Presentation Transcript

1. Investing in renewables Bilbao, 9 September 2010
2. Index IB and IBR overview Wind energy in Spain The European Directive The US wind energy market
3. Iberdrola today Among the largest utilities in the world… Financial Data (1) (EurBn) Operating Data (2) Total assets 95.1 Installed capacity(MW) 43,900 Equity 31.5 Wind capacity* (MW) 11,400 Total Sales 24.6 EBITDA 6.8 Distributed energy (GWh) 205,000 Operating Cashflow 4.9 Net Profit 2.8 Customers (Million) 28 Leverage 45.8% … and the leading wind energy producer (1) Balance Sheet Data as of 06-30-2010 ; Income Statement Data as of 12-31-2009; (2) Installed capacity data as of 06-30-2010; Distributed energy data as of 12-31-2009; * includes mini-hydro
4. Iberdrola RenewablesInstalledcapacity Installedcapacityreaches 11.406 MW… *As of 30/06/2010
5. Iberdrola Renewables Largest renewable company in the world… Pipeline end 2009 Installed Capacity end 2009 GW MW 10,752 58.4 7,459 6,318 6,425* 30.2 5,491 29.8* 3,443 3,874 17.4** 2,629 2,257 4,434 4,016 1,487 n.a. 2,862* 2,551 770 IBR NextEra ANA EDPR EEN IBR FPL ANA EDPR EEN MW as of 2006 MW added in 2007-2009 … in terms of installed capacity, pipeline and also capacity additions * As of 3Q09. ** As of 1H09.
6. IBR international expansion 1,900peoplepresent in 23 countriesworldwide Germany UK UK 802 MW Poland Poland 161 MW USA USA3,591 MW Canada 63 MW Russia Sweden France France 275 MW Estonia Portugal Portugal 92 MW Mexico 80 MW Guatemala Spain Spain 5.276 MW China Italy Romania Morocco Greece Brazil Bulgaria 66 MW 49 MW 220 MW Hungary Cyprus 2008/09 Additions Accumulatedto 2007 78 MW Pipeline / DevelopmentActivity As of 31 December 2009
7. 3.9 GW of windcapacity in the US The most regionally diversified company in the US, with operating assets in 23 states, all with RPS* requirements… WA 1,980 199.5 NH 26 24 AK 8 ND 1,203 149.1 ME 175 MT 375 MN 1,809 450 OR 1,758 737 NY 1,274 161 VT 6 SD 313 60,4 ID 147 WY 449 MA 15 MI 143 WY 1,101 IA 3,670 303 PA 748 163. RI 1 NE 153 IL 1,547 372 UT 223 IN 1,036 OH 7 NJ 8 CO 1,246 156 State RPS CA2,794 219.5 WV 330 KS 1,014 150 MO 309 146 State RPS Goal TN 29 HI 63 AZ 63 63 NM 597 OK 1,130 TX 9,410 523 CCGT IBR gas storage In black, state installed MW according to AWEA In red, IBR owned installed capacity as of 30/06/2010 … which has contributedtotheleadership in 2009 in installedcapacity * Ex Kansas.
8. IBR Gas Assets in North America 4.13 bcm of gas storage managed in North America No. 3 independent storage operator Results depend on: Seasonal price spreads Locational price spreads Short-term price volatility Seasonal Earnings (November – March) Owned Storage Storage Under Dev Contracted Storage Transport Primary Supply Basins Primary Markets … and 0.91 bcm under development Notes (1) Based on public information (2) Managed capacity includes owned 1.40 bcm owned, 0.65 bcm managed and 2.08 bcm contracted storage
9. Index IB and IBR overview Wind energy in Spain The European Directive The US wind energy market
10. Winddevelopment in Spain: aninternationalsuccess Top 5 cumulativeinstalledcapacity (MW) Source: GWEC
11. Theevolution of theelectricitymix Electricitymix Produccion (GWh) * RE incluye: eolica, solar PV & CSP, biomasa, mini-hidro, CHP, RSU Fuente: REE Stronggrowth of electricitygenerationwithcombinedcycle and SpecialRegime
12. In H1 2010, wind met 17% of electricity demand Coverage of the peninsular electricity demand Coal has decreased its production by 60% on annual basis Hydroelectric generation has increased by 80%, and wind energy by 26% on annual basis Source: REE, data jan-jun 2010
13. Industrygrowth has beendrivenby a goodregulatoryframework Challenge: sustain a favourableregulation in a maturingmarket 1997 1998 1999 2002 2004 1994 ROYAL DECREES R. D. ON “SPECIAL REGIME” ELECTRICITY ACT NATIONAL PLAN FOR RENEWABLE ENERGY NATIONAL ENERGY PLANNING ROYAL DECREES “436/2004” Regulator and stability to achive targets Priority access Premium incentive 29% of 2010 electricity production to be renewable Basic framework for RES 200 MW of CSP in 2010 13.000 MW de parques eólicos en 2011 2007 2008 2009/2010 IN 2020 BINDING TARGET OF 20% RENEWABLE ENERGY RENEWABLE ENERGY DIRECTIVE APPROVED NEW RENEWABLE ENERGY PLAN RD“661/2007” APPROVED NAP Renewableenergylaw Renewables RD 2005 Regulatory stability to achive targets 500 MW of CSP in 2010 Binding target in Europe
14. TheSpanish support framework to renewables is based on four pillars… Predictability: remuneration defined for the entire life of the asset Stability: framework is based on criteria of non retroactivity FINANTIAL Profitability: offers a reasonable return for investors The development of the transmission lines has been adequate TECHNICAL Integrationinto the system throughtadequateregulatoryincentives …that have guaranteed the necessary legal security and economic profitability for investors.
15. Retribution scheme under RD 661 Total Retribution €/MWh, 2009 prices Cap Floor 90 78 76 Tariff 0 45 59 90 Pool Price
16. 16 Wind industry has proved to be a driver for social and economic development The wind energy sector is a source of value creation and employment for the national economy Wind energy industry accounted for 0.21% of the Spanish GDP, (+0,1% indirect) More than 41.000 direct jobs in the renewable sector in Spain Source: Deloitte, Macroeconomic impact of wind energy sector in Spain, November 2009 The socio-economic benefits (some 9.700 million€) by far outweigh the support received by the industry(1.100 million €)
17. Technologies Onshore Wind is the winning technology Cost Efficiency Growth Potential Tech Maturity Wind Onshore Very high Very high High and improving Wind Offshore Medium Very high Medium Solar PV Low Medium/High Low/Medium Solar CSP Low Medium Low
18. Economicchallenge: competitiveness €/MWh Current situation Each renewable technology faces different challenges and regulation must be adapted to them if we want to make renewables more competitive Solar PV Solar Thermoelectric Biomass Wind Convencional+ emissionscosts Convencional t Wind Solar PV Biomass Solar Thermoeléctric Maturing technology. Without economic or technological barriers. Logistical barriers Closer to being competitive. Matureing technology. Far from being competitive, but large potential for cost reduction. Slow development Technological uncertainty. Far from competitive FIT / FIP / GC Requires support for R & D to reduce investment costs and improve performance Demonstration Projects. Requires in R & D + I Economic support Sectorial policies
19. 2010 Spanish renewable targetsWind vs. Solar Wind energy is a cost-efficient renewable technology, which has shown stable development over the years. An excessive retribution for Solar PV favored the exponential growth in this sector. PV capacity in 2009 exceeded significantly the objectives for 2010 (over 9 times). Source: CNE
20. Production and costs strongly varies depending on the technology Cost vs. production Source: ownelaboration
21. Index IB and IBR overview Wind energy in Spain The European Directive The US wind energy market
22. Europe:favorable legislation in place European Directive on the Promotion of renewable energy Mandatory target of 20% renewable energy by 2020 Burden sharing: each MS must increase at least 6% its renewable energy. The rest will be distributed according to the GDP per capita with intermediate two-year targets from 2012 National action plans approved in 2010 Priority access to the grid Cooperation mechanisms for MS 230 GW of wind energy in the EU by 2020
23. Europe´s commitment in the promotion of renewables: Directive 20/20 Individual renowable targets UE EU EnergyPolicy 2020 20% renewable 20% efficiency -20% emissions Global UE renewable target 11,5% Source: Directive of theEuropeanParlament and of the Council
24. Spain38 GW of windby 2020 22,7% of final energy consumption from renewable sources 40% renewable electricity by 2020 NationalAction Plan 2011 - 2020 Renewable targets 2020 Wind energy will be the main technology contributing to meet 22,7% of renewable energy consumption in 2020 Windon-shore 35 GW Windoff-shore 3 GW Solar PV 8,4 GW Solar TS 5GW
25. Index IB and IBR overview Wind energy in Spain The European Directive The US wind energy market
26. The US istheworld´slargest market The united States is the number one wind energy market, with more than 35GW of installed capacity. The US wind energy market delivered nearly 10 new GW in 2009. China grows faster in 2010 than the US. Top 5 cumulativeinstalledcapacity (MW)
27. US and Spain windmarkets in 2009 35GW of wind 19GW of wind  To meet 15% of electricity demand, U.S. wind power capacity would have to reach some 230 GW installed. This would generate enough electricity to power 80 million homes They would avoid some 500 million tones of CO2 (10% of total emissions) Avoided fossil fuel imports would be about 42 billion € annually Hundred of thousands of new jobs would be found >15% of electricityconsumption <2% of electricityconsumption Source: company estimates, AWEA
28. The US is a veryattractivemarket Wind resource Land Excellentwindresource More than 8,000 GW of available land-based wind resources (Black&Veath, 2007). As much as 600 GW of wind resources could be available for $60 to $100 MWh, including the cost of connecting to the existing transmission system. Large land areas available to install new wind capacity Regulation Regulatory framework has improved since Obama Administration: PTC till 2012 and ITC with grants Federal legislation required for LT growth Transmission and integration Transmission infrastructure must be extended and improved to accommodate new capacity and provide access to geographically dispersed wind resources. Market size and abundant wind resources. The policies and regulatory measures are key to the development of wind Black&Veath, 2007 Source: U.S Department of Energy (DOE) “20 Percent Wind Energy by 2030” 28
29. UnitedStates´regulatoryconditions Stimulus billincentives for renewable energy Three-year extension of PTC (production tax credit) Access to ITC (investment tax credit), instead of PTC Monetization of the ITC through a Treasury grant. The grant will be equal to 30% of the eligible investment costs of a project started in 2009 or 2010 The Stimulus Bill has allowed the industry to continue investing in renewables in a context of financial crisis It is an engine for economic and employment growth in the US Grants mechanism provides visibility to US growth through 2012
30. Slowdown in wind energy development in the 1H 2010 Only 1,3 GW of new wind capacity in the 1H of 2010 in US. 2010e: 4-7GW of new installed capacity. Lack of long-term policy and market signals Uncertainty regarding the extension of PTC RPS targets that have been exceeded or are expected to be achieved in the short term in several States* Decreasing power demand and low wholesale power prices ….have created a difficult environment in which to negotiate PPA contracts * 4 Statesexceeded, 4 Statesexpectedtomeetthe target in the short term
31. Yet further steps still needed… Only long-term targets will be able to provide the necesary regulatory stability and economic predictability to allow investments Implement long-term support for renewable electric generation through national RPS Internalization of environmental costs: Adoption of a national “cap and trade” system on emissions Anticipate and take action against bottlenecks: Transmission 31
32. Investing in renewables Bilbao, 9 September 2010