fuel

Panama

Gas and electricity

distribution

Colombia

Gas distribution

Argentina

Gas distributionBrazil

200 MW fuel-gas

Dominican Republic 250 MW c.cycle

+ regasification

Puerto Rico SpainGas and electricitysales

Portugal

Gas Sales

France

Gas sales and distribution,

regasification projects

Italy

Electricity distribution

Moldova

Gas liquefaction

Egypt

Participation in

liquefaction plant

Oman

110 MW (fueloil+gas)

Kenya

Integrated project

AngolaCoal mining

South Africa

Wind power projects

Australia

Gas transport

Morocco

Gas Sales

Luxembourg

Gas Sales

Belgium

Gas and electricity distribution and sales, 7,000 MW CCC, 1,900 MW hydro, 600 MW nuclear, 2,000 MWcoal, 150 MW fuel-gas, 1,100 MW specialregime, regasification, upstream.

Energy sales

Holland

3

EU Energy Policy: Three pillars

Are the three pillars balanced?

?

4

EU Energy Policy: What has been achieved in the EU?

Efforts are concentrated in the electricity sector

Source: CEER Report on Renewable Energy Support in Europe, May 2011

Economic Impact of RES in the EU

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Economic Impact of RES: The Spanish case (I)Renewable support schemes

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2005 2010 Increase %Incr.

Spanish RES support (M€) 1.246 7.134 5.888 M 473%

Economic Impact of RES : The Spanish case (II)Electricity system costs evolution

2020 ForecastSystem costs

M€

8

More than an economic impact:Integration of RES in the system

The intermittency and lack of firmness of renewable production requires high flexibility like the provided by the CCGTs

The progressive penetration of RES in the generation mix increases the need for this support or back-up

27 August 2009 9 November 2010

Combined Cycles

(CCGTs)

Wind PowerMW

h

More than an economic impact (II):Integration of RES in the system

9

By taking the 50 cases with higher and lower wind coverage is confirmed that the combined cycle is the technology that supports the major variability

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Competiviness is a global thing. What about RES?

Source: IFIEC Europe 11/2012Source: IFIEC Europe 11/2012

*Based on 2009 new added capacity

0%

1%

2%

3%

4%

5%

6%

Total Europe Australia Brazil Canada China India USA Rest of theworld

193 GW

-19 yrs

360 GW

-234 yrs

32 GW

-25 yrs

199 GW

-14 yrs

30 GW

-31 yrs

17 GW

-64 yrs

2020

16%

*2.5GW

-6 Yrs 158

GW-

103 Yrs

47GW

-4.7 Yrs

9GW

-7 Yrs

60GW

-4.5 Yrs

10GW

-10.5 Yrs

10GW

-38 Yrs

10 GW

-25 yrs

Level to achieve for a fair level playing field

**

Wind Target EU27

0%

1%

2%

3%

4%

5%

6%

Total Europe Australia Brazil Canada China India USA Rest of theworld

193 GW

-19 yrs

360 GW

-234 yrs

32 GW

-25 yrs

199 GW

-14 yrs

30 GW

-31 yrs

17 GW

-64 yrs

2020

16%

*2.5GW

-6 Yrs 158

GW-

103 Yrs

47GW

-4.7 Yrs

9GW

-7 Yrs

60GW

-4.5 Yrs

10GW

-10.5 Yrs

10GW

-38 Yrs

10 GW

-25 yrs

Level to achieve for a fair level playing field

**

Wind Target EU27

0%

1%

2%

3%

4%

5%

6%

Total Europe Australia Brazil Canada China India USA Rest of theworld

193 GW

-19 yrs

360 GW

-234 yrs

32 GW

-25 yrs

199 GW

-14 yrs

30 GW

-31 yrs

17 GW

-64 yrs

2020

16%

*2.5GW

-6 Yrs 158

GW-

103 Yrs

47GW

-4.7 Yrs

9GW

-7 Yrs

60GW

-4.5 Yrs

10GW

-10.5 Yrs

10GW

-38 Yrs

10 GW

-25 yrs

Level to achieve for a fair level playing field

**193 GW

-19 yrs

360 GW

-234 yrs

32 GW

-25 yrs

199 GW

-14 yrs

30 GW

-31 yrs

17 GW

-64 yrs

2020

16%

*2.5GW

-6 Yrs 158

GW-

103 Yrs

47GW

-4.7 Yrs

9GW

-7 Yrs

60GW

-4.5 Yrs

10GW

-10.5 Yrs

10GW

-38 Yrs

10 GW

-25 yrs

Level to achieve for a fair level playing field

**

Wind Target EU27

**Based on 2009 country electricity consumption and 2009 new added capacity

Source GWEC; EEA; IEA

Sh

are

of

WIN

D g

en

era

tio

n i

n t

ota

l e

lec

tric

ity

co

ns

um

pti

on

***

2010

***Based on and 21% average load factor in EU

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Competiviness is a global thing. What about RES?

The EU contributes so little...

Source: Ignacio Perez Arriaga. Economic for Energy Workshop 2012 Source: Ignacio Perez Arriaga. Economic for Energy Workshop 2012

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Natural gas can be a reliable alternativeUSA: Henry hub. Shale gas influence

Fuente: EC – JRC Jul 2012

Shale gas production has a growing impact on electricity generation

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Conclusions

1. Climate Change is a big challenge. The electricity

sector leads the transformation

2. RES have a strong impact on costs & to be integrated

3. A competitive energy sector is key for the growth of the

economy

4. Gas is a secure, environment-friendly and reliable

alternative