Energy Renaissance: Why You Need an Emerging Market Strategy for Success

Energy Renaissance: Why you need Energy Renaissance: Why you need an Emerging Market Strategy for an Emerging Market Strategy for

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Industry Best Practice: Using a Systematic Approach to Industry Best Practice: Using a Systematic Approach to Designing Country Pipeline Systems (GILDesigning Country Pipeline Systems (GIL--100 Index)100 Index)

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Roberta Gamble

Partner, Energy & Environment

Frost & Sullivan

Today’s Presenters

Importance of Emerging

Markets to Energy & Energy

Intensive Industries

Frost & Sullivan’s GIL-100

Energy and Energy Intensive Dr. Vinod Aggarwal

2

Energy and Energy Intensive

Industries (EII) Index

Leveraging the GIL-100 EII

Index

Dr. Vinod Aggarwal

Chief Economist, Frost & Sullivan

John Raspin

Partner, Energy & Environment

Frost & Sullivan

The Importance of Emerging Markets to Energy & Energy Intensive

Industries

Roberta Gamble

3

Industries

Major Energy Trends

Global Energy Trends and Inflection Points

Energy Inflection Points

Iraq to emerge as a strategic source of world oil supply by the 2030s

Growing World Energy Consumption

• Expected to grow by 30% by 2040 (over 2010)

Green Energy

• Use of renewable energy doubled

!

4

Shale Gas

• Commercial production in the

United States

• Huge reserves in China

United States to replace Saudi Arabia as the largest oil exporter by mid 2020

Global nuclear power generation will be scaled down following Fukushima Daiichi disaster

• Use of renewable energy doubled

between 2000 and 2012

• Use of oil declining

• Use of natural gas increasing

!

!

Source: Frost & Sullivan

Energy Renaissance: Renewable Energy Shapes the World

Forms of Renewable Energy

Hydro Power

Wind Power

Solar Photovoltaics (PV)

Policy Support• Less than 50 countries worldwide had renewable

energy support policies in the past decade• As of 2013, 120 countries have renewable energy

policies

Cost Advantage• Technological innovation has led to a decline in PV

Energy Renaissance: Renewable Energy takes the Lead

5

Concentrated Solar Power (CSP)

Biomass and Waste

Geothermal Power

Marine Power

module prices by up to 75 percent between 2008 and 2012

• The price of wind turbines has declined by 25 percent during the past three years

Focus on Emerging Markets• 2012 witnessed a marked decline in renewable

energy investment in developed countries• The economic downturn in the Western world led to a

gradual shift of investment in renewable energy to emerging countries


Renewable Energy Landscape Changes: Emerging Markets in Focus

With policy uncertainty and budgetary constraints looming in the US and Europe, investments are being channeled into renewable energy in emerging markets

Factors Promoting Renewable Energy in Emerging Nations

Regional, national and state legislation mandates or incentives for renewable energy

Targets for Renewable Energy : Emerging Nations

Turkey :23 percent by 2023

6

Growth of smart cities/urbanization

Reduction in Oil Import Dependence

2023

Israel and Jordan :10 percent by 2020

UAE : 7 percent by 2020

Argentina :8 percent by 2016Brazil: Phase out fossil fuel by 2019 in favor of renewable energy

South Africa: Resource specific renewable energy target by 2030

Thailand :20 percent by 2020

Cost Efficiently Meeting Growing Energy/Electricity Demands Source: Frost & Sullivan

North America

255.9323.8

393.5

EU

2010 2015 2020

283.9 409.4503.8

Russia

2010 2015 2020

48.752.0 56.8

China

2010 2015 2020

250.9

404.8

538

Renewable Energy Installed Capacity Projected to Increase in

Emerging Markets

Renewable Energy Installed Capacity, Global, 2010, 2015 and 2020

CAGR (2010-2020):5.9 %

CAGR (2010-2020): 1.6 %

7

2010 2015 2020

OECD APAC

2010 2015 2020

83.4 104.7130.7

Latin America

20152010 2020

157.8 178.7202.6

Africa

52.638.4

27.5

202020152010

India

2010 2015 2020

84.856.2

130

All figures are in Gigawatt. Source: Frost & Sullivan

CAGR (2010-2020): 4.4 %

CAGR (2010-2020):2.5 %

CAGR (2010-2020):6.7 % CAGR (2010-2020):8.7 %

CAGR (2010-2020):7.9 %

CAGR (2010-2020):4.6 %

Investment in Renewable Energy on the Rise in Emerging

Economies

$294 billion will be spent on wind and solar

power installed capacity in China per its five yearplan till 2015

$9.7 billion invested in Latin America to

develop renewable energy in 2012 with Brazil,Mexico and Chile being the leaders

8

$12 million investment by Google in a PV

plant in South Africa

$813 million investment by Investec in

renewable energy generation in South Africa


Diverse challenges that can exist in an Emerging Market

Regulatory

Need for local partners and/ or networks

Product customization

Competition

Robust business planning

Infrastructural development

Emerging Market Entry Strategies Need to Address a Mix of

Client Challenges

9

Regulatory challenges

Competition from local players

Risks in entering Emerging Markets• Financial risk• Risk to business continuity• Product risk• Market risk


Poll Question #1

10

Frost & Sullivan’s GIL-100 EII Index

Dr. Vinod Aggarwal

11

Index

Solution for Client Challenges

What is our Value Proposition?

The Emerging Market Innovation program’s fundamental value proposition: define,design and drive an Emerging Market Strategy.

Why is an Emerging Market Strategy Important?

To address dramatic global energy market changes, we help companies create a country pipeline to understand supply and demand that uses a data driven best

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country pipeline to understand supply and demand that uses a data driven best practices approach

What is our Best Practices Approach?

• Leverage Growth, Innovation & Leadership (GIL) 100 Index and Country Pipeline Systems

• Customize the model based on criteria that is important to your business• Continuously monitor the country pipeline systems for opportunities and changes• Adopt an immersive approach by networking with industry peers and emerging market

expertsSource: Frost & Sullivan

Emerging Market Growth Monitor and Global Economic Tracker

Global Economic Tracker- Insights and

GIL-100 Index

Economic Insights

I-CIF-DSD

Economic Outlook Briefings (4 EMG-EI+ 4 REOs)

Excel+ PPT (32+16)

GET-IT

Emerging Market Growth Monitor

GPS+GC Quarterly updates for:

Emerging EconomiesAPAC, Europe, Middle East & Africa, LATAM, BRICS

Developed Economies

North America, Western Europe, Rest of the World

13

Emerging Market Growth Monitor (EMGM)Global Economic Tracker- Insights and

Trends (GET-IT)

GIL-100 Indices

• Energy Intensive Industries

• Water & Wastewater

Economic Insights

I-CIF-DSDs (BRICS)

Economic Outlook Briefings

• Quarterly updates on economic trends and

industry indicators

• Specific insights from our emerging market

experts

• Economic and industry correlations unique

to a company’s business enabling them to

navigate uncertainties

Best Practices Approach : GIL-100 Index for Energy

Intensive Industries

Growth, Innovation, 1

Supply Side Index


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Growth, Innovation, and Leadership Indicators

Country Coverage

Index Construction

GDP Brackets

2

3

4

Supply Side Index• The GIL-100 Energy Supply Side Index ranks countries that produce

energy on a large scale

• Manufacturers of equipment used in the production and supply of energycan evaluate sales opportunities (turbine manufacturers, transformers,heat exchangers)

Demand Side Index• The GIL-100 demand side index ranks countries that are most conducive

to industrial development (energy intensive industries)

• The index will help manufacturers of equipment used in industries that areenergy intensive identify sales opportunities (pasteurisers, pumps, motors)

Using the GIL-100 Index: A Simple 3-Step Process

Select Pillar Weights

100 Countries

50 – 30 Countries

50 – 30 Countries

Develop a Country Pipeline31

15

Select Weights for Indicators of Each Pillar2

5 – 10 Countries by Region and by GDP Bracket


Sample Analysis: Three-Phased Project Process

PHASE I PHASE II PHASE III

AS

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Evaluate and weight/ rank 30 target countries for market expansion on

FIT

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Growth Opportunity:Available customer base

Business MilieuBusiness Milieu

Business setup requirements, Taxation,

Total Electricity Net

Generation

Total Electricity Net

Consumption

Evaluate top countries for market expansion

An interactive strategy development session between Frost & Sullivan and Client to

Prioritize and select the best countries for growth based on capabilities, fit and external opportunities.

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BR

OA

D A

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ES

SM

EN

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30

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Business setup requirements, Taxation, Labor Laws, etc.

Corporate EnvironmentCorporate Environment

Ease of doing business, corruption perception, trading and infrastructure

Growth ProspectsGrowth Prospects

Market sizing and forecasts, market trends

Country Risks

Political, economic and financial risks

Market AnalysisMarket Analysis

Value chain analysis, customer analysis and competitive landscape

Consumption

Economics

Infrastructure

Other

Petroleum Consumption

opportunities.

Generate a roadmap for target countries and market entry strategies in Phase IV


Emerging Market Innovation (EMI) Value Proposition for Energy

and Energy Intensive Industry Clients

Economic Insights

• Economic insights are designed to leverage a

systematic data foundation and develop valuable

insights on growth trends that are currently impacting

]

17

insights on growth trends that are currently impacting

global markets

• They delve into pertinent economic issues and present

analysis and actionable insights that are imperative for

impending business decisions

GIL 100 IndexRenewable Energy

]

]

Smart Cities


Poll Question #2

18

Leveraging the GIL-100 Index for EII

John Raspin

19

for EII

Making all the Right Moves : Structuring your Emerging

Market Strategy

• How should your company prioritize emerging markets beyond BRIC countries based on the

factors most relevant to your company and

products?

• If I look for a sales opportunity in Russia, how cost competitive will I be compared to local players?

Companies are shifting toward emerging markets for better sales opportunities and also to penetrate high growth domestic markets

20

competitive will I be compared to local players?

• Which countries make the most sense for sales opportunities for energy equipment based on their industry outlook and ease of doing business?

“We were delighted with the Macro-to-Micro perspectivethat Frost & Sullivan proposed as part of supportingour quest to develop a systematic Country PipelineSystem. A data driven decision approach that typicallychallenges a "gut feel" approach to the next bigmarkets was important for us…”

– Senior Management of a leading equipment manufacturing company

?Tier II

India, Saudi Arabia, UAE, Qatar

Tier IChina, Russian Federation, Brazil


Important Pillar IndicatorsBase Model Rating

CustomizedModelRating

Total Renewable Electricity Net

Looking for the fastest growth markets in Europe to sell wind turbines

European Wind Turbine

Manufacturing Company

Customizing the GIL- 100 EII Supply Side Index

Index Pillar

Base Model Pillar

Weight

CustomizedModel Pillar

Weight

21

Total Renewable Electricity Net Generation

Wind Electricity Net Generation

Total Renewable Electricity Net Consumption

Total Renewable Electricity Installed Capacity

Wind Electricity Installed Capacity

� �� Low Medium High Very HighRemoved

Growth 70 70

Innovation 20 20

Leadership 10 10

��

��

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EIISupply

Side Rank

GILCountry

Global Results (Top 10)

EII Supply

Side Rank

GILCountry

GIL -100 Energy Intensive Industries Supply Side Index Result

Comparison: Base Version and Customized Version

EIISupply

Side GIL

Country

Customized Regional Results: Europe and Central Asia (Top 5)

Base Version Results

Customized Version Results

Regional Results

Top Emerging Countries

22

Rank

1 United States

2 China

3 Germany

4 Japan

5Russian

Federation

6 Canada

7 France

8 Brazil

9 Korea Rep.

10 Switzerland

1 Germany

2 Norway

3 Sweden

4 France

5 Switzerland

EII Supply

Side Rank

GIL Country

1Russian

Federation

2 Kazakhstan

3 Cyprus

4 Turkey

5Czech

Republic

Side Rank

Country

1 China

2 United States

3 Canada

4 Germany

5 Brazil

6 Japan

7 Norway

8 Sweden

9 France

10 Singapore

Countries




Total Milk Production

Looking for potential markets in Asia to sell milk pasteurizers

North American Equipment Manufacturing

Company in Food and Beverage Industry

Customizing the GIL- 100 EII Demand Side Index

Index Pillar

Base Model Pillar

Weight


Weight

� ��

23

Total Milk Production

Butter and Other Products

Cheese Production

Evaporate and Condensed Milk Production

Skim and Butter Milk Production

Fresh Cream Production

Gross Expenditure on Research and Development (% of GDP)


Growth 40 10

Innovation 40 80

Leadership 20 10

�

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EIIDemand

Side Rank

GIL Country


EII Demand

Side Rank

GIL Country

GIL -100 Energy Intensive Industries Demand Side Index Result


EIIDemand

Side GIL Country

Customized Regional Results: APAC(Top 5)



Regional Results

Top Emerging Countries

24

Rank

1 China

2 United States

3 Germany

4 Japan

5 France

6 India

7 Canada

8 Korea, Rep.

9 Singapore

10 Netherlands

1 China

2 Japan

3 Korea, Rep

4 Singapore

5 India

EII Demand

Side Rank

GIL Country

1 China

2 India

3 Malaysia

4 Thailand

5 Philippines

Rank

1 United States

2 Germany

3 China

4 Japan

5 France

6 Korea, Rep.

7 Singapore

8 Netherlands

9 India

10 Sweden

Countries




Looking for growth markets in LATAM to sell electric arc furnaces

European Equipment Manufacturing

Company in Steel Industry

Customizing the GIL- 100 EII Demand Side Index

Index Pillar

Base Model Pillar

Weight


Weight

��

25

Crude Steel Production

Apparent Steel Use

Import of Iron and Steel

Export of Iron and Steel

Electricity Consumption by Industry and Construction

IIP Growth


Growth 40 70

Innovation 40 20

Leadership 20 10

��

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EIIDemand

Side Rank

GIL Country


EII Demand

Side Rank

GIL Country

GIL -100 Energy Intensive Industries Demand Side Index Result


EIIDemand

Side Rank

GIL Country

Regional Results: Emerging LATAM Countries (Top 5)





26

Rank

1 China

2 United States

3 Germany

4 Japan

5 France

6 India

7 Canada

8 Korea, Rep.

9 Singapore

10 Netherlands

1 Brazil

2 Chile

3 Mexico

4 Argentina

5 Uruguay

EII Demand

Side Rank

GIL Country

1 Brazil

2Argentina

3 Uruguay

4 Chile

5Peru

Rank

1 China

2 United States

3 Germany

4 Korea, Rep.

5 Japan

6 India

7 Singapore

8 Brazil

9Russian

Federation

10 France

Version Results


GIL-100 Index Workshop

Macro Micro

GIL-100 Index Workshop

A ½ day onsite or virtual briefing session where a team of qualified and trained Frost & Sullivan facilitators and analyst conduct presentations and guide clients on how to prioritize growth opportunities and define growth strategies. Workshop requirements & content must be defined and agreed in advance.

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½ Day WorkshopGIL-100 Index Detailed Country Investigation

In Scope Not In Scope


Who are Your Regional Contacts?

EuropeEnguerran Ripert

Cyril Cromier

Roberta Gamble/ Ravi K/ John Raspin

Global Energy Champions

North AmericaVishal SapruNils Frenkel

28

APACSuchitra Sriram

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• Designing an Emerging Market Strategy?

• Creating a Country Pipeline Systems?

• Emerging Market Economic & Industry Indicators

• Strategic Scenario Planning?

What would you like to see from Frost & Sullivan?

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• Other?

Please inform us by “rating” this presentation.

Frost & Sullivan’s Growth Consulting can assist with your growth strategies

Q&A

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For Additional Information

Liz Clark

Corporate [email protected]

32

Sathyajit Rao

Vice President

Emerging Market Innovation

[email protected]

Prerna Mohan

Industry Manager

Emerging Market Innovation

[email protected]

The Frost & Sullivan Story

19611961 19901990 TodayToday

EmergingEmerging ResearchResearch19611961––19901990

Growth PartnershipGrowth Partnership19901990––TodayToday

Visionary InnovationVisionary InnovationTodayToday––FutureFuture

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Pioneered Emerging Market & Technology Research

• Global Footprint Begins

• Country Economic Research

• Market & Technical Research

• Best Practice Career Training

• MindXChange Events

Partnership Relationship with Clients

• Growth Partnership Services

• GIL Global Events

• GIL University

• Growth Team Membership

• Growth Consulting

Visionary Innovation

• Mega Trends Research

• CEO 360 Visionary Perspective

• GIL Think Tanks

• GIL Global Community

• Communities of Practice

Investor Relations

Energy Renaissance: Why You Need an Emerging Market Strategy for Success