FINANCING THE ENERGY TRANSITION

FINANCING THE ENERGY TRANSITION CLEAN ENERGY INVESTMENT TRENDS: HISTORY AND PROSPECTS GUY TURNER CHIEF ECONOMIST PRESENTATION TITLE, DAY MONTH YEAR 1

CONTENTS 1. Global investment patterns to date 2. UK - historic and future investment 3. Global future investment 4. Financing PRESENTATION TITLE, DAY MONTH YEAR 2

GLOBAL Internal Note: Includes NEW all add-ons (Corp INVESTMENT R&D, Gov R&D, SDC and adjustment IN for CLEAN re-inv equity) ENERGY BY SECTOR 2004 12 ($BN) $317bn $262bn $281bn $168bn $195bn $196bn Other Energy smart technologies $117bn Bioenergy $54bn $80bn Wind Solar 2004 2005 2006 2007 2008 2009 2010 2011 2012 Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D. Includes digital energy & energy storage asset investment. PRESENTATION TITLE, DAY MONTH YEAR 3

NEW INVESTMENT IN CLEAN ENERGY BY REGION Q1 2004 Q2 2013 ($BN) 36.8 33.9 30.6 27.4 21.9 21.9 19.1 17.2 19.8 13.8 8.9 8.8 8.1 10.111.9 50.8 35.1 47.242.5 43.3 27.0 47.7 45.7 42.947.4 53.0 57.3 66.1 57.2 77.9 73.8 65.5 53.3 63.1 58.4 63.1 43.6 53.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EMEA AMER ASOC Note: Total values include estimates for undisclosed deals. Excludes corporate R&D, government R&D, digital energy asset investment and energy storage asset investment (only available annually) PRESENTATION TITLE, DAY MONTH YEAR 4

NEW INVESTMENT IN CLEAN ENERGY BY REGION 2004 12 ($BN) North America & Caribbean 14.3 7.0 31.0 40.8 41.3 29.2 47.7 68.4 46.1 15.5 Europe 37.4 28.4 17.9 71.1 73.8 60.5 110.9 100.7 78.7 26.5 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Asia & Oceania 105.1 94.6 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Middle East & Africa 40.7 31.2 53.9 69.0 47.5 Full year H1 only Central & South America 9.9 15.522.7 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 11.8 0.5 0.6 1.1 1.7 2.9 1.6 5.0 3.6 4.4 '04 '05 '06 '07 '08 '09 '10 ' '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 0.8 11.7 15.9 10.9 13.6 11.110.5 3.4 5.4 2.8 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Note: Excludes corporate and government R&D PRESENTATION TITLE, DAY MONTH YEAR 5

TOP 10 COUNTRIES IN TERMS OF NEW INVESTMENT IN CLEAN ENERGY, 2012 ($BN) China 65.0 United States 36.5 Germany 19.8 Japan Italy 16.0 14.1 United Kingdom India South Africa Brazil France 9.1 6.4 5.7 5.3 4.6 Note: Total values include estimates for undisclosed deals. Excludes corporate and government R&D. Excludes digital energy & energy storage asset investment. Country is destination (not origin) of flows. PRESENTATION TITLE, DAY MONTH YEAR 6

NEW INVESTMENT IN CLEAN ENERGY BY ASSET CLASS Q1 2004 Q2 2013 ($BN) 50.8 53.0 47.2 42.5 43.3 47.7 45.7 42.947.4 35.1 36.8 33.9 30.6 21.9 27.4 27.0 21.9 17.2 19.1 19.8 8.9 8.8 8.1 10.111.9 13.8 57.3 66.1 57.2 77.9 73.8 65.5 53.3 63.1 58.4 63.1 40.6 53.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Asset finance* Public markets VC/PE Small distributed capacity Note: Total values include estimates for undisclosed deals. Excludes corporate R&D, government R&D, digital energy asset investment and energy storage asset investment (only available annually) PRESENTATION TITLE, DAY MONTH YEAR 7

CONTENTS 1. Global investment patterns to date 2. UK - historic and future investment 3. Global future investment 4. Financing PRESENTATION TITLE, DAY MONTH YEAR 8

NEW Internal Note: INVESTMENT Includes all add-ons (Corp R&D, Gov IN R&D, CLEAN SDC and adjustment ENERGY for re-inv equity) IN THE UK BY SECTOR, 2004 12 ($BN) $12bn $10bn $11bn $10bn Other $5bn $6bn $7bn $5bn Energy smart technologies Bioenergy Wind Solar $1bn 2004 2005 2006 2007 2008 2009 2010 2011 2012 Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D. Includes digital energy & energy storage asset investment. PRESENTATION TITLE, DAY MONTH YEAR 9

UK RENEWABLE ENERGY CAPACITY (GW) 45 Historical capacity 40 35 30 25 20 15 PV 10 Biomass and Waste - 5 Hydro Wind onshore 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 PRESENTATION TITLE, DAY MONTH YEAR 10

UK RENEWABLE ENERGY CAPACITY (GW) 45 40 Historical capacity BNEF short-term projections 35 30 25 20 15 10-5 Wind onshore Wind offshore Hydro 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 PRESENTATION TITLE, DAY MONTH YEAR 11

UK RENEWABLE ENERGY CAPACITY (GW) 45 40 35 Historical capacity 2020 target = 50% of 2012 installed thermal & nuclear capacity BNEF short-term projections National RE Action Plan Submissions 30 25 20 Wind onshore 15 10 5 0 Wind onshore Wind offshore Wind offshore Hydro 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 PRESENTATION TITLE, DAY MONTH YEAR 12

UK RENEWABLE ENERGY CAPACITY (GW) 45 40 Historical capacity BNEF short-term projections National RE Action Plan Submissions 35 8GW shortfall (20% of target) 30 25 20 With no new build other than what is in the pipeline as of today Wind onshore 15 10-5 Wind onshore Wind offshore Wind offshore Hydro 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 PRESENTATION TITLE, DAY MONTH YEAR 13

EU27 RENEWABLE ENERGY CAPACITY (GW) 500 450 Historical capacity BNEF short-term projections National RE Action Plan submissions 400 350 300 Other PV 250 PV 200 Wind onshore 150 100 Wind onshore 50 Hydro Hydro - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 PRESENTATION TITLE, DAY MONTH YEAR 14

CONTENTS 1. Global investment patterns to date 2. UK - historic and future investment 3. Global future investment 4. Financing PRESENTATION TITLE, DAY MONTH YEAR 15

ANNUAL INVESTMENT IN POWER GENERATION CAPACITY ($BN) NEW NORMAL SCENARIO 800 700 600 500 400 300 200 100 0 2006 2010 2015 2020 2025 2030 Marine Solar thermal Small-scale PV Solar PV Offshore wind Wind EfW Biomass Geothermal Hydro Nuclear Oil Gas Coal Note: EfW is energy from waste Small-scale PV includes commercial and residential scale rooftop PV. PRESENTATION TITLE, DAY MONTH YEAR 16

GLOBAL POWER GENERATION CAPACITY (GW) 10,000 9,000 8,000 7,000 6,000 Marine Solar thermal Small-scale PV Solar PV Offshore wind Wind 5,000 EfW Biomass 4,000 3,000 2,000 1,000 Geothermal Hydro Nuclear Oil Gas 0 Coal 2006 2010 2015 2020 2025 2030 Note: EfW is energy from waste Small-scale PV includes commercial and residential scale rooftop PV. PRESENTATION TITLE, DAY MONTH YEAR 17

TOTAL PRIMARY ENERGY DEMAND TWh Mtoe 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2005 2010 2015 2020 2025 2030 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Renewable Energy (excl. hydro) Hydro Nuclear Traditional biomass Fossil IEA WEO 2012 PRESENTATION TITLE, DAY MONTH YEAR 18

ANNUAL LARGE-SCALE PV INSTALLATIONS BY REGION - NEW NORMAL SCENARIO (GW) 50 45 40 35 30 25 RoW MENA Japan Australia Brazil 20 India 15 10 5 0 2006 2010 2015 2020 2025 2030 Europe China USA Note: large scale denotes systems larger than 1MW PRESENTATION TITLE, DAY MONTH YEAR 19

CONTENTS 1. Global investment patterns to date 2. UK - historic and future investment 3. Global future investment 4. Financing PRESENTATION TITLE, DAY MONTH YEAR 20

RENEWABLE ENERGY ASSET FINANCE INVESTMENT BY SOURCE, 2004 H1 2013 ($BN) 180 144 149 124 110 101 cross Cross-border border 72 unknown Unknown 54 domestic Domestic 44 25 2004 2005 2006 2007 2008 2009 2010 2011 2012 H1 2013 Note: Total values include estimates for undisclosed deals. Volumes show new build asset finance for renewable energy projects only. PRESENTATION TITLE, DAY MONTH YEAR 21

CROSS-BORDER RENEWABLE ENERGY ASSET FINANCE INVESTMENT BY FLOW, 2004 H1 2013 ($BN) 100% 90% 80% 70% X 60% 50% 40% 30% 20% 10% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 H1 2013 --- Investment Investment in the in South the South in 2011 in 2011 surpassed surpassed 25% the of 25% total mark CBI X North/South X North/South investment investment peaked peaked in 2012 in 2012 at 27% at 27% of total with $10.8bn CBI with deployed $10.8bn deployed North/South South/South South/North North/North Note: North is defined as OECD member countries, South is defined as the rest of the world. PRESENTATION TITLE, DAY MONTH YEAR 22

THE IMPORTANCE OF COSTS $/MWh Wholesale costs 160 140 120 100 80 60 40 US coal US CCGT EU coal + carbon EU CCGT + Carbon PV cost competitive with retail power in: Germany Australia India Italy 20 0 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 PRESENTATION TITLE, DAY MONTH YEAR 23

ANNOUNCED ENERGY STORAGE PROJECTS WORLDWIDE (MW AND NUMBER OF PROJECTS) 00 00 00 00 00 00 0 16 12 10 6 7 14 10 11 8 7 1052 11 9 10 7 410 501 606 3 4 190 2 2 324 78 89 51 150 22 113 45 122 3 16 3 23 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 18 16 14 12 10 8 6 4 2 0 Capacity (MW) Number of projects 2009 2010 2011 2012 2013. PRESENTATION TITLE, DAY MONTH YEAR 24

GLOBAL ENERGY STORAGE CAPACITY TO BE COMMISSIONED IN 2013 (MW) Compressed air 1MW Sodium sulphur batteries 1MW Flow batteries Flywheels Not selected 6.0 9.9 24.5 4.7 5.0 13.5 43.1 Total = 164MW Others Australia 3MW Japan 4.1MW Canada Germany China Lead-based batteries 43.1 123.3 US Lithium-ion batteries 44.8 By technology By country PRESENTATION TITLE, DAY MONTH YEAR 25

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