CEN Webinar Presentation - Mark Fulton (Oct. 12, 2011)

8/3/2019 CEN Webinar Presentation - Mark Fulton (Oct. 12, 2011)

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DB Climate Change AdvisorsDeutsche Bank

Mark FultonGlobal Head of Climate Change Investment Research

Deutsche Bank Climate Change Advisorshttp://www.dbcca.com/research

October 12th, 2011

The German CLEAN Program Story,Replication Possibilities in the US

CEN Webinar


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DB Climate Change AdvisorsDeutsche Bank Mark Fulton

The German CLEAN Program Story, Replication Possibilities in the US

Best-in Class:Driving Transparency, Longevity and Certainty (TLC)

2

Country

Emissions Control Financial SupportGrid

Improve-

ment

Plan

Budget

Strength

(% of 2010

GDP)

Capital

Investment

200 0-2010

(USD Bn)

Binding

Emissions

Target

RenewableElectricity

Standard

(RES)

Long-termEnergy

Efficiency

Plan

Feed-in

Tariff (

FiT)

Long-term

Govt-based

Green Bank

Tax

Benefit

Long-term

Funding

Program

China -1.6% 148.3Germany -3.6% 393.2

United Kingdom -11.5% 384.1

United States

COP Acc State-level State-level State-level State-level State-level -10.0% 164.1California X -1.0% -Texas X X X -2.2% -

Brazil X -2.2% 42.3South Korea

COP Acc X -1.1% 31.2India

COP Acc State-level X -5.5% 27.1Australia State-level X State-level -4.2% 9.8South Africa

COP Acc X X -5.3% 0.4Notes: COP Acc= policy is a submission to the Copenhagen Accord and is not legally binding ; =tentative / unconfirmed policy dependent on certain provisions (e.g. funding)Source: DBCCA Analysis 2011


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Germany Has Developed ComprehensiveGreen Legislation Over Past 20 Years

3

1980 1990 2000 2002 2004 2006 2008

1,000 SolarRoofs

Program

100/250MW wind

program

Feed-InLaw

EcologicalTax

Reform

EEGAmendmentFiTs uncapped

100,000Solar Roofs

Program

CombinedHeat and

Power Act

Energy

SavingOrdinance

RenewableEnergiesHeat Act

RenewableEnergy

Sources Act(EEG)

FiTs emphasized

EU ETSParticipation in first

trading period(2005-2007)

KyotoProtocolsignatory

EEG

Amendment

Source: DBCCA analysis 2011

2009

BiofuelsQuota Act

MarketIncentiveProgram

2010

NationalRenewable

EnergyAction Plan

Adjustmentsto FiTs to

reflect costs& volume

Increased support for renewables in 2011, as Germany accelerates nuclear

phase-out following Fukushima


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Mark FultonThe German CLEAN Program Story, Replication Possibilities in the USDB Climate Change Advisors

Deutsche Bank

Map of Germanys Low Carbon Targets

10/12/2011 2010 DB Blue template

4

Greenhouse Gas40% below 1990

levels by 2020

Renewable EnergyFinal Energy Target

18% by 2020

RE Thermal

14% by2020

RE Electricity

30% by 2020

RE Transport

10% by 2020



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Deutsche Bank

Germany Has Led the Way in RE DeploymentThrough Feed-in Tariffs


5

55 60978750 11989 14604 16623

18390 2057922194 23836

25716 27204

1 76

186296 435

1105 20562899

41706120

9914

17320

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

MWI

nstalled

REGeneration(%ofTotalConsumption)

Wind Solar PV RE Generation (in relation to total gross electricity consumption)

Renewable EnergySources Act

(EEG)FiTs emphasized

Energy SavingOrdinance

CombinedHeat and

Power ActEEG

AmendmentFiTs uncapped

EU ETS Participationin first trading period

(2005-2007)

RenewableEnergies Heat

Act

EEGAmendment

NationalRenewable

Energy ActionPlan

Notes: Investment data converted from Euros to USD according to average of monthly USD-EUR foreign exchange rate; RE generation includes hydroSources: German Federal Ministry for the Environment; Bloomberg New Energy Finance 2011; DBCCA Analysis 2011

2010 annual investment in renewable energy installations exceeded $40 Bn


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Deutsche Bank

Germany Has Exerted Consistent DownwardPressure on PV Prices Through FiT Degressions


6

Germanys Solar PV Rates (EUR cents / kWh) and Capacity Additions

(2001 - 2010)

110 110 139

670

951843

1,271

1,809

3,806

7,400

0.51

0.48

0.46

0.62

0.60

0.56

0.530.52

0.43

0.39

0.51

0.48

0.46 0.46

0.43

0.41

0.38

0.35

0.32

0.24

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Added MW

Upper Bound

Lower Bound



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Deutsche Bank

German PV FiT Rates Have More Closely TrackedSolar System Costs Than in Other Markets


7

0

1

2

3

4

5

6

7

8

Q206

Q406

Q207

Q407

Q208

Q408

Q209

Q409

Q210

Q410

Q211

Q411

SystemCost($/W)

Germany

Spain

Italy

CzechRepublic

NPV of European Feed-in Tariffs and System Cost ($ / Watt)

Notes: NPV calculated at 4% discount rate; system cost represents German average and excludes impacts of value-based pricing in high FiT marketsSource: Bloomberg New Energy Finance


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Deutsche Bank

Germanys Volume Sensitive Degression Schedulefor Solar FiTs


8

Scenario MW installed Degression(2010) Degression (2011)

< -2 GW < 1500 6% 1.5%-2 GW 1500 7% 4%-1 GW 2500 8% 6.5%Base case 3500 9% 9%+1 GW 4500 10% 12%+2 GW 5500 11% 15%+3 GW 6500 12% 18%> +3 GW > 6500 13% 21%



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Deutsche Bank

A Policy That Works: Solar PV Already Below orClose to Below Retail Electricity Rates in Germany


9

0.00

0.10

0.20

0.30

0.40

0.50

0.60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Year

Euro/kWh

0.00

0.10

0.20

0.30

0.40

0.50

0.60

Euro/kWh

3500 MW Corridor ( 7500 MW Corridor ( 7500 MW Corridor (Freestanding)

Average Elec. Price Euro / kWh



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Deutsche Bank

Germany a Global Leader in Renewables


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Germanys Electricity Supply Mix2010A

Germanys Electricity Supply Mix2020E

17% RE 38% RENote: Totals may not add due to rounding; Germanys National Renewable Energy Action Plan (NREAP) targeted 38.6% RE by 2020; Other includes waste-to-energy, biogasand landfill gasSources: EWI; GWS; Prognos; DB Research

Share of power from renewables is expected to more than double by 2020

Also expect 11.4% reduction in power production by 2020 due to efficiency gains

Coal

52%

NaturalGas

9%

Nuclear

21%

Oil

1%

Wind

6% Solar2%

Biomass

6%Hydro

3% Coal

37%

Natural Gas

17%

Nuclear5.5%

Oil

0.1%

Wind

23%

Solar

6.5%

Biomass

7.5%

Hydro

5%

Geothermal

0.3%

Other

2.1%


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Deutsche Bank

German Government Has Ambitious RE Forecasts


11

Germanys Electricity Supply Mix2030A

Germanys Electricity Supply Mix2050E

55% RE 80% RE

Notes: Totals may not add due to rounding; Germanys Energy Concept Plan(2010) targeted 50% RE by 2030 and 80% by 2050 - upward revisions are post-Fukushima andaccelerated nuclear phase-out plan; Other includes waste-to-energy, biogas and landfill gasSources: German Energy Concept Plan 2010, German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety; EWI; GWS; Prognos; DB Research; ,DBCCA Analysis 2011

Coal

19%

Natural Gas

22%

Wind

30%

Solar

9%

Biomass

9%

Hydro

7%

Geothermal

0.4%

Other

3.6%Coal

10%

Natural Gas,

10%

Wind

50%

Solar

14%

Biomass

9%

Hydro

4%

Geothermal

2%


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Deutsche Bank

Rapid Growth in German Clean Energy Industry


12

Note: Includes all quoted companies tracked by Bloomberg New Energy Finance with an exposure of 50% or greater to clean energy; market capitalization data calculated as ofyear-start (2004 and 2011)Sources: Bloomberg New Energy Finance, Bloomberg

1%

6%

16%

10%

38%

16%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Market Cap of RE Companies

(CAGR 2004 - 2011)

Number of RE Companies

(CAGR 2004 - 2011)

Japan US Germany

Growth in Market Cap and Number of Renewable Energy Companies(CAGR, 2004 2011)


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Deutsche Bank

Sales of German Renewable Energy Companies WillBe Increasingly Export-Based


13

6.6 6.6 6.6 6.66.6

19.9

32.9

41.3

6.6

32.7

47.8

59.1

0

10

20

30

40

50

60

70

Minimum Cautious Optimistic Maximum

BillionsofEuros(E

UR2005)

2007

2020

2030

Germanys Renewable Technology Exports Over TimeVarious Forecast Scenarios

Source: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, 2010


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Deutsche Bank

Germanys Renewable Energy Sector Employed339,500 in 2009, a 2x Increase from 2004


14

450

500

161

277

322340

580600

0

100

200

300

400

500

600

700

2004 2007 2008 2009 2020E 2030E

ThousandsofJobsbyRenew

ableEnergySector

Wind Biomass Solar Hydropower Geothermal Public / Non-Commercial

Germanys Renewable Energy Jobs Over Time

Source: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, 2010

Expectedrange


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Deutsche Bank

US Has History of Inconsistent Federal PolicySupport for Renewables


15

0

2,000

4,000

6,000

8,000

10,000

12,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

AnnualWindCapaci

tyAdditions(MW)

Further extension of the Section 1603 Treasury cash grant programcan help to create and preserve green jobs

92%Drop

76%Drop

76%Drop

Production Tax Credit Expiration Years

Section 1603 TreasuryCash Grant Extendedin December 2010 for 1year only

Advanced EnergyManufacturing TaxCredit Expired end-2010

Sections 1703 & 1705Loan Guarantees Expiring in 2011

Will wind marketdrop off again in

2012?

Sources: AWEA, 2011; Bloomberg New Energy Finance, 2011

Forecasts / Estimates


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2010-2030: US Electricity Supply Mix BecomesGreener and More Gas-Intensive

45%

24%

19%

8%

3%

Coal

Coal CCS

Natural Gas

Nuclear

BaseloadRenewables

Wind and Solar


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Note: 2010 values sum to to 99% due to 1% electricity supply from petroleum (not shown),Sources: EIA; DBCCA Analysis 2011

US Electricity Supply Mix2010A (% Total TWh)

US Electricity Supply Mix2030E (% total TWh)

11% RE24% Nat Gas

24% RE38% Nat Gas

Assumes from 2010-2030 energy efficiency measures limit growth in electricity

demand to 0.7% CAGR

20%

1%

38%

17%

7%

17%


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Deutsche Bank

~500,000 Net New Jobs in 2030 as Compared with2010


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Sources: WPK Model, DBCCA analysis 2011.

Annual Net New Job Additions by Sector and Type,2010-2030


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Deutsche Bank

Conventional technologies have started out at very high cost and have onlyachieved cost reduction with economies of scale

Solar and Wind are still more expensive than fossil generation and requireinterim support until adequate scale is reached

Renewables are trending towards grid parity

Source: Hudson Clean Energy Partners Analysis, 2011

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

RetailCost($/kWh)

Generation(TWh)

Coal Generation Gas Generation Nuclear Generation Solar Generation Wind Generation

Coal Cost Trend Gas Cost Trend Nuclear Cost Trend Solar Cost Trend Wind Cost Trend

Coal, Natural Gas, andNuclear required massiveachievements in improvingscale to achieve current

favorable cost structures

Solar and Wind areexperiencing significantimprovements in theircost structure with smallincreases in scale

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

Generation(TWh)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

RetailCost$/kWh

1935 1940 1945 1950 1955 1960 19651930 1970 1975 1980 1985 1990 1995 20001965 2005 2010

Coal Generation

Coal Cost-trend

Gas Generation

Gas Cost-trend

Nuclear Generation

Nuclear Cost-trend

Solar Generation

Solar Cost-trend

Wind Generation

Wind Cost-trend

U.S. Electricity Generation and Retail Cost by Energy Source 1930 2010


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Disclaimer

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DB Climate Change Advisors is the brand name for the institutional climate change investment division of Deutsche Asset Management, the asset management arm of Deutsche Bank AG. In the US, DeutscheAsset Management relates to the asset management activities of Deutsche Bank Trust Company Americas, Deutsche Investment Management Americas Inc. and DWS Trust Company; in Canada, DeutscheAsset Management Canada Limited (Deutsche Asset Management Canada Limited is a wholly owned subsidiary of Deutsche Investment Management Americas Inc); in Germany and Luxembourg: DWSInvestment GmbH, DWS Investment S.A., DWS Finanz-Service GmbH, Deutsche Asset Management Investmentgesellschaft mbH, and Deutsche Asset Management International GmbH; in Denmark, Finland,

Iceland, Norway and Sweden, Deutsche Asset Management International GmbH ; in Australia, Deutsche Asset Management (Australia) Limited (ABN 63 116 232 154); in Hong Kong, Deutsche Asset Management(Hong Kong) Limited; in Japan, Deutsche Asset Management Limited (Japan); in Singapore, Deutsche Asset Management (Asia) Limited (Company Reg. No. 198701485N) and in the United Kingdom, DeutscheAlternative Asset Management (UK) Limited (formerly known as RREEF Limited), Deutsche Alternative Asset Management (Global) Limited (formerly known as RREEF Global Advisers Limited), and DeutscheAsset Management (UK) Limited; in addition to other regional entities in the Deutsche Bank Group.

This material is intended for informational purposes only and it is not intended that it be relied on to make any investment decision. It does not constitute investment advice or a recommendation or an offer orsolicitation and is not the basis for any contract to purchase or sell any security or other instrument, or for Deutsche Bank AG and its affiliates to enter into or arrange any type of transaction as a consequence ofany information contained herein. Neither Deutsche Bank AG nor any of its affiliates, gives any warranty as to the accuracy, reliability or completeness of information which is contained in this document. Exceptinsofar as liability under any statute cannot be excluded, no member of the Deutsche Bank Group, the Issuer or any officer, employee or associate of them accepts any liability (whether arising in contract, in tort ornegligence or otherwise) for any error or omission in this document or for any resulting loss or damage whether direct, indirect, consequential or otherwise suffered by the recipient of this document or any otherperson.The views expressed in this document constitute Deutsche Bank AG or its affiliates judgment at the time of issue and are subject to change. This document is only for professional investors. This document wasprepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. The value of shares/units and their derived income may fall as well as rise. Pastperformance or any prediction or forecast is not indicative of future results. No further distribution is allowed without prior written consent of the Issuer.

The forecasts provided are based upon our opinion of the market as at this date and are subject to change, dependent on future changes in the market. Any prediction, projection or forecast on the economy, stockmarket, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance.

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CEN Webinar Presentation - Mark Fulton (Oct. 12, 2011)