Clean Energy Investment Trends By Michael Liebreich Of New Energy Finance June 2008

Clean Energy Investment Trends REFF Wall Street Market Drivers Michael Liebreich Chairman & CEO new energy finance

New York, 19 th June 2008

© new energy finance, 2008 2

Source: New Energy Finance, IMF WEO Database, IEA WEO 2007, Boeing 2006 Annual Report

Adjusted for reinvestment. Geared re-investment assumes a 1 year lag between VC/PE/Public Markets funds raised and re-investment in projects. Grossed up value based on disclosed deals

Total Global New Investment in Clean Energy 2004 2007

1% of global fixed asset investment Clean energy asset finance is 9.6% of global energy infrastructure spend 2.5 times the size of commercial aircraft investment sector

$148.4bn

$92.6bn

$58.7bn

$33.4bn

2004 2005 2006 2007

76% Growth

58% Growth

60% Growth

© new energy finance, 2008

NEX vs. AMEX Oil, NASDAQ and S&P 500 2003 - 2007

Source: New Energy Finance, Bloomberg Index Values as of 09 June 2008

0

50

100

150

200

250

300

350

400

450

500

30 Dec 02 30 Dec 03 30 Dec 04 30 Dec 05 30 Dec 06 30 Dec 07

NEX AMEX Oil NASDAQ S&P 500


NEX vs. AMEX Oil, NASDAQ and S&P 500


0

50

100

150

200

250

300

350

400

450

500



Credit crunch!


Total public markets transactions, Q1 2004 Q1 2008

Source: New Energy Finance Main markets only. OTC markets include with VCPE figure

$4.3bn

$1.0bn

$12.8bn

$3.7bn

$5.2bn $5.3bn

$3.9bn

$1.4bn

$5.4bn

$1.9bn $2.0bn

$1.5bn $1.2bn

$0.9bn $0.4bn

$0.1bn $0.2bn

$0.1bn

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

Secondary

IPO

Convertible & Other


Total asset financing transactions Q1 2004 Q1 2008

Source: New Energy Finance Grossed up values based on disclosed deals.

$19.1bn

$27.8bn

$37.1bn

$30.5bn

$24.9bn

$15.8bn

$24.7bn

$15.3bn $16.5bn

$14.3bn $13.4bn

$9.1bn $9.0bn $7.8bn

$5.8bn

$3.8bn $3.3bn $4.4bn

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

Acquisition

Refinancing

New build


Venture capital and private equity for companies, Q1 2004 Q1 2008


$4.7bn

$2.5bn

$3.4bn

$2.9bn

$3.5bn $3.7bn

$1.9bn

$2.5bn

$3.5bn

$1.4bn

$2.1bn

$1.6bn

$1.2bn

$1.5bn

$0.6bn

$0.4bn

$1.2bn

$0.2bn

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

PIPE/OTC

PE Buy-out

PE Expansion Capital

VC Late Stage

VC Early Stage


NEX vs. AMEX Oil, NASDAQ and S&P 500


0

50

100

150

200

250

300

350

400

450

500



Credit crunch!


Total public markets transactions, Q1 2004 Q2 2008

Source: New Energy Finance Main markets only. OTC markets include with VCPE figure

INDICATIVE Q2 2008 VALUE

$4.3bn

$1.0bn

$12.8bn

$3.7bn

$5.2bn $5.3bn

$3.9bn

$1.4bn

$5.4bn

$1.9bn $2.0bn

$1.5bn $1.2bn

$0.9bn $0.4bn

$0.1bn $0.2bn

$0.1bn

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

Secondary

IPO

Convertible & Other


Venture capital and private equity for companies, Q1 2004 Q2 2008



$4.7bn

$2.5bn

$3.4bn

$2.9bn

$3.5bn $3.7bn

$1.9bn

$2.5bn

$3.5bn

$1.4bn

$2.1bn

$1.6bn

$1.2bn

$1.5bn

$0.6bn

$0.4bn

$1.2bn

$0.2bn

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

PIPE/OTC

PE Buy-out

PE Expansion Capital

VC Late Stage

VC Early Stage


Total asset financing transactions Q1 2004 Q2 2008



$19.1bn

$27.8bn

$37.1bn

$30.5bn

$24.9bn

$15.8bn

$24.7bn

$15.3bn $16.5bn

$14.3bn $13.4bn

$9.1bn $9.0bn $7.8bn

$5.8bn

$3.8bn $3.3bn $4.4bn

Q1 '04

Q2 '04

Q3 '04

Q4 '04

Q1 '05

Q2 '05

Q3 '05

Q4 '05

Q1 '06

Q2 '06

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

Acquisition

Refinancing

New build


Eurozone wind farm financing rate, Euribor rate and ECB official rate

Source: New Energy Finance

1%

2%

3%

4%

5%

6%

7%

8%

Jan 2007 Apr 2007 Jul 2007 Oct 2007 Jan 2008 Apr 2008

Fed rate US Libor Total rate including spread

1%

2%

3%

4%

5%

6%

7%

8%


ECB rate Euribor Total rate including spread


US wind farm financing rate, US Libor and Fed funds rate


1%

2%

3%

4%

5%

6%

7%

8%


Fed rate US Libor Total rate including spread


Yields on tax equity in affordable housing and wind projects 2007 - 2008: %

Source: New Energy Finance Anecdotal evidence based on interviews with tax equity investors and wind project developers.

5.00%

7.00%

5.75%

6.50%

Summer 2007 Summer 2008

Affordable Housing tax yields

PTC yields


USD denominated contracts, Q4 2002- Q12008: Sample Size and $m/MW

Source: Companies, New Energy Finance Notes: 10 point rolling average, averaged by quarter of contract signing. Where no data points present, previous value from the previous quarter is usd

0

2

4

6

8

10

12

Q4_2

002

Q1_2

003

Q2_2

003

Q3_2

003

Q4_2

003

Q1_2

004

Q2_2

004

Q3_2

004

Q4_2

004

Q1_2

005

Q2_2

005

Q3_2

005

Q4_2

005

Q1_2

006

Q2_2

006

Q3_2

006

Q4_2

006

Q1_2

007

Q2_2

007

Q3_2

007

Q4_2

007

Q1_2

008

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

Number Price

38% rise in prices Q4 '06- Q1'08


Wind turbine supply lead times April 2001 - March 2008

Source: New Energy Finance Notes: Trend line reflects 30point rolling average beginning in April 2001. Lead times are based on expected start of delivery, less date of contract signed.

0

5

10

15

20

25

Sep '02 Mar '03 Oct '03 Apr '04 Nov '04 May '05 Dec '05 Jul '06 Jan '07 Aug '07 Feb '08

Lead times 30pt rolling avg


Reported US wind project power prices: $/MWh

Source: Federal Energy Regulatory Commission, New Energy Finance Desktop

Notes: Prices are average of reported quarterly contract prices weighted by volume of electricity. Reporting projects exclude projects connected in ERCOT zone.

$33.5/MWh $36.0/MWh

Average 2003 Average 2007

7% Increase

15.0

20.0

25.0

30.0

35.0

40.0

2003

Q4

2004

Q4

2005

Q4

2006

Q4

2007

Q4

Elec

tric

ity p

rice

($/M

Wh)

0

10

20

30

40

50

60

70

80

90

100 Number of reporting projects (RH) Weighted average price (LH)


NEX vs. Wind Sector

Source: New Energy Finance, Bloomberg Index Values as of 19 May 2008

80

100

120

140

160

180

200

220

240

Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08

NEX (89)

NEX Wind (15)

Developer/ Power

Generator (7)

Turbine Manufacturer (6)


Methodology explained in Research Note, “The cell maker’s dilemma: When will the silicon shortage ease?”. Based on data and assumptions updated in February 2008.

Projected solar silicon production by tier, 2006- 2011 ktonnes

Source: New Energy Finance, 2008

147

118

80

49

27 19

2006 2007 2008 2009 2010 2011

Silicon Tier 3

Silicon Tier 2

Silicon Tier 1


2006 US biofuels bull run


And investment shift to South America

$8.7bn

$13.1bn

$4.2bn

$1.0bn $1.0bn $0.7bn

$0.2bn

M&A/MBO

New investment 2001 2002 2003 2004 2005 2006

2007

VC/PE, Public Markets and Asset Finance only. Excludes re-investment adjustment. Grossed up value based on disclosed deals

$6.9bn

$4.0bn

$0.2bn $0.04bn


Biofuels contribution to food price increases, 2004 - 2007

Base currency: US$ Source: New Energy Finance, USDA

Max price impact of Biofuels

+ 2.7%

+ 17.0%

+ 8.1% 168%

136%

63% Sugarcane

Food Oils

Grains

Input cost $ depreciation Other Supply & Demand Biofuels


Grain supply-demand drivers, 2004-2007: m hectares (% change of land use)

Source: New Energy Finance, USDA

20.2 (2.9%)

2.7 (0.4%)

-2.6 (-0.4%)

-3.6 (-0.5%)

-4.8 (-0.7%)

-6.6 (-1.%)

-7.6 (-1.1%)

-24.1 (-3.5%) Population

Biofuels

Australia

Urbanisation

Yield Increase

Animal feed

Consumption habits

Added land

100%= 686m Hectares.

Total net impact on land availability

equivalent to -3.9%


Grain land use for ethanol production 2007 (k hectares)

Source: New Energy Finance, USDA

9,017 22 831

172 137

0 0

0

0

0 0 0

Rice

Sorghu m

Wheat

Corn

US EU 27 China

New Energy Finance New Carbon Finance www.newenergyfinance.com www.newcarbonfinance.com

Michael Liebreich +44 20 7092 8803 [email protected]

Decision support for your clean energy and carbon market investments

Clean Energy Investment Trends By Michael Liebreich Of New Energy Finance June 2008

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