October 20, 2008 09:57 ET

Examine the Rise of Renewable Energy Strategies Amongst Major European Utilities

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The rise of renewable energy strategies amongst major European utilities


Increasing regional and state-based climate policies, support mechanisms and renewable targets are instigating long-term renewable strategies amongst the major European utilities. By adding renewables to their generation portfolios at a record pace, these firms are also faced with having to develop equally aggressive and robust renewable retail strategies.


- Knowledge of the various Kyoto-driven policies, mechanisms and national targets that are driving record investments in renewable power generation

- Comprehensive analysis of various leading utilities - Iberdrola, EDP, Enel, EDF, Endesa, E.ON, RWE, ESB, ESB, ENBW, Centrica, Nuon, EVN, RWE, SSE

- Analysis of the renewable assets held by investors and independent power providers, key to building competitive advantages among major utilities.

- A concise examination of each firm's traditional / renewable capacity and generation mix, investment strategy and growth prospects in renewables


Utilities and merchant generators are scaling their renewable portfolios at a record pace amid expectations of favorable government frameworks, persistent high carbon and hydrocarbon prices, and increasingly stringent emission regulations. Renewables will play a more dominant, more strategic part of the generation mix, driven by the supply side.

Large hydropower makes up the bulk of the total European renewable capacity. Yet, wind power generation is by far the most scalable option, with the major European utilities aiming to grow their asset base by several thousand megawatts or by as much as 41% annually. Enel and Iberdrola dominate the hydropower and wind power sectors respectively.

The rapid development of merchant generator renewable portfolios will increasingly shape utilities' green retail strategies: institutional investors and IPPs will continue to play a significant role in the supply of renewable power as they ramp up investment levels and installed capacity targets in the field of renewable power generation.

Reasons to Purchase

- Benchmark your company against the leading players, develop and improve your competitive strategy and profit from future growth opportunities

- Understand the capacity and generation mix both in terms of renewable and non-renewable energy as well as within renewable energy

- Discover how European utilities plan to invest in renewable energy and the impact this will have on their capacity mix

European policy has instigated unprecedented uptake of renewable power
 generation by the major European utilities 2
The Kyoto Protocol instigated EU policies aimed at curbing harmful emissions
 and promoting renewables 2
Born from the Kyoto Protocol, the EU Emissions Trading Scheme is a major
 pillar of EU climate policy 2
At present, at least 64 countries have a national target for renewable
 energy supply 4
The RES-E directive sparked the adaptation of legal frameworks in all EU
 countries 5
The EC also recently proposed a directive on the promotion of the use of
 energy from renewable sources 6
As a result, the renewable energy industry has experienced unprecedented
 levels of growth 7
Large European utilities have placed renewables at the heart of their
 corporate strategy 8
Large utilities have achieved efficiencies, scale and pace by consolidating
 their renewables operations 9
European utilities have grown their renewable portfolios at a record pace
 from a low initial installed base 10
The majority of renewable power generation assets are owned by firms for
 which renewables have evolved as a strategic imperative 11
Of all the European utilities, Iberdrola leads the way in its long-term
 commitment to wind power generation 11
Iberdrola has placed renewables at the heart of its corporate strategy 13
Despite strong fundamentals, Renovables has slid since its IPO, following
 fears over recession and possible regulatory changes 14
Renovables' recent declining share price was largely driven by global and
 local market pressures 15
Iberdrola's aggressive strategic investment plan will continue to deliver
 dominance in the global wind generation market 16
Energias de Portugal is the second largest wind asset owner amongst the
 large European utilities 17
Of all the European utilities, EDPR has the second largest wind capacity
 growth target relative to its existing capacity 18
Large hydropower accounts for the bulk of Enel's renewable power generation
 capabilities 19
Of all the European utilities, Enel has the most aggressive wind capacity
 growth target relative to its existing capacity 20
Enel's strategic renewables investment plan delivered a record increase in
 wind capacity in 2007 21
The rapid development of merchant generator renewable portfolios will
 increasingly shape utilities' green retail strategies 22
The mid-tier renewable asset owners have traditionally applied domestic
 strategies as a means of complying with regulatory requirements; a trend
 which is now rapidly changing 23
EDF was one of the first players to consolidate its portfolio of renewable
 power assets 23
Since the IPO, EDF EN has delivered strong growth in terms of both
 operational and financial performance 24
EDF EN has significantly outperformed the market, despite recent fears over
 recession and possible regulatory changes 25
EDF EN's dominant market position and efficient horizontally integrated
 model have kept the company ahead of the curve 26
Endesa is delivering against its strategy to further its global and
 sustainable energy model based on a larger mix of renewables 27
E.ON's aggressive investment strategy in renewable energy is likely to keep
 it ahead of its closest rival EDF EN 28
RWE is the latest of the large European utilities to pool its renewables
 activities separate from its core generation activity 29
RWE Innogy's investment plan is sufficient to more than triple its renewable
 installed capacity by 2012 30
The majority of smaller 'green' asset owners also exhibit strong growth
 objectives in the field of renewables, albeit from a much lower installed
 base 32
SSE's renewable strategy stretches beyond mere compliance with domestic
 regulatory requirements 32
ESB, ENBW and EVN have followed suit; only Nuon's long-term commitment to
 renewable energy is under question 33
Reconciling aggressive utility renewable strategies with weak consumer
 demand for 'green' energy presents a great opportunity 34
Glossary 35
Ask the analyst 35
Datamonitor consulting 35
Disclaimer 35
List of Figures 
Figure 1: More than one third of the EU's power would have to come from
 renewable sources in order to meet the overall 20% target 4
Figure 2: No less than 60 countries (37 developed and transition countries
 and 23 developing countries) have some form of policy to promote renewable
 power generation 5
Figure 3: No less than 60 countries (37 developed and transition countries
 and 23 developing countries) have some form of policy to promote renewable
 power generation 5
Figure 4: Countries with an existing share of final energy supply that meets
 or exceeds the draft directive's 'interim trajectory' will benefit most 6
Figure 5: Global renewable electricity capacity reached 207GW in 2006 7
Figure 6: Large hydro in developing countries accounts for the bulk of the
 world's renewable power generation capacity 7
Figure 7: Shifting strategy drivers have impacted utilities, forcing them to
 evaluate their options in renewables 8
Figure 8: Large European renewable asset owners integrate horizontally along
 the value chain by initiating their renewable development activity
 separately from their core generation activity 9
Figure 9: Enel leads the way in terms of total installed capacity of
 renewable power generation. When large hydropower is excluded, Iberdrola
 boasts the largest renewable installed capacity. 10
Figure 10: In 2007, 17,414MW renewable capacity (9,710MW hydro) accounted
 for 41% of total capacity 11
Figure 11: In 2007, 29TWh renewable generation (16TWh hydro) accounted for
 24% of total output 12
Figure 12: The renewables arm of Iberdrola, Iberdrola Renovables, is a
 profitable and diversified business with strong growth prospects 13
Figure 13: Markets recognize that the wind industry is largely at the mercy
 of government programs that drive artificially stimulated demand 14
Figure 14: Since its IPO, Renovables has underperformed its largely
 vertically integrated peer group, as well as the Spanish Ibex index 15
Figure 15: Iberdrola is currently on track to deliver its short- (2008)
 and medium- (2010) term strategic plan 16
Figure 16: In 2007, 9,078MW renewable capacity (6,048MW hydro) accounted for
 58% of total capacity 17
Figure 17: In 2007, 29TWh renewable generation (16TWh hydro) accounted for
 24% of total output 17
Figure 18: EDPR is allegedly on track to deliver on its 2008 yearly target
 of 36.5% (+1.4GW) wind capacity growth 18
Figure 19: In 2007, Enel had a renewable energy capacity of 30,468MW,
 accounting for just over 40% of its total electricity generation capacity
Figure 20: Enel's 2008-12 strategic investment plan calls for extremely
 aggressive increases (+41% CAGR) in wind power installations 20
Figure 21: Enel's planned growth in renewables over the 2007-11 period
 delivered a 61% increase in wind capacity in the past 12 months 21
Figure 22: Merchant generators contract the output from their considerable
 renewable portfolios direct to utilities and industry through PPAs 22
Figure 23: Installed capacity at EDF Energies Nouvelles (EDF EN) - EDF's
 'green' energy business - almost doubled between 2005 and 2007 23
Figure 24: In 2007, the proceeds from the capital increase allowed EDF EN
 to accelerate its growth, thereby meeting or exceeding its objectives 24
Figure 25: In Q1 2008, investor sentiment towards EDF EN remained
 relatively strong, despite widespread bear market conditions 25
Figure 26: Since its IPO in Nov 2006, EDF EN has outperformed its largely
 vertically integrated peer group, as well as the French index 26
Figure 27: In 2007, Endesa increased its renewable energy capacity by 29%
 (358MW) and its generation output by 16.5% (388GWh) 27
Figure 28: As at May 2008, E.ON Climate & Renewables held 1,351MW of
 renewable installed capacity, mainly wind assets in the US 28
Figure 29: Renewables constitute a modest part of RWE's capacity mix and
 generation output, a trend which is likely to change by 2012 29
Figure 30: Innogy's aggressive renewable capacity growth target (of +41%
 CAGR) - which is second only to Enel in Europe - will be met by an average
 annual investment of EUR 1 billion 30
Figure 31: Innogy plans to grow its renewable capacity to more than 10GW by
 2020 31
Figure 32: SSE's recent acquisition will provide it with the scope to build
 on its UK-leading position in renewable energy, ahead of Centrica 32
Figure 33: EVN and Nuon's proportion of renewable capacity assets relative
 to total assets is very significant at 7% and 8%, respectively 33
Figure 34: The gap will be bridged by thinking of 'green' energy as a
 differentiator which is gaining acceptance as a more sound basis of
 competition than simply price or even service 34

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