Joffrey DUPUY MENA Analyst Make Consulting

Analyst PRESENTATION
MENA Wind Power
Outlook
02 April 2015
Joffrey Dupuy
[email protected]
Introduction
A few words about MAKE
Summary
 MAKE is one of the global wind industry's
premier 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.
Joffrey Dupuy
Market Analyst at MAKE

Master of Engineering (M.Eng.), Energy &
Environment

Master in Business Administration

2.5 years experience in Energy

Focused in Middle East and Africa
 MAKE is based in Aarhus (DK) and has offices in
Hamburg (DE), Chicago, Boston (U.S.) &
Shanghai (China).
 Publish industry leading wind energy research
reports, analysis and databases
 Consult on wind farm investments, market
assessment, supply chain dynamics, technology,
O&M, M&A advisory, business & market modelling
and offshore wind
 Due-diligence partner for European and
international PE and industrial investors
MENA Wind Power Outlook
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Introduction
A sample of our clients
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Less new installed capacity in 2014 than expected
MENA market to represent nearly 3% of the global market with 15GW on more
than 590GW in the next 10 years

MENA markets installed 430MW in 2014 compared to our expectation of 560MW
-
Mainly due to the result of slower than expected development progress and delays in a project in Egypt where
100MW were connected early 2015

MAKE forecasts MENA to install about 6.7GW from 2015 to 2020

In total, MAKE expects MENA markets to install 15GW over the next 10 years
accounting for nearly 3% of global market
-

This base case assumes that key MENA markets continue on a path to maturity
The MENA region requires assistance in establishing adequate regulatory frameworks
-
Some target markets lack policy mechanisms - Government intervention is necessary in emerging markets to
establish concrete support and to create a stable investment arena
Open the market to private investors - New liberalisation policies are being implemented in order to attract
new investors. Capital need to come from the private investors
Transmission constraints may impede growth - An insufficient or even non-existent grid may slow consistent
growth in markets challenged by limited transmission that is able to connect areas with quality wind resources
to load centers
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Operational capacity in the Middle East and North Africa at the end of 2014
Morocco and Egypt are clearly leading the region
MENA added 430MW in 2014; N. Africa added 410 MW while M. East only 20MW
Iran Others
112 20
Tunisia
241
791
Morocco
1.8GW
655
Egypt
Source: MAKE
<1MW
1 – 300MW
300 – 500MW
>500MW
Source: MAKE
Most of the operational capacity in MENA is located in North Africa, which represents
93% of the total operational capacity in MENA; Morocco and Egypt represent 85% of this
MENA Wind Power Outlook
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Market share in Middle East and North Africa
Gamesa leads the region with a monopoly in Tunisia
Turbine OEM cumulative market
share YE/2014
Asset owner cumulative market share
YE/2014
Nordex Others
Alstom
3%
2%
6%
Theolia Others
SUNA
4%
3%
5%
GDF Suez
Vestas
8%
12%
NREA
36%
Total
1.8GW
54%
Total
1.8GW
ONEE 11%
22%
Siemens
13%
Gamesa
Source: MAKE
STEG
19%
Nareva Holding
Siemens gained market share in the region in 2014 thanks to its 300MW Tarfaya project
in Morocco; Vestas did not add any capacity in MENA in 2014
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Ownership type breakdown in the Middle East and North Africa
MENA market mostly still state-controlled
Ownership type breakdown cumulative
YE/2014

Public
1.8GW
State-Owned 
4
3
The Morocco market is the most open to private
investment with only 11% of the market stateowned

All of the projects in Algeria, Egypt and Tunisia
are 100% state-owned; the first projects from
private investors awarded in 2014 in Egypt

Tunisia will reform its current renewable energy
regulatory framework following a new
government in place from February 2014
20%
7
Only 14 companies represented with five
operates in Morocco
Private
14%
66%
Limited private investors in the region
14 companies
Source: MAKE
While government investment has dominated, new liberalisation policies are being
implemented in order to attract new investors
MENA Wind Power Outlook
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Wind ressources in Middle East and North Africa
Western Sahara & the Red Sea coast - best development zones
Wind resources spread accross MENA with an average speed of 4 to 5 m/s
5 - 6.5 m/s
≥ 6.5 m/s
Note: Wind speed at 80m height
Source: MAKE, IRENA
Wind speed in MENA drives development interest in the region and is estimated to be
higher than 5m/s across the whole region with very few sites lower than 3m/s
MENA Wind Power Outlook
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Macro conditions in Middle East and North Africa
Morocco is the most politically stable market
Political instability is the biggest barrier in the MENA region
≤1
2
3
4
Note: Scope of study – see methodology slide
Source: MAKE, IMF
The dependency on fossil fuels for electricity production combined with a need for extra
generation capacity is driving wind capacity growth in the region
MENA Wind Power Outlook
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Regulatory conditions in Middle East and North Africa
Most MENA markets are without an energy regulatory agency
Morocco is still implementing an energy regulatory agency
≤1
2
3
4
Note: Scope of study – see methodology slide
Source: MAKE
A basic renewable energy regulatory framework and target have been implemented across
much of MENA, but these frameworks have yet to be utilized or put into practice
MENA Wind Power Outlook
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Track record in Middle East and North Africa
Few activity observed in the majority of the MENA country
Egypt, Iran and Morocco are clear leaders in the region
≤1
2
3
4
Note: Scope of study – see methodology slide
Source: MAKE
Only 7 of 19 countries had operational wind capacity at the end of 2014, totalling 1.8GW;
the region that previously ranked last in terms of installed capacity (sub-Saharan Africa)
MENA Wind Power Outlook
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Forecasts for onshore wind in Middle East and North Africa
2015 and 2016 to be stable before steep growth through 2024
MENA forecast, 2015e-2024e
(MW)
Steady growth expected in the region
Others
Jordan
Saudi Arabia
Egypt
Morocco
Tunisia
2,500
+10%
2,055
2,000
2,165 2,190
The Middle East and North Africa region will add
nearly 1.5GW per year on average from 2015 to
2024

Saudi Arabia to install its first MWs in 2017

Egypt and Morocco to grow side by side until
2017 when Egypt will take the lead

Israel and Jordan will grow from 2015 due to
better government support and involvement

Algeria connected its first MW in 2014; has
doubled its target to 5GW for 2030 giving more
confidence in the market
1,815
1,575
1,500
1,250 1,310
1,000
500

810
845
948
431
0
‘14
’15e
’16e
’17e
’18e
’19e
’20e
’21e
’22e
’23e
’24e
Source: MAKE
The MENA region will grow by 90% YoY in 2015, driven by Iran, Jordan and Israel while
momentum in Morocco and Egypt continues
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Cumulative forecasts for onshore wind in Middle East and North Africa
Morocco to lose pole position to Egypt by 2018
MENA cumulative forecast, 2015e2024e
(MW)
Others
Jordan
Saudi Arabia
Egypt
Morocco
Tunisia
MENA to install nearly 17GW by 2024

Development will remain concentrated in Egypt,
Morocco and Saudi Arabia in 2024 representing
66% of the MENA market

Despite the disbanding of KACARE in early 2015,
MAKE expects Saudi Arabia to lead the Middle
East sub-region after 2020

By 2018, Egypt will take the lead in terms of
cumulative capacity and keep the position at
least until 2024

Cumulative capacity in Morocco in 2020 will
reach 2.3GW confirming MAKE’s expectation on
the country to reach its 2GW target
17,935
18,000
15,545
15,000
13,180
+26%
12,000
10,975
9,035
9,000
7,360
5,975
6,000
4,650
3,627
3,000
2,707
1,822
0
‘14
’15e
’16e
’17e
’18e
’19e
’20e
’21e
’22e
’23e
’24e
Source: MAKE
The MENA region will grow steadily with a 25% CAGR from 2014 through 2024, with
15GW of new capacity, boosted by Morocco, Egypt and Saudi Arabia
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Forecasts for onshore wind in Middle East and North Africa
The grass is not necessarily greener in MENA
Barriers





Political instability
Low electricity prices
Market limited for foreign/private players
Limited experience in renewable energy project development
Insufficient or non-existent transmission system
Drivers




Good wind resources
Need generation capacity as demand is increasing very fast
Diversify the generation mix – Save the oil
Build an industry in the country
MENA Wind Power Outlook
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Forecasts for onshore wind in Middle East and North Africa
Key recommendations
The MENA region requires assistance in establishing adequate regulatory
frameworks
• Some target markets lack policy mechanisms - Government intervention is necessary in emerging markets to
establish concrete support and to create a stable investment arena
• Reform the electricity pricing mechanisms – Will make renewable energy economically advantageous compare to
conventional energy sources
• Open the market to private investors - New liberalisation policies are being implemented in order to attract new
investors. Capital need to come from the private investors
• Policies to be simplified or enhanced. Policies are too complicated to understand , too difficult to comply with, and/or
are not lucrative enough to attract investment
• Transmission constraints may impede growth - An insufficient or even non-existent grid may slow consistent growth
in markets challenged by limited transmission that is able to connect areas with quality wind resources to load
centers
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Methodology 1/2
Market Assesment Variables
Scoring
Macro
5-year average (GDP 2015-2019) = 3.0%+
Power demand vs supply
Dependence on fossil fuels (>85%) of total generation
One point for
each variable up
to four total points
Track Record
Regulatory
Political stability
Some level of policy mechanism in place for renewables
Plans for a renewables tender, RFP, or power auction
Functional energy regulatory agency
One point for
each variable up
to four total points
Renewable Energy target
Installed capacity >100MW
Project pipeline (under construction/planned) <500MW
Project pipeline (planned/proposed) ≥500MW
One point for
each variable up
to four total points
Turbine order backlog >25MW
Scope of study: Top 9 markets according to MAKE’s Q1 MOU 2015 – Algeria, Egypt, Iran, Israel,
Jordan, Libya, Morocco, Saudi Arabia, Tunisia
MENA Wind Power Outlook
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Methodology (2/2)
Forecasting and Assesment Methodology
MAKE’s forecast model
 Annual installation numbers are based on fully commissioned, grid-connected wind turbines
 Model based on four main categories: regulatory framework, macro conditions, project pipeline,
and transmission
 Supportive data generated from several different industry tracking mechanisms and MAKE’s vast
industry network
Determination of Research Focus
 This analysis focuses on emerging markets of tomorrow that will not necessarily start sustained
development until 2015+
 Markets were selected based on forecasted CAGR 2014-2024 as well as new installed capacity
during this period
MAKE’s market assessment model
 Countries evaluated using the same categories as in our forecast model with a more general
focus on track record
 Several variables that influence the condition of each category are analyzed and scored on a fourpoint scale; for example, in the macro category we do not just evaluate average 5-year GDP, but
also items like competition from conventional fuel sources and renewable targets as a percentage
of total energy demand
 Categories are weighted according to importance in order to calculate an overall market
assessment score
MENA Wind Power Outlook
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Contact
Joffrey Dupuy
[email protected]
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.
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MENA Wind Power Outlook
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