GLOBAL CLEAN ENERGY INVESTMENT TRENDS. ICCR event February 2015

Transcription

1 GLOBAL CLEAN ENERGY INVESTMENT TRENDS ICCR event February 2015

2 Global gross annual capacity additions by technology, (GW) Flexible capacity Solar thermal Small-scale PV 300 Utility-scale PV Offshore wind Onshore wind Biomass Geothermal 150 Hydro Nuclear 100 Other Gas 50 0 Oil Coal Note: Figure excludes retirements Source: Bloomberg New Energy Finance 1

3 Capital investment by region and by technology, ($bn nominal) APAC $3,596bn RoW $1,461bn Americas $1,315bn Europe $1,301bn ,000 1,500 2,000 2,500 3,000 3,500 4,000 Solar Fossil fuels Wind Other renewables Nuclear Note: Figure excludes other and flexible capacity. Source: Bloomberg New Energy Finance 2

4 Price of solar modules and experience curve ($/W as function of global cumulative capacity) Cost ($/W) (in 2013 dollars) Q ,000 10, ,000 1,000,000 Experience curve (c-si) Module prices (Maycock) Module prices (Chinese c-si) (BNEF) Experience curve (thin-film) Module prices (thin-film) (First Solar) Cumulative capacity (MW) Source: Bloomberg New Energy Finance, Paul Maycock, company filings Notes: Prices in 2013 USD. 3

5 Global residential-scale PV system economics Note: NJ, New Jersey; CA, California. Source: Bloomberg New Energy Finance Note: NJ, New Jersey; CA, California. Source: Bloomberg New Energy Finance 4

6 Future of the utility: Results of survey of 400 US electric utility executives You can think about Hawaii as a postcard from the future of what s going to happen in the electric industry in the United States James Robo, chairman and chief executive officer of NextEra, following the company s acquisition of Hawaiian Electric Industries Source: Utility Dive, State of the Electric Utility Survey results,

7 US electric generating capacity build by fuel type (GW) Other Renewables Hydro Nuclear Oil Gas Coal Since 2000, 93% of new power capacity built in the US has been natural gas plants or renewable energy projects Source: EIA 6

8 New investment in clean energy ($bn) 32% 17% $318bn -7% $294bn -9% 16% $310bn 0.5% $272bn $268bn 17% 36% $175bn $205bn $206bn 46% 46% $128bn $60bn $88bn Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D, and spending for digital energy and energy storage projects (not reported in quarterly statistics). Source: Bloomberg New Energy Finance 7

9 New investment in clean energy by region ($bn) $272 $318 $294 $268 $ $205 $206 $175 $128 $88 $53 $89 $60 $67 $68 $43 $11 $17 $26 $40 $10 $17 $35 $41 $44 $35 $48 $65 $52 $48 $52 $3 $ Other EMEA Other APAC Other AMER Europe China US Total new investment in clean energy globally increased for the first time in three years and is near its 2011 peak US investment levels were up in 2014 and are second highest in the world on a country basis In 2014, the US was the world s second-largest market for new wind installations, behind China, and third-largest for solar, behind China and Japan Source: Bloomberg New Energy Finance Notes: For definition of clean energy, see slide in Section 2.2 of this report titled Finance: US clean energy investment (1 of 2) total new investment, all asset classes ($bn). AMER is Americas; APAC is Asia-Pacific; EMEA is Europe, Middle East, and Africa. 8

10 Clean energy investment types & flows 2014 ($bn) Asset and company mergers, acquisitions, refinancing, buy-outs etc Projects Equipment manufacturing/ scale-up +2 Technology development VC Corp RD&D Gov R&D PE Public markets new equity Total company investment Re-invested Renewable energy AF Digital energy & storage AF SDC Total investment M&A/buy-outs etc. Total transactions Note: Total values include estimates for undisclosed deals. AF = asset finance, SDC = small distributed capacity. Source: Bloomberg New Energy Finance 9

11 NEX CLEAN ENERGY INDEX YTD Jan 03 Jan 05 Jan 07 Jan 09 Jan 11 Jan 13 Jan 15 Note: Values as of 01 January 2015; NASDAQ and S&P 500 rebased to 100 on 1 Jan 2003 Source: Bloomberg New Energy Finance 10

12 EVOLUTION OF US SOLAR PROJECT FINANCING Development 2008 ~2012 Construction Commission / Operation Development ~ and the near-term future Construction Commi -ssion High-liquidity investment vehicles Spin-out of operating assets DEBT INSURANCE COMPANIES BANKS INFRASTRUCTURE DEBT FUNDS Project bonds / asset-backed securitisation INSURANCE COMPANIES PENSION FUNDS MUTUAL FUNDS BANKS RETAIL INVESTORS HEDGE FUNDS EQUITY TAX EQUITY VENTURE CAPITAL (VC) DEVELOPMENT PRIVATE EQUITY SMALL/MED DEVELOPERS INFRASTRUCTURE PRIVATE EQUITY LARGE DEVELOPERS / UTILITIES BANKS (AND OTHER SELECTED PLAYERS) HIGH-RISK HEDGE FUNDS Yieldcos DEVELOPMENT PRIVATE EQUITY INFRASTRUCTURE PRIVATE EQUITY VC SMALL/MED DEVELOPERS LARGE DEVELOPERS / UTILITIES BANKS / NON-FINANCIAL CORPORATES ACQUISITION- ORIENTED UTILITIES COSTS OF CAPITAL ~2x returns on original investment ~15% cost of equity (levered) ~8-9% tax equity yield (after-tax, unlevered), ~14-18% (levered) ~6-7% cost of debt ~14% cost of equity (levered) ~6-7% cost of debt ~1.5-2x returns on original investment 7-9% cost of equity (unlevered) ~8% tax equity yield (after-tax, unlevered) ~5-6% cost of debt ~6% cost of equity (unlevered) ~5% cost of debt (capital markets debt financing) 11

13 US SOLAR IPOS BY YEAR AND TOTAL OFFERING SIZE ($M) Source: Bloomberg New Energy Finance 12

14 YIELDCOS: DEFINITION AND CONTEXT Publicly-traded company whose main purpose is to buy and hold operational assets and pass the majority of cashflows from those assets to investors in the form of dividends Not new eg, Canadian firms originally launched under FAIT structures (Innergex, Brookfield, Northland Power) This recent surge is unique as the companies are not taxadvantaged, and most are focused in US with strong tilt towards nonhydro renewable energy For investors, the opportunity looks especially attractive in environment of low interest rates Source: Bloomberg New Energy Finance 13

15 NORTH AMERICAN YIELDCOS: NAMEPLATE CAPACITY BY TECHNOLOGY, CURRENT VS PLANNED (MW, GROWTH) Note: Patterned bars indicate planned capacity, and coloured bars indicate current capacity in the yieldco. Abengoa s non-power generation assets are not reflected in this chart. TerraForm numbers include recent First Wind acquisition. Planned includes ROFO plus pending acquisitions. Source: Company filings, Bloomberg New Energy Finance 14

16 GREEN BOND (NARROW UNIVERSE) ISSUANCE BY TYPE, BY YEAR, ($BN) Δ2.6x ABS Project US municipal Labelled corporate Supranational, sovereign & agency Notes: See Section 2 of BNEF s Q Green Bonds Market Outlook for methodology. Source: Bloomberg New Energy Finance, Bloomberg Terminal 15

17 A1 CORPORATE BOND ISSUANCE BY REGION (LEFT) AND BY ESTIMATED PRIMARY SECTOR (RIGHT), BY YEAR, ($BN) EMEA AMER APAC Wind Solar EST and EVs Other Multiple Notes: APAC is Asia-Pacific; AMER is Americas region; EMEA is Europe, Middle East, Africa. EST stands for energy smart technologies, BNEF s terminology for digital energy, energy efficiency and advanced energy storage. EVs stands for electric vehicles. Other includes bioenergy, geothermal and small hydro. See Section 2 of the accompanying report for methodology. Source: Bloomberg New Energy Finance, Bloomberg Terminal 16

18 WHAT IS GREEN? Source: Bloomberg Green Bonds Terminal Guide 17

19 SIGNIFICANT FOSSIL FUEL DIVESTMENT WILL MEAN INVESTING OUTSIDE OF ENERGY STOCKS Oil & gas and coal companies compared to other sectors (market cap and yield) Total market cap ($trn) Largest 100 Co average yield Oil & Gas $4.65 Oil & Gas 2.41% Coal $0.23 Coal 2.21% Information technology Information technology $ % Pharmaceuticals $3.93 Pharmaceuticals 0.86% Food & Beverage $3.34 Food & Beverage 2.09% Engineering $1.66 Engineering 1.52% REITs $1.39 REITs 4.55% Automobiles $1.23 Automobiles 1.33% Industrials $1.17 Industrials Note average yield is current average annual dividend yield. Includes the largest 3,000 companies in each sector, or fewer if the sector has less than 3,000 listed firms. Data as at 31 July % Source: Bloomberg Based on BNEF report, Fossil fuel divestment: a $5trn challenge, August

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