GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / / / / / / / / / / / / / / / GLOBAL STEG MARKET OUTLOOK ESKOM CSP AND SOLAR AUGMENTATION CONFERENCE, JOHANNESBURG 26 AUGUST 2013 DEREK CAMPBELL

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / THE DEFINITIVE SOURCE OF INSIGHT, DATA AND NEWS ON THE TRANSFORMATION OF THE ENERGY SECTOR San Francisco Sao Paulo Washington New York Cape Town Sydney London Beijing New Delhi Hong Kong Tokyo Singapore Zurich

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / COVERAGE: UNIQUE BREADTH.... Wind Solar Geothermal Biofuels, Biomass & Waste to Energy RENEWABLE ENERGY Smart Grid & Demand Response, Power Storage, Advanced Transportation, Energy Efficiency ENERGY-SMART TECHNOLOGIES CCS WATER EU ETS Australia Global / Kyoto North America CARBON MARKETS EU RECs North America RECs Asian RECs RENEWABLE ENERGY CERTIFICATES POWER SECTORSMARKETS GAS

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / CONTENTS 1. CURRENT STATE OF THE MARKET 2. POTENTIAL TO REDUCE LCOE AND BEYOND 3. IMPLICATIONS OF NATURAL GAS ON STEG

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / NEW BUILD ASSET FINANCE OF STEG PROJECTS BY REGION, ($BN) Source: Bloomberg New Energy Finance

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / GLOBAL SOLAR THERMAL CAPACITY, (MW) Source: Bloomberg New Energy Finance

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / ABANDONED STEG PROJECTS (MW) Source: Bloomberg New Energy Finance

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / WHY THE SLOWDOWN? Initial capital expenditure is high and there have been bankruptcies as companies struggle with liquidity Partly in consequence of runaway PV build (and also the Spanish debt crisis), government support has been removed or switched to PV. PV wins solar tenders. Rapid decline of PV costs makes STEG a less attractive option for generating clean energy from large sunny areas PV POLICY SUPPORT FINANCE Increasing concern over availability of water resources for cooling and washing WATER

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / CONTENTS 1. CURRENT STATE OF THE MARKET 2. POTENTIAL TO REDUCE LCOE AND BEYOND 3. IMPLICATIONS OF NATURAL GAS ON STEG

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / SOLAR THERMAL LCOES ($/MWH) Source: Bloomberg New Energy Finance

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / TECHNOLOGY INNOVATION Cost of components (eg mirrors, steam turbines) is extremely high Each plant is designed differently, so skilled engineers are required and customisation difficult Reducing component costs through optimising design to use less material, or lower cost material, or to improve efficiency Achieve economies of scale through increasing the plant size Add storage, or hybridise STEG with fossil fuel, to increase utilisation of the turbine. This can also help STEG power output match power demand – something PV or wind cannot do Source: Bloomberg New Energy Finance CURRENT COSTREDUCING COSTS

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / CONTENTS 1. CURRENT STATE OF THE MARKET 2. POTENTIAL TO REDUCE LCOE AND BEYOND 3. IMPLICATIONS OF NATURAL GAS ON STEG

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / GAS EFFECTS ON STEG Gas reserves risen by 34% between Large pipeline of LNG terminals and exploration Cheaper gas means cheaper electricity Gas sets the price of electricity and reduces peak hour prices for STEG Source: B.P, Bloomberg New Energy Finance TCM BCM

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / LCOE IN 2013 ($/MWH) Source: Bloomberg New Energy Finance

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / CONTENTS 1. CURRENT STATE OF THE MARKET 2. POTENTIAL TO REDUCE LCOE AND BEYOND 3. IMPLICATIONS OF NATURAL GAS ON STEG

GLOBAL STEG MARKET OUTLOOK, 26 AUGUST / / 2014 AND BEYOND There will be some markets where the advantages of STEG over PV are valued – for example, weak power grids, or countries with a strong evening electricity demand peak Several countries (Australia, Morocco, India) are also offering tenders for one or two large STEG projects Saudi Arabian market 2.1GW in 2 rounds of bidding, by GW (although BNEF believes the long term target may be shifted towards PV) Cost reductions and technology improvements continue to be made by companies like BrightSource and Abengoa, which are building plants and gaining the experience to make the technology better

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