Enel Green Power
Global renewable energies market trendsGlobal renewable energies market trendsGlobal and Italian PV market trendsGlobal and Italian PV market trendsEGP EGP business strategiesbusiness strategies
Ingmar WilhelmIngmar WilhelmExecutive Vice PresidentExecutive Vice President
66thth June 2011 June 2011 -- MilanMilan
Graphical Oil Path 1964 – 2010
1980
1980HIGH
1981
2007
OIL ROLLER COASTER RIDE
This chart tracks the relationship between oil prices and oil consumption since 1964. Global oil consumption is shown on the horizontal axis and oil prices shown on the vertical axis. So when consumption is increasing and prices are flat, the line moves straight right. And when prices are rising and demand stops growing the line moves straight up.
$100
$90
$80
$70
Pric
e of
oil*
1990
End 2000Record demand spurs a run up in prices
1982Recessions dampen demand
1979 -1980Iranian revolution, Iran – Iraq war
What’s going on here?In the early 1980s, oil consumption fell. This is why the chart seems to turn around
2008
2010
Barclays Capital Projections (Weekly Oli Data Review 23 June 2010):• Demand 2009 84,6 mb/d • Average WTI 2009 62 $/b• Demand 2010 86,1 mb/d • Average WTI 2010 85 $/b
19641969
1973
19751978
1983
1985
1986
1990
19962000
2004
30 40 50 60 70 80
$60
$50
$40
$30
$20
$10
World oil consumption
Million barrels a day
Pric
e of
oil*
*Average annual price of West Texas Intermediate crude oil, adjusted for inflation using the Consumer Price Index.Posted prices (not spot prices) are shown before 1983. Source: Energy Information Administration, Federal Reserve, Bureau of Labor Statistics, Rocky Mountain Institute
90
1990 Iraq invades Kuwait
1973 The Arab oil embargo causes prices to soar
1997-1998 Asian financial crisis
Late 1960s, early 1970s Oil prices are steady and consumption grows quickly
2009
2001 Sept.11 attacks
Global CO2 Emissions … and Potential ReductionBusiness-As-Usual Scenario and Reduction Potentials
30
40
50
60 CCS (19%)
Nuclear (6%)
Renewables (17%)
Power gen. efficiency and fuel switching (5%)
End use fuel switching (15%)
~28 Gt
57 Gt
global emissions (Gt)
0
10
20
2010 2015 2020 2025 2030 2035 2040 2045 2050
End-use fuel and electricity efficiency (38%)
Source: IEA - World Energy Outlook 2010.
Business-As-Usual Scenario: +100% CO2 by 2050.
A wide range of technologies will be necessary to reduce energy related CO2 emissions substantially
14 Gt
CO2global emissions (
Global Resources Availability
Geothermal Hydro
SolarWind
Renewable EnergiesSummary of Development Status
On-shore Wind
GeoLarge scale
Hydro
Biomass
& biofuel
On-shore Wind
GeoLarge scale
Hydro
Biomass
& biofuel
• R&D efforts focused on improving power generation performances and reducing costs
Development status R&D efforts required
1 Mature 1
• R&D required to make technologies more reliable and profitable
2
Source: McKinsey.
Time
Develop-ment
Pilot
Smallscale
H2
Off-shore Wind
TidesWaves
Thermal solar
Solar PV
Time
Develop-ment
Pilot
Smallscale
H2
Off-shore Wind
TidesWaves
Thermal solar
Solar PV
2 Early commercial
3 Still in the labs
and profitable
• R&D required to let technologies leave the labs
3
Key rules for regulation:- Incentivize technological innovation- Bring support in tune with cost curve
Installed capacity
• Levelized Cost of Electricity (LCOE) is the full cost of generating electrical power expressed in €/MWh
• LCOE allows to compare
€/MWh
Levelized Cost of Renewable Energies in 2010
600
700
800
900High
Average
Low
Source: EPIA, EER, “Comparative Cost of Renewable Power Generation in Europe in 2010”, for wave, tidal, solar CSP and offshore wind costs.
• LCOE allows to compare different technologies
• LCOE vary as a function of the range of load factors for various technologies
• Selection of sites with high load factors lowers LCOE0
100
200
300
400
500
Renewable energy - a growing industry
By technology By geography
Min Max
4% 9%
4% 8%
Expected Growth
CAGR 2010-20
2020 Max
1030
550
(GW)
2020 Min
616
364
(GW)
Installed base
433
251
2010 (GW)
Installed base
407
243
2009 (GW)Min Max
11% 15%
2% 2%
Investments
~53
~63
2010 (€bn)2009-10 (GW) %
+38 24%
+26 3%
Delta capacity
Installed base
~197
~1,005
2010 (GW)
Installed base
~159
~979
2009 (GW)
Technology Area
Expected Growth
CAGR 2010-20
Wind
Hydro
Europe
North America
Source: EPIA, GWEC, EER (2010); WEO 2010 New Policies scenario (2020 min); industry reports/McKinsey (2020 max); Ren21 “Rapporto Renewables Global Status” 2010 (2009), EGP estimates based on market capex (investments), Bloomberg New Energy Finance (R&D).Note: Solar includes PV and CSP technology. In 2010 CSP cumulative installed capacity is ~1GW.
4.6%
4% 12%
7% 9%
1% 7%
8.7%
110
1,000
330
3,020
57
819
198
~2,054
37
420
172
~1,313
35
376
166
~1,2274.6%
12% 29%
8% 10%
5% 23%
8.7%
~54
~1
~16
€187bn+86
+16 70%
+0.3 3%
+5 10%
7.0%
~40
~11
~60
~1,313
~24
~11
~55
~1,227TOTAL TOTAL
Solar
Geo-thermal
Biomass
Africa
Asia
Latin America
All renewable technologies and regions confirm their strong potentialTotal 2010 R&D investments = 28€bn (11€bn corporates + 17€bn governments)
Global Cumulative PV Growth2000-2010
23
39
20
25
30
35
40
Rest of World
China
Japan
USA
GW
Global PV Installed Capacity
Source: EPIA (Market Outlook 2010 - high scenario; Global market outlook 2014), GSE provisional Data 2010.
• Impressive PV growth in 2009 (+46%) and 2010 (+71%); 39% CAGR worldwide in 2000-2010
• Europe is the strongest region with 72% PV market share
• Germany, Italy and Spain represent 61% of the market (respectively 16.8GW, 3.7GW, 3.6 GW)
1 2 2 34
57
10
16
0
5
10
15
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
USA
EU
Additional PV Installed Capacity in Europe in 2010
7,4
4
5
6
7
GW
2010 Additional PV Capacity in Europe
Source: EPIA (Market Outlook 2010 - high scenario), GSE provisional data 2010, iSuppli PV Market Research.
• 2010 additions bring the cumulative capacity in Germany to 17 GW
• 5 EU countries reached 1 GW of cumulative market
2,3
1,5
0,70,4 0,4
0,2 0,1 0,10
1
2
3
Germany Italy Czech
Republic
France Spain Belgium Greece Austria UK
Scenarios for Global Cumulative PV Growth
PV Cumulative Installed Capacity 2010-2050 – Different Scenarios
GW
WEO SCENARIO
IEA - WEO 2010 “New Policies” Scenario
• 57 GW in 2015
• 110 GW in 2020
• 294 GW in 2030
• 406 GW in 2035
Source: EPIA, Solar Generation 6, February 2011, IEA - WEO 2010 New Policies scenario.
EPIA “PARADIGM SHIFT” Scenario:
• 23 GW in 2009
• 40 GW in 2010
• 750 GW in 2020
• 1,850 GW in 2030
• 4,670 GW in 2050
The potential of PV is enormous because: � Variety of technologies� Important efficiency and productivity still ahead � Proximity to demand� Variety of solutions and full architectural integration
Italian renewables scenario with the 4th Conto Energia
23,9 26,530,3
65,9
Geo
Biomass
Solar
Wind
Hydro
Renewables production (TWh) Renewables installed capacity (GW)
58,269,4 73,7
123,8
Geo
Biomass
Solar
Wind
Hydro
Growth: +12.7% p.a.
Growth: +36GW(+8.1% p.a.)
Growth: +12.6% p.a.
Growth: +50TWh(+5.3% p.a.)
Source: Terna, PAN, EGP estimateNote: Pump storage excluded from the RES production and installed capacity. 2010 power production mix includes pump storage (3.2GWh with 3.6GW installed)
2008 2009 2010 2020
Hydro
Power production mix 2010 Key factors for growth
• Italy has strong renewable resources, across all technologies
• With the 4th Conto Energia, a share of some 30GW of PV can be expected by 2020
• Italy will presumably reach its 2020 renewable energies target building on national resources
• Major stimulus to the Italian power plant construction and energy services industry provided
2008 2009 2010 2020
Hydro
2010 Total Production: 287 TWh
Hydro
19%
Wind
3%Solar
1%Geo
2%Biomass
3%
Coal
12%
Gas
53%
Oil
3%
Other
4%
Transformation of the Renewable IndustryStrategic focus of new EGP organic growth plan
Growth
Industry transformation
• Outstanding growth perspective still valid
• Investor shift from boutique to industrial
Regulation
New EGP growth plan
• Proactive role: create and seize more diversified investment opportunities
• Increasing attention on all incentive schemes in the EU
• Federal plan in US did not
• Higher market/project selectivity• Focus on cost competitive technologies in
predictable markets offering stable frameworksRegulation
Markets
Technologies
• Federal plan in US did not materialize (as foreseen)
predictable markets offering stable frameworks
• Higher demand and renewablesgrowth in S-East Europe, Latin America and Africa
• Diversification with cost competitive technologies
• Leverage on scale and competence
• Diversification: non-Wind capex up from 33 to 50% • New geothermal concessions addressed in Chile,
Turkey and Greece• New hydropower projects and concessions in Italy,
France, Romania and Latin America
11
• Shift between the areas of interest thanks to capexallocation flexibility
• Tender participations in new market
Strengthening the diversified footprint of EGPNew and complementary combinations of technologies and markets
Italy France Greece Romania Iberia North America
Brazil Chile Mexico
Wind √ √ √ √ √ √ New New New
Hydro √ New √ √ √ √ √
Technological dimension:
leverage existing know how in more markets
Market
dimension:
leverage
existing
positions
through
Geo √ √ New
PV √ New New √ New
Biomass New √ √
through
more tech’s
Diversification is further strengthened through:
• new neighboring markets, e.g. Africa, Turkey and Peru, Colombia
• integrated approach to utility-scale and distributed generation projects
New EGP Plan 2011-2015Rebalancing growth across technologies
GWOld Plan
Wind
Hydro
• Constant capacity level • Reallocation from Italy and Spain to Latin America and Rest of Europe
• Share down from 90 to 75%
• Strong increase• Additions stemming from all areas, in particular Latin America
0.10.4
3.23.2
DescriptionGW
New Plan
+0.3
0
∆∆∆∆ GW
+300%
0%
%%%%
Geo
Solar
Biomass
• Increases its share with projects in Italy, US and Chile, concessions addressed also in Turkey and Greece
• Rising share • Building on unique positioning• Now proportional consolidation
• Entry in Italy as precursor market• Building on a diversified pipeline
0.10.2
0.10.5
00.05
4.3 3.5
+0.1
+0.4
+0.05
+0.8
+100%
+400%
n.a.
+23%
Manufacturing
Vehicle: 3Sun (EGP/Sharp/ST)Consolidation:
33% proportional
• PV modules manufacturing plant located in Sicily. Multi junction technology
Power generation
Vehicle: ESSE (EGP/Sharp)Consolidation:
50% proportional
• Target markets: EMEA
• First plant (Altomonte, 5MW) operating in 2010
Vehicle: EGPConsolidation:100% full
• Target markets: Italy, Rest of Europe, North America
• 2011-2015: approximately
Retail
Vehicle: Enel.siConsolidation:100% full
• Keep current market positioning in Italy that is in pole position to achieve grid parity
Business development - PhotovoltaicEGP strategy for the period 2011-2015 built on three complementary pillars
A sound integrated PV plan worth ~1€bn
• Capacity: 160MWp/year
• Reference market: EMEA
• Operating within 2011
2011-2015 capex:c. 80€mn
5MW) operating in 2010
• 2011-2015: approximately 170MW
• 2011-2015: approximately 300MW
2011-2015 capex:c. 350€mn
2011-2015 capex:650€mn
grid parity
• Diversify into energy efficiency products
EBITDA margin:~7%-8%
1,500
2,330
6,500
2,300 2,400 2,500 2,3403,000
4,000
5,000
6,000
7,000
Cap
Max
Historical data
100%
32%38%
50%63% 60%
50% 50% 50% 50%
Small Medium-Large Small installations without CAP in 2011 and 2012
Italian PV Market, added capacity (MW) Segmentation of Italian PV market
Business Development by Technology - PhotovoltaicEnel.si development opportunities in the retail market
5,000
9 70338
717
2,330 2,300 2,400 2,500 2,340
0
1,000
2,000
3,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
68%62%
50%37% 40%
50% 50% 50% 50%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
• Enel.si captures the retail market value through • circa 500 installers• new commercial packages + post-sales services• strong brand awareness
• Enel.si: concentrates on the residential and SME segment with a market share of some 20 to 25 %
• Strong market growth (2009-2015 CAGR +62%)• Only European market with predictable medium term
scenario• National target of 8 GW (2020) in current NREAP
increased to 23 GW in 2016 (and hence ~ 30 GW in 2020)• Grid parity for several segments reached around 2015
Smart Grids:
a key enabler to distributed renewable power generation
Central and distributed
End user real timeinformation and participation Multi-directional ‘flows’ Plug & Play
technologies
Central and distributed resources
Smart equipments and power
electronics
Central and distributedintelligence
Seamless integrationof new applications
Medium term outlook
• Increasing share of renewables driven by wind and solar
• Increasing competitiveness of renewables
• Incentives can be lowered over time
• New HV grids to catch bestsites and link to demand
• Power system flexibility requirements increase
• Utility scale generation: energy management of large diversified portfolios
• New smart grids to managesupply and demand locally
• Distributed generation: service&supply solutions, new applications, energy efficiency
PV COMPETING IN THE ENERGY SECTOR:PV COST ROADMAP, PV COMPETITIVENESS, GRID INTEGRATI ON
PV Competitiveness
PV Cost developmentWhat is the European PV cost development until 2020?
EPIA responds to 3 key questions affecting the tran sition path of PV as a competitive source of energy
??
19
PV CompetitivenessWhat are relevant levels of competitiveness?
When will these levels be reached by countries and segments?
PV Grid integrationWhat are the true limits to grid integration and which measures help best?
??
??
LCOE [€nominal/kWh]
0.40
0.35
0.30
0.250.22
0.240.25
0.270.29
0.32
0.36
The levelized cost of electricity (LCOE) generated b y PV in Europe is set to decline by around 50% until 2020
Range of LCOE decline in Europe 2010 – 2020
Band of LCOE reflects:
• Four different system size segments
• Crystalline Silicon and Thin Film technologies
• Differences in national installed system and operations cost
20
0.25
0.20
0.15
0.10
0.05
0.002020
0.19
0.08
2019
0.19
0.08
2018
0.20
0.08
2017
0.21
0.09
2016
0.22
0.09
2015
0.24
0.10
2014
0.16
0.11
2013
0.12
2012
0.13
2011
0.14
2010
Source: EPIA/ A.T. Kearney / Phoenix Solar LCOE model; various input sources
operations cost
• Differences in national irradiation
• Different WACC for different countries considered
• VAT for residential segment
The most important driver of PV: the cost curve!
The system price per Watt is set to decline in Euro pe by some 40 to 60% in the period from 2010 until 2020
Projection of European installed PV system referenc e price range 1) (2010 to 2020; weighted technology mix per segment)
Installed system prices
[€nominal/Wp]
3.41
∆: - €/W 0.96 to- €/W 1.33
21
2020
1.30
2.08
1.34
2.16
2018
1.40
2.24
2017 2019
1.46
2.34
2016
1.521.70
2.70
2013 2015
2.44
1.81
2.84
2012
1.931.60
2011
2.07
3.18
2010
2.26
3.41
2.56
2014
3.00
1) Range across segments and PV technologies (c-Si and thin-film); includes harmonized, competitive standard margins for modules, BOS and installations; incl. administrative cost; VAT excluded
Source: EPIA/ A.T. Kearney LCOE model; various input sources
The PV competitiveness is assessed on the basis of LCOE curves for each of the 5 major European countries
LCOE curves
Germany
France United Kingdom
22
Reference LCOEs:
• Average irradiation per country (except 3kW)
• Weighted average of c-Si and TF based on market share per segment and country
Italy
Spain
PV will compete in 2 major races in the energy sect or
“Dynamic grid parity Race” for small and medium siz ed plants“Generation value Race” for large scale plants
3 kW Residential rooftop
3kW
100kW
Relevant races of PV in the energy sectorSegments Competition
Dynamicgrid parity
• Electricity consumer: Invest
23
1
2
Commercial rooftop
500 kW Industrial rooftop
Utility ground-mounted
500 kW
100kW
2.5 MW
consumer: Invest in a PV system or buy from grid?
Generation value
• Power generation player: Add PV to generation portfolio or gas fired CCGT?
PV can successfully compete in both races for all s egments and countries by 2020
Year of competitiveness and level of system prices in €/Wp
2.03 1.64
2.24
2.56
1.841.84
1.902.14
2.03
1.47
1.79 1.46
1.78 1.41Dynamic
grid parityDE
FR
ES
IT
UK
12.05
2431) Data based on average irradiation
Size of PV system in kW
100 500
2500
Year in which competitiveness is reached for 3 kW for the highest irradiation band
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1.841.84 1.47
1.81
1.53 1.46
1.74 1.62
1.79 1.76
1.47 1.38
1.79
UK
Genera-tion value
2DE
FR
ES
IT
UK
PV will reach competitiveness for millions of households in all major European markets by 2020
Households affected by dynamic grid parity over time
3 kW with 30% self-cons.25-35 years PV lifetime
• France will reach parity already in 2014 for 2 mn households while 22 mn (84%)
• In 2016 6% of the households (2.4 mn) can reach dynamic grid parity
• UK will reach parity only in 2019 for 12 mn households (46%) while almost all
France GermanyUnited Kingdommn of households mn of households mn of households
26262222
12102
0
10
20
30
40
20182016201420122010 2020
404040
19
20
10
20
30
40
202020182016201420122010
24
12
0
10
20
30
40
202020182016201420122010
1
25
for 2 mn households while 22 mn (84%) benefit in 2017
can reach dynamic grid parity• From 2018 on, all areas can compete
• Italy reaches parity for almost half of the households in 2015 and 2 years later for all households
• Spain reaches parity for 26% of households in 2016 while 95% of households benefit in 2020
mn households (46%) while almost all (92%) benefit in 2020
ItalySpainmn of households mn of households
24242424
1410
0
10
20
30
40
202020182016201420122010
1514138
40
10
20
30
40
20122010 20162014 20202018
PV grid integration is important for both the regio nal and the national/European grids
Overview PV grid integration
European & National/ TSO
level in HV grid
Frequency stability/ Balancing
Backup power
3 levels of PV grid integration:
• High voltage: very large ground based systems
26
Regional / DSO level in LV and
MV grid
Grid side
Consumer side
PV system side
based systems
• Medium voltage : Industrial & commercial ground based and roof-top systems
• Low voltage: Roof-top residential systems
• Number of individual actions needed to implement measure
• Availability of technical devices / maturity of solutions
Criteria considered
PV grid integration measures:Cost-benefit ratio and Ease of implementation
difficult
Eas
eof
Impl
emen
tatio
n
Assessment criteria and first results
10) Voltage control at customer connections
9) Booster Transformer
8) Tap changer
12) Grid reinforcement
Example: German distribution grid
12) Grid reinforcement
13) 14) Storage
• No significant differences between countries
27
• € cost per additional GW of hosting capacity
• For some measures: Ranking of measures without qualified analysis
Criteria considered
solutions
• Feasibility from stakeholder perspective
highlow Cost-benefit ratio(cost per additionally connectable PV generation capacity)
simpleIm
plem
enta
tion
8) Tap changer
7) VAr control at PV converter
6) 3-phase connection
6) 3-phase connection 13) 14) Storage
Source: Consentec assessment; Workshop discussions
Type of grid: Urban grid Rural grid
Conservative as well as realistic scenarios show th at there is still significant PV hosting capacity in the grid
Today’s grid hosting capacities
ItalyGW
26-3716
28
4
Current installed
Total
26
Rural
11
Urban
21
15
PV hosting capacity
Source: Consentec analysis; EPIA and A.T. Kearney Workshop inputs
Hosting capacity will need to be further detailed b y region and country
Qualitative road map for PV distribution grid integr ation
Application of measures can importantly extend host ing capacity of existing networks
Cost [€]
Cost [€]
Order of measures
Voltageproblems
Current problems Current problems
Rural area Urban area
3.Transformer
and line reinforce -
29
Additional PV capacity [GW]
Transformer and line reinforcement
(including continuousmeasures to avoid the reoccurrence of voltage problems)
measures oriented at
specific cost per additional PV capacity
relation (only best
value measures
shown)
1. Transformer
and line reinforce-
ment
Additional PV capacity [GW]
2.Transformer
and line reinforce-
ment
Tap changers and reinforcement of
transformer capacityVoltage VArcontrol
reinforce -ment
Source: Consentec analysis; EPIA and A.T. Kearney Workshop inputs
www.epia.org
