The strategies of 50 leading companies in the global renewable industry

1. IREX MONITOR The renewables think tank
IREX MONITOR
The renewables think tank
The strategies of the 50 leading companies
in the global renewable industry
Alessandro Marangoni
The global renewable energy industry:
companies’ strategy and market trends
Roma, October 9th 2012
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2. IREX MONITOR The renewables think tank
The challenges of the RES sector
European
p
sovereign SECTOR STILL VIBRANT
debt crisis
 $ 257 billion of investments
Decline in  Emerging countries
selling prices are gaining ground
Reductions-cuts
of subsidies  In estment in solar energ
Investment energy
Consolidation exceeded those in wind
of the industry US caught up with China
Overcapacity
pyright Althesys 2012.
Crisis technology
s
manufacturers
Globalisation
Gl b li ti
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3. IREX MONITOR The renewables think tank
The renewable energy industry worldwide
The Top 50 players: the key to understanding is
trends in the sector as a whole
a complex scenario
The largest in RES industry
(Revenue/MW installed) global
competitive
The most international arena
(% revenue outside domestic market)
20 PV
pyright Althesys 2012.
• 33 technology companies
gy 8 Wind
s
5 Solar + Wind
12 Utilities
• 17 power generation companies
p g p
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5 Pure Renewable
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4. IREX MONITOR The renewables think tank
The renewable energy industry worldwide is
The strategies of the 50 leading companies in the
g g p
global renewable industry
a complex scenario
The t t i
Th strategies of the 50 l di companies i th
f th leading i in the
global renewable industry
The top 50 players’ major deals
Performance of the renewable energy industry
pyright Althesys 2012.
s
Strategic trends and future perspectives
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5. IREX MONITOR The renewables think tank
The top 50 players’ major deals
Performance of the renewable energy industry
Strategic trends and future perspectives
pyright Althesys 2012.
© Cop s
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6. IREX MONITOR The renewables think tank
The Top 50 deals: main RES segments
572 major operations done by the Top 50
$ 69 3 billi = 27% of th world’s i
69.3 billion f the ld’ investments and 63 171 MW
t t d 63.171
RES segments by number of operations
pyright Althesys 2012.
s
 Wind onshore and PV leaders  Offshore wind: 9,048 MW of plants
operational or in construction in 2011
 Biomass/WTE more local
 CSP: 11.7% of the total amounted invested
11 7%
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 Development of the solar combined cycle
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7. IREX MONITOR The renewables think tank
Where are the top players investing …
Europe
45% of the operations
Offshore wind: 34% of the MW
Eastern European co ntries
E ropean countries:
new key markets
Emerging markets
g g
Growing share: 19.4%
Huge potential for wind in India - Brazil
China
pyright Althesys 2012.
Leader in wind: 18 GW of new capacity,
s
but l
b t low di l
disclosure of major players
f j l
Growing solar sector: 2.2 GW of power
installed and 2.7 GW of deals closed by
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the Top 50 in the home market
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8. IREX MONITOR The renewables think tank
The players
Most active players in terms of
number of operations:
 39.5% technology providers
 26.5% pure renewable
 20.8% utilities
Key trends
 Business development in power generation is the main way: 55.2% MW
pyright Althesys 2012.
 The expansion of equipments’ manufacturing capacity is the 2nd: 17.8%
p q p g p y
s
 Vertical and horizontal Integration: 12.8%
 Increasing importance of geographical and market diversification
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8.1% 3.7%
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9. IREX MONITOR The renewables think tank
Type of operations done by the Top 50
The construction of new power plants was the dominant type of operation
250
37.9%
200
27.8%
150
100
13.7%%
50 6.3% 5.9%
4.2% 3.7%
0.5%
0
New Plant TK Plant Supply Collaboration
Joint Venture Acquisition Merger Disposal
pyright Althesys 2012.
Agreements Partnership
s
 Corporate finance operations: 16.9%
 M&A: 35% of the corporate finance operation
p p
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10. IREX MONITOR The renewables think tank
The top 50 players’ major deals
Performance of the renewable energy industry
Strategic trends and future perspectives
pyright Althesys 2012.
© Cop s
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11. IREX MONITOR The renewables think tank
Financial performance, a double-sided picture
double-
European
financial crisis
Overcapacity General poor financial Increased
6.2 (P T )
6 2 GW (Pv-Top) results of RES industry
lt f i d t competition
titi
Cuts in
subsidies
Technology providers ...
pyright Althesys 2012.
s
... l t a lot of money!
lost l t f !
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12. IREX MONITOR The renewables think tank
Financial performance, a double-sided picture
double-
Utilities & Pure Renewable ...
%Var. Pure
Utilities Total
2011‐2010 Renewable
Revenue 33.5% 0.2% 21.7%
EBITDA 125.0% 14.0% 95.4%
EBIT 32.1% 14.0% 27.0%
Net income 18.3% 5.3% 13.1%
... profited of subsidies and falling tech costs
pyright Althesys 2012.
s
 Utilities stronger than Pure renewables, paying the friction of take-off
 Utilities already restructuring in the past
 Increase of revenue for utilities, mainly outside Europe
utilities
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13. IREX MONITOR The renewables think tank
The photovoltaic industry
PV segment suffered the most during 2011
 Drop by 60% in ASP for PV ˃ decline in manufacturing costs
 Revised subsidies in key markets Market cap
 Chi
Chinese companies’ d
i ’ dumping prices ...
i i decreased
by 68.1%
Western companies:
EBIT - 586.6%
Chinese companies:
EBIT - 167.3%
pyright Althesys 2012.
s
Bankruptcies of
renowned solar PV
companies
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14. IREX MONITOR The renewables think tank
The wind industry
Average 41.1% drop in operating income
CHINESE COMPANIES WESTERN COMPANIES
 Three largest wind companies: EBITDA down 29.3% over 2010
25.2% drop in revenue Technological leadership
 New installations: 930 MW
lower than in 2010
pyright Althesys 2012.
s
 Cooling government support  Market close to maturity
 Financial troubles, difficult to
 E t of foreign players in the
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Entry f f i l i th
carry out large plant projects
domestic market
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15. IREX MONITOR The renewables think tank
Power generation segment
Utilities and pure renewable outperformed the overall sector
Market cap
slipped just 2%
Sample of 5 utilities
S l f tiliti
with a full mix of sources:
EBITDA of the RES
segment 62.7%
62 7%
EBITDA of the group overall
pyright Althesys 2012.
performance: 19.4%
s
 RES less volatile than Oil&Gas, subject to geopolitical risk
 For utilities operating both in renewable and in traditional generation the
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RES segment exceeded the performance of the company overall
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16. IREX MONITOR The renewables think tank
Size is a competitive advantage
The Top 50 index outperformed the other green indexes
Global players better than small-mid cap
 Economies of scale
 Vertical integration
 Diversified geographic
g g p
portfolio
pyright Althesys 2012.
 Mix of sources
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17. IREX MONITOR The renewables think tank
The top 50 players’ major deals
Performance of the renewable energy industry
Strategic trends and future perspectives
pyright Althesys 2012.
© Cop s
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18. IREX MONITOR The renewables think tank
A challenging environment...
Companies are
p RES industry is
y New markets &
reorganizying changing quickly opportunities
their business are rising
INTERNATIONALIZATION
INTEGRATION
pyright Althesys 2012.
s
INNOVATION
RESTRUCTRING - M&A
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19. IREX MONITOR The renewables think tank
Restructuring and Consolidation
RESTRUCTURING: the priority to manage the overcapacity
and to stop price falling
No further drop in the technology
price is expected in the near future ?
Financial pressure + competition are driving CONSOLIDATION
i the upstream PV, wind and power generation segments
in th t PV i d d ti t
pyright Althesys 2012.
s
Companies are likely to continue acquiring
market share through M&A operations to survive
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20. IREX MONITOR The renewables think tank
Globalisation
ALL THE PLAYERS ARE FOLLOWING INTERNATIONALIZATION STRATEGIES
Windy-sunny regions with strong economic
Decrease in technology price
gy p
growth are profitable also without subsidies
 Target of investments from developed
g p
Emerging countries economies
 Home to world class competitors
Delocalisation of the production into
PV market
pyright Althesys 2012.
emerging and low-cost regions
s
Western companies are entering Asian
WIND market
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market easier than Chi
k t i th Chinese enter E
t Europe
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21. IREX MONITOR The renewables think tank
The integration strategies
ARE COMMON TO SURVIVE THE CONSOLIDATION OF THE MARKET
Equipment & Development, Plant Power O&M +
VALUE CHAIN Raw material
components construction, EPC generation services
URE RENW
Wind WIND CONSTRCUTORS
TIES UTILITIES
PU
PV
PV MANUFACTURERS
CES
Hydro
SOURC
UTILIT
Biomass
WTE
pyright Althesys 2012.
s
CSP
Geother
In the future the distinction between
traditional energy and renewable will ffade
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Marine
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22. IREX MONITOR The renewables think tank
Innovation strategies
The Top 50 maintened R&D spending even during the hardest time in 2011
 Western companies: 2% of their revenue in R&D˃ Chinese companies
NEW TECHNOLOGY WILL GAIN
GROUND IN THE FUTURE
OFFSHORE WIND
GEOTHERMAL
HYBRID CSP
pyright Althesys 2012.
s
MORE INVESTMENT WILL FOCUS ON INTEGRATING RES INTO
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POWER SYSTEM: STORAGE AND SMART GRID WILL BE THE KEY
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23. IREX MONITOR The renewables think tank
© Copyright Althesys 2012. All rights reserved.
It is forbidden to reproduce any part of this document, in whole or in part, in any form or by any means,
without prior written consent from Althesys Strategic Consultants.
alessandro.marangoni@althesys.com
g @ y
Via Larga, 31 - 20122 Milano
Phone: +39 02 5831.9401 - Fax: +39 02 5830.1281
www.althesys.com
www althesys com
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