Sustainable Swiss Private Banking since 1841.

Renewable Energies and Clean Tech –Megatrends for a clean and

sustainable future

Dr. Matthias FawerBank Sarasin Sustainable InvestmentTBLI ConferenceZurich, 8. November 2012

Our Bank – Facts at a glance

Leading Swiss private bank – founded in 1841

Investment advice and asset management for private and institutional clients

Active asset management with a sustainable investment philosophy based on more than 20 years of experience and an integrated approach based on the analysis of financial, social and ecological opportunities and risks

Represented world wide at more than 20 locations in Switzerland, Europe, the Middle East and Asia

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Sustainability research since 1989 Continuous build-up of staff and low fluctuation Responsible for CHF 12,7 billion / EUR 10,5 billion assetsFirst renewable energy fund launched in 2000

The team:74 employees30 portfolio manager 10 sustainability analysts

On average:40 years of age15 years of work experience

Number of employees working in sustainable investment

Sustainable Investment at Bank Sarasin –Significant Resources & Experience

Source: Bank Sarasin, as at 30.06.2012

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Two opposite trends convert our energy system

Undervalued risks

Finite nature of fossil fuels

Growing costs

Above average growth over the last ten years Technological progressDecreasing costs

Conventional energies Renewable energies

Source: Die Presse.com Source: Blis Solar

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Renewables – success story since 12 years

Renewable with highest growth rates of all energy sources

Investments in Renewables grew from USD 200 bn in 2010 to USD 250 bn in 2011

Global PV installations grew with average 50% p.a. over last 12 years

Costs and prices for solar power were cut in half from 2000 to 2010, and again halved till 2012

Global wind installations increased on average by 30% p.a. over last 12 years

Renewable share (488 GW) of global power capacity (5’360 GW) is 9% (without hydro)

Source: Clean Edge, 2012; * assumption Bank Sarasin

12 years of Clean Tech: Review

2000 2010 2012*

Global PV-market (bn) $ 2.5 $ 90 $ 105

Annual PV-installation 0.3 GW 20.3 GW 33 GW

PV-installation costs per watt $ 9.0 $ 4.0 $ 2.0

Global wind market (bn) $ 4.0 $ 60 $ 65

Annual wind installation 4.5 GW 39 GW 43 GW

Technology(Gigawatt)World total

2010World total

2011World total

2012*

Wind 199 241 284Biomass 54 72 85Photovoltaic (PV) 40 70 103Geothermal 11 11.2 12Solar thermal power 1.3 1.8 2.5Ocean power 0.3 0.6 1.0Total electricity from Renewable energies 306 397 488

Source: REN 21, 2012; 2012*: assumption Bank Sarasin

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Renewables – initial euphoria followed by a collapse

Renewable Energy stocks (e.g. RENIXX) won >400% till 2007 First loss after financial crisis in Sep. 2008 (-65%)Since May 2009 steady loss of 25% p.a. on averageOutperformance after Fukushima already gone by end of April ’11Aftermath of financial crisis still had a negative effect on renewable energy project investments On-going cuts in government support schemes

Renewable energy stocks from 2004 to 2012 vs. MSCI World Net

Source: Datastream

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WORLD RENEWABLE ENERGY (RENIXX) MCSI WORLD

Costs of renewable power – grid parity is near

All renewable technologies have different grade of maturity, cost and growth potential

Individual learning curves and production volumes are used for forecasts

PV with the fastest cost reduction curve

In 2020 all Renewables produce electricity for less than 0.15 EUR/kWh

Onshore Wind is and will be the cheapest renewable power source

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2010 2012 2014 2016 2018 2020

EUR

/kW

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Ocean Power PV CSP

Wind Offshore Geothermal Wind Onshore

Development of power production cost till 2020

Source: Nov. 2012; Bank Sarasin

New set-up of power production required

With growing share of renewable power there will be a conflict with base load capacity (nuclear, coal) -> see upper graph

Fluctuating solar and wind power needs to be accompanied by flexible power from hydro, bioenergy and gas -> see lower graph

Optimum mix of wind and solar to have least storage requirement over a year is 3:1

Peak power can be shifted with Demand-side management (DSM)

Attractive storage and/or flexible power through pumped hydro, compressed air and power-to-gas capacities

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0h 6h 12h 18h 24h

GW

Baseload

Load CurveSurplus RE

Load Curve Load Curve with DSM*

RE from other regions & storage plantsPhotovoltaicBioenergy, Hydro, CSP & Geothermal

Wind

0h 6h 12h 18h 24hTime of day (hour)

GW

Source: Energy [R]evolution 2012; Greenpeace Intl., Amsterdam; Jun. 2012 .

Source: The Economist, ABB

Smart Grid Renewable Energies

Smart Meter

Clean Electric Utilities

Clean FossilEnergy (Gas)

Transmission E-Mobility

Efficient HomeBuildings

Energy Storage

LED

EfficientProducts

Transformation of energy system is on its way

Not only Renewables are needed. It’s a common and integrated approach for a energy revolution

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GreenBuildings Efficient

Transport

Megatrend 1 – System thinking and services

System Thinking

Energy Metering

Energy Management

Energy Storage

Increase own Consumption

ServicesEducationMarketingProject Development Pre-financingContractingOperation & Maintenance

Source: Solarworld Source: Greenpeace

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Megatrend 2 – new off grid applications

Focus on new off grid applications for two billion people in Developing and Emerging Markets with no constant access to electricity (e.g. solar home systems, micro grid system for villages, hybrid systems)

More Renewables offer an important support to achieve the UN- Millennium goals for better education and health care and a reduction of poverty and hunger

Source: SMA Solar Source : kaco

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Megatrend 3 – after consolidation, more innovation

Current phase of overcapacities in module and turbine production keeps pressure on margins high and leads to a painful consolidation

Capacity reduction leads to a more balanced supply and demand. Survivors and healthy companies introduce new area of innovation

Mass production of modules and turbines is shifting towards Asia (= commodities). European companies focus on high quality premium products and/or niche products

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Megatrend 4 – new investors in Clean Tech space

Renewable industry has grown and matured, and therefore has become interesting for new investors:

New financially sound investors from the oil and gas sector such as Total invested in Sunpower and Statoil with Offshore wind activities…

… to progressive energy utilities. E.g. Stadtwerke Munich with shares in Offshore wind and solar thermal power plants aim to cover 100% electricity demand from renewables by 2015)…

… as well as companies from conventional sectors such as Bosch (PV, batteries), Audi (power-to-gas systems), Toshiba (bought Swiss smart meter company Landis & Gyr)…

Insurance companies such as Allianz and MunichRe looking for new investment opportunities with stable return such as from renewable energy infrastructure

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Megatrend 5 – CleanTech as growth driver for wavering world economy

Renewable energies and the whole CleanTech industry will become an important driver for world economy to avoid further recession

These technologies allow future investments in a sustainable and fair development with lesser harm to nature

First mover countries into an energy revolution with renewables and smart grid could have an advantage of experience from a home market that can be sold/exported on a global scale

Experience with “Sandy”: Derelict US-infrastructure needed investments anyway. Shift towards smarter and cleaner energy system

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Outlook

Decisive investments in global energy system over coming years. Fast changes expected

Renewable technologies need to work together with utilities and grid operators to achieve the «Energiewende». Jointly working together

Collaboration is needed to achieve a sound and cost efficient new energy system

New progressive and global investors in Renewables such as Hanwha Group, Samsung, Foxconn and Flextronics.

CleanTech/Renewables as a growth driver for world economy

Sustainable Swiss Private Banking since 1841.

Many thanks for your attention