2. Table of Contents
A General Overview of the Industry 3
Solar 4
Wind 5
Alternative Fuel Vehicles 6
Considerations for Manufacturers 7
Conclusions 8
3. The US is competing for leadership in the growing alternative energy industry, and China presents both a growing
opportunity and a competitor
Growth in alternative energy industry
•40% revenue growth for wind, solar and fuel cells in 2007
•US shipments of solar PV cells up to 280,000 in 20007 from
15,000 in 1998
China is a fast growing market for alternative energy
•Under 2007 plan, alternative energy is to provide 15% of
country’s need by 2020, 30% by 2040
•$30 bn of latest Chinese stimulus package dedicated to
hydropower, wind and solar
China is also a leading producer of alternative energy
hardware
•World’s leading producer of Solar PV cells, producing nearly
half of world’s megawattage
•70% of components of all wind turbines built in China
•Most AE production exported out of China
•Domestic AE production likely to rely on hydropower US Renewable Energy Usage 2008
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4. Solar energy is a growing industry, but the current state of the technology makes it uncompetitive with traditional
energy sources without government subsidy
Solar energy is divided into two types:
•Thermal: The conversion of sunlight into heat
•Photovoltaic: The conversion of sunlight into electricity
Solar energy is inefficient and expensive
•Residential solar electricity currently costs the consumer $.30 to $.40
per kilowatt hr, twice as much as electricity from other sources
•Current solar technology only converts 10% of sunlight to electricity.
•Scientists claim to be close to unveiling cells that are 30-40% efficient
•Thermal conversion is considered more promising, but research is Hanoi
ongoing
Solar sector is growing
• Global PV power went from 9000 MW in 2007 to 13,400 in 2008
•5600 MW of new PV power installation in 2008, versus 2400 in 2007
•11% increase in industry-wide revenue in 2007
•European Leadership
•Europe is the world’s biggest solar market, with 80% of global demand
•In 2008, Spain overtook Germany as world’s biggest consumer of solar
generated power.
•Both Spain and Germany have feed-in tariffs, where utilities are required to
buy solar electricity at government determined rates
HCMC
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5. Demand for wind generated energy creates opportunities for investors, manufacturers and landowners
Fast growing industry
•8500 MW of wind power installed in 2008, which brought US capacity
up to 25,300 MW. value for renewable tax
•Approximately 5000 MW estimated for 2009
•The wind power industry created 35,000 new jobs in 2008
•Projected to be an $83.4 bn industry by 2017
•Offshore wind generation seen as having most potential
•The American Wind Energy Association estimates the addition of
100,000 MW of installed capacity worldwide over the next decade, or
$100 bn of revenue.
•Each MW is estimated to provide 4.8 job years of direct and indirect
employment.
Potential market for manufacturers
•There are over 16,000 manufacturers in the US that produce
components with the NAICS codes used in wind turbines.
•Number of wind turbine manufacturers increased to 14 in
2008, providing more opportunities for potential subcontractors
•In Illinois, potential wind turbine component manufacturers
currently employ over 57,000 workers. Land Use Opportunities
Rent revenue from one single industrial turbine is
approximately $3000/yr, or $55 an acre. This is a
Manufacturing Opportunities
potential revenue stream for farmers or other
•Plastics
landowners.
•Iron Foundries
•Fabricated Structural Metal
•Ball bearings
•Industrial Fans
•Turbines
•Power Transmission
•Printed Circuits
•Electronic Components
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6. Alternatively Fueled Vehicles (AFV)
Alternative Fuel Sources
Vehicles can be fueled by a variety of energy sources besides conventional gas
and diesel:
•Ethanol: Fuel additive made from corn
•Biodiesel: Fuel from vegetable oil and fat
•Natural gas
•Propane
•Hydrogen
AFV’s purchased before December 2010 are eligible for a
$4000 tax credit. Vehicles placed into service before 2005
may be eligible for a $2000 tax deduction.
Infrastructure Challenges
Tesla Roadster
Demand for electric vehicles is constrained by the lack of recharging
MSRP: $101,500
infrastructure.
0-60: 3.9 sec
The cost of constructing a national electric car recharging system is
estimated at $320 bn. Another proposed solution is a battery replacement
service that would charge the driver for miles driven, like a prepaid cell
phone.
Hybrids versus pure AFV’s
A hybrid engine uses a combination of internal combustion and
electric power, where the engine charges the battery and
powers the car at high speeds, and the battery powers the car
at low speed.
Source: US Department of Energy 6
7. Some high-level considerations for manufacturers include:
So how much potential business is there in alt energy?
•The market is growing, both domestic and export markets.
•The opportunities for manufacturers include components for
wind or solar energy systems, or in manufacturing energy
efficient building materials or appliances.
What tax incentives are currently available?
•Most business tax incentives are for energy producers.
•Some notable exceptions include a tax credit for
manufacturers of energy efficient appliances. Tax
deductions are also available for energy efficient homes
and office buildings.
•There are investment tax credits of up to 30% for
investment in alternative energy producers such as wind,
solar, and microturbines.
What is included in the stimulus package?
•Tax credits for gas stations that install ethanol pumps,
and car owners who convert their cars to electric.
•A 30% tax credit for homeowners who install energy
efficient technology like wood stoves.
•Funds for 3,000 miles of power lines to connect wind
and solar farms to the electrical grid.
•3 year extension on wind farm tax credit.
What are the main business opportunities?
•For manufacturers, components for wind and solar
power generation.
•For investors, alternative energy companies, especially
after tax incentives.
•For landowners, rent revenue from wind or solar power
producers.
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8. Forecast and Conclusions
•While demand for alternative energy may fluctuate somewhat with oil prices,
the industry will continue growing.
•Increased public concern for the environment and worldwide governmental
policy will ensure market growth.
•China is already a major producer, and represents a growing market.
•The Chinese government is committed to balancing economic growth
with environmental protection.
•Wind power represents an opportunity for both manufacturers and
landowners.
•Although China manufactures the majority of wind turbine
components, US manufacturers can exploit this growing market.
•Alternatively fueled vehicles are another opportunity.
•While small smart cars do not sell will in the US, India, China and
Africa represent a growing car market.
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9. Cornerstone’s team of strategy and operations consultants support executives in decision-making related to the
international component of their business
• About us: • Cornerstone has conducted desk-top and/or field research in over
Cornerstone’s team of internationally-oriented business professionals 65 countries:
specialize in supporting strategic and tactical initiatives by offering Ireland
Austria Russia Algeria
executives a broad range of advisory services related to defining, Belgium Italy Slovakia Egypt
Bulgaria Latvia Slovenia Ghana
building, and revamping the international component of their business. Czech Rep. Lithuania Spain Libya
Denmark Luxembourg Sweden Morocco
Estonia Netherlands Switzerland South Africa
Finland Norway Turkey Tunisia
• Experience across many industry sectors: France Poland Ukraine
Airlines Business Services Construction Equipment Germany Portugal UK
Hungary Romania
Appliances Business Equipment Medical Devices
Automotive Chemicals Plastics
Banking Computers Publishing
• Clients have engaged Cornerstone to provide analysis and
recommendations on:
Sales and marketing strategy Logistics and supply chain
Regulatory compliance Import/ Export
Currency risk Customs and Duties
Tax incentives and subsidies Manufacturer sourcing
Corporate structuring Manufacturing deployments Argentina Australia Lebanon
Market entry /exit strategy Procurement optimization Bahamas Bangladesh Macau
Brazil Brunei Malaysia
Business case development and Labor attraction/retention BVI PR China New Zealand
strategic planning strategies Canada Hong Kong Philippines
Chile India Singapore
Partnerships and alliances Utilities and transport Colombia Indonesia Taiwan
Real estate and facilities infrastructure Mexico Israel Thailand
Panama Japan UAE
USA South Korea Vietnam
9
10. Although terms of engagement depend on the scope, duration, and complexity of the project, Cornerstone offers
clients a straightforward, transparent, and competitive fee structure:
Initiative Building Platform Development Performance Management
Cornerstone prepares a detailed ‘Scope of Cornerstone prepares a detailed ‘Scope of Cornerstone prepares a detailed ‘Scope of
Work and Fee Agreement’ to summarize all Work and Fee Agreement’ to summarize all Work and Fee Agreement’ to summarize all
the elements of the engagement, including: the elements of the engagement, including: the elements of the engagement, including:
•Compensation: Fees depend on the •Compensation: Fees depend on the •Compensation: Fees depend on the
number practitioners involved, their level, number practitioners involved, their level, number practitioners involved, their level,
and pre-agreed hours dedicated to the and pre-agreed hours dedicated to the and pre-agreed hours dedicated to the
engagement. Hourly rates range from engagement. Hourly rates range from engagement. Hourly rates range from
$70/hour to $150/hour depending on the $70/hour to $150/hour depending on the $70/hour to $150/hour depending on the
practitioners level practitioners level practitioners level
•Duration: Typically 2 to 4 weeks of full- •Duration: Typically 3 to 7 weeks, •Duration: Typically 2 to 5 weeks of full-
time desktop work combining desktop and field-work. time desktop work. An alternative model
•Travel: Aside from a one or two trips to the •Travel: Field-work could start as early as includes Cornerstone on a pre-agreed
client’s office, Initiative Building generally the second week. The client may join as schedule (e.g.: quarterly, annually, etc.)
requires limited field-work deemed necessary •Travel: Field-work may be helpful, but
•Costs: One potential cost associated with •Costs: Travel related expenses arising depends on complexity. The client may join
Initiative Building includes a market, from field-work or trips to the client office as deemed necessary
country, or industry research report from a are incurred by the client at cost. •Costs: Travel related expenses arising
3rd party research firm. Such reports can from field-work or trips to the client office
provide hard data to evidence opportunities are incurred by the client at cost.
otherwise not available.
- For reference only, and subject to further discussion - 10
11. Contact
Mr. Daniel Scheeringa
Senior Consultant
Mobile: +1 312.505.5588
Email: djs@cornerstone-international.net
Cornerstone International Strategy Advisors LLC
200 East Randolph Street
Suite 2200
Chicago, IL. 60601
Tel: +1 312.924.1889
www.cornerstone-international.net
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