INVESTMENT IN R&D IN RENEWABLE ENERGY 2018Kopenhagen, Mai 22, 2018

Dr. Christine Grüning *

*The Project is supported by the Federal Ministry for theEnvironment, Nature Conservation and Nuclear Safety.

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The Centre’s approach

Research

Policy advice

Project design

Project

implementation

▪ Focus on climate (adaptation and mitigation) and sustainable energy finance

▪ Crowding-in new investors, in particular from the private sector

▪ Structuring of innovative financing instruments

▪ Efficient use of public sector instruments that may be required to facilitate private sector investments

▪ >EUR 4m revenues

▪ 30 experts

▪ Offices in Frankfurt and Nairobi

▪ Three partners:

The Centre combines research with project implementation to foster a dialogue between the private and public sector.

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Global Trends in Renewable Energy Investment

… tracking Renewable Energy (RE) investments globally…

Sector: Solar

Offshore and onshore wind (>1MW)

Biomass and waste-to-energy

Biofuels

Geothermal

Small hydropower (<1 MW; >50MW)

Marine

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Tracking RE investments

TechnologyResearch

TechnologyDevelopmen

t

Manufacturing

Scale-up

Roll-out[Asset

Finance]

Government

Venture Capital/Private Equity

Private Equity Markets

Mergers & Acquisition

Credit (Debt) Market

47.0

72.7

112.7

158.9

181.4 178.3

243.6

287.8

255.5

234.4

284.3

323.4

274.0 279.8

55% 55% 41% 14% -2% 37% 18% -11% -8% 21% 14% -15% 2%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Corporate R&D

Government R&D

VC/PE

Public markets

Small distributed capacity

Asset finance*

Growth:

Global new investment in renewable energy by asset class, 2004-2017, $bn

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*Asset finance volume adjusts for re-invested equity. Total values include estimates for undisclosed deals.

Global transactions in renewable energy, 2017$bn

6Footnote: SDC = small distributed capacity. Total values include estimates for undisclosed deals. Figures may not add up exactly to totals, due to rounding.

1,0 4,8 5,1 0,8 5,7 17 (3)

216

49 280

114 394

VC CorpRD&D

Totalinvestment

SDC*Assetfinance

GovR&D

Publicmarkets new

equity

M&A/B-O etc.

Total transactions

Re-invested

Totalcompany

investment

PE

Technology development

Scale-up

Projects

Asset and company mergers, acquisitions, refinancing, buy-outs etc.

R&D investment in renewable energy, 2004-2017, $bn

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10% 15% 16% 8% 43% -4.5% 6% -4% 3% -8% 2% 9% 6%

4.04.4

5.1

5.96.4

9.28.8

9.38.9 9.2

8.4 8.5

9.39.9

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GovR&D

CorpR&D

Growth:

Source: Bloomberg, Bloomberg New Energy Finance, IEA, IMF, various government agencies

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0.00/0.1

0.05/0.2

0.1/0.3

0.5/0.4

0.3 1.3

1.1 0.8

2.8 2.0

0%

2%

1%

10%

2%

6%

6%

Marine

Geothermal

Small hydro

Biomass & waste

Biofuels

Wind

Solar

Corporate R&D | Gov R&D Growth:

Source: Bloomberg, Bloomberg New Energy Finance, IEA, IMF, various government agencies

Corporate and government renewable energy R&D by technology, 2017, growth on 2016, $bn

Corporate and government renewable energy R&D by region, 2017, and growth on 2016, $bn

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3% | 0%

16% | 0%

8% | 0%

16% | 0%

0.1 1.9

1.1 1.0

1.9 0.6

1.5 1.2

China

United States

ASOC (excl. China & India)

Europe

Corporate R&D | Government R&D Growth:

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Data on Renewable Energy Investment

Data on: Venture Capital/Private Equity ; Public Markets, Small Distributed Capacity and

Asset Finance

since 2004

Methodology: deal value (in USD)

financial closure determines year of investment

check-ed back and continuously up-dated historical data based on confirmed and

disclosed information

Database: Bloomberg New Energy Finance

Methodological challenges in collecting data on R&D investments in RE

11Footnote: Solar thermal is parabolic trough with storage, PV is crystalline silicon with no tracking.

➢ Challenge: ➢ Companies are (often) disclosing R&D investments, but not specific for Renewable (or

Clean) Energy

➢ Methodology: Estimated share of total R&D investments based on level of exposure toclean energy➢ A1 Main driver (50-100% of value)

A2 Considerable (25-49% of value)A3 Moderate (10-24% of value)A4 Minor (<10% of value)

➢ Diversified company (e.g. General Electric) with subsiidiaries disclosing R&D investment (e.g. the turbine maker)

➢ Tags on companies‘ involvement in different RE sectors – split of the R&D spend equally

➢ Source: Bloomberg Terminal

… Corporate R&D for key quoted companies

Limitations of the corporate R&D investment in RE

12Footnote: Solar thermal is parabolic trough with storage, PV is crystalline silicon with no tracking.

➢ Comparability of the data: ➢ Regional differences in costs for reserachers e.g. China vs. Europe➢ Different company policies in capitalising development efforts vs. Account it as cost in

the profit and loss account

➢ Investements by smaller (not key) listed and not listed companies

Thank you!

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Dr. Christine GrüningFrankfurt School - UNEP Collaborating Centre for Climate & Sustainable Energy Finance

http://fs-unep-centre.org/E-Mail: c.gruening@fs.dePhone: +49 (0)69 154008-647Fax: +49 (0)69 154008-4647