Analyst PRESENTATION Offshore Wind Market Developments September 2015 Steen Broust Nielsen sbn@consultmake.com
Introduction Developer Panel: Offshore Wind Market Developments Session Overview Discussion on Offshore Wind Market Developments - Status for the global offshore wind market - Overview of developer project pipelines, timelines, and requirements for suppliers - Newest trends and challenges in project development and their implications on the supply chain development. - Discussion of key requirements for companies in the industry Offshore Wind Developer Presentation, Panel Discussions & Q&A - Vattenfall, Ole Bigum Nielsen, Vice President, Engineering & Construction - EDF Energies Nouvelles SA, Bruno Kold Larsen, Area Manager - WPD Offshore Denmark A/S, Peter Stabell, Managing Director Introductory comments from MAKE on Global Offshore Wind Market Trends Steen Broust Nielsen - Partner at MAKE - More than 15 years wind sector experience including from LM Wind Power. Has served on the Board of EWEA and GWEC MAKE - one of the global wind industry's leading strategic consulting and research firms, serving the world s leading wind companies from all parts of the value chain from raw material suppliers to IPPs and utilities. MAKE Consulting is based in Aarhus (Denmark) and has offices in Hamburg (D), Chicago, Boston (U.S.) & Shanghai (China) September 2015 2
Offshore wind LCOE Offshore wind is at start of the learning curve with large potential to reduce gap to grid parity Technology liftetime (years) Installed global capacity (GW) Coal 113 Coal 1,970 Gas 75 Gas 1,600 Nuclear 63 Nuclear 401 PV 38 PV 113 Wind onshore 33 Wind onshore 343 Wind offshore 23 Wind offshore 9 Source: Siemens Source: Siemens, MAKE Being one of the youngest electricity sources having not yet gained economies of scale and standardization Offshore Wind has large cost reduction potential. September 2015 3
Offshore wind LCOE Offshore wind has cost reduction opportunities in multiple areas including scale effects Turbines & plant Substructures Transmission O&M Larger turbines and wind farms Increased reliability Scale effects and industrialisation Standardised and optimised offshore foundation design and design criteria Industrialised manufacturing ebop optimisation of substation and transmission capex Innovative transmission solutions Improved grid access Low OPEX drivetrains Turbine and component quality Condition monitoring, diagnostics, preventive maintenance Source: Siemens, MHI-Vestas, MAKE September 2015 4
Global market trends Offshore wind segment to more than triple in share of global market Global grid-connected forecast: 2014-2024e 4-6% 4-9% 11-23% 80 60 (GW) 40 20 0 14 15e 16e 17e 18e 19e 20e 21e 22e 23e 24e Source: MAKE Offshore markets Onshore markets Offshore growth largely to be European until 2017 after which Chinese offshore is expected to be a key driver for global offshore September 2015 5
Global market trends Northern Europe - 92% of global offshore wind Annual grid connected capacity 2013 & 2014 (MW) Cumulative grid connected capacity (MW) YE 2014 1.800 1.600 1.400 +8% 0% 7% 0% 1% 0% 1.200 1.000 800 600 400 200 92% 87% 0 92% 2013 2014 APeC China Southern Europe Northern Europe Americas RoW Source: MAKE September 2015 6
Outlook for offshore markets in Northern Europe Offshore wind increase importance in N Europe Grid-connected forecast for new wind power capacity: 2014-2024e (MW) -9% (GW) 11 10 9 8 7 6 5 4 3 2 1 0 16% 14 30% 15e 10% 16e 32% 17e 31% 18e -1% 44% 31% 19e 20e 52% 21e 42% 22e 44% 44% 23e 24e 6 Source: MAKE Offshore Onshore EU 2020 targets and national policies for offshore wind in Northern Europe is set to more than double the share of the regions overall demand for new wind power capacity to 2020. September 2015 7
Outlook for offshore markets in Northern Europe Top-5 markets account for 92% of demand to 2020 Grid-connected forecast for new wind power capacity: 2014-2024e (MW) 5.0 4.5-27% +19% 4.0 3.5 (GW) 3.0 2.5 2.0 3.0 X2 1.5 1.5 1.0 0.5 0.0 14 15e 16e 17e 18e 19e 20e 21e 22e 23e 24e Others Denmark Belgium Netherlands Germany United Kingdom Source: MAKE Offshore wind demand highly concentrated in a few markets to 2020 with more markets developing from 2020 such as Sweden, Finland and Ireland September 2015 8
Future Outlook Contracting trends partially reshaping supply chain organisation Contracting trend Onshore substation Cable installation & O&M HVDC converter stations HVAC substations Turbines Foundations Export cable Inter-array cable Big technical project organisations Supply Installation Smaller project organisations Supply Installation Project management subcontracted Multi-contract Turn-key/EPC wrap EPCI Supply Installation Turbines Company 1 Company 5 Turbines Company 1 Turbines Company 1 Cables Company 2 Company 3 Company 6 Company 7 Cables Company 2 Company 3 Foundations Foundations Foundations Cables Company 2 sub-contract: Turn-key scope Electric system Company 4 Company 8 Electric system Company 4 Electric system * Engineering, Procurement, Construction, Installation Source: CIP, MAKE Financial investors de-risk investments by reducing number of contracts and interfaces market increasingly moving towards turn-key and EPCI for an increasing share of market 29 September 2015 9
Our Offshore Subscription research products Market Report: Global Wind Turbine Technology Trends Insights into key technological issues Sector Reports: Global Wind Turbine O&M In-depth analysis of the global wind power services market and strategies 4 Research Notes 20+ pages of expert synthesis of key issues in the industry 4 Global Wind Power Market Outlook Quarterly updates of detailed market forecasts offshore as well as onshore Offshore Flash Notes 2-3 pages of instant analysis and insights into the latest industry developments Global Offshore Wind Power Market Analysis of current and expected global and local conditions 4 Global Offshore Wind Power Project Database Updates Offshore Analyst Presentations www.consultmake.com 29 September 2015 10
To receive full presentation please contact: Steen Broust Nielsen sbn@consultmake.com consultmake.com 2015 MAKE Consulting A/S. All rights reserved. Reproduction or distribution of this report in any form without prior written permission is strictly forbidden. Violation of the above restrictions will be subjects to legal action under the Danish Arbitration Act. The information herein is taken from sources considered reliable, but its accuracy and completeness are not warranted, nor are the opinions, analyses and forecasts on which they are based. MAKE Consulting A/S cannot be held liable for any errors in this report, neither can MAKE Consulting A/S be liable for any financial loss or damage caused by the use of the information presented in this report. Denmark Sønder Allé 9 DK-8000 Aarhus T +45 7026 6628 U.S. 117 N. Jefferson Street Suite 400 Chicago, IL 60661 T +1 312 441 9590 U.S. 225 Franklin Street 26th floor Boston, MA 02110 T +1 978 448 3186 China Level 26, Shanghai Times Sq. Office Tower, Shanghai 200021 T +86 21 5117 9329 Germany Neuer Wall 10 20354 Hamburg T +49 40 822 15 3111 September 2015 11
Wind Power Research Products To make the right decisions for your wind business and investments in today s environment of intensifying competition and shifting demand, you need access to reliable and timely industry insights. MAKE delivers research, forecasts, data and a multifaceted view of the global wind-power industry with unrivaled depth and accuracy, offering you a competitive advantage in accelerating business results. 12
The MAKE knowledge model To fully understand the current status and development of the global wind power industry it is essential to have multifaceted insights into burning issues that will impact the industry s future. MAKE s team of experts constantly analyzes global and regional data to provide a full spectrum of analytics that cuts across the 4 key drivers / barriers for growth: markets, value chain, technology and finance. Markets Value Chain Technology Finance 13
The MAKE knowledge model MAKE s global team of analysts closely monitor macroeconomic, policy and project developments, order placements and installations in over 140 key and emerging onshore and offshore wind power markets worldwide. Markets Tier I Markets: China U.S. India Germany United Kingdom Brazil Canada Tier II Markets: Mexico France Turkey Australia Sweden Netherlands Tier III Markets: Italy Poland Ireland Japan South Africa Chile Denmark Belgium Finland Greece Russia Romania Ukraine Norway Egypt Argentina Austria Morocco Pakistan South Korea Ethiopia Spain Peru Venezuela Saudi Arabia Uruguay + 100 more markets 14
The MAKE knowledge model The ever-evolving dynamics of supply and demand impact companies across the wind power value chain. MAKE constantly monitors all value chain segments for interesting developments, such as supply-demand imbalances, sourcing strategies, key company positions, M&A activity and much more. Value Chain Wind plant development Raw material supply Component supply Wind turbine manufacturing Logistics Engineering, procurement and construction Asset ownership Operations & maintainance 15
The MAKE knowledge model MAKE s technology team closely monitors individual partners in the supply chain and their technical innovation and product development and forecasts technological trends in key areas, including: Wind Turbine Rotor Nacelle Tower Control systems Components Balance of Plant Foundations Substations Electrical work Installation equipment Offshore Installation vessels Cable-laying vessels Foundations Substations Transmission cables Technology 16
The MAKE knowledge model As the demand for wind power ultimately depends on economic viability and cost-competitiveness, understanding the financial and cost developments is key. Our team studies various financial aspects of the industry: Renewable power generation portfolio strategies of global asset owners Regional financing mechanisms and structures for both onshore and offshore Capital markets and finance availability Competitiveness of wind versus other sources of energy, power pricing and levelised cost of energy by region and technology Understanding the key drivers of cost including technology, logistics and raw materials Finance 17
BASIC EXTENDED PREMIUM PREMIUM+ SUPERIOR OFFSHORE An introduction to MAKE research subscriptions MAKE offers tiered subscription plans for varying market intelligence needs The BASIC subscription package provides a perfect solution for clients looking for foundational knowledge of the wind power industry. It includes regional and market reports that provide updated industry outlooks and extensive information about the global status of wind power supply chains, technology, and asset ownership The EXTENDED subscription includes all products inside the BASIC subscription + Sector Reports providing in-depth insight into the offshore wind and O&M sectors Research Notes on key global issues and developments in wind, including wind power market share analysis, LCOE forecast, and much more Semi-annual forecast updates The PREMIUM subscription is a more advanced package, which includes all products inside the EXTENDED subscription + Quarterly forecast updates that ensure continuous updates on market development Flash Notes providing instant analysis and insight into the latest events in the industry and keeps our clients on the cutting edge of wind power development The PREMIUM+ subscription is a complete toolbox of wind power research, insights, data and analytical support. It contains all products inside the PREMIUM subscription + Global Wind Turbine Order Database Global Wind Power Project Installation Database Global Offshore Wind Power Project Database Global Wind Turbine Technology Database 10 Analyst Access Hours The SUPERIOR subscription is our most elite research package, containing all of MAKE s research products. It is the most complete toolbox of wind power research, insights, data, and analytical support. It contains all products inside the PREMIUM+ subscription + Global Wind Turbine Order Database Global Wind Power Project Installation Database Global Offshore Wind Power Project Database Global Wind Turbine Technology Database 10 Analyst Access Hours Semi-annual Wind Turbine OEM Market Share Forecast The OFFSHORE subscription is specially designed for the specific intelligence needs of our offshore wind power clients It includes all products with offshore wind power content that are included in our PREMIUM package + our Global Offshore Wind Power Project Installation Database 18
BASIC EXTENDED PREMIUM PREMIUM+ SUPERIOR OFFSHORE Product and subscription overview MAKE offers a range of product categories containing various individual publications Semi-annual Wind Turbine OEM Market Share Forecast The must-have forecast on OEM positioning across the globe for the next five years 10 Analyst Access Hours Direct consultation with our regional research teams across the globe Global Wind Turbine Technology Database Global Wind Power Project Installation Database Global Wind Turbine Order Database Global Offshore Wind Power Project Database Quarterly Market Outlook Updates + Webinars Flash Notes Sector Reports + Webinars Semiannual Market Outlook Updates + Webinars Research Notes Annual Market Outlook Updates + Webinar The definitive global wind turbine model database complete with technical specifications and data A definitive list of all installed Onshore projects across the globe Monthly global wind turbine order intake data A definitive list of all Offshore projects installed and in the pipeline Updates of global forecasts for onshore and offshore markets, order flow and turbine pricing Instant analysis and insight into the latest industry developments Special reports on global offshore wind power and global wind turbine O&M sectors Updates of global forecasts for onshore and offshore markets, order flow and turbine pricing Expert analysis of key strategic wind power industry topics Global forecasts for onshore and offshore markets, order flow and turbine pricing Company Database Profiles of leading wind turbine supply chain and asset owner companies Analyst Presentations* Expert presentations delivered at global wind power conferences Market Reports + Webinars Regional Reports Analysis of global wind turbine technology, supply and demand trends Comprehensive insight into regional wind power markets All products in category can be purchased as single reports All products in category are included in the offshore subscription Offshore-related products in category are included in the offshore subscription 19
BASIC ( 5,500) EXTENDED ( 11,000) PREMIUM ( 13,000) PREMIUM+ ( 20,000) SUPERIOR ( 24,000) OFFSHORE ( 6,000) Six competitively priced subscriptions to suit your intelligence needs Subscription Overview and Pricing Q1 Q2 Q3 Q4 Semi-annual Wind Turbine OEM Market Share Forecast 10 Analyst Access Hours Global Wind Turbine Technology Database Global Wind Power Project Installation Database Global Wind Turbine Order Database Global Offshore Wind Power Project Database Quarterly Market Outlook Updates + Webinars Flash Notes 5 Flash Notes 5 Flash Notes 5 Flash Notes 5 Flash Notes Sector Report + Webinar Global Wind Turbine O&M Global Offshore Wind Power Market Semiannual Market Outlook Updates + Webinars Research Notes 2 Research Notes 2 Research Notes 2 Research Notes 2 Research Notes Annual Market Outlook Updates + Webinar Global Wind Power Asset Ownership Company Databases Global Offshore Wind Power Global Offshore Wind Power Global Wind Power Supply Chain Global Offshore Wind Power Global Offshore Wind Power Analyst Presentations* Market Reports + Webinars Global Wind Power Asset Ownership Global Wind Turbine Supply Chain Global Wind Turbine Trends Regional Reports (Wind Power Outlooks) North America, Latin America China Middle East & Africa Rest of APAC Europe All products in category can be purchased as single reports. Regional Reports are available at 1,500 per report. Market and Sector Reports are available at 2,500 per report All products in category are included in the Offshore subscription Offshore-related products in category are included in the Offshore subscription 20
Add-ons to suit your intelligence needs Subscription add-ons MAKE provides a range of supplementary research services and data products to support your specific business needs Analyst Access Hours Analyst Access Hours are designed for our subscription clients to consult directly with our regional research teams in Denmark, U.S., China, the U.K. and Germany. Access hours can be used for Q&A sessions, tailored online or even minor ad hoc projects. Price: EUR 200 per hour for a minimum of 10 hours. Global Wind Turbine Order Database Monthly updated global database of firm wind turbine orders Continuous monitoring and tracking of order intake of 40+ wind turbine OEMs Monthly updates of new order intake and comprehensive overview of tracked onshore and offshore orders year-to-date 14 data points for registered order entries Data provided for announced, public and unannounced firm order Price: EUR 2,000 for a one year subscription with monthly updates. 21
Add-ons to suit your intelligence needs Subscription add-ons MAKE provides a range of supplementary research services and data products to support your specific business needs Global Wind Power Project Installation Database The definitive listing of installed wind power projects across the globe 29,000+ listed projects in the AMER, EMEA and APAC regions Includes projects in 140+ markets Up to 16 data points for registered projects Price: EUR 4,000 for a one year subscription, released annually. Global Offshore Wind Power Project Database The definitive listing of offshore wind power projects across the globe 900+ listed projects in the AMER, EMEA and APAC regions Include installed as well as planned projects in 30+ markets Up to 28 data points for registered projects Price: EUR 1,500 for a one year subscription, updated quarterly. (Included in the Offshore subscription) Global Wind Turbine Technology Database The definitive global wind turbine model database complete with technical specifications and data Key information on over 250 turbines offered from the top 20 global turbine manufactures Data on turbine configuration, technology architecture and drivetrain choices Suitability according to IEC wind class and certification Price: EUR 3,000 for a one year subscription, released annually. (Included in the Premium+ and Superior subscription) 22
Add-ons to suit your intelligence needs Subscription add-ons MAKE provides a range of supplementary research services and data products to support your specific business needs Semi-annual Wind Turbine OEM Market Share Forecast The must-have forecast on OEM positioning across the globe the next five years Five-year market share forecast for top-15 turbine OEMs split by MW and units MW turbine segment Offshore and onshore Major countries* Region (SA, NA, EU, MEA, CN, APAC) Price: EUR 5,000 for a one year subscription, released semi-annually in xls format. (Included in the Superior subscription) *Countries included are Germany. U.K., Turkey, France,. Sweden, Italy, Netherlands, Poland, Belgium, Ireland, Finland, Romania, Spain, U.S., Brazil, Canada, Mexico, China, India, Australia, Japan, South Africa 23