Accessing Capital In Response To Demand - Neil brown
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www.earthcp.com | Strictly Private & Confidential
EARTH CAPITAL PARTNERS
TBLI Accessing Capital In Response To Demand10th November 2011, London
www.earthcp.com 2Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
KEY DRIVERS
ey drivers for renewable energy growth include climate change mitigation, national and regional energy security and increasing energy demand
(1) IPCC (2008)(2) NYMEX(3) IEA (2010)(4) NEF (2011)
Climate Change Energy security
Increasing demand Falling costs
Long-term renewable capacity growth
Oil price volatility (US$/b)(2)Increasing global temperature(1)
Silicon Module Experience Curve(4)Global energy demand forecast(3)
Other drivers
• Economic stimulus
• New technologies
• Distributed generation
• Limiting future compliance costs
www.earthcp.com | Strictly Private & Confidential3Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
McKinsey & Company. (2009.) “Pathways to a Low-Carbon Economy: Version 2 of Global Greenhouse Gas Abatement Cost Curve.”, p. 7
www.earthcp.com | Strictly Private & Confidential4Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
GROWTH
Build-up of renewables generation since 1990 and the forecast taking into account the broad policy commitments and plans that have been announced by countries around the world including the national pledges to reduce emissions
Growth in renewable generation (1)
(1) World Energy Outlook 2010 (IEA)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
-
1 000
2 000
3 000
4 000
5 000
6 000
1990 2008 2015 2020 2025 2030 2035 Renewable generation as a proportion of globabl generation
Renewable electricity generation (TWh)
Renewables % renewable generation
0%
5%
10%
15%
20%
25%
-
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2008 2015 2020 2025 2030 2035
Renewable capacity as a proportion of globabl capacity
Renewable electricity capacity (GW)Renewables % renewable capacity
www.earthcp.com 5Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
LEVELISED COST OF ENERGY
radual convergence of renewable technologies such as onshore wind with CCGT
0 50 100 150 200 250 300 350 400 450 500
Marine- TidalMarine- Wave
STEG- Parabolic TroughSTEG- Parabolic Trough + Storage
Wind- OffshoreSTEG- Tower & Heliostat
STEG- LFRPV- c-Si
STEG- Tower & Heliostat w/storagePV- Thin Film
Geothermal- Binary PlantBiomass- Gasification
PV-c-Si TrackingBiomass- Anaerobic Digestion
Biomass- IncinerationGeothermal- Flash Plant
Municipal Sold WasteWind- Onshore
Coal FiredLandfill Gas
Natural Gas CCGT
Levelised cost of energy (US$/MWh)
LCOE
BNEF- 2011 EU-ETS EUA Forecast
Central Scenario
799
740
www.earthcp.com 6Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
INVESTMENT OPPORTUNITY?
Sustained and significant investment activity to date(1) – looking ahead, an estimated US$5.7 trillion investment opportunity to 2035 in new renewable energy capacity globally(2)
(1) REN21 (2009)(2) IEA (2010)(3) NEF (2011)(4) SEFI (2010)
WEO refers to World Energy Outlook, an annual report by the International Energy Agency. The different forecasts relate to the amount of spend required to achieve different carbon dioxide targets to limit the impact of climate change.
US
$ b
n
“…the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply.” (4)
Annual investment forecast to 2030Annual investment in clean energy (2005-10)(3)
51.7
76.3
112.9
150.8
180.1 186.5
243
0
50
100
150
200
250
300
2004 2005 2006 2007 2008 2009 2010
These figures refer to “clean energy” which includes investments in renewable energy, biofuels, energy efficiency, smart grid and other energy technologies, carbon capture and storage and infrastructure investments targeted purely at integrating clean energy
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xcluding large hydro. Renewable capacity figures based on known commissioned projects logged on the Bloomberg New Energy Finance desktop. EIA , IEA , Bloomberg New Energy Finance
loomberg New Energy Finance
www.earthcp.com 8Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
ew investment volume adjusts for re-invested equity. Total values include estimates for undisclosed deals
loomberg New Energy Finance, UNE P SE FI
www.earthcp.com 9Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
enewable Energy: Progressing towards the 2020 target, European Commission
www.earthcp.com 10Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
CS /Tremont HFRI
S&P 500MSCI World
Barclays Agg. Bond
DJ STOXX 50 FTSE 100
Citi Gov. Bond
CS High Yield II General CB Arb.
Dedicated Short EM
Eq Mkt Neutral
Event Driven Distressed
ED Multi-Strategy Risk Arb. FI
Global Macro Equity L/S
Managed Futures
Multi-Strategy
S&P 500 100% - - - - - - - - - - - - - - - - - - - -
MSCI World 94% 100% - - - - - - - - - - - - - - - - - - -
Barclays Agg. Bond 1% -3% 100% - - - - - - - - - - - - - - - - - -
DJ STOXX 50 78% 81% -17% 100% - - - - - - - - - - - - - - - - -
FTSE 100 76% 81% -10% 86% 100% - - - - - - - - - - - - - - - -
Citi Gov. Bond -2% 9% 57% -33% -14% 100% - - - - - - - - - - - - - - -
CS High Yield II 58% 58% 20% 46% 48% 4% 100% - - - - - - - - - - - - - -
CS / CS/Tremont 57% 63% 9% 54% 50% 1% 55% 100% - - - - - - - - - - - - -
Tremont CB Arb. 24% 27% 3% 25% 24% -6% 50% 50% 100% - - - - - - - - - - - -
Dedicated Short -77% -76% 7% -57% -59% 2% -56% -54% -28% 100% - - - - - - - - - - -
EM 59% 67% -1% 60% 59% -6% 53% 75% 36% -56% 100% - - - - - - - - - -
Eq Mkt Neutral 38% 44% 4% 28% 32% 17% 32% 42% 36% -32% 42% 100% - - - - - - - - -
Event Driven 60% 66% -7% 55% 54% -7% 68% 79% 58% -61% 70% 44% 100% - - - - - - - -
Distressed 57% 63% -6% 50% 49% -6% 68% 69% 52% -58% 61% 38% 93% 100% - - - - - - -
ED Multi-Strategy 54% 60% -9% 53% 51% -11% 61% 79% 58% -55% 70% 42% 94% 76% 100% - - - - - -
Risk Arb. 48% 54% 1% 38% 41% 11% 48% 54% 42% -51% 52% 37% 66% 55% 64% 100% - - - - -
FI 12% 16% 7% 14% 13% -3% 37% 43% 49% -13% 29% 28% 39% 36% 40% 19% 100% - - - -
Global Macro 22% 26% 23% 24% 22% 3% 25% 73% 33% -15% 50% 34% 42% 36% 44% 26% 42% 100% - - -
Equity L/S 66% 73% 5% 57% 57% 10% 54% 87% 39% -70% 72% 42% 75% 66% 73% 61% 27% 46% 100% - -
Managed Futures -1% 3% 24% -6% -3% 27% -8% 26% -7% 2% 3% 16% 1% 3% -2% -2% 2% 38% 16% 100% -
Multi-Strategy 27% 34% 1% 23% 22% 11% 43% 56% 56% -27% 39% 31% 50% 44% 52% 36% 37% 35% 48% 7% 100%
AVERAGE OF 36M CORRELATIONS
The data provided above for "Equity Market Neutral" does not take into consideration the impact of fraud-related hedge fund blow ups. Correlations are based on monthly performancesDow Jones Credit Suisse, Bloomberg
31 January 1994 to 31 December 2009
> 60%< +/-30%< -60%
Source: Credit Suisse Liquid Alternatives ,Alpha Strategies Group
www.earthcp.com 11Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
CS/Tremont HFRI
S&P 500MSCI World
Barclays Agg. Bond
DJ STOXX 50 FTSE 100
Citi Gov. Bond
CS High Yield II General CB Arb.
Dedicated Short EM
Eq Mkt Neutral
Event Driven Distressed
ED Multi-Strategy Risk Arb. FI
Global Macro Equity L/S
Managed Futures
Multi-Strategy
S&P 500 100% - - - - - - - - - - - - - - - - - - - -
MSCI World 98% 100% - - - - - - - - - - - - - - - - - - -
Barclays Agg. Bond 27% 32% 100% - - - - - - - - - - - - - - - - - -
DJ STOXX 50 88% 89% 8% 100% - - - - - - - - - - - - - - - - -
FTSE 100 89% 91% 28% 91% 100% - - - - - - - - - - - - - - - -
Citi Gov. Bond 25% 31% 78% 0% 18% 100% - - - - - - - - - - - - - - -
CS High Yield II 76% 79% 27% 72% 70% 10% 100% - - - - - - - - - - - - - -
CS/ CS/Tremont 72% 79% 19% 68% 73% 15% 80% 100% - - - - - - - - - - - - -
Tremont CB Arb. 61% 67% 30% 63% 66% 4% 83% 87% 100% - - - - - - - - - - - -
Dedicated Short -77% -72% -3% -71% -71% 7% -57% -46% -36% 100% - - - - - - - - - - -
EM 77% 85% 32% 73% 75% 26% 82% 93% 86% -52% 100% - - - - - - - - - -
Eq Mkt Neutral 61% 68% 28% 53% 55% 43% 54% 67% 54% -32% 70% 100% - - - - - - - - -
Event Driven 73% 78% 9% 72% 76% 2% 75% 96% 84% -52% 88% 65% 100% - - - - - - - -
Distressed 73% 75% 4% 71% 70% -2% 78% 92% 81% -51% 84% 58% 97% 100% - - - - - - -
ED Multi-Strategy 71% 76% 11% 70% 77% 4% 71% 95% 83% -51% 88% 67% 99% 91% 100% - - - - - -
Risk Arb. 64% 73% 40% 52% 65% 44% 67% 79% 69% -37% 82% 57% 71% 64% 72% 100% - - - - -
FI 65% 68% 32% 60% 58% 8% 83% 84% 90% -41% 83% 45% 78% 81% 74% 62% 100% - - - -
Global Macro 29% 37% 48% 15% 30% 41% 43% 70% 65% -4% 66% 53% 58% 50% 60% 65% 59% 100% - - -
Equity L/S 79% 87% 22% 76% 84% 19% 74% 93% 79% -57% 93% 69% 91% 82% 93% 82% 71% 61% 100% - -
Managed Futures -16% -10% 11% -25% -8% 38% -27% 14% -12% 15% 5% 20% 5% -7% 13% 17% -18% 49% 14% 100% -
Multi-Strategy 65% 71% 12% 66% 67% 1% 84% 95% 93% -39% 89% 60% 93% 92% 91% 74% 86% 62% 86% -5% 100%
36M CORRELATIONS TO AUG 201030 September 2007 to 31 August 2010
> 60%< +/-30%< -60%
The data provided above for "Equity Market Neutral" does not take into consideration the impact of fraud-related hedge fund blow ups. Correlations are based on monthly performancesDow Jones Credit Suisse, Bloomberg
Source: Credit Suisse Liquid Alternatives ,Alpha Strategies Group
www.earthcp.com 12Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
WHAT DOES THIS INVESTMENT REQUIRE?
• Equity finance for development (and build?), debt on operational assets, but.....
• Debt requires certainty of cash flows, therefore equity needs security of debt security....
• Debt requires • Subsidy
• Certainty
• Time
• What return level on projects?• Some index-linking
• Greater reality?
www.earthcp.com 13Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.
Earth Capital Partners LLP is authorised and regulated by the Financial Services Authority.This material is for distribution only under such circumstances as may be permitted by applicable law. It is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The contents of this document should not be treated as advice relating to legal, tax or investment matters and prospective investors are advised to consult their own professional advisers.
Neil BrownSenior Partnerneil.brown@earthcp.com +44 (0) 20 7811 4500
CONTACT
LONDON RIO DE JANEIRO34 St James’s Street R.Ferreira de Almeida, 42St James’s Alto da Boa VistaLondon SW1A 1HD Rio de Janeiro – RJ - Brazil
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