the macmillan memorial lecture bridging the infrastructure gap by gus macdonald

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STRICTLY CONFIDENTIAL The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald THE INSTITUTION OF ENGINEERS AND SHIPBUILDERS IN SCOTLAND

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The Institution of Engineers and Shipbuilders In Scotland. The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald. ‘Infrastructure to 2030’ report (OECD, 2006). Strategic transport Investment Needs 2009 – 2030 estimates ($ Billion). Aggregate Investment: 2009 - 2030. - PowerPoint PPT Presentation

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Page 1: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

STRICTLY CONFIDENTIAL

The MacMillan Memorial Lecture

BRIDGING THE INFRASTRUCTURE

GAPBy

Gus Macdonald

THE INSTITUTION OF ENGINEERS AND SHIPBUILDERS IN SCOTLAND

Page 2: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

2

INFRASTRUCTURE INVESTMENT NEEDS

Sector ($ US Billion)

Road 5,370

Telecoms 8,170

Electricity 4,210

Water 18,090

‘INFRASTRUCTURE TO 2030’ REPORT (OECD, 2006)

Page 3: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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Airports 2,200

Port infrastructure 830

Rail (incl. maintenance) 5,000

Oil and Gas – transport 3,255

STRATEGIC TRANSPORT INVESTMENT NEEDS 2009 – 2030 ESTIMATES ($ BILLION)

Aggregate Investment: 2009 - 2030

Page 4: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

4

4.4%

2.4%

9.5%

8.1%

3.2%

2.0%

4.6%

6.0%

2.6%

1.2%

3.8%3.3%

World OECD China India

2010-2015 2015-2030 2030-2050

GDP GROWTH RATES

Sources: IEA World Energy Outlook 2010, Energy Technology Perspectives, 2010. International Energy Agency

4.4%

2.4%

9.5%

8.1%

3.2%

2.0%

4.6%

6.0%

2.6%

1.2%

3.8%3.3%

World OECD China India

2010-2015 2015-2030 2030-2050

4.4%

2.4%

9.5%

8.1%

3.2%

2.0%

4.6%

6.0%

2.6%

1.2%

3.8%3.3%

World OECD China India

2010-2015 2015-2030 2030-2050

4.4%

2.4%

9.5%

8.1%

3.2%

2.0%

4.6%

6.0%

2.6%

1.2%

3.8%3.3%

World OECD China India

2010-2015 2015-2030 2030-20502010-2015 2015-2030 2030-2050

Page 5: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

5

0

5000

10000

15000

20000

25000

2007 2015 2030

China

United States

India

Russia

France

Germany

China’s GDP to overtake US GDP before 2025.

WORLD ECONOMY SHIFTING EASTG

DP

($P

PP

Bill

ion

s)

Source: IEA World Energy Outlook, 2009. International Energy Agency

0

5000

10000

15000

20000

25000

2007 2015 2030

China

United States

India

Russia

France

Germany

0

5000

10000

15000

20000

25000

2007 2015 2030

China

United States

India

Russia

France

Germany

Page 6: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

6

100

150

200

250

300

350

Port containers Air Freight Air passengers Global GDP

PASSENGER AND FREIGHT DEMAND-OUTLOOK TO 2030

Ind

ex B

ase

leve

l 201

0 =

100

2010 2015 2020 2025 2030

Page 7: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

7

Selected countries to 2030

GDP PER CAPITA GROWTH

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2007 2015 2030

United States

Germany

France

Russia

China

India

Page 8: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

8

This year the UK came 28th in international rankings. In terms of

productivity, this infrastructure deficit is as serious as our

budget deficitDavid Cameron

“”

Page 9: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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Privatisation is again sweeping the world, with governments hauling in a

record $213bn in revenues last year

Financial Times

“”

Page 10: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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GAS DISTRIBUTION COMPANIES

Company Ownership/ Main shareholders

1 Scotia Gas Ontario Teachers (Canada)Borealis (Canada)

2 Northern CKI (Hong Kong)

3 National Grid

Listed plc, UK

4 Wales & West

Macquarie (Australia)AMP Capital (Australia)CPPIB (Canada)Industry Funds Management (Australia)

1

2

3

4

Page 11: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

11

ELECTRICITY DISTRIBUTION COMPANIES

Company Ownership/ Main shareholders

1 Scotland and Southern

Listed plc, UK

2 Scottish Power Iberdrola (Spain)

3 North West Colonial First State (Australia)JP Morgan infrastructure (US)

4 North East & Yorkshire

Berkshire Hathaway (US)

5 South Wales & South West and Central Networks

Pennsylvania Power and Light (US)

6 London, South & South East

CKI (Hong Kong)

1

2

2

34

5

5

1

6

Page 12: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

12

WATER COMPANIES

RegionalCompany FDI shareholders

Northumbrian CKI (Hong Kong)Ontario Teachers (Canada)

Yorkshire Citigroup Infrastructure (US)GIC (Singapore)

Anglian CPPIB (Canada)Colonial First State (Australia)Industry Funds Management (Australia)

Wessex YTL Power International (Malaysia)

Thames Macquarie-led consortium (International)

Southern JP Morgan infrastructure (US)Future Fund (Australia)UBS Infrastructure (Swiss)CKI (Hong Kong)

Page 13: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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Natural monopolies or high entry barriers

Predictable cash flows – inflation linked

INFRASTRUCTURE CHARACTERISTICS

Insulation from business cycle

Portfolio diversification

Page 14: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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UK an attractive market for global investors

Foreign ownership (shareholding) around 40% and increasing

Investor opportunities for differing preferences

UK INFRASTRUCTURE – OWNERSHIP ORIGIN

Source: OFT

UK

Rest of World

Europe

Page 15: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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Netherlands

Australia

United Kingdom

United States

Canada

Simple average

Japan

Spain

Germany

Italy

PENSION ASSETS AS % GDP- SELECTED COUNTRIES 2009

Source: OECD Global Pension Statistics

130%

82%

73%

68%

63%

36%

25%

8%

5%

4%

Page 16: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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We are not going to save the planet by

putting our country out of business

George Osborne

“”

Page 17: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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Curmudgeons and fault finders who hold forth on

the impossibility of renewals...the climate sceptics and armchair

engineersChris Huhne

“”

Page 18: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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INSTALLATION VESSELS

Page 19: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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Transition piece

INSTALLATION EQUIPMENT

Pile driving

Turbines loading

Turbine installation

Transport to site

Page 20: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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OFFSHORE O&M

Offshore substation and accommodation platforms

Boat landing

Helicopter access

Mother-ship solution

O&M Vessel

Page 21: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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ELECTRICAL

Page 22: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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Page 23: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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I wrote it because sustainable energy is

important. If you would like to have this book free, please help yourself: it is on the internet at

www.withouthotair.comProf. David MacKay

“”

Page 24: The MacMillan Memorial Lecture BRIDGING THE INFRASTRUCTURE GAP By Gus Macdonald

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BRIDGING THE GAP

Multilateral Funds

Sovereign Wealth Funds

GFC Stimulus Packages

Infrastructure Banks

Privatisation/PPP

Institutional/Pension Funds

Retail Infrastructure Products

Corporate Investment

User Payments

Taxpayer Support