1、Successfully green,1,The battle against climate change 30 years of successes and failures in Europe,Indianapolis, September 2007,Presentation,Successfully green,2,Roland Berger is an international strategy consultancy, with extensive experience in “green“ issues for energy companies & policy makers,
2、Roland Berger experience with green issues,VALUE CHAIN,ISSUES,Retail,Carbon trading,Renewables marketing,Wind energy,Solar energy,Biomass & Biofuels,CHP,SETTING THE SCENE,Source: Roland Berger,Successfully green,3,When I met Mr Simcox at a reception in London he asked me if I could provide our persp
3、ective on how Europe became (or stayed?) green,4.2,Midwest2),1.5,Netherlands,Denmark,-65%,2.0,Source: EIA, US Census, CBS, Statistics Denmark,Selected regions have similar monthly average temperature (overall average 47-50 F)1) Selected regions primarily use natural gas for cooking and heating compa
4、rable share of electricity in total energy consumption by households,Electricity consumption by households per capita, 2004 MWh,1) 8.3-10 C 2) Minnesota, Iowa, Wisconsin, Illinois, Indiana, Michigan, Ohio,0.17,SETTING THE SCENE,Successfully green,4,Today I will present you a snapshot of the results
5、from our recently executed European “green energy“ research,Green energy in Europe research May September 2007,SETTING THE SCENE,Top green performers,How are successful green companies identified? Who are the top performers in Europe?,1,Source: Roland Berger,Successfully green,5,Sample,60%,Other com
6、panies,40%,The research covers the 20 largest utilities and 12 key markets in Europe,Research overview,SETTING THE SCENE,Roland Berger has analyzed 20 companies,Analysis of financial and operational data of 20 leading European energy companies Desk research Interpretation of results based on Roland
7、Berger experience,covering all major European markets, including a wide spectrum of market players,Sample split by company size 2006 revenues, EUR bn, representing a major share of European electricity generation,10-15,15%,15-25,30%,25,20%,5,15%,5-10,20%,Sample share in European electricity generati
8、on 2006, TWh,3,270 TWh,Companies in scope cover 12 main European markets Specific regulatory situation has been assessed for each country in scope,80%,Source: Roland Berger,Successfully green,6,The study provides insights into successes and failures, from which we may learn,Overview of key learnings
9、,SETTING THE SCENE,Successes,End-user efficiency: Centrica has reduced electricity consumption by 26 GWh between 2002-2005 by stimulating efficiency products for consumers Efficiency: The Dutch government supported the roll-out of HE boilers, with 70% of homes covered, significantly reducing electri
10、city demand Wind: Denmark, Germany and Spain are amongst market leaders in wind energy production and wind energy solutions, driven by early investments and favorable feed-in fees CHP: CHP covers 30%-50% of electricity generation in Northern European countries, driven by strong government stimulatio
11、n Biomass/ waste incineration: Countries in Western Europe have reduced environmental impact of fossil fuel plants by co-firing biomass and waste (25%) Coal: Eon increased efficiency of coal plants from 36% to near 46%, reducing costs and CO2 output,Failures,Green retail products: Green energy retai
12、l products amass 25% uptake in Dutch market, however as demand was mainly covered by import less than 5% of generation capacity switched to green Solar cells: Subsidies have made Germany the main destination for solar cells and have made solar cells more expensive Carbon trading: When it became appa
13、rent that CO2 emissions rights were not scarce, the EU Emission Trading Scheme (EU-ETS) collapsed,Source: Roland Berger,Successfully green,7,1. Top green performers How are successful green companies identified? Who are the top performers in Europe?,Successfully green,8,Carbon footprint is not a goo
14、d measure for “greenness“, legacy and short-term changes affect the scores,1,Carbon footprint of selected European energy companies1),Status quo, 2006 g CO2/kWh,Development, CAGR 2002-2006 % change2),Electrabel,GDF,Centrica,Vattenfall,Suez,Endesa,Nuon,Union Fenosa,DONG,Eneco,Essent,E.ON,Enel,EDP,SSE
15、,RWE,Fortum,British Energy,EDF,Iberdrola,Centrica3),Union Fenosa,EDP2),E.ON,Electrabel3),RWE,Nuon,Enel,Endesa3),Iberdrola,Vattenfall,Suez,GDF,Eneco3),Fortum,EDF,SSE,British Energy,1) Based on generated electricity; based on supplied electricity for Eneco and Nuon (no generation or no data on emissio
16、ns from generation) 2) No historical data available for Essent and Dong; 3) Only 3 years data available, CAGR 2004-2006,Source: Annual reports, company documents and websites,Top 3 depends on nuclear and/or hydro for 70% of generation,Only a few companies show improvement,11.0,Successfully green,9,W
17、e look at renewables investments to determine leaders, which are EDP, Iberdrola and the major German companies,1,Source: Annual reports, company documents and websites,1) No (historical) data available for Essent, Nuon, Eneco, Centrica, DONG and GDF; Eneco has no installed capacity in 2006 2) Only 3
18、 years data available, CAGR 2004-2006; 3) Total capacity decreased for Fortum (-1.0%) and British Energy (-8.2%),Renewables footprint of selected European energy companies1),Renewable capacity development, CAGR 2002-2006 % change,Renewables in installed capacity, 2006 % MW,12%,51%,4%,45%,38%,19%,15%
19、,11%,34%,29%,35%,42%,19%,0%,17.5,10.7,8.7,7.5,4.3,3.0,2.7,1.7,1.6,1.4,0.4,0.1,0.0,2.1,E.ON,EDP2),RWE,Iberdrola,Enel,Electrabel2),SSE,Suez2),Endesa,Union Fenosa,Vattenfall,Fortum,EDF,British Energy,Top 4 development includes both leaders and laggards in renewable capacity,0.0,Successfully green,10,2.
20、 Best practice green strategies What are examples of best practice green strategies in Europe?,Successfully green,11,Green strategies work on different levels, ranging from saving energy to reducing emissions from conventional generation,Types of green strategies,2,Increasing priority,D,Storing emis
21、sions,Best practice examples,Value chain,A,Saving energy,Energy efficiency programs (residential & business) Smart meters,RetailRetail,B,Using renewable sources,Green products for business customers Wind energy (onshore & offshore) Biomass (co-firing & mono-firing) Hydro energy,Retail Generation Gen
22、eration Generation,C,Increasing output of conventional, non-renewable sources,High-efficiency condensing boilers Combined Heat & Power Increasing thermal plant efficiency,Retail Generation Generation,Carbon capture and sequestration technology is in its infancy, first plants are currently under deve
23、lopment,Successfully green,12,Centrica realizes significant energy savings by marketing retail insulation and lighting solutions, leveraging government support,Total energy saved in EEC, Centrica, April 2002 May 2005 GWh,2,Source: Centrica EEC Annual Report 2004/2005,26,478,Total,52%,48%,8,993,Insul
24、ation,69%,31%,9,202,Lighting,33%,67%,5,163,Heating,15%,85%,3,120,Appliances1),Subsidized,Non-subsidized,1) e.g. solar cells,2,642,Successfully green,13,Government support to set up a market enabled the successful implementation of high-efficiency (HE) condensing boilers,Market penetration of HE boil
25、ers,2,In conventional boilers, the water vapor produced when combusting natural gas is lost via a flue HE boilers condense this vapor and use it to heat water or air for the central heating system Across Europe, conventional boilers are being replaced with HE boilers government support and standards
26、 play an important role HE boilers achieve efficiency of 90% (70-80% for conventional boiler) HE boilers can save up to 40% on consumer energy bills (payback period of boiler roughly 2-3 years),Source: RIVM, Energy Saving Trust,Comments,Share of HE boilers as % of total Example: the Netherlands,Spon
27、sored research (Gasunie),Subsidies for HE boilers,Consultation with installation companies (since early-90s),Introduction of energy efficiency standards for newly built houses,Beginning of dismantlement of subsidies for HE boilers,Successfully green,14,Iberdrola has become a market leader in wind en
28、ergy in just five years thanks to technological development and favorable feed-in fees,Development of Iberdrolas wind energy,2,Mid 90s,Turbine size up-scaling and falling costs Favorable policies and government measures (feed-in fees in its home country Spain) Market put into place (manufacturers, i
29、nstallers, operators) Installed capacity growth of 22% per year (1990-2001),Present (2007),Ambitious renewable growth targets Profitable business (EUR 557 m EBITDA; 11.5% of group results) IPO in preparation for 20% of renewables business provisional valuation of EUR 3.5-4 bn,Source: IEA, Iberdrola,
30、0.8,2001,1.1,2002,2.0,2003,2.9,2004,3.5,2005,4.1,2006,+39%,Installed wind capacity, 2000-2006 GW,Wind power in total capacity, 2001 vs. 2006 %,2001,2006,Installed capacity GW,Generation GWh,+28%,8,Successfully green,15,CHP was strongly supported by government today it covers a significant share of g
31、ross electricity generation in several European countries,Use of CHP in selected countries, 1994-2004 % of gross electricity generation,2,Comments,Thermal efficiency of CHP plants is 80-90% (compared to 35-55% of conventional plants) CHP is used by energy companies (heat and power sold publicly) as
32、well as by large industrial companies (generation for own use) Transport of heat is difficult and expensive, making CHP a local business efficiency of decentral CHP is higher than that of central CHP Part of current heat demand, now fulfilled by other solutions, could be fulfilled by CHP remaining p
33、otential of CHP is still significant,EU 15 average,Denmark,Finland,Netherlands1),Source: Eurostat, Roland Berger analysis,1) Declining share of CHP in the Netherlands due to the unpredicted decline in government support (MEP subsidies), share is picking up again in recent years,Successfully green,16
34、,Dutch companies implemented co-firing of biomass in existing coal plants biomass is major part of companies renewable generation,Development of biomass in the Netherlands,2,GENERATION BIOMASS,Source: Research Policy magazine, CBS,Policy agreement between Dutch market players and government (1999) s
35、et ambitious targets for carbon emission cutback Liberalization of green products in retail market provided a second incentive to increase green generation Both Dutch market players with in-house generation capacity, Essent and Nuon, increased the use of biomass in existing coal plants to expand the
36、ir green generation capacity Experience with technology and supply chain proves to be valuable in development of next generation clean-coal plants Note: in-house generation capacity still not enough to fulfill total market demand for renewable energy,Background of co-firing,Renewable generation in t
37、he Netherlands GWh,2,673,2000,2,992,2001,3,629,2002,3,646,2003,4,963,2004,7,020,2005,Biomass co-firing,Other biomass,Wind,Water,Solar PV,Waste incineration,7,020,Successfully green,17,Carbon costs and public awareness force producers with a coal or gas heritage (e.g. RWE, E.ON) to increase the effic
38、iency of their plants,Development of efficiency of coal plants,2,GENERATION THERMAL,Comments,For producers with a coal/gas/nuclear heritage, green production capacity will remain a marginal part of total capacity for a long period of time Current plants, especially coal-fired plants, need to become
39、more efficient to manage overall costs of generation (including emission rights) Modernizing & expanding current plants goes hand in hand with building new plants,33%,60s,36%,70s,43%, 10,00s,46%,CO2 emission level avg. ton/MWh,Efficiency of avg. plant %, Europe 36%,Source: RWE,Efficiency of newly bu
40、ilt coal plants Example: RWE,Successfully green,18,3. Green regulatory contribution How have European regulators successfully contributed to green improvement? What are key success factors?,Successfully green,19,Stable political support drives green Scandinavia and Austria are best in class with 50%
41、 share of renewables and CHP,Source: Eurostat, European Union Energy & Transport in figures 2006,Green generation in EU share of renewables and CHP in electricity generation,Renewables and CHP in electricity generation, 2004 % of total TWh,EU-25 average,3,3%,11%,14%,Renewables,10%,CHP,Other renewabl
42、es,Hydro,CHP,6%,12%,18%,Renewables,8%,CHP,25%,Renewables,50%,CHP,5%,5%,10%,Renewables,9%,CHP,7%,Renewables,30%,CHP,Spain,5%,22%,28%,Renewables,11%,CHP,Portugal,Netherlands,Denmark,Germany,6%,40%,45%,Renewables,8%,CHP,Sweden,12%,18%,30%,Renewables,34%,CHP,Finland,1%,60%,62%,Renewables,15%,CHP,Austria
43、,6,Successfully green,20,A stable regime should follow a clear governing principle, fostering regulation to embody an integrated set of measures,3,Example: Waste management in Benelux,Successfully green,21,Europe is learning too: over the last 3 decades, Europe has seen random “waves“ of green energ
44、y, which we currently see reviving,Development of green energy technologies (1970-present),70s,80s,90s,00s,Energy efficiency,Combined Heat & Power generation,CHP reduces need of combustion for generating heat: reduction of emissions,NEXT GEN? Micro CHP,Some countries use CHP for 30 to 50% of total e
45、lectricity generation,Wind energy,Extensive R&D efforts in 80s & 90s delivered turbines at competitive size and price,As of mid-90s, government support provided the necessary encouragement for commercial investment to take off,NEXT GEN? Offshore wind,Governments promoted energy efficiency (incl. rei
46、ntroduction of wintertime),Growing interest in renewables: research into solar & wind began,NEXT GEN? Energy efficiency,2,Successfully green,22,Regulatory failures are particularly instructive for the Midwest, they show the conditions under which tax or trade do work,Key success factors for regulato
47、ry measures,3,Link incentive to objective,Closed system for subsidization,Well equipped players,What can happen if KSF is not met?,Examples,“Fraud”,- Green retail subsidies were used in the Netherlands on imports no change in production park,System collapses,- CO2 trading system collapsed when it be
48、came apparent there was oversupply and trading was not 100% closed,Market will not develop,+ Government supported companies in rolling out CHP, HE boilers by training market, giving long-term licenses - Companies were not equipped to trade carbon market took 3 years to develop,KSF,Stable, proven tec
49、hnology,Money wasted,- German government invests heavily in solar cells, increasing price of cells but hardly affecting usage,Successfully green,23,Promising technology,Problem solver,Missed opportunities,Dead end street,Stable technology in a stable regulatory context is a prerequisite for green su
50、ccess,Context for evolving technologies,3,Context stability dominant systemHarmonious standards & infrastructure Existence of international policiesTechnology stability dominant researchCommon visions & expectations “rules of the game“ are supported and reproduced Exchangeable products & knowledge Formation of networks between scientific and commercial players,
