Confidential. © 2012 BearingPoint
DESERTEC industrial initiative
Desert power – From vision to reality
Schweizerischer Energierat: Energie-Lunch
Montag, 22.Oktober 2012
AXPO an der Zollstrasse 62, Zürich
Dieter Weber, Dr. Samyr Mezzour, Mario Becker
BearingPoint AG, Switzerland
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Disclaimer
•Die in der vorliegenden Präsentation enthaltenen Informationen wurden sorgfältig zusammengestellt und aus heutiger Sicht zutreffend gewichtet und bewertet. Eine Gewährleistung für die Zuverlässigkeit, Aktualität, inhaltliche Richtigkeit, Genauigkeit oder Vollständigkeit dieser Informationen wird nicht übernommen. Jegliche Haftungsansprüche wegen Schäden materieller oder immaterieller Art, die aus der Nutzung der hier enthaltenen Informationen entstanden sind, werden vollumfänglich ausgeschlossen.
BearingPoint Switzerland AG
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•Business consulting to deliver tangible value
Business consulting brings together management and technology capabilities to align operating models and technology with business strategy.
As business consultants, we help clients make transformation real.
Our approach to working with clients is highly collaborative and designed to improve business performance, from strategy to execution.
We are focused on long-term partnership relationships with our clients.
Strategic consulting
Business consulting
IT services
Outsourcing
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•Global reach to help clients wherever they are
• North America:
Zoom on Europe: 26 offices in 15 countries
60% of major public and private organisations
are among our clients*
3,200 consultants
*data from Eurostoxx 50
Northern Europe Australasia & Africa:
Southern Europe & South America:
Asia:
Poland
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Banken
Versicherungen
Kapitalmarkt
Chemie, Pharma
Konsumgüter, Handel
Industrieprodukte
Telekommunikation, Medien
Seg
men
te
Seg
men
te
Commercial Services
BU Business Unit
Financial Services
BU Business Unit
Energieversorger
Öffentliche Verwaltung, Bund, Kantone, Städte
Transport und Logistik
Verteidigung
Seg
men
te
Public Services/ Infrastructure Services
BU Business Unit
•Marktausrichtung
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•Aktuelle Fragestellungen
Markte
rfo
lg
Firmenspezifische Fragenstellungen
Geschäftsmodell Konzentration auf Kern-kompetenzen, Auslagerungen in Service Center, Dienst-leistungen für Dritte
Wettbewerb Wettbewerb nimmt zu, Druck auf die Margen (Grosskunden), sinkende Energiepreise
Netz Nationale Netzgesellschaft (Betrieb & Eigentum), Netz-engpässe
Kundenerwartungen Hoher Stellenwert der Versorgungssicherheit, vertretbare Preise, Umwelt
Atom-Ausstieg Ausbau erneuerbarer Energien. Kooperationen und Investitionen.
Kundenbeziehung Kundenmanagement wird wichtiger, abgeschlossene Verträge laufen aus
Strukturwandel Aufbau neuer Kompetenzen, Auslandexpansion und Internationalisierung
Marktöffnung 2002 Ablehnung EMG, Stufen-weise Marktöffnung, 2009 Teilmarktöffnung
M&A Konsolidierung in der Branche, Internationalisierung
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Public Services Financial Services
•Servicebereiche
Information Management
IT Strategy & Transformation
Customer Management
Business Strategy & Transformation
Commercial Services
Finance Transformation
Risk, Compliance & Security
OpEx &Core Industry Solutions
Supply Chain Management
SAP Advisory
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•Referenzen (Auszug)
Finanzstrategie & -organisation
Shared Service Center
Unternehmens-steuerung & -planung
Performance & Cash Mgmt
Compliance & Risk Mgmt
Trading
Finance and Support
Functions
IT Strategie & Architektur
IT Organisation
IT Government
Analyse, Bewertung und Integration von ERP-Systemen
IT Sourcing Advisory
Business Intelligence
IT PMO
IT Strategy, SAP Advisory
CRM Strategie
CRM Prozesse & Leistungen
Vertrieb und Service
Energiedaten-Mgmt
Customer Management
Business & Functional Strategy
BPR / Transformations-Services
Business Lifecycle Mgmt
Post Merger Services
Regulierung / Unbundling
Kraftwerkeinsatz-planung
Business Strategy &
Transformation
Supply Chain-Optimierung
Sourcing & Outsourcing
Energieeinkauf
Abrechnung
Vertriebseffizienz & -steuerung
Tarifierung
Supply Chain Management
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•Agenda
DESERTEC Vision & Dii
The first Dii reference project
Opportunities & Challenges
1
2
3
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The convenient truth! Large potential of renewables in EUMENA
Solar power potential Wind power potential
Source: Dii, Fraunhofer ISI
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The 2050 DESERTEC Vision for EU-MENA*
*MENA: Middle East North Africa
Vision Supply 15% of Europe’s electricity consumption by 2050 (ca. 700 TWh energy; ca. 200 GW total installed power).
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Dii: 56 partners from 15 countries
21 Shareholders 35 Partners
Cooperations with: Arab League, EIB, ENTSO-E, MEDGRID, World Bank, KfW, African Development Bank, AHK…
Network of numerous organisations: EU-Comission, Ministries of Energy in EU and
MENA, Research Institutes…
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Five work areas derived from Dii‘s mission and objectives
Roll-out plan
Economic assessment and implementation roadmap
Regulatory Concept
Creating a sustainable regulatory and legislative framework
Generation Converting RE from sun and
wind in the deserts
Markets Bridging the gap between
expected revenues and costs
Transmission Enabling transport from source to
local/remote markets
Our mission is to enable the roll-out of the Desertec concept with the target of supplying MENA and Europe with power produced from sun and wind energy sources.
The long-term goal is to satisfy both a substantial part of the energy needs of the MENA countries and to meet about 15% of Europe’s electricity demand by 2050.
Develop a Roll-out Plan until 2050
Create a favourable Regulatory
Environment
Enable concrete Reference Projects
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Shareholders
Transmission System Operators HVDC Systems Manufacturers Other organisations
Dii Transmission staff works closely with WG Transmission experts: ─ Quarterly all-day meetings (in Munich, Rome, Madrid) ─ Monthly conference calls and ─ frequent bilateral calls
Universities
Technical consultants
Working Group “Transmission” has been supported by experts from the following organizations
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•BearingPoint was leading or coordinating the following transmission working packages at Dii
Topic Analysis Result 1. Optimal transmission technology
Assessment of current & future (2030) high-voltage transmission technologies
Selection of high-voltage transmission systems for 2016–2030–2050
2. Optimal transmission path
GIS analysis to evaluate optimal transmission paths (topographical, technical, economical) and their feasibility to relax bottlenecks
Assessment of EUMENA interconnector capacities
Transmission paths to convey desert power
3. Transmission cost model
Evaluation of CAPEX and OPEX Calculation of Levelized Cost of Transmission (LCOT) Transmission cost model 2012–2030–2050
Cost of transmission systems 2012–2030–2050
4. Implementation challenges
Identification and prioritization of implementation challenges (regulatory, financing, markets, permitting, public acceptance, technical, operational)
Definition of action plan
Action plan for implementation challenges
5. Grid studies
Long term (2030-2050): Holistic grid analysis for the EUMENA region, measuring the impact of desert power on European grids and defining concrete new AC/HVDC lines along major MENA-EU transit paths
Short term (2016-2020): Grid analyses assessing congestions/reinforcement needs due to Dii reference projects on local MENA grids and on Spanish and on Italian grids.
EUMENA grid 2050 & Reference projects Congestion analyses NTC for 2030-2050 Required length of new lines Location of new lines and necessary grid
reinforcements Location of balancing power solutions Total costs of transmission
INPUT
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Dii open to all field-proven technologies
Photovoltaics (PV)
Concentrated Solar Power
(CSP) Wind Power
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Kramer Junction (Mojave Desert, California, USA) SEGS III-VII, 5 x 30 MWe CSP, Owner: Nextera
Picture: Siemens ©
a Dii Partner
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Picture: Abengoa ©
Solucar Platform, Spain: PS10, Sevilla PV, Eureka 5 and PS20 (left to right)
a Dii Partner
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Tucson Electric Power: Springerville, Arizona – USA (500 kW) Picture: First Solar©
Utility-scale PV power plants require a large amount of space; which is a problem in Europe, but not in the Sahara!
a Dii Partner
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Picture: Siemens ©
Wind Park Lillgrund, Sweden: 48 Offshore Turbines (~110 MW)
a Dii Partner
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•Agenda
DESERTEC Vision & Dii
The first Dii reference project
Opportunities & Challenges
1
2
3
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Challenges on the way
Bridge the gap between costs of renewable energy and market prices until competitiveness is achieved
Create favorable regulatory conditions that integrate renewable energy from outside Europe into the European energy market.
Integrated energy grid to facilitate local and intercontinental distribution of generated power
1. Business Case
4. Socio-economic benefits
2. Transmission
Energy producing nations must benefit: economic growth, knowledge transfer, clean energy security
3. Regulatory framework
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Whatever scenario, RE need to become attractive in the commodity market
Grid parity
* PV and Wind are corrected to reflect the lack of dispatchability and storage capacity.
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Arab spring: An opportunity for DESERTEC!
Opportunities long-term
Development of a sustainable and innovative industry
Job creation
Stability and social peace
Photo: Presseurop, AFP, Inhabitat
Challenges
High unemployment among young graduates and the younger population
Rising global food and energy prices…
Growing poverty
…
Tunisia
Egypt
Libya
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Transmission technologies for high capacity land and undersea electricity transport are already available
HVDC Land Cable
Australia: „Murray link“
Power capacity: 200 MW (150kV)
Distance: 180km
[ready for market: 1,100 MW]
State of the art transmission projects allow high capacity long distance transport over 2,000 km via OHL (in China) and over 500 km via sea cables (Norway-Holland)
HVDC Overhead Line
China: Xiangjiaba-Shanghai
Power capacity: 6,400 MW (800kV)
Distance: 2,000 km
HVDC Submarine Cable
SAPEI (Sardegna-Penisola Italiana):
Power capacity : 1,000 MW
Distance: 400 km
Depth: 1’600 m
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Consequences of bulk power from the desert on European grid: a challenge.
Challenges
Today the European power grid is not able to absorb bulk power from MENA
The injection of massive desert power would create bottlenecks, which may result into a chain reaction of black-out across Europe
Possible (and existing) Mediterranean grid connections
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Objective Transmission projects in Europe in the context of the 3 pillars of EU Energy policy: Security of Supply Renewable Energy Integration Internal Energy Market
AC> 300kV
29.600
DC
9.600
5.000
0 Total
Projects
42.100
AC< 300kV
2.900 45.000
40.000
35.000
30.000
25.000
20.000
15.000
10.000
new
upgrade km
A chance: Transmission projects in Europe according to ENTSO-E Ten-Year Network Development Plan
ENTSO-E: a trans-European network (2009): 42 TSOs from 34 countries 525 million customers 828 GW generation capacity 305,000 Km of transmission lines Total demand:3,400 TWh/year Electricity trade volume: 400 TWh/year
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Only few transmission paths feasible due to deep waters of Mediterranean
•Red =>2000m depth, actual technical limit for laying submarine cables
However, cable manufacturers are confident that the depth technical limit can be extended to 3´000m before 2030. This will then open new corridors across the Mediterranean Sea!
Morocco
Tunisia
Algeria
Libya
Spain
Italy
Algeria
Italy
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Only few transmission paths feasible due to deep waters of Mediterranean
•Red =>2000m depth, actual technical limit for laying submarine cables
However, cable manufacturers are confident that the depth technical limit can be extended to 3´000m before 2030. This will then open new corridors across the Mediterranean Sea!
Morocco
Tunisia
Algeria
Libya
Spain
Italy
Algeria
Italy
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•Agenda
DESERTEC Vision & Dii
The first Dii reference project
Opportunities & Challenges
1
2
3
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Dii sequenced planning of reference projects
500 MW
Capacity
Timeline
500 MW
2-3 GW
2016 2010
Dii’s initial planning horizon
Dii reference projects
2012
1 GW
1 GW
... 2020
= Start of operation
= Tender
2011
Morocco
Tunisia
Algeria
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Two CSP plants
(Power 400 MW)
Mix PV / Wind power plants
(Power 100 MW)
The first Dii reference project in Morocco will generate a cumulated power of 500 MW
CSP1: 150MW parabolic trough with 4h storage, and dry cooling
CSP2: 250MW parabolic trough with 4h storage, and dry cooling
PV: Poly-Si 50 MW
Wind: onshore 50 MW
Export share: 100% Local consumption: 100%
Export share: 80% (400 MW)
Local consumption: 20% (100 MW)
600 M€ (30% equity from a Sponsor Group of Dii)
~150 M€ Sponsor Group lead by RWE Innogy
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•In a nutshell…
•Why EU & MENA countries, plus 56 established corporations, engage
themselves for the realization of DESERTEC?
*MENA = Middle East and North Africa
1. Tremendous potential of clean energy is unexploited
2. Technology exists and is evolving rapidly
3. Economic and social opportunity for the EU and MENA*
4. Political willingness of the EU and MENA* countries is available
5. Pilot projects are being planned
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Thank you very much for your attention!
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•Current installed capacity and projects mainly located in the US and Spain
Focus countries with (high) CSP potential
Equator
Tropic of Cancer
Tropic of Capricorn
CSP capacity – installed capacity and project pipeline (in GW, until 2015)
Australia
Pipe-
line
0.5
Inst.
cap.
0.0
MENA
Pipe-
line
0.8
Inst.
cap.
0.0
Spain
0.3
Pipe-
line
2.5
Inst.
cap.
US
Pipe-
line
8.0
Inst.
cap.
0.4
RoW
Pipe-
line
0.5
Inst.
cap.
0.1
Source: Interviews with industry experts; Estella analysis; NREL
Current capacities and planned projects mainly located in US and Spain1)
MENA expected to ramp up in mid term
DNI levels ≥2,000 are prerequisite for the deployment of CSP
… However capacity in MENA will increase strongly
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DESERTEC Foundation & Desertec industrial initiative (Dii): 2 different organizations
DESERTEC vision
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„Desert Power 2050“ (DP 2050), an integrated
view of the EUMENA system as a whole
Develop RE Projects
Construct RE plants
Operate RE plants
Country strategies
System Strategy
Enable first RE Reference Projects
Market players
Market players
Market players
•A comprehensive, but pragmatic strategy for the entire EU-MENA region…
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2.61.30.80.60.50.40.3
150.0
90.0
62.0
44.7
25.8
12.05.9
2005 2000 2010 2020 2015
•If China can install 150 GW of wind energy by 2020, why can’t the MENA region install 200 GW by 2050?
Today
Cumulative wind power capacity installed in China (GW)
Source: Green Chip Stocks (2008), CWEA (2011), Renewables International (2012)
China is on track to install more than 90 GW of wind power capacity by 2015 and 150 GW by 2020.
Wind power (GW)
MENA: Middle East North Africa
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A CSP plant is expensive, however, various instruments may be used to close the financial gap
Tax Transmission Dii base case
Concessionsal Finance
Gap Electricity price
Total Debt & lenders’
requirements
Plant OPEX Plant CAPEX
Base case Gap
Required revenue per c€/kWh
Sites with high solar yields
Efficient technologies
Process innovation
Vertical integration
Market consolidation
Feed-in-Tariff
Utility PPAs
Green or CO2 certificates
Concessional Finance
Grants
Reduce cost of electricity
Increase revenue from electricity
GAP
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•What is technological feasible today will be economically viable tomorrow
System cost development per kW1 in percent of 2010 cost estimate
Source: Dii 1. Refers to nameplate capacity, i.e. kWp (kW peak) for Utility PV and Wind and kWe (kW electric) for CSP
70%
40%
30%
0%
2045 2040 2035 2030 2025 2020 2015 2010
50%
80%
2050
100%
80%
60%
40%
20% Utility PV
Wind off-shore
CSP with 8h storage
Wind on-shore
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•Energy security debate: the process
Criticism Desired outcomes Response
MENA countries are / will
be unreliable suppliers.
Desert power will have a negative impact on EU security of supply
Energy security is thus seen as a major challenge to RoP implementation.
A realistic and constructive
discussion, based on scientific literature
Showing positive effects important for EC: energy security is an important factor in infrastructure investment decisions (see 2nd Strategic Energy Review)
Driver of EU and member state support
Risks of political supply
interruption or terrorist attacks on infrastructure are generally minor and manageable.
Energy security should not be a defensive issue for desert power.
On balance, desert power will improve EU security of supply.
Positive stance: show positive net effects Negative stance: energy security as „negative“
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•Terrrorist attacks on energy infrastructure: an international perspective (2005-2010)
Country # of attacks (% of global total)
Pakistan 743 28.9%
Iraq 669 26.0%
Colombia 261 10.1%
Afghanistan 215 8.4%
Nigeria 112 4.4%
Thailand 70 2.7%
Russia 70 2.7%
Philippines 67 2.6%
Israel 49 1.9%
Yemen 42 1.6%
Total 2298 89.3%
Countries with >40 attacks / year Dii countries vs. selected Western countries (bold)
Source: Worldwide Incident Tracking System (WITS, 2012) Terrorism is defined in statute [22 USC § 2656f(d)(2)] as: premeditated, politically motivated violence perpetrated against noncombatant
targets by sub-national groups or clandestine agents. (“Noncombatant” includes civilians and military personnel who at the time of the incident are unarmed or not on duty.)
Country # of attacks
Algeria 17
Spain 11
France 5
Egypt 3*
Canada 3
Greece 2
Lebanon 2
Saudi Arabia 2
Morocco 0
Tunisia 0
Jordan 0
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60
65
70
75
80
85
90
95
100
105
110
3,000 2,900 2,800 2,700 2,600 2,500 2,400 2,300 2,200 2,100 2,000
Tariff/LCOE development over DNI level (in % compared to reference plant location Spain)
Tariff decrease about -4.5%-points with an increase of DNI by 100 kWh/m²a due to increasing plant output
At DNI of 2,500 kWh/m²a tariff range between 81-83% compared to reference plant location in Spain (DNI 2,084 kWh/m²a), e.g. in Saudi Arabia
At DNI of 2,700 kWh/m²a tariff ranges between 74-75% compared to reference plant location, e.g. in Algeria
Source: Estella
• Portugal • United Arab Emirates
• Italy • Greece • Southern Turkey
• Spain • Tunisia
• Arizona/US • Saudi Arabia
• Morocco • Nevada/US • Australia • California/US
• Algeria • South Africa
DNI in kWh/m²a
Reference plant location – DNI 2,084 kWh/m²a (100%)
-33-35%
-18-19%
-24-25%
-4.5% per 100 kWh/m²a
• Chile
•Electricity cost of CSP decrease significantly with increasing irradiation level
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•CSP: Overlay of generation potentials with transmission cost emphasizes northern areas
Source: Dii
CSP site attractiveness based only on solar resource
CSP site attractiveness for export based on solar resource and transmission
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BearingPoint assisted Dii in developing the business case for the 1st reference project
Equity investor 1
Investor 2
…
Bank 1
Bank 2
…
Lead equity investor
Lead debt provider
30
% E
qu
ity
70
% D
eb
t
> 600 M€
Other equity investors
Other lending institutions
1st Dii project
150 MW solar power plant in Morocco
Dii developed a business case for the 1st pilot project in Morocco, and attracted several capital providers to arrange a “club deal”.
A solid and proven financial model used by BearingPoint has proven to be key for discussions with investors (see next slide).
1st Dii project (Morocco)
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•About Dr. Samyr Mezzour
Citizenships
Swiss-Moroccan
Education
BSc. Mechanical Engineering, ETHZ
MSc. Industrial Engineering, ETHZ
PhD Economics, HEC Lausanne
Professional Experience
Private Equity analyst @ Winterthur Asset Management
Sr. Consultant @ BearingPoint Consulting
& Project Manager at Dii
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•Ihre Ansprechpartner
Pfingstweidstr. 60
CH-8005 Zürich
Dieter Weber Partner Leiter Public Services Schweiz
T +41 43 299 64 70
C +41 79 400 40 65
www.bearingpoint.com
Pfingstweidstr. 60
CH-8005 Zürich
Mario Becker Business Consultant
T +41 43 299 6565
C +41 79 521 1569
www.bearingpoint.com
Pfingstweidstr. 60
CH-8005 Zürich
Dr. Samyr Mezzour Sr. Business Consultant
C +41 79 751 38 12
F +41 43 299 64 65
www.bearingpoint.com