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Italian Innovation Day Enel Green Power Case History "Why Italy Matters", march 3st 20111
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Enel Green Power Case History
Francesco Starace – CEO of Enel Green Power
Why Italy Matters
San Francisco – March 31st, 2011
2
Global Energy Demand
3
Graphical Oil Path - 1964 – 2010
Barclays Capital Projections (Weekly Oli Data Review 23 June 2010):• Demand 2009 84,6 mb/d • Average WTI 2009 62 $/b• Demand 2010 86,1 mb/d • Average WTI 2010 85 $/b
19641969
1973
1975 1978
1980
1980HIGH
1981
1983
1985
1986
1990
19962000
2004
2007
OIL ROLLER COASTER RIDE
This chart tracks the relationship between oil prices and oil consumption since 1964. Global oil consumption is shown on the horizontal axis and oil prices shown on the vertical axis. So when consumption is increasing and prices are flat, the line moves straight right. And when prices are rising and demand stops growing the line moves straight up.
30 40 50 60 70 80
$100
$90
$80
$70
$60
$50
$40
$30
$20
$10
World oil consumptionMillion barrels a day
Pric
e of
oil*
*Average annual price of West Texas Intermediate crude oil, adjusted for inflation using the Consumer Price Index.Posted prices (not spot prices) are shown before 1983. Source: Energy Information Administration, Federal Reserve, Bureau of Labor Statistics, Rocky Mountain Institute
90
1990 Iraq invades Kuwait
End 2000Record demand spurs a run up in prices
1982Recessions dampen demand
1979 -1980Iranian revolution, Iran – Iraq war
1973 The Arab oil embargo causes prices to soar
1997-1998 Asian financial crisis
Late 1960s, early 1970s Oil prices are steady and consumption grows quickly
What’s going on here?In the early 1980s, oil consumption fell. This is why the chart seems to turn around
2008
2009
2001 Sept.11 attacks
2010
4
Source: Enel estimates based on EPIA, GWEC, EER (2010); WEO 2010 New Policies scenario (2020 min); industry reports/McKinsey (2020 max); Ren21 “Rapporto Renewables Global Status” 2010 (2009), EGP estimates based on market capex (investments), Bloomberg New Energy Finance (R&D).(1) Calculated on 2020 max figures.
Renewable Energy: a growing industryExpected worldwide growth
Strong growth in all technologies and across all regionsDuring 2010, total R&D investments amounted to €28bn (€11bn from corporate)
~ €180bnTOTAL +82 GW~1,309 GW
2009-10 (GW) %
6.7%
~ 50Solar +15~38 67% 32%
Geothermal +0.3 ~11 3% 9%
~ 50Wind +35 ~194 +22% 16%
8.5%
~ 65Hydro +26~1,006 3% 2%
~ 15Biomass +6~60 11% 22%
2010 (€bn)CAGR 2009-2020(1)2010 (GW)
TechnologyGlobal
installed base
Global installed
base
Delta capacity
EGP tech. presence
Invest-ments
Expected growth
364251
2020 Max
2020 Min
2010
TOTAL
Africa
Asia
Europe
North America
Latin America
Geography
(GW) (GW) (GW)
550
616432 1,030
198172 330
5737 110
819416 1,000
2,0541,309 3,020
Expected growth
8%
9%
7%
11%
9%
8.5%
CAGR 2009-2020(1)
By technology By geography
~23
~11
~159
~980
~54
2009 (GW)
~1,227 GW
~ 1
5
Note: 1) Including ENEOP2) Including “new markets” (0,2 MW)
EGP presence
North America
Operating 788 MW
Production 2.6 TWh
In execution 0.3 GW
Pipeline 9,1 GW
Unrivalled footprint in 16 countries across all main renewable technologies
Iberia and Latin America
Operating 2,187 MW
Production 6.5 TWh
In execution 0.6 GW
Pipeline 13.7 GW
Italy and Europe
Operating 3,127 MW
Production 12.7 TWh
In execution 0.6 GW
Pipeline 6.2 GW
Enel Green Power
Operating 6,102 MW
Production 21.8 TWh
In execution 1.5 GW(1)
Pipeline 29.2 GW(2)
A global leaderEGP global footprint – FY 2010
6
Pipeline by technologyFY 2010
Installed capacity by technologyFY 2010
2%13%
42%
43%
Production by technologyFY 2010
Unique generation mix and diversified geographical presenceEGP portfolio overview
Total = 6.1 GW
Well-balanced asset base
Total = 21.8 TWh
3%2%
89%
Total = 29,2 GW
In execution by technologyFY 2010
10%1% 3%
86%
Total = 1.5 GW
OtherWindGeothermalHydro
6%
2%24%
51%
23%
7
FY2010 profit & lossFrom EBITDA to net income (€m)
8
On-shore Wind
Geo
Time
Develop-ment
Pilot
Smallscale
Large scale
Hydro
H2
Off-shore Wind
TidesWaves
Thermal solar
Solar PV
Biomass & biofuel
On-shore Wind
Geo
Time
Develop-ment
Pilot
Smallscale
Large scale
Hydro
H2
Off-shore Wind
TidesWaves
Thermal solar
Solar PV
Biomass & biofuel
• R&D efforts focused on improving power generation performances and reducing costs
Renewable energiesTechnological development status
Development status R&D efforts required
1 Mature
2 Early commercial
3 Still in the labs
1
• R&D required to make technologies more reliable and profitable
2
• R&D required to let technologies leave the labs
3
All the technologies could benefit from R&D effort – Some of them have yet to leave the labs: huge efforts will be required
Installed capacity
9
Renewable Technologies: Wind
Factors affecting developmentFactors affecting developmentState of the art and future evolutions
• Greater turbines resulting in reduction in costs of production
• Incentive schemes in many countries
1981 2008
0,06 MW 3,0 MW
• On-shore: new materials and more efficient designs allow for a greater dimension and efficiency of the turbines
• Off-shore: the dimensions tend to be increased (up to 5-6 MW) in order to exploit the stronger winds available
* Enel Analysis
10
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7 8 9 10
Note: Capacity factor for M1 is 30,1%; Capacity factor for M2 is 17% at 6 m/s wind* IEC classifications: IEC III (0-7.5 m/s); IEC II (7.5-8.5 m/s); IEC I (8.5-10.0 m/s)
Source: http://www.windpower.org/en/tour/wres/pow/index.htm;
Capacity factor %
Average wind speed, m/s
M2
M153M1
M2 30
+77%
IEC* III
(low wind)
IEC* II
(med)
IEC* I
(high)
Annual power production from 20 MW capacity at 6 m/s
GWh
Higher efficiency at same wind speed conditions
WIND - In the past few years, turbine efficiency has increased significantly
11
Renewable Technologies: Photovoltaic Solar and Concentrated Solar
Factors affecting developmentFactors affecting developmentState of the art and future evolutions
• Technological developments (incremental or discontinuous)reduce the costs of the panels and increase efficiency, getting closer to “grid parity”.
• Incentive schemes in many countries
• Traditional technologies: silicon “mono-” and “poli- cristalline”
• New “thin film” technology: reduces the use of silicon (main cost component of the system) and the cost of energy production
• Enel’s commitment to developing concentrated solar
12
LCD*, PDP** price developmentUSD, at 2003 prices
* Liquid Crystal Display** Plasma Display Panel
Source: ICFAI
Price decrease expected in solar PV lower but similar to the high tech industry examples
EXAMPLE
2003 2004 2005 2006 20071,000
2,000
3,000
4,000
5,000
37-inch LCD*
42-inch PDP**
CAGRPercent
•The price reduction path expected for solar PV module between 2008 and 2020 is lower but similar to the high tech industry
•As an example, LCD* and PDP** technology price decreased ~20-25% p.a. over the last 4 years
-24%-24%
-21%-21%
13
PV Business Model Committed to the PV sector
ManufacturingManufacturing DevelopmentDevelopment EPCEPC Large scale plants O&M
Large scale plants O&M
3SUN (EGP, SHARP, STM) EGP EGP EGP
DevelopmentDevelopment EPCEPC
IPP – ESSE(1)
(EGP, SHARP)
Large scale plants O&M
Large scale plants O&M
Retail channel (Enel.si)
IPP – ESSE(1) IPP – ESSE(1)
EGP is strategically positioned across the whole PV value chain
Turn-keyinstallation to
domestic/business customers
(1) EGP Sharp Solar Energy.
14
• Enel Green Power• Sharp• ST Microelectronics
Partners(each 1/3)
• Catania, at STM M6 premisesLocation
Technology • Sharp triple-junction thin-film
Capacity
• 160 MW/y (Q4 2011)
• + 320 MW/y (2012-14)
At start
Ramp-up
Capex• ~ 320 M€ (160 MW/y)
• ~ 770 M€ (480 MW/y)
Enel Green Power : • Business Development • Retail Sales Network
Sharp: • Technology• International Sales Network
STMicroelectronics:• Manufacturing Experience and Site• Trained Personnel
Employment
• ~280 people (160 MW/y)
• ~700 people (480 MW/y)
• Over 400 people during construction
Partners’ contributions
3SunPV Factory Joint Venture
15
Enel.si: EGP Retail Arm
A unique approach to renewable distributed generation
Solar PV and other
distributed renewables
Energy Efficiency
Turn Key PV and other distributed renewable installations (mini-wind, geo-thermal heat pumps, solar-thermal) to domestic and business customers
Leadership in the Italian fast growing retail PV market
Energy efficiency and energy savings solutions for domestic and business customers
Partnerships with products and technology leaders
Business lines
1
2
Business model Franchising A strong growing franchising network with over
500 entrepreneurs franchisees with EGP brand
16
• Franchising: local entrepreneurs supported by Enel.si
• Enel.si offers to retail market - through its franchising network - distributed renewable energy generationproducts and services and energy efficiency solutions
• Enel.si provides to franchisees centralized communications, products, technical assistance, finance solutions, sales and technical training platform
• Over 550 franchisees with local distributed points of sale
• Over 250 MW photovoltaic plants installed
• Refueling product pipeline with new innovative retail applications and bundle offers for residential, SOHO, small-industrials segments
Over 550 franchiseeslocally distributed over Italy
Business modelBusiness model
OpportunitiesOpportunities
Enel.si: access to the fast growing retail market
17
Innovation in renewablesSolar thermodynamic – Archimede
Thermodynamic innovative system developedwith ENEA patent, integrated with a moderncombined cycle
Using molten salts (fertilizers) as a fluid that canreach temperatures of about 550 °C
Molten salts store the sun's heat to produceelectricity even in low sunlight (even during thenight)
Net capacity: 4,7 MWe
Gross annual production: 9,7 GWh
Being constructed in Priolo Gargallo (Siracusa)
Enter into exercise: July 2010
18
Tenerife /Greece / TurkeyResource evaluation
Italy In operation 730 MW
US - NevadaIn operation
47 MW
US - UtahDrilling17 MW
ChileDrilling80 MW
El Salvador In operation
200 MW
• 40 plants - 775 MW* - 5,000 GWh
• 460+ people involved in operation
• Types: dry steam, flash steam and binary cycle
• Operations since 1904
GeothermalGlobal Resources Availability and EGP presence
* Consolidated MW as of December 2010.
19
Enel Green Power Geothermal plants Binary cycle - North America
Salt Wells
Stillwater
Salt Wells and Still Water are the world largest binary cycle plants
They are the benchmark in binary geothermal energy generation
•A binary system with two fluids, hot water from underground wells
heats an organic fluid and turns it into a vapor that makes the turbine
generate power.
•They are “Closed-loop” systems that continually replenishe the
geothermal resource used in the power generation process, without use
of other Natural Resources (water)
•They will also be the first hybrid solar-geothermal applications in
the world.
Stillwater
(14 MW)
(33 MW)