The Schaffner Group Investors’ Day 2011 The Schaffner Group Investors’ Day 2011 1 Caution regarding forward-looking statements This communication contains statements that constitute “forward-looking statements”, including, but not limited to statements relating to the implementation of strategic initiatives and other statements not limited to, statements relating to the implementation of strategic initiatives, and other statements relating to our future business development and economic performance. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in currency exchange rates and interest rates, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, and counterparties and developments in the markets in which they operate, (6) legislative developments, (7) management changes and changes to our Business structure and (8) other key factors that we have indicated could adversely affect our business and financial performance which are contained in other parts of this document and in our past and future filings and reports, including those filed with the SIX Swiss Exchange. More detailed information about those factors is set forth elsewhere in this document and in documents furnished by Schaffner Group, including Schaffner Holding's Annual Report for the year ended September 30, 2010 Report as well as the 2010/11 Half-Year Report. Schaffner Group is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward- looking statements whether as a result of new information, future events, or otherwise.
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110615 Schaffner Investors Day 2011€¦ · Electronic devices & power supplies Strategic markets: 56% (51%) Historic growth markets: 32% (36%) Electronic devices & power supplies
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The Schaffner Group
Investors’ Day 2011The Schaffner Group
Investors’ Day 2011
1
Caution regarding forward-looking statements
This communication contains statements that constitute “forward-looking statements”, including, but not limited to statements relating to the implementation of strategic initiatives and other statementsnot limited to, statements relating to the implementation of strategic initiatives, and other statements relating to our future business development and economic performance.
While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations.
These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in currency exchange rates and interest rates, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, and counterparties and developments in the markets in which they operate, (6) legislative developments, (7) management changes and changes to our Business structure and (8) other key factors that we have indicated could adversely affect our business and financial y yperformance which are contained in other parts of this document and in our past and future filings and reports, including those filed with the SIX Swiss Exchange.
More detailed information about those factors is set forth elsewhere in this document and in documents furnished by Schaffner Group, including Schaffner Holding's Annual Report for the year ended September 30, 2010 Report as well as the 2010/11 Half-Year Report. Schaffner Group is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.
The Schaffner Group
Investors' Day 2011
9:00 – 10:45 Update on strategy implementation Alexander Hagemann Currency impact, financing
and taxes Cleantech and marketing initiatives Electromobility Q&A
Kurt Ledermann
Stefan MellyAlexander Hagemann
10:45 – 11:00 Break all
11:00 – 12:30 Asia-Pacific with focus on China Leading edge technology generated
by collaboration with universities
Eduard HadornFabian Beck
by collaboration with universities Some Thoughts on European
electricity mix Q&A
Alexander Hagemann
12:30 – 13:30 Lunch – Individual discussions all
The Schaffner Group
Update on strategy implementationAlexander Hagemann, CEO
The Schaffner Group
Update on strategy implementationAlexander Hagemann, CEO
4
Schaffner growth supported by power electronics markets and reliability concerns
Energy efficiency Renewable energy Transport
Power electronic equipment is prerequisite for better energy efficiency and alternative power generationC f S ff f f Components from Schaffner guarantee the safe and reliable operation of power electronic equipment
- Filtering of harmful electrical noise- Increasing the stability of electric power grids- Ensuring compliance with standards and regulations- Increasing lifetime of electrical machines
Some shift in strategic markets to be expected
Continued focus on energy efficiency (motor drives) and renewable energy Growth of traction market slows down, Schaffner market share is high
El t bilit ill l t ti l t i Electromobility will propel automotive electronics Maintain leadership in mature markets
Motor drives
Renewable energy
Traction
Electronic devices & power supplies
Strategic markets: 56% (51%)
Historic growth markets: 32% (36%)
Electronic devices & power supplies
Machine tools & robotics
Telecom equipment
Automotive electronics
Other
Other markets: 12% (13%)
Share of HY1 2010/11 net sales (in brackets: PY)
Asia-Pacific growth strategy so far a success
Strong foundation for continued organic growth in APAC
Underrepresentation in North America is addressed
I di i i i d i 2010 B il i 2012 India activities were started in 2010, Brasil in 2012
2015 goal: 40% APAC, 40% Europe, 20% Americas
Share of Asia-Pacific sales (in %)Sales by regions (in %)
33%
20%
30%
20% 27%
33%
APAC Americas Europe
7%60%
0%
10%
FY
05/06
FY
06/07
FY
07/08
FY
08/09
FY
09/10
17% 18%
Power Quality: Schaffner‘s growth engine
CAGR after Jacke acquisition exceeds 40%: market/share
Schaffner to become the first global supplier of power quality solutions
Market share Power Quality
Schaffner to become the first global supplier of power quality solutions
Increase goal to no. 1 or 2 position in 2015 (incl. M&A)
Contributors to growth: technology, manufacturing processes, distribution
Margin expansion is a must
Addressed market: ca. CHF 1.4bn
6.
2011-2015: Growth strategy
The Schaffner business model allows for sustained double-digit l th d ti i di 10%sales growth and operating margins exceeding 10%
More output, protected IP R&D collaboration Electromobility
Lean conversion Process redesign and SAP PQ manufacturing efficiency
Expanded resources in China Pole position in electro-mobility Develop Schaffner’s talent pool
Continued focus on operational excellence Objective: Margin expansion, while CHF strengthens and inflation is
i i (l b t i l )increasing (labor, materials, energy)
1. Implementation of Lean Manufacturing: 62.5% of manufacturing (by labor hours) is done lean (March 2011)
2. New Shanghai operations to set benchmark in efficient power magnetics manufacturing: lean cells, material flow, automated testing
3. Establishment of Material Group Management in Q1/2011 to p greduce material cost, improve supplier performance
4. New initiative: supply chain improvements to reduce inventories, reduce obsolete materials, improve customer service
SAP implementation
Complete business process redesign in 2008
Started SAP implementation with go-live in China/Singapore/Japan in 2009
End of 2011, almost every operation will be on SAP
Multiple benefits
- Company-wide transparency of processes
- Improved master-data quality
- Warehouse management
- Planning systems
Schaffner employees are key to strategy implementation Company-wide succession planning
Talent pool
Hiring excellent 2nd level managers to secure strategy achievement
The bottom line
Schaffner is set up for 10% annual organic growth between now and 2015
Double-digit operating margins are a clear objective
The Schaffner Group
Currency impact, financing and taxesKurt Ledermann, Chief Financial Officer
The Schaffner Group
Currency impact, financing and taxesKurt Ledermann, Chief Financial Officer
14
Currency exposure
0 027
0.029
THB/EUR 5 yrs. 10% 2 yrs. 11% 1 yr. -9%
0.0042
0.0044
HUF/EUR 5 yrs. 0% 2 yrs. 6% 1 yr. 3%
0.015
0.017
0.019
0.021
0.023
0.025
0.027
Jun.2006 Jun.2007 Jun.2008 Jun.2009 Jun.2010
0.003
0.0032
0.0034
0.0036
0.0038
0.004
Jun.2006 Jun.2007 Jun.2008 Jun.2009 Jun.2010
EUR/CHF5 yrs. ‐22%
USD/CHF5 yrs. ‐31%
1
1.2
1.4
1.6
1.8
2
Jun.2006 Jun.2007 Jun.2008 Jun.2009 Jun.2010
y2 yrs. ‐20%1 yr. ‐14%
0.7
0.8
0.9
1
1.1
1.2
1.3
Jun.2006 Jun.2007 Jun.2008 Jun.2009 Jun.2010
2 yrs. ‐21%1 yr. ‐27%
Currency exposure – Correlation
Currency CNY EUR HUF JPY SGD THB USD
CNY 1.000 0.536 0.215 0.529 0.870 0.930 0.984
EUR 0.536 1.000 0.743 0.177 0.689 0.563 0.518
HUF 0.215 0.743 1.000 -0.146 0.477 0.278 0.190
JPY 0.529 0.177 -0.146 1.000 0.348 0.512 0.547
SGD 0.870 0.689 0.477 0.348 1.000 0.868 0.856
THB 0.930 0.563 0.278 0.512 0.868 1.000 0.928
USD 0.984 0.518 0.190 0.547 0.856 0.928 1.000
Currency exposure – Cashflow
CHF USD/CNY EUR HUF THB Rest
Net sales Net operating expenses
Currency exposure – Net assets
18%
22%
31%USD/CNY
THB
HUF
EUR
25%
4%Rest
Currency exposure – Translation
Translation risk on P&L (for H1-10/11):
- on Bookings CHF ‒ 10.5 mon Bookings CHF 10.5 m
- on Net sales CHF ‒ 9.8 m
- on EBIT CHF ‒ 1.1 m
Translation risk on Balance sheet (for H1-10/11):
- on Equity CHF ‒ 2.0 m
Income taxes2004/05 2005/06 2006/07 2007/08 2008/09 2009/10
Efficient power electronics contribute togreen building technologies helping togreen building technologies, helping toreduce the consumption of electrical power
Motor drives for heating, air conditioning, elevators Savings -30% to -70%
LED lighting technologies -80%
EnergyStar rated datacenters -20%
Energy efficiency
These devices create complex power lit h ll f b th th b ildiquality challenges for both the building
power supply and the power grid
Schaffner ECOsine™ active harmonic filters support a reliable and clean power network e.g. in the new office building One Island East in Hong Kong
Energy efficiency
One of the key technologies, energy efficient motor drives, keeps developing t ff i f t t iti f S h ffstrong, offering future opportunities for Schaffner
AC & DC low voltage motor drives market 2010 USD 10.6bl. (+13%)
APAC15.0%
20.0%
25.0% Americas
EMEA
Japan
APAC
20142013 201420132012201120100.0%
5.0%
10.0%‛Total Market’
Sour
ce: I
MS
Res
earc
h 20
11
Energy efficiency
New EU guideline for energy-related products 2009/125/EG drives future growthfuture growth
Relevant eco-design deadlines:
June 2011 - all electric motors to fulfill efficiency class IE2
January 2015 - electric motors (7.5 to 375kW) to fulfill efficiency class IE3, or IE2 in combination with an efficient motor drive
January 2017 - electric motors (0.75 to 375kW) to fulfill efficiency class IE3, or IE2 in combination with an efficient motor drive
Renewable energyRenewable energy
Renewable energy – PV
After the feed-in tariff driven boom in Spain (2007/08) and in Germany (2010) th l b l PV k t h t d l i d i 2011the global PV market has entered a slower period in 2011
Sour
ce: B
loom
berg
NEF
201
1ItalyItaly
Germany2010
Germany2010
Spain 2007/08Spain
2007/08
Renewable energy – PV
The future PV market will be much less d d t f d d i b tdependent from and driven by government incentives
An increasing number of case studies show that PV can be competitive without subsidies
Reasons
Falling costs of PV panels
PV i f i i i PV inverter manufacturing over-capacities
Increasing cost of electricity
Increasing cost of fossil fuels
Renewable energy – PV
Example
‛Solar energy competitive with oil in the Persian Gulf’ (Bloomberg)
Selling oil rather than using it to generate discounted electricity
Large scale plants can generate a rate of return of >9% if oil prices rise to above USD 150
Renewable energy – PV
ExamplePV systems help cover peak energy demand in hot regions duringPV systems help cover peak energy demand in hot regions duringnoon hours, when electricity cost are the highest
Building air conditioning
Cold storage refrigerated warehousesExample: Fond Du Lac Cold Storage, New Jersey, USA
Renewable energy – PV
ourc
e: B
loom
berg
NEF
201
1
There is still new government stimulus to help drive further development of th l b l PV k t Sothe global PV market
China’s 12th five-year plan (2011-15)
Target: 5GW of installed capacity by 2015 Target: 5GW of installed capacity by 2015
China‘s historical and expected PV demand in MW (conservative scenario)
China‘s historical and expected PV demand in MW (optimistic scenario)
The global wind market cooled off in 2010 in terms of new capacity
Sour
ce: G
WEC
201
1
Renewable energy – Wind
The potential for Schaffner continues to grow
The following trends can be observed
More off-shore wind parks
Bigger turbines (e.g. Vestas 7MW)
Optimized for low wind locations
Higher efficiency
Higher efficiency requires a new innovative ‛f ll i ’ t h l‛full conversion’ technology
Full conversion increases thefiltering need per turbine 3x
Renewable energy – Wind
Wind Turbine - Double Wind Turbine - Full
PowerElectronics
P = 30%
PowerElectronics
P = 30%
Filt
erF
ilter
Filt
erF
ilter
Filt
erF
ilter
Filt
erF
ilter
PowerElectronics
P = 100%
PowerElectronics
P = 100%PowerElectronics
P = 30%
Filt
er
Filt
er
Filt
er
Filt
er
PowerElectronics
P = 100%
Stator
Ro
tor
Example: 3MW turbine
~2MW direct
~1MW power electronics
1MW filters needed
Example: 3MW turbine
0MW direct
3MW power electronics
3MW filters needed
P = 30%P = 30%P = 30%
Marketing initiativesMarketing initiatives
Segment marketing
Integrated segment marketing allows a more specific and targeted approach oft t i ti l k t i l i b th k ti d l
Define Strategic Segments
Build Specific Expertise
Define Target Accounts
Develop Marketing Tools
Launch Segment Campaign
strategic vertical markets, involving both marketing and sales groups
Marketing job:
Qualify Addresses
Prioritize Accounts
Call On Accounts
Local Marcom Feedback
Sales job:
Segment marketing example
Direct sales organization
Key aspects of marketing and sales efforts differ between segments
EMC Harmonic Filters
Power Magnetics
Automotive
Product Management
XXX XX
Channel Marketing
XXX XXX
Key Account Management
XX X XXX XXX
Applicationengineering
X XX X
Customengineering
XX X XXX XXX
After sales services
XX
Direct sales organization
In bigger sales organizations, EMC, Power Quality and Automotive sales ti iti lit t th factivities are split up to ensure the necessary focus
Besides the change in organization, additional sales engineers and application engineers are hired in many regions
Example Schaffner USA
Sales USA
EMC Components
Group
Power Quality Group
Automotive (planned)
Channels to marketElectronics distributorsSchaffner uses major electronics distributors to serve the broad market with EMC d tEMC products
Inventory management
Logistics
Re-packaging
Overnight shipments
Some design-in and technical support
Extended regional coverage
Channels to marketPower Quality sales partnersIn 2009 Schaffner started to establish a dedicated network of specialists to
t th i b i ith ti d i h i filtsupport the growing business with active and passive harmonic filters
Access to end user markets
High technical competency
Complementary products and services
Commissioning, preventive maintenance, repairs, spare parts
Channels to marketRockwell Automation partnerIn 2010 Schaffner became member of the prestigious Rockwell Automation ENCOMPASS i lth f k ti t itiENCOMPASS program, opening a wealth of new co-marketing opportunities for EMC and Power Quality products
Summary
Schaffner continues to focus upon a few selected strategic growth markets.
Segment marketing ensures that each market segment is properly and individually addressed
Splitting the direct sales organization up in EMC, Power Quality and Automotive allows an optimum market penetration and customer support
Dedicated channels to market help to reach more customers and more regions quicker and more effectively. Additional services can be offered
The Schaffner Group
ElectromobilityAlexander Hagemann, CEO
The Schaffner Group
ElectromobilityAlexander Hagemann, CEO
48
EV reduce CO2 – even with coal power plants
Market will evolve – uncertainty about speed
Newly launched models are a big success
Nissan Leaf Chevrolet Volt Pure electric vehicle
2011 allocation for US market sold out in March: 10,000 units
Considered an economic choice for urban commute
Electric vehicle with range extender
~50% reduction of fuel consumption at normal use
No range anxiety
A great driving experience
German carmakers decide on their strategy in 2011 – likely PHEV and range extenders
Multiple opportunities for Schaffner components in PHEV and EV Total addressable value per car exceeds EUR 100
Market entry strategy: focus on partnering, IP generation Fundamental understanding of EMC related problems through simulation
Development of EMC filters with unmatched compactness, cost
Significant opportunities with keyless entry systems: functional integration, market growth
Resources to achieve objectives
~20 projects for electromobility are either won or under development
Have increased engineering resources by 100%
Introduction of new process capabilities at Schaffner Thailand
Getting ready for Automotive at Schaffner Shanghai
Objective to achieve CHF 40 million sales with Automotive solutions in FY 2014/15
The Schaffner Group
Asia-Pacific with focus on ChinaEduard Hadorn, Vice President Business Development Asia
The Schaffner Group
Asia-Pacific with focus on ChinaEduard Hadorn, Vice President Business Development Asia
58
Economic outlook in major markets in Asia
Solid outlook for H2/11 with potential slow down in growth due to
- soaring inflation
- rising Asian currencies will lead to a steady realignment in global market share
The earthquake in Japan will have minor effect on the macro outlook
Likely new leaders in Japan, Korea, China, Taiwan, HK in 2011/12
Expected GDP growth in 2011
- APAC 5.6%
- developing Asia 8.9% (Asean, China, India)
Economic outlookChina Is adjusting policy settings
- higher minimum wages for factory workers
- curb excessive loans and inflation
- control of the real estate market (high- vs. low-end apartments)
Corruption scandal in the Ministry of Railway (MOR) and the subsequent policy changes has major impact on all parties
GDP growth expected to ease to 8-9% in H2/11
Economic outlookJapan A rebound in industrial output is not expected soon
Push for alternative energy generation
Currency (JPY) is rising again
Economic outlookTaiwan Export will drive growth in H2/11 (Taiwan is producing products which the
d d d th i k t t)advanced and the emerging markets want)
Taiwan chip makers gained major market shares
Low inflation but stronger currency (TWD)
Economic outlookAustralia Export dependent business continues to struggle where as the
i i t i till b imining sector is still booming
Inflation is expected to soar in H2/11
Strengthen (AUD) currency
Economic outlookIndia Corruption scandals and high inflation dominate the political situation
Overall GDP growth is expected to ease to ~ 7.5% (total 2011) but export surged >40% (yoy)
Though anti-corruption law and tighter monetary policies expected
Business outlook for SchaffnerChina Strong demand for EMC and PQ products from the PV and wind turbine
k t i H2/11 f ll i l i h H1/11market in H2/11 following a sluggish H1/11
Schaffner has developed new magnetic components for these markets to achieve cost and technology leadership
Well positioned to benefit from the strategic changes announced by the Ministry of Railway which is expected to release new projects/orders
Through new strategic partnerships, Schaffner will become a major supplier of harmonic and other PQ filters aiming infrastructure, factory automation and energy saving projects. Schaffner has already equipped several metro gy g j ylines with active harmonic filters in each station
Business outlook for SchaffnerChina First projects started with foreign and local automotive companies for EMI
filt i l ti i l tfiltering solutions in electro-cars
Although well publicized, this business is expected to take off at the earliest in 2013
The use of EV in big numbers will challenge the electric grid too which will require the use of EMC and harmonic filters in the stationary charging stations
Business outlook for SchaffnerJapan In spite the earthquake, we expect improved sales in H2/11 mainly due to
- Industrialization of several new projects
- Push for alternative energy generation
- Shift towards localization (production shift to eg. China) to remain price competitive in the global market
As one of the few non-Japanese companies, Schaffner managed to penetrate the Japanese traction market for our magnetic components. They are mainly used in their overseas projects
Business outlook for Schaffner Australia – Korea – South East Asia These countries are moving ahead strongly with active/passive harmonic
filt d t t filt Thi f i l f t t ti i f t tfilters and out-put filters. This for mainly factory automation, infrastructure (data centers, hospitals, metro stations, etc.) and mining projects
Further acceleration expected in sales as complementary product series will become available in the next 12 months
Strong regional partnerships have been established with global industry leaders already contributing to this fast growth in sales
Business outlook for SchaffnerIndia Whilst the EMC market is still in its infant stage, PQ filters for the sub-
t d d l t i l i f t t i hi h d dstandard electrical infrastructure are in high demand (e.g. 20 units active harmonic filters for a cement company)
The aging railway system (>50 year old technology) will be up-graded gradually in the next years where as there is already a substantial demand for magnetic components used in metro trains
Schaffner will also tap the fast emerging PV and wind turbine market in India in H2/11
Growth initiatives in Asia
Schaffner moves to a new building in Shanghai in H2/11(18’000 / t i th t i )(18’000 sqm/ ~ twice the current size)
Next to the expansion of production capacity mainly for magnetic components and active/passive harmonic filters, the location offers dedicated production facilities for automotive parts
The move will allow to introduce optimized material and production flows (designed in cooperation with an European consulting company) and a state-of-the art fully automatic testing system for magnetic components
Growth initiatives in Asia
A regional (3rd party) warehouse established in Singapore
Expanded sales and application services throughout Asia and new distributor and partnerships were added mainly for harmonic filter series (infrastructure projects)
Established presence in India with own sales and application engineers and built-up regional distributors
Schaffner obtained IRIS certification (for traction) in 2011 and works towards ISO/TS certification (for automotive)
The Schaffner Group
Leading edge technology generated bycollaboration with universitiesFabian Beck, Vice President Research & Development
The Schaffner Group
Leading edge technology generated bycollaboration with universitiesFabian Beck, Vice President Research & Development
72
Strategy and benefits
Cooperation with university for future solution for reliable and innovative tcomponents
Motivated person which are challenged by tasks from industry and science
Broad basis of competence with practical implementation at Schaffner
Networking helps us to seek for suitable partner
We support the qualification of young academics to identify and recruit talent for Schaffner
Scientific network
BFE Bundesamt für Energie,BernBern NTB Interstate University of Applied Sciences of
Technology, Buchs Hesso Haute école spécialisée de
Suisse occidentale, Sion Fraunhofer-Institut IZM, Berlin Silesian University of Technology, Gliwice Cologne University of Applied Science,
KölnKöln
Successful product launch
Novel patented technology to suppress dangerous and unwanted leakage t f l t i t t i t li bilit d f tcurrent for electronic apparatus to increase system reliability and safety
Short development period by intense project collaboration of science, development, production and supply chain
Successful research andtechnology development BFE financed technology project to
i titi d t igain competitive advantage in harmonics mitigation
European Center for Power ElectronicsECPE European network
Establish EMC specific lectures together with Dr. E. Hoene and Prof. J.-L. Schanen
The main objective of ECPE European Center for Power Electronics e.V. is the promotion of research, innovation, education, publicity and technology transfer in the area of power electronics in Europe
The Schaffner Group
Some Thoughts on European electricity mixAlexander Hagemann, CEO
The Schaffner Group
Some Thoughts on European electricity mixAlexander Hagemann, CEO
78
Changes in economics of electricity market
Price of electricity will increase short- and long-term- Oversupply from German PV and wind power is eliminated by decommissioning
of oldest nuclear reactors
- Hot summers reduce supply of hydro power and nuclear power
- No more political acceptance of cost externalization
Gaining a realistic perspective on the cost of nuclear- Significant increase in capital spending for safety updates
- Higher than expected cost to decommission old plants
- Worldwide no solution for waste storage, but spent-fuel storage pools inherently o d de o so ut o o aste sto age, but spe t ue sto age poo s e e t yunsafe, and final storage to be expensive
Finally a focus on energy conservation- European regulation on energy efficient motors
- Economics of energy conservation improve
Shale gas as alternative bridge technology
Aspects related to alternative energy
Cost of alternative energy generation (focus on PV, wind)
Distribution of alternative energy
Electricity storage
Distribution and storage are no issue until the share of alternative energy becomes high – most regions of the world will face such problems in 5 to 10 years only
Cost of alternative energy
On-shore wind power electricity cost is now 9.2 US cents per kilowatt-hour (l li d t 63MW Ki d C it j t i V t USA i V t(levelized cost 63MW Kingdom Community project in Vermont, USA, using Vestas 3MW turbines, commissioning in 2012. Source: Bloomberg New Energy Finance)
After the latest cost decreases, 2011 IRR of German PV projects equals 2010 IRR
Electricity cost from PV in China currently at 0.73 Yuan (11 US cents) per kilowatt-hour; cost for homes and industry to reach coal-generated electricity in 2015(Source: Xinhua)
PV: new market dynamics at grid parity?
PV: Reduce distribution issues by emphasis on own consumption PV output is highest when demand
is highis high
Modest storage capacity sufficient to balance generation and demand
Makes already economic sense in Southern Europe, Southern USA, without subsidies
High demand for inverters with storage at Intersolar
Storage: the big frontier
Short-term, no big problem
- Rare situation of oversupply
- Pumped reservoirs
- Flexible supply by natural gas when needed
Need for fundamentally new solutions when share of renewables increases
Recent advances in research are promising: example HTE
- High-Temperature Electrolysis (HTE) can generate Hydrogen at 90% efficiency
- Methane (equivalent to natural gas) can be generated from hydrogen and carbon dioxide
- Methane can be stored in the natural gas grid
Conclusion
Electricity prices will increase – with or without renewables
There can be no doubt that renewables reach grid-parity
Shift in political climate puts focus on solving open issues (distribution, storage)
The drive towards energy efficiency has just begun
But: Expect continued resistance from major utilities to protect legacy investments; many still believe that low electricity prices can stay