Appa Presentation Macrostudy

Study of the macroeconomic impact of Renewable Energies in Spain

Piet Holtrop, Attorney at Law at APPA member firm HOLTROP S.L.P Transaction & Business Law,

Barcelona, May 21st 2010

01.- Introduction

¿What is APPA?

Founded in 1987, we are the only association in Spain which covers all renewable technologies on a national level.

APPA is comprised of 500 companies with interests in 10 different renewable technologies. The association defends an integral vision of renewable technology and is active in Spain and Europe.

APPA sections:

BiofuelsBiomassWindGeothermal (Low temp)Geothermal (High temp)

MarineMiniwindMinihidraulicSolar PhotovoltaicConcentrated Solar Power

02.- Study of the impact of renewable energies

What does this study do for us?

The study “Study of the macroeconomic impact of Renewable Energies in Spain”, carried out by Deloitte is the first study that evaluates the impact of clean energies in our society in a global way.

Some aspects of the study are:

» Economy» Employment» Environment» Supply risk» Human health» Price of electricity

03.- Impact of renewable energies in the economy (1)

Steepest growth rate

The sector grows faster than the rest of the Spanish economy.

3.3% 4.4%3.3%

8.7%4.0%

37.3%

-2.8% 0.5%

14.4%

-10%

0%

10%

20%

30%

40%

50%

2006 2007 2008

% G

row

th

Spain

Renewable Energies

Energy Sector


Contribution to the Spanish GDP (2008)

Direct: 4.805.000.000 €Indirect: 2.510.000.000 €

0,67% of GDP

4,876

5,3085,616

7,315

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2005 2006 2007 2008

GD

P in

re

al v

alu

es

(b

as

e 2

00

8)

-m

illio

n €

Direct Induced Total Impact


Contribution to the GDP per renewable technology

Wind – 48,1% Photovoltaic – 25,3% Biomass – 14,5% Concentrated Solar – 11% Minihidraulic – 7,8% Biofuels – 1,9% Miniwind – 0,7% Geothermal (H. T.) – 0,2% Geothermal (L. T.) – 0,1% Marine – 0,1%

Fiscal balance

The sector is a net fiscal contributor in all researched years:(2005-2008).

The fiscal balance was 404.000.000 euros in 2008


0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

2005 2006 2007 2008

€n

om

ina

les

Subsidies

Local taxes, Property tax

Corporate Income Tax

Other taxes and fees

04.- Impact of renewable energies in the environment (1)

The best tool to avoid greenhouse gas emisions

The Sector avoided the emission of 23,6 million tonnes of CO2 in 2008, worth 499 million euros, 5,7% of all emissions in Spain. If the policy objectives had been met, this would

have been twice as much.

18,899,730 19,374,506

22,565,18423,649,572

336

218

501 499

0

100

200

300

400

500

600

700

800

900

1000

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2005 2006 2007 2008

€in

no

min

al v

alu

es -

mil

lio

ns

CO

2eq

(to

nn

es)

05.- Impact of renewable energies in energy dependence (1)

89% of Spain’s energy is imported. In 2008 this amounted to 44 billion euros, 50% of Spain’s energy cost. A supply cut would have severe consequences.

The supply default of one country during one month would cause losses equivalent to 0,75% of GDP.

0.0%

0.2%

0.5%

1.0%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1 día 10 días 20 días 43 días

los

s in

te

rms

of

% o

f G

DP

05.- Impact of renewable energies in energy dependence (2)

Renewable energies avoided importation:

In 2008 10 million toe (tonne of oil equivalent) of fossil fuels were avoided:

1 toe is 7,4 boe (barrel of oil equivalent)

06.- Impact of renewable energies in the electricity price (1)

How is the price of electricity determined?The price of all the electricity is paid taking the production cost of the last MWh matched in the market (this is, the highest price), the existence of Renewable Energies reduces this impact by fixing lower marginal prices.

Renewable energies enter the market at zero price and thus reduce the final price.


Renewable energies reduce the price for generation of electricity.

The result obtained from this analysis is that the savings due to a lower marginal cost in the electricity market resulting from the existence of renewable energies amounted to 4,919 million € in 2008 (this represented a saving of 19.94 € per MWh acquired in the market)

4,574

2,255

3,698

4,919

0

1,000

2,000

3,000

4,000

5,000

6,000

2005 2006 2007 2008

in m

illi

on

€


¿Why pay feed in tariffs to renewables?

In 2008 the surplus is of 619 million euros

-910

-1,314-1,661

-2,605

837

1,5251,311

2,725

336218

501 499

-3000

-2000

-1000

0

1000

2000

3000

2005 2006 2007 2008

€in

no

min

al

va

lue

s -

mill

ion

s Incentives

Economic impact of avoiding fossil fuel imports

Economic impact of avoiding CO2 emissions

07.- Compliance with policy goals (1)

Spain is still far from meeting its goals:

Primary energy:

Electricidad:

Spain met its emission goals 2 years before planned

7,6% (2008) 12,1% (goal 2010)

20,4% (2008) 30,3% (goal 2010)

8.- Conclusions (3)

Renewable energies: the basics of production model are inverted:

The tendency of fossil fuel prices is upwards, because we are running out of oil, and exploration technology is becoming more

expensive. The cost of generation with renewable energy decreases every year, reaching economies of scale, and the

resources used are infinite.

An increasing demand of fossil fuel increases its price, an increasing demand of renewable energies reduces its price.

8.- Conclusions (4)

¿Are renewable energies expensive?

Data 2008:

2.605 M € (feed in tariff) 4.919 M € (generation price saving)

2.725 M € (Avoided import)

499 M € (avoided CO2 emisions )

404 M € (net fiscal balance)

132 M € (savings health expenses)

120.722 employees

315 M € (R&D investment)

1.227 M € (Net commercial balance)

Thank you for your attention

The study which is basis of this presentation will be available at:

www.appa.es

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Appa Presentation Macrostudy