How to promote the necessary investment in the European energy transition?

Transcription

1 How to promote the necessary investment in the European energy transition? Gerd Schräder Regulatory Affairs, RWE Innogy GmbH Energy transition: A multifaceted challenge for Europe 2 nd symposium 11 th June 2014 RWE Innogy 6/12/2014 PAGE 1

2 Transformation of European energy sector will require unprecedented investment According to the Green Investment Bank Commission, decarbonising the UK economy will require up to 550 bn of investment by 2020 The sums required to upgrade the grid are huge, as much as 1 trillion in Europe by bn - level of investment required over current decade for UK to meet its 2020 energy policy and environmental objectives PAGE 2

3 Renewable growth is changing the shape of the electricity system in Europe 8 May : Electricity prices and German photovoltaic electricity generation Electricity prices (hourly contracts of European energy exchanges; in /MWh) German PV power generation (in GW) German PV power production Germany CH France Netherlands 0 00:00 12:00 23: EEX, RWE Supply & Trading PAGE 3

4 Market prices are far away from full costs of any generation type Indicative full costs by type /MWh CCGT Fix costs CO 2 -Costs Coal Fuel costs Other variable costs Onshore Wind Offshore Wind Source: Investor Relations / Fraunhofer ISE (2012) indicative costs PAGE 4

5 It is clear that the traditional utility balance sheet financing approach will not suffice Market capitalisation of listed top utilities 1 [ bn] Feb 2008 Nov 2013 Combined 2008 Market Cap: 590 bn -56% -18% Combined 2013 Market Cap: 260 bn 3,750 3, Euro Stoxx 50 GDF Suez National Grid Enel E.ON EDF Iberdrola Centrica RWE SSE CEZ Fortum 1 Source: Reuters PAGE 5

6 RWE Innogy: We develop our future on the basis of our core values trust, passion and performance Our future business models Services Business models Technologies Partnering Offshore Wind We are a trusted partner for competitive renewable energy Green products Hydro & New Technologies Onshore Wind Focus on partnering Operational excellence Growing in core markets, increasing profit along the value chain PAGE 6

7 RWE Innogy is already becoming a trusted partner for the European energy transition Offshore wind Greater Gabbard > 504 MW > 50% shareholder > SSE lead operator Rhyl Flats > 90MW > 50.1% shareholder Gwynt y Môr > 576 MW > 60% shareholder Dogger Bank Forewind Thornton Bank C-Power (+ other Belgian investment & industrial companies) North Hoyle Zephyr > Up to 9000 MW > 25% shareholder > 325 MW > RWE Innogy is largest shareholder at 26.7% > 60 MW > 33% shareholder > UKs first project financed offshore wind farm Successful Partnerships Onshore wind Jüchen Green Gecco Zephyr > 7 MW > Different stakeholders, e.g.employees RWE Innogy, cooperative Bürger- Energie, interested municipal utilities > 5 wind farms in Germany and the UK with around 80 MW > 51% Shareholder > 331 MW > 33% Shareholder Little Cheyne Court > 60 MW > 59% Shareholder Middlemoor& Lindhurst > 54 and 9 MW > 51% Shareholder PAGE 7

8 Case Study: Equity strategic partnership Gwynt y Môr 2.2 billion investment 576 MW Completion % 30% 60% Gwynt y Môr Offshore Wind Farm PAGE 8

9 Case Study: Equity financial partnership Greencoat UK Wind plc UK Government Novusmodus LLC (investment company) Green Investment Bank Greencoat UK Wind plc 24.95% 165.2m total investment 90 MW Constructed MW 24.95% Constructed % Rhyl Flats Offshore Wind Farm Little Cheyne Court Onshore Wind Farm 50.01% 59% RWE Innogy PAGE 9

10 Case Study: Non recourse debt partnership Thornton Bank Financing Thornton Bank Phase 1-3: Suppliers Equity Supplier: Utilities: Investment funds: 325 MW 27% RWEI share 1.3 bn project financing Turbine: Electrical Engineering: Credit financing Public: Private: Output Installation: Credit insurance Turbines: Rotor blades: PPAs: Green Certificate off take: Foundations: PAGE 10

11 Recent changes in regulatory regimes, legislative processes and political discussion increasingly lead to less reliable support conditions for RES, delay projects and endanger investments EU is pushing for competition in RES legislation Premium* Significant change Pool price + ; eligibility for specific incentives* Feed-in* Green certificates* * Status as of 01/10/2013 PAGE 11

12 Investors expectations > Long-term stable investment climate > No retroactive changes in legislation > Necessity to earn back the invested capital to generate new investments > Investors can manage project and market risks but no regulatory risk > Avoid regulatory-driven boom and bust cycles PAGE 12

13 Gerd Schräder Regulatory Affairs RWE Innogy GmbH Gildehofstr Essen +49 (0) gerd.schraeder@rwe.com RWE Innogy 6/12/2014 PAGE 13