global power & energy outlook – key trends & investment opportunities to 2020
TRANSCRIPT
Global Power & Energy Outlook – Key Trends & Investment Opportunities to 2020
Jonathan Robinson, Senior Consultant
Harald Thaler, DirectorHarald Thaler, Director
Energy & Power
April 7, 2011
Functional Expertise
• Over a decade of research and analysis expertise in the energy & power industry, including
- Strategic market analysis with a strong analytical background
- Lead analyst and advisor in numerous consulting assignments for the global energy industry
- Managing research agenda for power generation research
Industry Expertise
� Proven track record across a broad range of power and energy sectors, with particular strengths in:
- Fossil-fired power generation (coal, gas, oil)
- Power plant maintenance and repair services
- Electricity demand and power generation capacity forecasts
What I bring to the Team
Harald Thaler
2
• Vast industry knowledge of the global power generation industry and its challenges and opportunities
• Global outlook and understanding of different business cultures, having lived and worked in several countries of Europe and Asia
• Fluent in German and Italian, working knowledge of Spanish, French and Thai.
• Extensive network of connections accumulated over the past decade
Career Highlights
• Established long-term relationships with global industry players including Alstom, Ansaldo Energia , Siemens and Wood Group
• Prior to joining Frost & Sullivan, worked as a freelance energy writer for publications such as Petroleum Economist, Reuters Business Insight and FT Energy
• Energy markets analyst for Datamonitor Plc - produced numerous studies covering the power, gas and oil markets of Europe, Latin America and Asia
Education
• M.Sc. (Econ.) European Studies – London School of Economics and Political Science (LSE)
• B.A. History and Politics – University of Kent at Canterbury (UK)
Harald ThalerIndustry Director
Energy & Power
Frost & SullivanEuropeLondon, UK
Functional Expertise
• 5 years of research & consulting experience, involvement in more than 40 projects. Particular expertise in:
• Opportunity Assessment
• Procurement Strategy
• Supply Chain Management Strategy
• Due Diligence for IPO/M&A activity
Industry Expertise
• Experience base covering broad range of energy sectors, leveraging long-standing working relationships with
leading industry participants:
• Renewables sector (wind, solar, tidal, hydro)
• Conventional thermal energy (coal, gas)
Jonathan Robinson
3
Jonathan RobinsonSenior Consultant
Energy, Environment Practice & Building Technologies Practice
London (UK)
• Nuclear
• Oil & Gas
• Future energy (fuel cells, energy storage, smart energy)
What I bring to the Team
• Extensive track-record of energy focused research and consulting projects
• Knowledge of, and relationships with, key stakeholders in the energy sector
• Strong analytical skills
Career Highlights
• Before Frost & Sullivan, worked for a political consultancy in London and for the NSW State Government in
Australia.
Education and Nationality
• MBus, University of Sydney; BSc Politics & Law, University of Southampton, UK National.
Electricity Growth Trends
44
44%
63%
93%
76%
61%
33%
71%77%
84%
57%63%
50%
60%
70%
80%
90%
100%
Carbon-Free Fossil
52%
67%
97%
81%
65%
32%
80% 82% 84%
66% 67%
50%
60%
70%
80%
90%
100%
Carbon-Free Fossil
Share of Fossil–Based Electricity Generation by Region, 2010
Share of Fossil–Based Electricity Generation by Region, 2020
World Power GenerationFossil Fuel Dominance to 2020 and Beyond
5
0%
10%
20%
30%
40%
0%
10%
20%
30%
40%
Source : International Energy Agency, Frost & Sullivan
*Carbon-Free includes nuclear and all renewable energy sources.
Source : International Energy Agency, Frost & Sullivan
*Carbon-Free includes nuclear and all renewable energy sources.
Coal
Oil
Gas
Nuclear
Hydro
Wind
Other renewables
2010-20 2020-30
World Power GenerationGrowth Trends by Power Generation Technology
Electricity Generation Average Annual Growth Rates by Technology, 2010-2030
6
-6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14%
Other renewables
Total
� Overall growth of 2.7% and 1.8% CAGR over next decades
� Gas, nuclear and hydro expanding at similar rates through 2020
� High coal growth in this decade but then declining
� Wind growth tailing off post-2020 but other renewables maintain momentum
Source: Frost & Sullivan
World Power GenerationGrowth in Electricity Generation by Region
Regional Share Trends in Electricity Generation, 2010, 2020, 2030
EU15.8%
Russia5.0%
Middle East4.0%
Africa3.0%
North America25.0%
Latin America5.3%
China19.2%
India4.4%
ASEAN3.1%
OECD Apac8.8%
Other6.3%
2010
� Traditional developed regions losing ground to
emerging markets
� Rapid urbanisation and creation of middle class
� India and China driving growth but developed
regions declining
� Fastest growth in India, ASEAN and China
� China expansion much more limited post-2020
� Anaemic increases in developed countries
7
Source : Frost & Sullivan, International Energy Agency
5.3%
EU13.1%
Russia4.4% Middle East
4.1%Africa3.2%
North America21.1%
Latin America5.2%China
25.4%
India6.0%
ASEAN3.6%
OECD Apac7.7%
Other6.1%
EU11.7%
Russia4.1% Middle East
4.6% Africa3.3%
North America19.1%
Latin America5.1%
China26.8%
India7.7%
ASEAN4.7%
OECD Apac6.7%
Other6.1%
2020 2030
� Anaemic increases in developed countries
Share of Fossil–Based Electricity Generation by Region, 2010
Share of Fossil–Based Electricity Generation by Region, 2020
46%
61%
91%
70%
60%
27%
62%67%
77%
58% 58%
60%
70%
80%
90%
100%
Carbon-Free Fossil
52%
67%
81%
65%
32%
80% 82% 84%
66% 67%
60%
70%
80%
90%
100%
Carbon-Free Fossil
World Power GenerationFossil Fuel Dominance to 2020 and Beyond
8
Source : International Energy Agency, Frost & Sullivan
*Carbon-Free includes nuclear and all renewable energy sources.
91%
0%
10%
20%
30%
40%
50%97%
81% 80% 82% 84%
0%
10%
20%
30%
40%
50%
Source : International Energy Agency, Frost & Sullivan
*Carbon-Free includes nuclear and all renewable energy sources.
50
100
150
200
250
300
350
2010-20 2020-30
Net Gas-Fired Capacity Changes in GW, 2010-2030 Net Coal-Fired Capacity Changes in GW, 2010-2030
World Power GenerationGas and Coal Regional Capacity Growth
10
20
30
40
50
60
70
802010-20 2020-30
9
-100
-50
0
Source: Frost & Sullivan
0
10
� Gas capacity growing in most regions of the world but major growth in coal capacity limited to China as well as Indiaand ASEAN
� Gas: growth declining dramatically in Middle East but accelerating in North America, China, India and ASEAN
� Gas driven by replacement need of ageing coal capacities in mature economies, diversification away from coal inemerging regions
� Also need for a more flexible generation system
Top 10 Trends for the Decade
1010
Power Demand Growth
Power Demand Growth
2010 20202015
Key Impact/Opportunities
1) Europe and North America - retrofit/refurbishment –
limited capacity expansion
2) China and India key markets (over 400 million people
Growth in GlobalElectricity Demand, 2010-2030
Low demand in West offset by boom in Middle East
Big expansion of electric/hybrid vehicles
Global electrification reaches 80%
Non-OECD countries Surpass OECD China becomes
largest consumer
30000
35000
11
2) China and India key markets (over 400 million people
in India without electricity) – but limited direct
opportunities for Western manufacturers - JV,
licencing key ways of market exposure
3) Low growth in Europe and North America – approx.
1%. Industrial demand forecast to be stake – energy
intensive industries heading to China
4) Gradual adoption of electrical vehicles – developed
economies first, developing economies soon after
Source: International Energy Agency, Frost & Sullivan
0
5000
10000
15000
20000
25000
2010 2015 2020 2025 2030
Ele
ctr
icit
y G
en
era
tio
n (T
Wh
)
Power Plant Decommissioning
Power Plant Decommissioning
2010 20202015
Key Impact/Opportunities
1) Obvious point decommissioning = need for
replacement plants
- Europe – gas likely to play a key role
Likely DecommissioningIn Selected Regions, 2010 - 2020
First of substantial wave of gas-fired plant closures
Closure of substantial coal-fired capacity in Europe to comply with the
Large Combustion Plant Directive
Gradual closure of nuclear-firedpower stations in Europe
and North America
80
90
Cap
acit
y D
eco
mm
issio
ned
(G
W)
12
- Europe – gas likely to play a key role
- Baseload power needed
- Middle East – gas
- Africa – mixture
2) Potential revenues from remediation work to restore
sites/prepare sites for new development
- Nuclear €300 million per reactor
- Opps for specialist waste companies/EPC players
that could expandSource: Frost & Sullivan
0
10
20
30
40
50
60
70
Europe Eastern
Europe &
Russia
Middle
East
Africa
Cap
acit
y D
eco
mm
issio
ned
(G
W)
Nuclear Power
Nuclear Power
2010 20202015
Key Impact/Opportunities
1) Focus on safety
2) Life extensions
Number of Reactors Planned and Under Construction
Fukushima Accident
Start of UK nuclear build
2nd Wave of Gen III+ construction
442 reactors in operation480+ reactors
operational
Global Safety Reviews
65 reactors under construction
Finalised construction of ITER
13
2) Life extensions
- up to 20 years = (€500
million)
- new plant = €5 - €6 billion
3) New equipment orders =
approximately 60 pressure
vessels ordered in the next five
years, despite Fukushima
Source: PRIS, Frost & Sullivan
New Age for Natural Gas
2010 20202015
Key Impact/Opportunities
1) The growth in unconventional gas - has put a lid on
global gas prices - creates opportunities for equipment
suppliers, exploration companies, pipeline companies,
project developers etc
CCGT favourite generation technology
Shale gas boom in USA
Growth in global pipeline network
Massive boost in LNG availability
Gas demand peaks in OECD but keeps growing elsewhere
Global LNG CapacityExpansion 2008 - 2013
New Age for Natural Gas
14
2) Continuing growth in gas pipeline network – big
projects in Europe – opportunities for raw materials
suppliers (eg pipes) and OEMs (eg turbines,
compressors)
3) Growth in LNG capacity - Qatar completed massive
investments and further growth from Australia - more
opportunities for equipment suppliers and developers
4) Low gas prices boost investments in gas-fired capacity
– Middle East key but other markets growing in
importance - also boost for cogeneration and onsite
powerSource: OECD
Clean Coal Commercial-
isation
2010 20202015
Cost Component Percentages of a CoalPlant with CCS
Transport,
Storage,
9%
90%
100%
Commercial CCS viability established and large-scale development commences
Ultra supercritical technologybecomes prevalent globally
Carbon Capture and Storage Pilot Plants
Clean Coal Commercialisation
Key Impact/Opportunities
1) Ultrasupercritical installations replace existing sub-
critical plants
2) Refurbishment and upgrading – creating opportunities
15
Source: Frost & Sullivan
Power
Plant,
70%
Capture,
18%
Transport,
3%
40%
50%
60%
70%
80%
90%
Power Plant with CCS
2) Refurbishment and upgrading – creating opportunities
for suppliers of boiler-related equipment such as
economiser, reheaters and superheaters
3) Commercial viability of capture unproven but
opportunities in demonstration projects
4) Transportation – further opportunities for pipeline-
related companies
5) Storage – mainly in depleted oil and gas fields and salt
aquifers
6) Commercial operations only post-2020
Market Liberalisation
2010 20202015
European Priority Corridors forElectricity and Gas
Focus on emerging markets retail liberalisation
Growing trans-regional power trading
Most power generation markets fully liberalised
Towards a global emissions trading system
Key Impact/Opportunities
1) Liberalised markets demand flexible generating assets
– boosts gas turbines and services market
Market Liberalisation
16
Source: EC DG Energy
– boosts gas turbines and services market
2) Market liberalisation creates more diverse fuel mix
3) More regional power exchanges, greater trans-
regional interconnections
4) Promotes more efficient operation of emissions trading
schemes
Smart Energy
Smart Energy
2010 20202015
Key Impact/Opportunities
1) Re-invigorated T&D
- Substantial upgrades for existing infrastructure
- PMUs, sensors, cables
- Enabling utilities to carry out preventive maintenance
Global Smart Grid RevenueForecasts, 2009-2017
Smart meters taking off in US and Europe
Smart meters reach most consumers in
developed world
Direct load control of smart appliances via remote management
Peak shaving through energy efficiency and promotion of
embedded generation
50,000
60,000
Reven
ues (
$ M
illi
on
)
17
- Enabling utilities to carry out preventive maintenance
2) ICT opportunities
- Substation automation – SCADA to IP based systems
using switches and IEDs.
- Volume of data transmitted and stored – huge opps for
the traditional ICT players. Datacentre growth through
need for storage.
3) Opportunities in the home
- Creation of Home Area Networks (HANs), remote utility
monitoring or customers given power though remote
access - smart phones?
- Need for appliances that are HAN readySource: Frost & Sullivan
0
10,000
20,000
30,000
40,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Reven
ues (
$ M
illi
on
)
Energy Efficiency
Energy Efficiency
2010 20202015
Key Impact/Opportunities
1) Green buildings = reduction of emissions + efficient
utilisation of resources.
- opps for range of renewables/building technologies -
mix of generation, but also monitoring
Conceptual Drawing of a Green Building
Global coverage for energy-efficient lighting
Green buildings become norm in developed world
Grid investments lay foundations for supergrids and reduce T&D losses
Global penetration of micro-renewables and micro-CHP
18
mix of generation, but also monitoring
- can be applied to existing housing stock as well to
some new buildings
2) Large-scale deployment of compact fluorescent lights
(CFLs) can help reduce peak electricity demand –
efficiency 4 or 5 times above incandescent bulbs. Further
improvements with OLED lighting
3) Increased investment in grid infrastructure will increase
efficiency + will enable growth in DG micro generation –
lower T&D losses + greater efficiencies through CHP
growthSource: Frost & Sullivan
Energy Storage
Energy Storage
2010 20202015
Key Impact/Opportunities
1) Advances in technology means that returns are
becoming more attractive
- Renewable off-peak being sold on-peak, asset
utilisation, cost savings
Forecast Growth of the EnergyStorage Market 2009 2016
Grid-scale energy storage such as pumped storage and CAES takes offImproved existing battery technologies emerge
such as Li-ion, Nickel-Zinc, and Molten Salt
Energy storage market reaches $50 billion
19
utilisation, cost savings
- Utility scale storage inevitable
2) New entrants to the market, businesses looking for the
best storage locations, potential for storage rental as
opposed to ownership – important to get in early to
secure best opps
3) Alternative vehicle growth means boom for lithium-ion
batteries
4) Rethink in strategies will lead to consolidation,
alliances, pricing pressures – fast changing market
Revenues
35%
40%
45%2010-20 2020-30
Continued Investment in Renewables
Continued Investment in Renewables
2010 20202015
Key Impact/Opportunities
1) Massive potential in a number of geographies
- Concentrated solar highest growth, but wind most
important in MW capacity
Growth in Wind and Other Renewables –2010, 2020, 2030
Renewables achieve grid parity in some European markets
European countries encourage investment
to reach 2020 EU targets
Strong renewable growth in developed economies,
backed by subsidies and regulation
Private equity investors re-focus back on
renewable projects
Commercialisation of Energy Storage
technologies drives growth
20
0%
5%
10%
15%
20%
25%
30%
Hyd
ro
Win
d
Bio
mas
s & W
aste
Geo
ther
mal
Sol
ar P
V
CS
P
Mar
ine
important in MW capacity
- Feed in tariffs/clear regulation vital
- Consistency very import – investors need
confidence that an investment can pay off
2) Renewables a key factor driving T&D investment to
connect new capacity to where it is needed.
- Creation of supergrid in Northern Europe, others
planned in North America and China
Source: IEA, Frost & Sullivan
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Europe
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Harald Thaler
Director
Energy & Power
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Jonathan Robinson
Senior Consultant
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