Lo sviluppo della produzione di energia da fonti rinnovabili: un costo o un opportunit. opportunità di copertura?

Transcription

1 Lo sviluppo della produzione di energia da fonti rinnovabili: un costo o un opportunit opportunità di copertura? Roberta Bigliani, EMEA Research Director FONTI RINNOVABILI, EFFICIENZA ENERGETICA E CO 2 Gli strumenti di mercato per incentivare gli investimenti e l innovazione GME - Assolombarda Milano, 3 aprile 2008

2 Agenda Hedging: A definition and practice Energy sector opportunity for hedging Utility companies starting to take advantage of opportunities 2008 Energy Insights, an IDC company Page 2

3 Energy Insights A premier global provider of research-based advisory and consulting services focused on market and technology developments impacting the energy industry. Part of IDC a leader in market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. Research led by team of senior analysts with decades of direct energy-industry experience Serving more than 125 clients utilities, IT vendors, oil and gas companies, equipment manufacturers, and other organizations 2008 Energy Insights, an IDC company Page 3

4 Drivers of Utility Adoption of Renewable Energy Historical Regulatory fiats (e.g. RE targets) Feed-in laws & quota obligations Government subsidies Public relations A new opportunity Providing a means of protection against possible losses from volatility of fossil fuel prices (and even supply) In other words, hedging 2008 Energy Insights, an IDC company Page 4

5 Hedging: A definition (or two) Merriam-Webster Dictionary: A means of protection or defense (as against financial loss) A securities transaction that reduces the risk of an existing investment position To take compensatory measures so as to counterbalance possible loss Webtrading.com Taking a position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change Wikipedia.it Con il termine inglese di hedging si fa riferimento, in ambito finanziario, ad una strategia d'investimento disegnata per ridurre il profilo di rischio di un investimento mediante l'utilizzo di strumenti derivati quali opzioni put e call, vendite allo scoperto e contratti future e forward. L'utilizzo di tali strumenti finanziari consente di ridurre la volatilità di un portafoglio riducendo di conseguenza la possibilità di perdite. Una strategia di hedging può inoltre permettere di assicurarsi una performance predeterminata (profit lock-in) anche in presenza di movimenti di mercato opposti a quelli previsti. Hedge Funds, though, not hedging, but speculating Leveraging borrowed funds with minimal capital 2008 Energy Insights, an IDC company Page 5

6 Why Hedge in Electric Utility Industry? Volatility of fossil fuels are the highest of any commodities For that reason alone, users of natural gas have increasingly looked to hedge natural gas costs through direct contracting measures But recent events creating more risk than traditional approaches can handle Emissions Trading Scheme Winter storms Geopolitical concerns (e.g. Russia, Middle East) LNG risks not to be ignored Global climate change threat physical, financial, and regulatory offers great rationale for hedging 2008 Energy Insights, an IDC company Page 6

7 Prior Work on Hedging Largely Ignored For roughly 15 years, Shimon Awerbuch ( pioneered the concept of reducing portfolio risk through the use of RE Investors hold efficient, diversified, balanced portfolios best hedge against uncertain future. Risk affects value and economic expectations Gas variable rate mortgage Engineering kwh cost estimates ignore risk Renewables question not if but only how much Every optimal portfolio requires some fixed-cost technology 2008 Energy Insights, an IDC company Page 7

8 Awerbuch s Calculations Turn Conventional Economics on Its Head Notes: DTI estimates use raw, projected natural gas costs and high capital charges (13-18% debt rate). Finance (CAPM) risk-adjusted estimates include fuel firming option. Source: Shimon Awerbuch, 2005, redrawn by Energy Insights, Energy Insights, an IDC company Page 8

9 Prior Work on Hedging Largely Ignored (or was it?) (cont.) Ryan Wiser & colleagues at U.S. Lawrence Berkeley National Laboratory ( have produced a series of detailed analyses as well Gas prices are high, volatile, unpredictable, and diversification with RE can help hedge these risks Directly hedge gas costs (company-specific) Reduce gas consumption and prices (societal) Work has focused on attempting to quantify value of RE as hedge Recommends developing a base case for future price of natural gas, using forwards, not forecasts, which in the past have created bias away from Renewables End of 2005 value calculated: RE risk premium = $0.016/kWh December 2006 calculation: RE risk premium = $0.005/kWh 2007: RE risk premium = $0.0049/kWh But huge uncertainty in forward pricing, too 2008 Energy Insights, an IDC company Page 9

10 LBNL: NYMEX forward prices exceed AEO forecasts, Energy Insights, an IDC company Page 10

11 Utility Case Study: MidAmerican Energy Signed first wind deal in 1999 with Enron Wind (Zond) for a power purchase agreement from MW MidAmerican Holdings taken private in 2000 by Berkshire Hathaway 54% coal 29% natural gas or oil 9% renewable (695 MW total, nearly all new since acquisition) 8% nuclear In 2003, MidAmerican Energy Company (MEC), moved to diversify its companyowned generation portfolio ~16% renewables by end of 2008 MidAmerican Holdings will have 20% renewables by end of Energy Insights, an IDC company Page 11

12 The context for MidAmerican Energy s initial wind investment 12 $/Mmbtu Historic spot pric e June 2003 futures pric e Source: NYMEX 2008 Energy Insights, an IDC company Page 12

13 The details on MEC s wind splurge In 2003, MEC decides to develop and own a 310-MW wind project in Iowa Along with a 790-MW coal project and a 540-MW CCGT Expanded wind project by 50 MW in 2004 Requested additional 545 MW buildout in April 2006; more in 2007 All told: MEC owns, is developing, or contracts for 1,244.3 MW of wind power MEC now ranks #1 in U.S. list of regulated utilities in wind ownership FPL s unregulated subsidiary owns more; sells output under PPAs How does the company s investment look now? Pretty smart Energy Insights, an IDC company Page 13

14 The Benefits of MidAmerican s Wind Hedge $/Mmbtu 16 Final monthly settled price May 9, 2007 futures price June 2003 futures price Energy Insights, an IDC company Page 14

15 The details on MEC s wind splurge In 2003, MEC decides to develop and own a 310-MW wind project in Iowa Along with a 790-MW coal project and a 540-MW CCGT Expanded wind project by 50 MW in 2004 Requested additional 545 MW buildout in April 2006; more in 2007 All told: MEC owns, is developing, or contracts for 1,244.3 MW of wind power MEC now ranks #1 in U.S. list of regulated utilities in wind ownership FPL s unregulated subsidiary owns more; sells output under PPAs How does the company s investment look now? Pretty smart... MEC can calculate financial benefits today, though future GHG hedging benefits still unclear 2008 Energy Insights, an IDC company Page 15

16 Main Barriers to Greater Use of RE Hedge Strategy Renewable energy cost concerns Perceived RE operational shortcomings Regulatory uncertainty and lack of guidance 2008 Energy Insights, an IDC company Page 16

17 Grazie! Roberta Bigliani Research Director, EMEA Energy Insights, an IDC company Page 17