LATEST TRENDS IN RENEWABLE ENERGY FINANCE SCOTTISH RENEWABLES CONFERENCE, EDINBURGH ANGUS MCCRONE 19 MARCH 2014 TRENDS IN RENEWABLE ENERGY INVESTMENT 1
CONTENTS 1. World clean energy investment trends 2. UK clean energy investment trends 3. Financing issues and the gap TRENDS IN RENEWABLE ENERGY INVESTMENT 2
GRADUALLY TURNING GREEN? Source: Wikimedia Commons TRENDS IN RENEWABLE ENERGY INVESTMENT 3
NEW INVESTMENT IN CLEAN ENERGY 2004 13 ($BN) 21% $318bn -10% $286bn -11% 17% 34% 0.6% $195bn $196bn $262bn $254bn 44% $167bn 46% $55bn 45% $80bn $116bn 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D, and spending for digital energy and energy storage projects (not reported in quarterly statistics). Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 4
CLEAN ENERGY INVESTMENT TYPES & FLOWS 2013 ($BN) +60 254 +58 312 312 Asset and company mergers, acquisitions, refinancing, buy-outs etc. +133 +16 Projects +2 +15 +14 +2 +13 46-2 Equipment manufacturing/ scale-up Technology development VC Corp Corp RD&D Gov Gov R&D PE Public Public markets Total Total company Re-invested RD&D R&D markets new equity investment company equity new equity investment Renewable Digital Digital energy & energy AF storage energy AF& AF storage AF SDC Total Total new investment M&A/buy-outs Buy-outs etc. etc. Total transactions Note: Total values include estimates for undisclosed deals. AF = asset finance, SDC = small distributed capacity. Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 5
NEW INVESTMENT IN CLEAN ENERGY BY REGION 2004 13 ($BN) 21% $103bn -10% -11% 44% 17% $39bn 34% 0.6% $49bn $62bn $78bn $68bn $88bn $109bn $71bn $121bn 45% $29bn $58bn $63bn $50bn $66bn 46% $18bn $13bn $24bn $22bn $23bn $35bn $42bn $45bn $70bn $82bn $84bn $115bn $127bn $106bn $68bn 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EMEA AMER ASOC Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D, and spending for digital energy and energy storage projects (not reported in quarterly statistics). Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 6
NEW INVESTMENT IN CLEAN ENERGY BY SECTOR Q1 2004 Q4 2013 ($BN) 50.7 47.2 42.3 43.4 34.8 52.7 47.7 47.3 45.643.0 36.7 33.9 30.5 21.8 19.1 17.1 21.8 27.3 27.1 8.9 8.8 8.1 9.811.8 13.8 57.5 66.1 57.3 78.0 74.1 65.0 53.4 69.6 58.3 62.1 43.6 58.3 49.1 58.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Wind Solar Biofuels Other Note: Total values include estimates for undisclosed deals. Excludes corporate and government R&D, and spending for digital energy and energy storage projects (reported in annual statistics only). Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 7
Q2 2013 LEVELISED COST OF ELECTRICITY $/MWH Marine - wave Marine - tidal STEG - LFR STEG - tower & heliostat STEG - parabolic trough + storage Fuel cells Wind - offshore STEG - parabolic trough STEG - tower & heliostat w/storage PV - thin film PV - c-si tracking Biomass - gasification PV - c-si Geothermal - binary plant Wind - onshore Municipal solid waste Biomass - incineration Geothermal - flash plant Landfill gas Biomass - anaerobic digestion Large hydro Small hydro Nuclear Natural gas CCGT Coal fired 1059 861 531 0 50 100 150 200 250 300 350 400 450 500 Global LCOE range Regional scenarios Q2 2009 central Q2 2013 central Note: CHP = combined heat and power; c-si = crystalline silicon; STEG = solar thermal electricity generation or concentrated solar power; CCGT = combined cycle gas turbine. Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 8
NEX CLEAN ENERGY INDEX 2003 2014 YTD Note: Values as of 06 January 2014; NASDAQ and S&P 500 rebased to 100 on 01 Jan 2003 Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 9
BIGGEST MOVERS IN NEX INDEX IN LAST 12 MONTHS % CHANGE Source: Bloomberg TRENDS IN RENEWABLE ENERGY INVESTMENT 10
CONTENTS 1. World clean energy investment trends 2. UK clean energy investment trends 3. Financing issues and the gap TRENDS IN RENEWABLE ENERGY INVESTMENT 11
UK CLEAN ENERGY INVESTMENT, BY TYPE 2004 2013 ($BN) 14 12 10 8 6 4 GovR&D CorpR&D Small-scale Public markets VCPE Asset finance 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Total values include estimates for undisclosed deals Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 12
UK CLEAN ENERGY INVESTMENT, BY SECTOR 2004 2013 ($BN) 14 12 10 8 6 4 Small hydro Marine Low carbon services Biofuels Energy smart technologies Solar Biomass & Waste Wind 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Total values include estimates for undisclosed deals Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 13
UK ASSET FINANCE DEALS SINCE JANUARY 2013 Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 14
PROJECTS IN SCOTLAND Source: Bloomberg TRENDS IN RENEWABLE ENERGY INVESTMENT 15
OFFSHORE WIND HAPPENING DESPITE SETBACKS Source: Bloomberg TRENDS IN RENEWABLE ENERGY INVESTMENT 16
CONTENTS 1. World clean energy investment trends 2. UK clean energy investment trends 3. Financing issues and the gap TRENDS IN RENEWABLE ENERGY INVESTMENT 17
DECC WHITE PAPER, JULY 2011 Investment of GBP 75bn in electricity generation capacity likely to be needed this decade, plus a further GBP 36bn on transmission and distribution. Source: DECC TRENDS IN RENEWABLE ENERGY INVESTMENT 18
INVESTMENTS REQUIRED TO REALISE NREAP ROADMAPS (GENERATION ONLY), BY COUNTRY, 2011 20 (EURM) Source: BNEF estimates, based on published NREAPs TRENDS IN RENEWABLE ENERGY INVESTMENT 19
UK RENEWABLES CAPACITY INVESTMENT, BY SOURCE 2004 2013 ($BN) 12 10 8 6 4 Small-scale Other Project finance On balance sheet 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Total values include estimates for undisclosed deals Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 20
AVERAGE INITIAL COST OF DEBT FOR ONSHORE WIND PROJECT IN THE UK 8% 7% 6% 5% 4% 3% 2% Project spread Swap fees Term swap 6M Libor Bank of England rate 1% 0% Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Note: Excludes arrangement fees and step-ups during life of loan. Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 21
SELECTED UTILITIES, CAPEX ON RENEWABLES, $BN 4,500 4,000 3,500 3,000 2,500 2,000 1,500 2009 2010 2011 2012 2013 (estimate) 1,000 500 0 SSE Iberdrola Enel E.ON RWE EDP Note: Figures are either for calendar years or for year to March, in which case the starting year is the one counted. Utilities have different definitions of capex. Figures are worldwide, not just Europe. Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 22
ROLE OF INSTITUTIONAL INVESTORS Institutions nibble at project yields who, why, how? Source: Bloomberg New Energy Finance, Wikimedia Commons TRENDS IN RENEWABLE ENERGY INVESTMENT 23
INSTITUTIONAL INVESTOR COMMITMENT TO EUROPEAN RENEWABLE ENERGY PROJECTS ($M) 3,500 3,000 2,500 2,000 1,500 PE/infrastructure fund Quoted fund Bond Direct 1,000 500 0 2007 2008 2009 2010 2011 2012 2013 Note: Excludes private investor conduits such as VCTs, EISs and retail bonds. Measures institutional commitment at the point the institution parted with the money, not necessarily at the point when the money was committed to a particular project. Source: Bloomberg New Energy Finance TRENDS IN RENEWABLE ENERGY INVESTMENT 24
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