cen webinar presentation - mark fulton (oct. 12, 2011)
TRANSCRIPT
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8/3/2019 CEN Webinar Presentation - Mark Fulton (Oct. 12, 2011)
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DB Climate Change AdvisorsDeutsche Bank
Mark FultonGlobal Head of Climate Change Investment Research
Deutsche Bank Climate Change Advisorshttp://www.dbcca.com/research
October 12th, 2011
The German CLEAN Program Story,Replication Possibilities in the US
CEN Webinar
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8/3/2019 CEN Webinar Presentation - Mark Fulton (Oct. 12, 2011)
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DB Climate Change AdvisorsDeutsche Bank Mark Fulton
The German CLEAN Program Story, Replication Possibilities in the US
Best-in Class:Driving Transparency, Longevity and Certainty (TLC)
2
Country
Emissions Control Financial SupportGrid
Improve-
ment
Plan
Budget
Strength
(% of 2010
GDP)
Capital
Investment
200 0-2010
(USD Bn)
Binding
Emissions
Target
RenewableElectricity
Standard
(RES)
Long-termEnergy
Efficiency
Plan
Feed-in
Tariff (
FiT)
Long-term
Govt-based
Green Bank
Tax
Benefit
Long-term
Funding
Program
China -1.6% 148.3Germany -3.6% 393.2
United Kingdom -11.5% 384.1
United States
COP Acc State-level State-level State-level State-level State-level -10.0% 164.1California X -1.0% -Texas X X X -2.2% -
Brazil X -2.2% 42.3South Korea
COP Acc X -1.1% 31.2India
COP Acc State-level X -5.5% 27.1Australia State-level X State-level -4.2% 9.8South Africa
COP Acc X X -5.3% 0.4Notes: COP Acc= policy is a submission to the Copenhagen Accord and is not legally binding ; =tentative / unconfirmed policy dependent on certain provisions (e.g. funding)Source: DBCCA Analysis 2011
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8/3/2019 CEN Webinar Presentation - Mark Fulton (Oct. 12, 2011)
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DB Climate Change AdvisorsDeutsche Bank Mark Fulton
The German CLEAN Program Story, Replication Possibilities in the US
Germany Has Developed ComprehensiveGreen Legislation Over Past 20 Years
3
1980 1990 2000 2002 2004 2006 2008
1,000 SolarRoofs
Program
100/250MW wind
program
Feed-InLaw
EcologicalTax
Reform
EEGAmendmentFiTs uncapped
100,000Solar Roofs
Program
CombinedHeat and
Power Act
Energy
SavingOrdinance
RenewableEnergiesHeat Act
RenewableEnergy
Sources Act(EEG)
FiTs emphasized
EU ETSParticipation in first
trading period(2005-2007)
KyotoProtocolsignatory
EEG
Amendment
Source: DBCCA analysis 2011
2009
BiofuelsQuota Act
MarketIncentiveProgram
2010
NationalRenewable
EnergyAction Plan
Adjustmentsto FiTs to
reflect costs& volume
Increased support for renewables in 2011, as Germany accelerates nuclear
phase-out following Fukushima
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8/3/2019 CEN Webinar Presentation - Mark Fulton (Oct. 12, 2011)
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Map of Germanys Low Carbon Targets
10/12/2011 2010 DB Blue template
4
Greenhouse Gas40% below 1990
levels by 2020
Renewable EnergyFinal Energy Target
18% by 2020
RE Thermal
14% by2020
RE Electricity
30% by 2020
RE Transport
10% by 2020
Source: DBCCA analysis 2011
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Germany Has Led the Way in RE DeploymentThrough Feed-in Tariffs
10/12/2011 2010 DB Blue template
5
55 60978750 11989 14604 16623
18390 2057922194 23836
25716 27204
1 76
186296 435
1105 20562899
41706120
9914
17320
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
MWI
nstalled
REGeneration(%ofTotalConsumption)
Wind Solar PV RE Generation (in relation to total gross electricity consumption)
Renewable EnergySources Act
(EEG)FiTs emphasized
Energy SavingOrdinance
CombinedHeat and
Power ActEEG
AmendmentFiTs uncapped
EU ETS Participationin first trading period
(2005-2007)
RenewableEnergies Heat
Act
EEGAmendment
NationalRenewable
Energy ActionPlan
Notes: Investment data converted from Euros to USD according to average of monthly USD-EUR foreign exchange rate; RE generation includes hydroSources: German Federal Ministry for the Environment; Bloomberg New Energy Finance 2011; DBCCA Analysis 2011
2010 annual investment in renewable energy installations exceeded $40 Bn
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Germany Has Exerted Consistent DownwardPressure on PV Prices Through FiT Degressions
10/12/2011 2010 DB Blue template
6
Germanys Solar PV Rates (EUR cents / kWh) and Capacity Additions
(2001 - 2010)
110 110 139
670
951843
1,271
1,809
3,806
7,400
0.51
0.48
0.46
0.62
0.60
0.56
0.530.52
0.43
0.39
0.51
0.48
0.46 0.46
0.43
0.41
0.38
0.35
0.32
0.24
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Added MW
Upper Bound
Lower Bound
Source: DBCCA analysis 2011
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
German PV FiT Rates Have More Closely TrackedSolar System Costs Than in Other Markets
10/12/2011 2010 DB Blue template
7
0
1
2
3
4
5
6
7
8
Q206
Q406
Q207
Q407
Q208
Q408
Q209
Q409
Q210
Q410
Q211
Q411
SystemCost($/W)
Germany
Spain
Italy
CzechRepublic
NPV of European Feed-in Tariffs and System Cost ($ / Watt)
Notes: NPV calculated at 4% discount rate; system cost represents German average and excludes impacts of value-based pricing in high FiT marketsSource: Bloomberg New Energy Finance
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Germanys Volume Sensitive Degression Schedulefor Solar FiTs
10/12/2011 2010 DB Blue template
8
Scenario MW installed Degression(2010) Degression (2011)
< -2 GW < 1500 6% 1.5%-2 GW 1500 7% 4%-1 GW 2500 8% 6.5%Base case 3500 9% 9%+1 GW 4500 10% 12%+2 GW 5500 11% 15%+3 GW 6500 12% 18%> +3 GW > 6500 13% 21%
Source: DBCCA analysis 2011
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
A Policy That Works: Solar PV Already Below orClose to Below Retail Electricity Rates in Germany
10/12/2011 2010 DB Blue template
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0.00
0.10
0.20
0.30
0.40
0.50
0.60
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Year
Euro/kWh
0.00
0.10
0.20
0.30
0.40
0.50
0.60
Euro/kWh
3500 MW Corridor ( 7500 MW Corridor ( 7500 MW Corridor (Freestanding)
Average Elec. Price Euro / kWh
Source: DBCCA analysis 2011
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Germany a Global Leader in Renewables
10/12/2011 2010 DB Blue template
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Germanys Electricity Supply Mix2010A
Germanys Electricity Supply Mix2020E
17% RE 38% RENote: Totals may not add due to rounding; Germanys National Renewable Energy Action Plan (NREAP) targeted 38.6% RE by 2020; Other includes waste-to-energy, biogasand landfill gasSources: EWI; GWS; Prognos; DB Research
Share of power from renewables is expected to more than double by 2020
Also expect 11.4% reduction in power production by 2020 due to efficiency gains
Coal
52%
NaturalGas
9%
Nuclear
21%
Oil
1%
Wind
6% Solar2%
Biomass
6%Hydro
3% Coal
37%
Natural Gas
17%
Nuclear5.5%
Oil
0.1%
Wind
23%
Solar
6.5%
Biomass
7.5%
Hydro
5%
Geothermal
0.3%
Other
2.1%
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
German Government Has Ambitious RE Forecasts
10/12/2011 2010 DB Blue template
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Germanys Electricity Supply Mix2030A
Germanys Electricity Supply Mix2050E
55% RE 80% RE
Notes: Totals may not add due to rounding; Germanys Energy Concept Plan(2010) targeted 50% RE by 2030 and 80% by 2050 - upward revisions are post-Fukushima andaccelerated nuclear phase-out plan; Other includes waste-to-energy, biogas and landfill gasSources: German Energy Concept Plan 2010, German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety; EWI; GWS; Prognos; DB Research; ,DBCCA Analysis 2011
Coal
19%
Natural Gas
22%
Wind
30%
Solar
9%
Biomass
9%
Hydro
7%
Geothermal
0.4%
Other
3.6%Coal
10%
Natural Gas,
10%
Wind
50%
Solar
14%
Biomass
9%
Hydro
4%
Geothermal
2%
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Rapid Growth in German Clean Energy Industry
10/12/2011 2010 DB Blue template
12
Note: Includes all quoted companies tracked by Bloomberg New Energy Finance with an exposure of 50% or greater to clean energy; market capitalization data calculated as ofyear-start (2004 and 2011)Sources: Bloomberg New Energy Finance, Bloomberg
1%
6%
16%
10%
38%
16%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Market Cap of RE Companies
(CAGR 2004 - 2011)
Number of RE Companies
(CAGR 2004 - 2011)
Japan US Germany
Growth in Market Cap and Number of Renewable Energy Companies(CAGR, 2004 2011)
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Sales of German Renewable Energy Companies WillBe Increasingly Export-Based
10/12/2011 2010 DB Blue template
13
6.6 6.6 6.6 6.66.6
19.9
32.9
41.3
6.6
32.7
47.8
59.1
0
10
20
30
40
50
60
70
Minimum Cautious Optimistic Maximum
BillionsofEuros(E
UR2005)
2007
2020
2030
Germanys Renewable Technology Exports Over TimeVarious Forecast Scenarios
Source: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, 2010
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Germanys Renewable Energy Sector Employed339,500 in 2009, a 2x Increase from 2004
10/12/2011 2010 DB Blue template
14
450
500
161
277
322340
580600
0
100
200
300
400
500
600
700
2004 2007 2008 2009 2020E 2030E
ThousandsofJobsbyRenew
ableEnergySector
Wind Biomass Solar Hydropower Geothermal Public / Non-Commercial
Germanys Renewable Energy Jobs Over Time
Source: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, 2010
Expectedrange
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
US Has History of Inconsistent Federal PolicySupport for Renewables
10/12/2011 2010 DB Blue template
15
0
2,000
4,000
6,000
8,000
10,000
12,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
AnnualWindCapaci
tyAdditions(MW)
Further extension of the Section 1603 Treasury cash grant programcan help to create and preserve green jobs
92%Drop
76%Drop
76%Drop
Production Tax Credit Expiration Years
Section 1603 TreasuryCash Grant Extendedin December 2010 for 1year only
Advanced EnergyManufacturing TaxCredit Expired end-2010
Sections 1703 & 1705Loan Guarantees Expiring in 2011
Will wind marketdrop off again in
2012?
Sources: AWEA, 2011; Bloomberg New Energy Finance, 2011
Forecasts / Estimates
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DB Climate Change AdvisorsDeutsche Bank Mark Fulton
The German CLEAN Program Story, Replication Possibilities in the US
2010-2030: US Electricity Supply Mix BecomesGreener and More Gas-Intensive
45%
24%
19%
8%
3%
Coal
Coal CCS
Natural Gas
Nuclear
BaseloadRenewables
Wind and Solar
10/12/2011 2010 DB Blue template
16
Note: 2010 values sum to to 99% due to 1% electricity supply from petroleum (not shown),Sources: EIA; DBCCA Analysis 2011
US Electricity Supply Mix2010A (% Total TWh)
US Electricity Supply Mix2030E (% total TWh)
11% RE24% Nat Gas
24% RE38% Nat Gas
Assumes from 2010-2030 energy efficiency measures limit growth in electricity
demand to 0.7% CAGR
20%
1%
38%
17%
7%
17%
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
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~500,000 Net New Jobs in 2030 as Compared with2010
10/12/2011 2010 DB Blue template
17
Sources: WPK Model, DBCCA analysis 2011.
Annual Net New Job Additions by Sector and Type,2010-2030
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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors
Deutsche Bank
Conventional technologies have started out at very high cost and have onlyachieved cost reduction with economies of scale
Solar and Wind are still more expensive than fossil generation and requireinterim support until adequate scale is reached
Renewables are trending towards grid parity
Source: Hudson Clean Energy Partners Analysis, 2011
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
RetailCost($/kWh)
Generation(TWh)
Coal Generation Gas Generation Nuclear Generation Solar Generation Wind Generation
Coal Cost Trend Gas Cost Trend Nuclear Cost Trend Solar Cost Trend Wind Cost Trend
Coal, Natural Gas, andNuclear required massiveachievements in improvingscale to achieve current
favorable cost structures
Solar and Wind areexperiencing significantimprovements in theircost structure with smallincreases in scale
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
Generation(TWh)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
RetailCost$/kWh
1935 1940 1945 1950 1955 1960 19651930 1970 1975 1980 1985 1990 1995 20001965 2005 2010
Coal Generation
Coal Cost-trend
Gas Generation
Gas Cost-trend
Nuclear Generation
Nuclear Cost-trend
Solar Generation
Solar Cost-trend
Wind Generation
Wind Cost-trend
U.S. Electricity Generation and Retail Cost by Energy Source 1930 2010
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DB Climate Change AdvisorsDeutsche Bank Mark Fulton
The German CLEAN Program Story, Replication Possibilities in the US
Disclaimer
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